Friday, July 24, 2015

Blogging Break

I am taking a two week summer vacation. I’ll resume blogging sometime in the week of August 10, starting with the cases that came out this week that I didn’t have time to blog before leaving, namely: Eli Lilly Canada Inc. v. Canada (Attorney General) - 2015 FCA 166; Eli Lilly Canada Inc. v. Apotex Inc., 2015 FC 875; and E Mishan & Sons, Inc v Supertek Canada Inc 215 FCA 163.

Monday, July 13, 2015

Non-Infringing Alternative "Defence" Rejected Once Again

ADIR v Apotex 2015 FC 721 Gagné J
            1,341,196 / perindopril / COVERSYL

As noted in my last post, this case is the accounting of profits portion of a bifurcated trial. In the liability decision, Laboratoires Servier v Apotex Inc, 2008 FC 825 aff’d 2009 FCA 222, Snider J held that the defendants had infringed the plaintiff’s ‘196 patent and she allowed the plaintiffs to elect an accounting of profits [1]. This post deals with the treatment of non-infringing alternatives in the accounting.

A substantial amount of the infringing material manufactured by Apotex in Canada was destined for export to markets such as the UK and Australia. Apotex argued that it could have manufactured perindopril API and finished dosage in other non-infringing jurisdictions for export to those same markets at exactly the same price, and if it had done so, it would have made exactly the same profits (or even more!) than it made by manufacturing in Canada [79]-[80]. In Schmeiser 2004 SCC 34, the SCC held that the preferred means of calculating an accounting is the differential profit approach, in which “A comparison is to be made between the defendant's profit attributable to the invention and his profit had he used the best non-infringing option” [102]. On this authority, Apotex argued that since it would have made just as much money using the non-infringing offshore manufacturing, the profits attributable to its Canadian infringement were zero. This is referred in the decision to as the “non-infringing alternative” or “NIA” “defence”. (As I have argued, this argument is not a defence, in the sense that it does not normally result in a complete bar to liability.)

Gagné J rejected the NIA argument as a matter of law [106], though she went on to hold that in any event it was not made out on the facts [142]. In my view, Gagné J’s reasons for rejecting the NIA analysis as a matter of law is not persuasive, but her analysis of its application on the facts is.

Friday, July 10, 2015

“Insurance” Provision in Transfer Pricing Agreement

ADIR v Apotex 2015 FC 721 Gagné J
            1,341,196 / perindopril / COVERSYL

This case is the accounting of profits portion of a bifurcated trial. In the liability decision, Laboratoires Servier v Apotex Inc, 2008 FC 825 aff’d 2009 FCA 222, Snider J held that the defendants had infringed the plaintiff’s ‘196 patent, and she allowed the plaintiffs to elect an accounting of profits [1]. This decision is primarily of interest for two points: the treatment of payments made on account of what was argued to be liability insurance provided by Apotex to its foreign purchaser to protect against infringement of a foreign patent, which is dealt with in this post, and the treatment of non-infringing alternatives, which I will consider in my next post.

Thursday, July 9, 2015

Inventive Concept and the Promise of Utility Are Not Necessarily Coextensive

AstraZeneca Canada Inc v Apotex Inc / esomeprazole 2015 FCA 158 Dawson JA; Ryer, Webb JJA aff’g 2014 FC 638 Rennie J
            2,139,653 / esomeprazole / NEXIUM

The FCA’s brief Esomeprazole decision affirms a couple of important points that were raised in yesterday’s post (which I wrote before having read the FCA decision).

An initial, basic point is that the FCA affirmed Rennie J’s holding that the patent was invalid for failing to satisfy the promise of the patent, which was higher than the mere scintilla necessary to support a patent. As I remarked in my post on Rennie J’s decision, this shows that “the promise doctrine is alive and well post-Plavix FCA 2013 FCA 186.” This is not entirely surprising, as Plavix formally reaffirmed the promise doctrine, holding only that the promise must be explicit, but with the FCA’s affirmance in this case any thought that Plavix was the first step towards abandoning the doctrine entirely must now be laid to rest.

The FCA also stated that “[i]t is also now settled law that some promises can be construed to impose utility requirements across each of a patent’s claims, while other promises may touch only a subset of the claims,” citing Celecoxib 2014 FCA 250 (blogged here). While Rennie J in this case did not construe the promise on a claim-by-claim basis, the FCA held this was not an error in light of the evidence and submissions before him [6]. As noted in yesterday’s post, the distinction between overarching and claim-specific promises was applied by O'Reilly J in his Deferasirox decision.

AstraZeneca also argued that “the Federal Court erred by construing the utility of the claims in issue in a manner inconsistent with their inventive concept. AstraZeneca argues that because it is a fundamental rule of claim construction that a claim receives one interpretation for all purposes, there must be a unitary, harmonious understanding of the essential elements of the claim, inventive concept and utility” [10]. The FCA rejected this proposition as being unsupported by any jurisprudence. In my view, this holding is entirely correct. To elaborate on an example given in yesterday’s post, suppose a racemic compound is known to treat cancer though with side effects, and it is obvious to a skilled person that one of the enantiomers is therapeutically effective while the other is responsible for the side effects, but it is unusually difficult to resolve the enantiomers. If a patentee succeeds in resolving the enantiomers through inventive ingenuity and claims the therapeutically effective enantiomer, the claimed invention is surely patentable. But if the inventive concept and the promise of utility are coextensive, it would be held invalid; the enantiomer is useful, because it treats cancer (without side effects), but that was obvious to anyone. The reason the claim is valid is that the inventive concept, namely the method of separating the enantiomers, is distinct from the utility.

Wednesday, July 8, 2015

Application of Distinction Between Overarching Promise and Claim-Specific Promise

Novartis Pharmaceuticals Canada Inc v Teva Canada Ltd (NOC) 2015 FC 770 O'Reilly J
            2,255,951 / deferasirox / EXJADE

As discussed in Monday’s post, the ‘951 patent relates to iron chelators, which are used to treat disorders caused by excess iron in the body [7]. As usual, the utility attack turned on the promise of the patent. O'Reilly J’s Deferasirox decision illustrates once again that under the promise doctrine the validity of the patent will turn on a meticulous reading of the disclosure. It is also interesting as applying the recently developed distinction between an “overarching” promise, which will affect all claims, and a promise that is directed at one claim only. One point I would quibble with is that there seems to have been an implicit assumption that the stated utility is the same as the inventive concept. Consequently, while O’Reilly J explicitly stated that (for the compound claims) he applied the low standard for utility that applies in the absence of an explicit promise, the standard he actually applied was higher than a mere scintilla.

SCC Viagra Decision Does Not Create a Duty to Disclose All Test Results

Novartis Pharmaceuticals Canada Inc v Teva Canada Ltd 2015 FC 770 O'Reilly J
            2,255,951 / deferasirox / EXJADE

The background to this decision is given in yesterday’s post. Today’s post deals with Teva’s insufficiency attack. While the SCC’s Viagra 2012 SCC 60 decision was not cited, that decision, and not classic insufficiency, was the basis for the attack. In particular, Teva argued that “the real invention [deferasirox] was buried in claim 32," [56], and that “the patent does not specifically identify the compounds that had been tested in vivo, so a skilled reader would not know which of them would work” [59]. This echos Viagra, in which the SCC held the Pfizer’s Viagra patent invalid for failing to disclose the true invention, essentially on the basis that the patentee had not disclosed that the sildenafil was the only compound which had been tested in humans. The reference to the invention being buried in the claims reflects Viagra because the SCC indicated that if sildenafil had been the only individually claimed compound, that might have constituted sufficient disclosure that it was the true invention. 

The facts in Deferasirox were similar to those in Viagra in that the disclosure did not specifically which compounds had been tested in vivo [59] and numerous compounds were individually claimed. O’Reilly J nonetheless dismissed Teva’s arguments, saying “all of the thirty claimed novel compounds had been demonstrated or soundly predicted to have the stated utility set out in the patent. A skilled person would have had no difficulty making and using any one or more of those compounds based on the information in the patent” [60]. In so holding, O’Reilly J joins prior decisions by Harrington J (here) and Snider J (here) to the effect that Viagra does not impose a general obligation to disclose which compounds were tested. This interpretation of Viagra now seems well-established, at least at the FC level. This is a welcome development. The SCC in Viagra sought to do what it saw as justice, but with a shaky grasp of the facts, which led to a decision which was confusing, and, in my view, doctrinally confused: see “The Duty to Disclose ‘The Invention’: The Wrong Tool for the Job, (2013) 25 IPJ 269. The FC has wisely chosen to interpret Viagra conservatively, rather than as creating a new ground of invalidity.

Tuesday, July 7, 2015

State of the Art for an Obviousness Attack Includes Only Art Discoverable in a Reasonably Diligent Search

Novartis Pharmaceuticals Canada Inc v Teva Canada Ltd 2015 FC 770 O'Reilly J
            2,255,951 / deferasirox / EXJADE

O’Reilly J’s decision in Novartis v Teva / deferasirox does not break wholly new legal ground, but it does develop several interesting points regarding the state of the art in obviousness, Viagra-style insufficiency, and the promise of the patent. I will deal with these issues in separate posts.

The ‘951 patent relates to iron chelators, which are used to treat disorders caused by excess iron in the body [7]. Iron chelators were known in the prior art, but the most effective could not be administered orally, and others were toxic or insufficiently effective [9]. The problem facing the inventors was therefore to find an effective iron chelator that could be orally administered. Two classes of compounds are disclosed in the patent: Formula I compounds were previously known, and the relevant claims were to their use for treatment of diseases involving excess iron in humans, while Formula II compounds were novel, and they were claimed both as compounds and for the use in treatment of iron excess diseases [14]. Deferasirox, the active ingredient in EXJADE, is a Formula II compound and so is covered by both use and compound claims.

The obviousness attack turned primarily on the facts, but a pure question of law was raised as to what constitutes the prior art for the purposes of an obviousness attack. O’Reilly J held that there was considerable doubt as to whether some of the sources formed part of the relevant prior art for the purposes of an obviousness attack because they would not have been located by a skilled person conducting a reasonably diligent search. But section 28.3 of the Act provides that an invention must not be obvious having regard to information that “became available to the public” in Canada or elsewhere before the relevant date. This is exactly the same language as used in the novelty provision, s 28.2. Citing Barrigar’s, Canadian Patent Act Annotated, at PA-341, Teva argued that this means that the old requirement that only reasonably discoverable information can be used in an obviousness attack is no longer the law, and the prior art for obviousness and novelty purposes should be the same [53]. 

Teva has a good argument based on the text of the Act, but I have argued 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”: What is the State of the Art for the Purpose of an Obviousness Attack?, (2012) 27 CIPR 385 at 394. I went on to note that “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.” In this case, O’Reilly J stated that “there is case law applying the usual ‘reasonably diligent search’ criterion even after the enactment of s 28.3. I see no reason to take a different approach here” [53]. While O’Reilly J is right to say that there was prior case law using the traditional criterion, the question of whether s 28.3 had modified the law was not raised in those decisions. O’Reilly J’s considered holding is therefore a significant development on this point of law. Strictly, however, his holding was obiter, since he held that the invention was not obvious even if Teva’s interpretation was correct [54]. With that said, I believe that O’Reilly J's decision is the first to directly address this point, and it certainly reinforces the view that properly interpreted, s 28.3 did not change the law.