Monday, September 21, 2015

There Is No Requirement to Refer to Evidence of Demonstrated Utility in the Patent

Eli Lilly Canada Inc v Apotex Inc / tadalafil formulation (NOC) 2015 FC 1016 Gleason J
            2,379,948 / tadalafil formulation / CIALIS, ADCIRCA

After the discussion of abuse of process issues in Friday’s post, this post turns to the substantive issues in this Tadalafil Formulation decision. Gleason J held that Apotex’ product did not infringe the 948 patent [72], which claims a particular formulation of tadalafil, and that the 948 patent was invalid for obviousness as being obvious to try [112], but that it was not invalid for lack of utility [145].

The holdings on infringement and obviousness turned entirely on the facts, and Gleason J came to the same conclusion as did de Montigny J in Mylan Tadalafil III 2015 FC 178 (blogged here), which she referenced. Two points of some interest are that Gleason J relied on comity in coming to the same conclusion as de Montigny J regarding the inventive concept [92]; and Gleason J took a very dim view Lilly’s expert Dr. Bodmeier for having changed his evidence to avoid a conclusion unfavourable to Lilly [56]-[57].

The discussion of utility was interesting in two respects. It started, as is now standard, by considering the promise of the patent. Lilly submitted that the promise of the patent was limited to rapid onset of pharmacological response [124], while Apotex argued for a broader promise, including advantages such as improved stability, among others. Gleason J ultimately held in favour of the more modest promise advanced by Lilly [137]. 

What is interesting is that Gleason J emphasized throughout that a patent need not have a promise. As Gleason J noted in her general statement of the law, it is established that in principle a patent need not have any promise at all ([117], [118], [120]), but it nonetheless remains the norm to assess utility against a promise which is more stringent than the scintilla that would otherwise be required to support a patent. Consequently, it is not surprising that Lilly chose to advance a modest promise rather than arguing that the patent contained no promise at all. Even so, in her analysis Gleason J suggested at several junctures that the patent might not contain any promises. She noted that while a promise must be explicit “the Patent nowhere makes an explicit promise of any sort” [133], and after reviewing the particular statements of advantage in the patent, she remarked that “There is little in these few statements to found a promise, but, despite this, it is common ground between the parties that this Patent does make a promise” [136]. Her holding that there was a modest promise was qualified by statements such as “To the extent there is any promise made in the 948 Patent” [136] and “to the extent the relevant claims in the Patent make a promise,” it is a modest one [137]. Given the current state of the law, it is no doubt tactically safer for a patentee to choose to argue for a modest promise rather than none at all, but it is apparent that in this case Gleason J would have been open to finding that the 948 patent did not make any promise.

The utility discussion also raised an important legal point on the requirement to disclose evidence of utility. It is now established in Canadian law that when utility is based on sound prediction, the factual basis for that prediction must be disclosed in the patent itself. (Though there has recently been some suggestion that this rule is limited to certain types of patents: see here and here.) In this case, no studies or tests at all were disclosed in the 948 patent, so Lilly did not appeal to sound prediction to establish utility, and appealed instead to demonstrated utility [123].

On the basis of Latanoprost 2011 FCA 236, [30], Pharmascience / NEXIUM 2014 FCA 133 [39], [40], and Sildenafil FCA 2010 FCA 242, Apotex argued that even evidence supporting demonstrated utility must be at least referred to in the disclosure [129], [140]. This interpretation of those cases had been accepted by Roy J in Gliclazide Dosage Form 2015 FC 108, which Apotex also relied on [140]. Gleason J dismissed this argument:

[141] With respect, I believe that Justice Roy’s determination on this point is erroneous and ought not be followed as it takes the obiter statements in Sildenafil FCA and Latanoprost out of context and does not address the many other cases where an opposite conclusion was reached.

I entirely agree with this view of of Latanoprost 2011 FCA 236 and Pharmascience / NEXIUM 2014 FCA 133, as discussed in my post on Roy J’s decision. Indeed, the FCA remarks relied on by Roy J were so tangential to the issues in those cases that I didn’t even mention them in my posts on those cases (see here and here). I must say that I read the Sildenafil FCA decision as providing stronger support for a requirement to disclose evidence of demonstrated utility in the patent, but that decision was brief and not entirely clear, and only a single sentence from it was being relied on. Moreover, in my view Gleason J was entirely right to conclude from her review of the case law generally that “the weight of authority is to the effect that the evidence of demonstrated utility need not be referenced in the patent for the patentee to rely on it” [142].

Gleason J’s holding on this point was not obiter, as she went on to find the promised utility was demonstrated on the basis of evidence that was not disclosed or even referred to in the patent [143]-[144]. I hope that Gleason J’s holding will settle this point, at least at the FC level

Saturday, September 19, 2015

Vigamox Decision Affirmed on the Facts

Actavis Pharma Compagny v Alcon Canada Inc / moxifloxacin (NOC) 2015 FCA 192 Boivin JA: Dawson, Webb JJA aff’g 2014 FC 462 Phelan J
1,340,114 / moxifloxacin / VIGAMOX

Alcon Canada Inc. v. Actavis Pharma Company / moxifloxacin (NOC) 2015 FCA 191 Boivin JA: Dawson, Webb JJA aff’g 2014 FC 462 Phelan J
            2,342,211 / moxifloxacin / VIGAMOX

These companion cases concern separate appeals, involving different patents, from a single decision by Phelan J. In both cases the FCA affirmed, essentially on the basis that the appellants were really attempting to re-argue the case on the facts and asking the FCA to re-weigh the evidence, which is not the role of a Court of Appeal.

Phelan J’s decision respecting the 211 patent is blogged here, and his decision on the 114 patent is blogged here and here.

Friday, September 18, 2015

Fairness in Abuse of Process: Which Party Will be More Severely Prejudiced

Eli Lilly Canada Inc v Apotex Inc / tadalafil formulation (NOC) 2015 FC 1016 Gleason J
            2,379,948 / tadalafil formulation / CIALIS, ADCIRCA

In Apotex Tadalafil Formulation Gleason J found that Apotex’ product did not infringe the 948 patent [72], which claims a particular formulation of tadalafil, and that the 948 patent was invalid for obviousness as being obvious to try [112], but that it was not invalid for lack of utility [145]. The main points of interest are Gleason J’s discussion of abuse of process, and her discussion of the suggestion in some recent case law that evidence of demonstrated utility must be disclosed in the patent. I will discuss abuse of process in this post, and utility in Monday’s post.

The abuse of process issue arose because de Montigny J ruled against Lilly on the same issues in respect of the same patent in Mylan Tadalafil III question, and in Sanofi Ramipril 2007 FCA 163 the FCA held that when an a patentee has failed in an NOC proceeding against one generic, it is generally an abuse of process within the meaning of paragraph 6(5)(b) of the NOC Regulations to relitigate the same allegation of invalidity when made by second generic. However, as Gleason J noted [11], the FCA did note that the doctrine of abuse of process should be applied on a case by case basis, “to ensure the application of the doctrine of abuse of process does not give rise to unfairness in the circumstances” (Sanofi Ramipril [40]). Gleason J held that “in the rather unique circumstances of this case, this application is not an abuse of process” [10]. The main distinction relied on by Gleason J was the fact that an appeal of de Montigny J's Mylan Tadalafil III decision was still pending, whereas in Sanofi Ramipril [40] appeals of the earlier decision had been exhausted [12], [14].

More important that this specific distinction is the general principle articulated by Gleason J:

[19] I believe the key issue for consideration involves determination of which party will be more severely prejudiced by a negative determination on the dismissal request.

Gleason J then went on to provide a detailed analysis of the consequences to both parties of allowing the prohibition application to proceed on the merits in this particular case. This principle strikes me as valuable in providing structure and meaning to the assessment of fairness in the exercise of the court’s discretion under s 6(5)(b), and indeed when dealing with abuse of process more generally. It is not an exhaustive principle (nor did Gleason J say it was), as it does not address concerns such as economy of judicial resources and the risk of conflicting judgments which go beyond the interests of the parties to the particular litigation, and which were emphasized in Sanofi Ramipril. But it is nonetheless a helpful elaboration on the question of fairness, which was adverted to but not developed in Sanofi Ramipril.

Gleason J’s statement and her subsequent discussion of the facts acknowledges that consideration of fairness requires a comparative balancing analysis, as opposed to focus solely on the plaintiff. A plaintiff may have legitimate reasons for bringing a subsequent action, even if considerations of judicial economy and fairness to the defendant ultimately warrant dismissal of the action for abuse of process. Implicit in Gleason J’s analysis is a risk analysis; there would be prejudice to Lilly from losing its ability to present its case on the merits, and that prejudice would be greatly magnified if it prevailed on the appeal in Mylan Tadalafil III [21]. In that sense, Gleason J’s analysis is broadly analogous to the “lower risk of injustice” principle enunciated by Hoffmann J In the context of interlocutory injunctions in Films Rover [1986] 3 All ER 772, 780. That is, even though one party might suffer a more substantial prejudice on a negative determination on the abuse motion, that prejudice should be discounted if that party would be unlikely to prevail on the merits. That would explain why it is relevant to ask whether the appeals from the prior decision are exhausted, which implies that the merits remain somewhat uncertain.

Tuesday, September 15, 2015

Non-Infringing Alternative and Intentional Infringement

Apotex Inc v Merck & Co, Inc / Lovastatin Damages 2015 FCA 171 Dawson JA: Stratas, Boivin JJA aff’g 2013 FC 751 Snider J
            1,161,380 / lovastatin / MEVACOR

In a comment to my post “Relevance of Infringer's Outside Option in Non-infringing Alternative Analysis,” on the FCA’s Lovastatin Damages decision, Ephraim Stulberg raises a point that deserves a full analysis:

My reading of the case is that the FCA has concluded (rightly or wrongly) that the NIA defence will typically be open only to unintentional infringers. The "but for" reconstruction cannot simply be based on the proposition that "had we only known the court would have found the patent valid"; otherwise, the actions of the defendant in the real world will be held against them (i.e. if the NIA was really such a good idea, why did you decide to roll the dice?)

I agree that the FCA did seem to be saying that an intentional infringer cannot normally raise the availability of an NIA in constructing the “but for” world. That is directly supported by the FCA’s repeated references to intentional infringement [91], [93] and it makes sense of the court’s reference to “brazen” infringement, which is otherwise puzzling [90]. It is also consistent with the court’s repeated references to Apotex’ belief that the 380 patent was invalid [92], [93], which indicates that, in the view of the FCA, Apotex intentionally infringed because it believed the patent was invalid.

The difficult question is why the FCA was of the view that intent is an important consideration. It is one thing to say that an intentional infringer cannot normally raise the availability of an NIA, but there must be some rationale for that holding, which would otherwise simply be unprincipled.

The reading I provided in my first post – that the FCA was saying that an infringer will not be able to raise the NIA in the damages assessment if it would not have been more profitable than the best outside option – is not strongly supported by the FCA’s emphasis on intent. As I explained in the footnote (*) in my first post, on that reading it doesn’t really make sense to say that an intentional infringer will not usually be able to raise the NIA analysis, because intent doesn’t say anything about whether the defendant believed it had a better outside option. On the other hand, my reading is quite strongly supported by the FCA’s only specific statement as to why as Apotex’ evidence was insufficient [94]; but if that reading is correct, the FCA’s emphasis on intent was misplaced.

While my reading of the decision does not really explain the court’s emphasis on intent, I can’t think of any other reading which does. The basic difficulty with a holding that an intentional infringer cannot raise the availability of an NIA is that, as the FCA explicitly recognized, the question at hand is one of causation [43], and intent is irrelevant to causation. If I smash a store window intentionally or accidentally, the damage I cause – the cost of replacing the window – is the same.

In some limited circumstances the intentional nature of the act might increase the harm done. The humiliation from an intentional public slap in the face might entail a real loss, even though the same physical act would be negligible if accidental. In such instances aggravated damages are appropriate to capture the intangible elements of the harm: see Cassell & Co Ltd v Broome (No 1) [1972] UKHL 3. But there is no suggestion in this case, either on the facts or in the FCA decision, that the infringement is linked to any kind of loss that would give rise to aggravated damages, and aggravated damages do not typically arise in patent litigation generally. And even if aggravated damages could somehow arise, I don’t see how there could be any link between the availability of the NIA and the quantum of the aggravated damages. So, an appeal to aggravated damages cannot justify a holding that an NIA should not be considered in assessing damages against an intentional infringer.

At first glance, punitive damages are more promising. Intent is certainly relevant to punitive damages, which are intended for punishment (or prevention), deterrence and retribution: Whiten 2002 SCC 18 [43], [53], Cinar 2013 SCC 73 [136]. Nonetheless, there are several problems with holding that an intentional infringer cannot rely on the NIA analysis in order to impose punitive damages.

First, as a general matter, punitive damages are not generally available for intentional patent infringers. Intentional infringement is common, particularly in pharmaceutical litigation, yet punitive damages are very seldom awarded. To award punitive damages routinely, but only in cases where the infringer could otherwise have competed with a non-infringing alternative, is unprincipled.

This leads to the second point. While intent is relevant to punitive damages, it is not the only factor that is considered. “Punitive damages are awarded against a defendant in exceptional cases for ‘malicious, oppressive and high-handed’ misconduct that "offends the court's sense of decency’. The test thus limits the award to misconduct that represents a marked departure from ordinary standards of decent behaviour” Whiten [36]. Intentional infringement alone falls far short of this standard, particularly when, as in this case, the infringer believed the patent to be invalid. If, for example, a generic launches at risk in the face of an evergreening formulation patent that it believes is almost certainly invalid, surely it should not be subject to punitive damages if the 10% chance that the patent was valid is ultimately realized.

Finally, punitive damages must be reasonably proportionate to the harm caused: Whiten [94]. This means the harm caused must be determined before punitive damages can be assessed; if we don’t know what harm was caused, how can we ensure that the punitive damages are proportionate to that harm? Again, we come back to the point that the harm caused does not depend on whether the infringement was intentional. By the same token, even if punitive damages were generally appropriate for intentional infringers, there is no particular reason to believe that the appropriate quantum of punitive damages would be arrived at by excluding the NIA analysis. Recall that the NIA analysis is not a defence, but only a method of assessing damages. In this case the facts established that Apotex would have competed equally effectively with the NIA, but in general the NIA analysis might show that the infringer would have captured only a part of the market, or even none at all. So to exclude the NIA analysis as a means of levying punitive damages would mean that sometimes the punitive damages would be an enormous multiple of the harm caused – potentially hundreds or thousands of times the harm actually caused, in cases where competition with the NIA would have been very effective – to a very small fractional multiplier. Indeed, the less the harm, the greater the multiplier, which is exactly the opposite of what we would want from punitive damages that are proportionate to the harm caused.

Consequently, it would be entirely unsound to impose punitive damages by holding that an intentional infringer cannot appeal to the NIA.

Having ruled out punitive damages and aggravated damages, I can’t think of any other reason why intent would be relevant. While the reading I offered in my first post doesn’t really explain the FCA’s emphasis on intent, I can’t think of any other principled explanation for the court’s holding that gives intent a central role. So on the whole, I still think the is the best reading is the one I provided in my first post, but it is certainly possible that I have misunderstood the court’s point.

Finally, Mr. Stulberg remarked that:

The "but for" reconstruction cannot simply be based on the proposition that "had we only known the court would have found the patent valid"; otherwise, the actions of the defendant in the real world will be held against them (i.e. if the NIA was really such a good idea, why did you decide to roll the dice?)

As a general matter, I don’t see what’s wrong with basing the but-for reconstruction on the proposition that “had we only known the court would have found the patent valid,” this is what the infringer would have done. For example, a reasonable royalty is assessed on the assumption that the parties to the hypothetical negotiation knew the patent is valid, even though real licenses are presumably discounted to reflect the possibility of invalidity. More generally, my view is that damages assessment should take into account not just whether the patent is valid, but all knowledge known at the time of trial: see my article with Tom Cotter, A New Framework for Determining Reasonable Royalties in Patent Litigation (forthcoming Fla L Rev). As to why the defendant would have infringed, the answer is that it is often more profitable to infringe. In this case the infringing process was substantially cheaper than the NIA, though that differential profit would have been captured by Blue Treasure (the Chinese joint venture which manufactured most of the infringing product), rather than by Apotex. But that does not make the NIA analysis irrelevant. If the NIA indeed just as good, it is true that the infringer would normally not infringe intentionally, but in general the NIA will allow some partial degree of competition. This is there is a broad range of possibilities between an NIA that is a perfect substitute for the patented product and one that would not have captured any sales at all. It is well established that a patentee cannot recover lost profits for sales that would have been captured by third parties with non-infringing products, and typically such competitors will capture some but not all of the infringing sales: see Jay-Lor 2007 FC 358, [197], AlliedSignal (1998), 78 CPR(3d) 129, 139 (FCTD). The NIA analysis just says the same is true even if the non-infringing sales would have been made by the infringer.

I consulted for Apotex at both the FC and FCA level. The views expressed in this post are my own.

Vigamox Decision Affirmed on the Facts

Actavis Pharma Compagny v Alcon Canada Inc / moxifloxacin (NOC) 2015 FCA 192 Boivin JA: Dawson, Webb JJA aff’g 2014 FC 462 Phelan J
1,340,114 / moxifloxacin / VIGAMOX

Alcon Canada Inc. v. Actavis Pharma Company / moxifloxacin (NOC) 2015 FCA 191 Boivin JA: Dawson, Webb JJA aff’g 2014 FC 462 Phelan J
            2,342,211 / moxifloxacin / VIGAMOX

These companion cases concern separate appeals, involving different patents, from a single decision by Phelan J. In both cases the FCA affirmed, essentially on the basis that the appellants were really attempting to re-argue the case on the facts and asking the FCA to re-weigh the evidence, which is not the role of a Court of Appeal.

Phelan J’s decision respecting the 211 patent is blogged here, and his decision on the 114 patent is blogged here and here.

Thursday, September 10, 2015

Latitude in Admitting Hearsay Evidence Contained Within Facially Reliable Scientific References

Takeda Canada Inc v Mylan Pharmaceuticals ULC / pantoprazole (NOC) 2015 FC 751 Barnes J
             2,341,031 / pantoprazole magnesium dihydrate / TECTA

In this NOC proceeding Takeda’s 031 patent claiming pantoprazole magnesium dihydrate was found to be not infringed and invalid for anticipation. Both aspects of the decision turned entirely on the facts. The most interesting aspect of the decision is Barnes J’s discussion of hearsay evidence in NOC proceedings, and in particular his statement that “some latitude should be extended to the reliance by expert witnesses upon hearsay contained within authenticated and facially reliable scientific references” [92].

Pantoprazole magnesium is a known gastric acid inhibitor, and the dihydrate form was the inventive concept of the 031 patent [3]. The relevant prior art was Example 10 of an international patent application [27]. As Barnes J noted, the test for anticipation is strict and requires that following the directions in Example 10 would “inevitably or necessarily” produce pantoprazole magnesium dihydrate. “If the evidence discloses on a balance of probabilities only that a dihydrate will sometimes be the result,” the attack based on anticipation will fail [39]. The only direct evidence was provided by Mylan’s expert, who testified that by following the directions in Example 10 he had produced pantoprazole magnesium dihydrate [40]. Takeda’s expert suggested that different choices might have produced a different result, but those concerns were all “theoretical” and Barnes J was not persuaded [48]. The fact that Takeda did not conduct any tests to determine whether Example 10 would produce the dihydrate form substantially undermined its case [49] (though of course, if Takeda had carried out such tests and they had all produced the dihydrate form, that would not have helped either).

Mylan argued its pantoprazole magnesium product did not infringe because it was the hemipentahydrate, not the dihydrate. The issue turned entirely on whether Mylan’s product was indeed the hemipentahydrate. Barnes J took into account the fact that Mylan’s ANDS submitted to the Minister of Health reports that its product was characterized by various testing methods and found to be a hemipentahydrate [15]. He held that the fact that the Mylan’s product specification allowed for a range of water content that encompassed both the dihydrate and hemipentahydrate, “says very little about what is actually produced” [60], and “it would take far stronger evidence than this to support an inference that Mylan’s disclosure about its product to the Minister was deceitful” [62]. Barnes J also considered evidence related to various tests used to characterize Mylan’s product, and he concluded that Takeda had not carried its burden of showing that Mylan’s product was the dihydrate, particularly in light of the imprecision of many of the tests [79]. [104]. Again, Takeda’s failure to carry out its own characterization tests weighed against it [103].

A significant piece of evidence relied upon by Mylan to characterize its product as a hemipentahydrate was the fact that the XRPD pattern obtained by Mylan for its product matches the XRPD pattern reported in US patent application 623 for a product characterized by the US 623 inventors as pantoprazole magnesium hemipentahydrate [88]. Takeda attempted to block the introduction of this evidence as hearsay [90]. Barnes J held it was indeed hearsay [90] and it did not fall clearly into one of the previously recognized exceptions to the hearsay rule [91]. Nonetheless, he considered it:

[91] In particular, there is no evidence before me to show that the admission of this evidence was justified on the basis of its necessity. That said, the opinions expressed by expert witnesses in patent litigation frequently rest on their acceptance of the accuracy of hearsay references concerning scientific issues or for the interpretation of prior art. In some cases, this is justified on the ground that experts in a particular field are permitted to rely on the accuracy of widely accepted and publicly reported data.

[92] Given the summary nature of NOC proceedings, I am of the view that some latitude should be extended to the reliance by expert witnesses upon hearsay contained within authenticated and facially reliable scientific references. The contents of US 623 were disclosed in Mylan’s NOA and its expert witnesses relied on the reported findings in support of their own analysis. Where such a reference contains sufficient information to allow the opposite party to replicate the work and assess the accuracy of the reported data, that party suffers no material prejudice by the admission of hearsay in support of an expert’s opinion. It was open to Takeda to run the same tests reported in US 623 and to fully characterize the resulting compounds. Despite the significance of this evidence, Takeda chose not to make that effort.

Thursday, September 3, 2015

The Value of the Standard

Professor Tom Cotter and I have a working paper on FRAND royalties, “The Value of the Standard,” that is now available on SSRN. Here is the abstract:

Standard-setting organizations (SSOs) often require member firms to license their standard-essential patents (SEPs) on undefined "fair, reasonable, and nondiscriminatory" (FRAND) terms. Courts and commentators in turn have proposed various principles for calculating FRAND royalties, among them that the royalty should not reflect "the value of the standard." As we show, however, this principle could be understood to mean any or all of three distinct concepts, namely that the royalty should not reflect the implementer's sunk costs; that the patentee should not be able to extract any of the value resulting from network effects; or that the royalty should be proportionate to the patent's contribution to the standard.

This Article proposes, as an alternative benchmark, that a FRAND royalty should reflect the incremental contribution of the patent to the value of the standard. This principle combines two related ideas: first, that royalties should reflect the hypothetical bargain the parties would have struck ex ante (prior to standard adoption), in view of the incremental value of the technology over unpatented alternatives as revealed ex post; and second, that multiple patents reading on a standard should be valued in proportion to their marginal contribution ("ex post Shapley pricing"). Our proposal would prevent patentees from extracting sunk costs or a disproportionate share of standard value, but (contrary to some approaches) it would enable them to draw some of the increased value resulting from network effects. We show that our approach is more consistent with sound innovation policy, and suggest some practical applications

Wednesday, September 2, 2015

NOC Abuse of Process Summarized

Gilead Sciences Inc v Apotex Inc 2015 FC 610 Barnes J
            2,298,059 / tenofovir (PMPA) / TRUVADA

In Gilead v Teva / tenofovir (NOC) 2013 FC 1272, the companion case to 2013 FC 1270 (blogged here), Barnes J refused to grant an order of prohibition to Gilead on the basis that the 059 patent was obvious. Teva had put in issue the validity of Claims 1 through 7, but Gilead had relied on on Claims 3 and 4 [3]-[4]. Apotex then served an NOA on Gilead alleging obviousness [5] and also alleging an abuse of process. Gilead responded by saying it intended to fill in an evidentiary gap from the earlier proceeding [6] and that it relied on all the Claims, not just 3 and 4 [8]. Barnes J held that Gilead’s response was indeed an abuse of process:

[13] It seems to me that an abuse of process finding in the NOC context is not dependant on the evidence to be called but, rather, on the issues presented to the Court for determination. Once the second person puts a validity issue into play, the patentee proceeds at its subsequent peril by not fully responding. In other words, it must live with the consequences of not fully joining issue in the first proceeding.

[14] A patentee cannot avoid an abuse of process finding by asserting the validity of only a select number of claims in an initial NOC proceeding, only to assert the validity of different claims in a subsequent NOC proceeding involving a different generic challenger. Where the initial NOA puts in issue the validity of certain patent claims, it is not open to the patentee to concede some of the claims but later resile from that position. If it were otherwise, the patentee could effectively split its case and unilaterally compel subsequent generic challengers to litigate claims, the invalidity of which the patentee had effectively conceded. This would amount to a manipulation of the system and it would violate the principle that the patentee is required to put its strongest case forward in the first instance.

[15] The situation may well be different where the initial generic challenger declines to put the validity of certain claims in issue in its NOA, perhaps relying solely on an allegation of non-infringement. There the patentee could presumably rely on the presumption of validity in the first instance without compromising its right to assert validity in the face of a subsequent challenge.

Tuesday, September 1, 2015

Relevance of Infringer’s Outside Option in Non-infringing Alternative Analysis

Apotex Inc v Merck & Co, Inc / Lovastatin Damages 2015 FCA 171 Dawson JA: Stratas, Boivin JJA aff’g 2013 FC 751 Snider J
            1,161,380 / lovastatin / MEVACOR

In Lovastatin Damages the FCA held that a non-infringing alternative should be taken into account in assessing damages for patent infringement if the alternative “could and would” have been used by the infringer. Yesterday’s post discussed the “could” branch of this test (which the FCA held was dispositive on its own [89]). This post reviews the “would” branch. The FCA held that even if the NIA was available to the infringer in the sense that it would have been technically feasible (the “could” branch), it should not be considered in assessing damages if the NIA would not have been used because there was some other product entirely that would have been more profitable than the NIA. This raises a tension between treating causation purely as a matter of establishing what would most likely have happened but for the infringement, and a purposive approach to the interpretation of s 55(1) of the Act.

As noted in yesterday’s post, I consulted for Apotex in this case at both the FC and FCA level. The views expressed in this post are my own.