Tuesday, March 22, 2016

Improper Priority Claim is Not a Material Misrepresentation

Uponor AB v Heatlink Group Inc 2016 FC 320 Manson J

I believe this is Manson J’s first patent decision since being appointed to the Federal Court. While the case spanned many grounds of validity and infringement, in the end it turned on its facts. The most interesting legal point relates to s 53 of the Act, but I also have a few miscellaneous comments on other aspects of the decision.

PEX is cross-linked polyethylene. It is used primarily for pipe and tubing (such as the new PEX water-pipes that I had just had installed in place of copper in my on-going kitchen renovation). The polyethylene used in making PEX is cross-linked by heating in the presence of an additive (such as peroxide) [77]. The ‘376 patent relates to a method of heating polyethylene (for the purpose of cross-linking, though that is not specified in the broadest claims), by heating it with infrared (IR) lamps “wherein wave lengths corresponding to the absorption peaks for the [polyethylene] material in respect of infrared radiation, have been eliminated in the infrared radiation irradiating the polymer material” [22, Claim 1]. Polyethylene has two absorption peaks, at 3.2 to 3.6 μm and 6.6 to 6.8 μm [20]. If it is heated by IR which includes those wavelengths, the surface layer of the polyethylene will absorb most of the radiation resulting in uneven heating and therefore uneven cross-linking. By excluding those wavelengths, the radiation will permeate though the entire thickness, giving more uniform cross-linking [21].

The main difficulty for the patentee is that the prior art, in particular the widely consulted “IR Handbook” [207-13] and US patent 4,234,624 [222-23] disclosed the idea of using short-wavelength IR (1.2 μm and 0.76 to 4 μm, respectively), to heat polyethylene for cross-linking. The ‘376 taught two methods of eliminating the undesired wavelengths, namely by filtering them out with a filter that blocks those wavelengths [38], or by using an IR source with a wavelength at 1.2 μm [39]. Thus it is clear that the term “eliminated” encompassed using a low wavelength source. Consequently, most of the broad claims were held to be anticipated or obvious [298]. Some of the claims specified that the undesired wavelengths were to be filtered out, but the patent did not disclose any suitable filter, so many more claims were invalidated. However, a few claims covering what the patent described as a preferred embodiment were held to be valid [251] and infringed [297]. These claims added the element of feeding the extrusion vertically through the IR lamps; this produces a more uniform pipe as it reduces distortions in the hot plastic due to gravity.

S 53
The PCT application from which the ‘376 patent was issued claimed priority from three earlier Uponor patent applications [51]. Manson J held that the claim for priority was not justified as it did not disclose the claimed subject matter [53], though this made no practical difference as the defendant did not rely on any prior art from the window between the priority date and the filing date [54]. The defendants argued that this unjustified claim to priority rendered the patent void under s 53, on the basis that “that the inventors . . ., the applicant. . . and all other entities claiming an ownership interest in the ‘376 Patent prior to its date of issuance, knew or were reckless in not knowing that the priority applications did not disclose the subject matter defined by any of the claims of the ‘376 Patent” [55].

Manson J rejected this argument. So far as the inventors were concerned,

[57] the Patent Act explicitly contemplates that the allegation must be made by the application. The inventors of the ‘376 Patent . . . were never “applicants” and as such, no duty is imposed against them.

Manson J cited Ratiopharm Inc v Pfizer Ltd (Amlodipine Besylate) 2009 FC 711 Hughes J at [115], for this proposition, though I must say that I don’t see such a statement at that paragraph. Later, at [199], after finding that misstatements had been made, Hughes J stated that “These misstatements and the selection of words such as unique, outstanding and particularly suitable were the work of patent draftsmanship not of the inventors.” Perhaps this is the passage Manson J had in mind. In any event, as Mason J went on to say, the inventors were not involved in drafting the patent.

More importantly, Mason J held that

[59] For an allegation to be material it must somehow affect how the public makes use of the invention taught by the ‘376 Patent. The only effect of an improper priority claim in this case would be that the applicant would not be entitled to the benefit of the earlier claim date of September 20, 1995, and instead the claim date would be September 20, 1996. This would not and does not impact how the public would make use of the invention.

[60] As was held by Justice Thurlow in Canadian Marconi Co v Vera Prinzen Enterprises Ltd (1964), 46 CPR 97 at 141 (Ex Ct), an improper claim to convention priority based on a U.S. application was not a material allegation in the petition which renders the patent void.

The narrow proposition, that an improper priority claim is not material, seems right to me intuitively, and it is supported by the authority of Thurlow J’s decision. I’m not so sure about the broader proposition, that an allegation is not material unless it somehow affects how the public makes use of the invention. In Amlodipine Besylate the misrepresentation at issue was omissions and misinformation regarding the properties of unclaimed substances [197], which “served to enhance the alleged uniqueness and outstanding characteristics of the besylate salt” [199], and Hughes J held the patent to be invalid under s 53 on the basis of these misrepresentations [204]. I don’t see how these statements would affect how the public makes use of the invention.

Subject matter
The claims at issue were to a “process for heating a polymer material” (Claim 1), and an “apparatus for heating a polymer material” (Claim 19). These claims are about as traditional as you can get, but  the defendant argued that the invention was not patentable subject matter on the basis that these claims disclose mental steps and not physical steps [151-52]. While Manson J dismissed this argument summarily, the fact that it was even made illustrates the confusion in the current state of the law on patentable subject matter.

Turning to utility, recall that the invention disclosed two ways of eliminating the undesirable wavelengths, namely by filtering them out, or by using a low wavelength source. Some of the claims (claim 2 and 36 and their dependent claims), specified the use of a filter. On the evidence, none of the filters disclosed in the patent would substantially eliminate the undesirable wavelengths [161-62]. Manson J consequently found that all the claims specifying the use of a filter “are invalid on the basis of inutility” [164]. I have to quibble a little bit here. It seems to me that the proper basis for holding those claims invalid is insufficient disclosure; the invention as claimed is useful, in that it would work if a suitable filter could be found, and the defect is that the patent did not disclose an appropriate filter, and such a filter could not be identified by a POSITA without undue effort. Indeed, Manson J went on to hold the same claims invalid for lack of sufficiency for exactly that reason [191-93], explicitly noting that the same analysis is relevant to both utility and sufficiency [176]. With that said, it is not unusual to hold that the invention lacks utility in such circumstances: see eg X v Commissioner of Patents (1981), 59 CPR (2d) 7 at 9 (FCA).

A couple of "promise of the patent" arguments were also raised (eg that the invention does not provide “uniform and fast heating,”) but these were summarily dismissed on the basis that there was no evidence to support them [154-55].

Turning to remedies, Manson J refused to allow an accounting of profits, saying:

[305] To be entitled to an accounting of profits, the Plaintiff must show some basis for the exercise of equity [citing Janssen [2006] FC 1234, [132]]. In the instant case, the Plaintiff has shown none, and I will not award the requested election of profits.

As discussed here and here, there is actually something of a split in the FC cases on whether a successful patentee is presumptively entitled to an accounting. While Manson J’s holding adds some weight to the more restrictive approach, I do not see it as particularly strong authority, because it was very briefly reasoned, and more importantly because the patentee did not have a particularly good case in any event. Recall that the main claims in the patent had all been held invalid, and while some claims were infringed, there was a serious question as to whether the remaining claims had resulted in any real commercial success; even the patentee hardly used its own process [302]. So, I rather doubt whether Manson J would have awarded an accounting even if he had adopted the view that the patentee was presumptively entitled to it.

Neither pre-judgment nor post-judgment interest was compounded [307, 308], but Manson J did not explain why, and it is hard to attach much significance to this without knowing how these points were argued. See here for posts discussing this issue.

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