Monday, May 20, 2019

What is the State of the Art for the Purpose of an Obviousness Attack?

Aux Sable Liquid Products LP v JL Energy Transportation Inc 2019 FC 581 Southcott J

The invention at issue in Aux Sable v JL Energy is relatively straightforward, but the decision raises several interesting legal issues. One of the key points is a pure question of law: what qualifies as part of the state of the art for the purpose of an obviousness attack? As it happens, I wrote an article on this topic a few years ago, "What is the State of the Art for the Purpose of an Obviousness Attack?” (2012) 27 CIPR 385, though it was not cited in the decision.

The main attack on Claims 1-8 was based on obviousness. The third step of the Windsurfing / Pozzoli test, as adopted in Sanofi 2008 SCC 61, [67] asks what differences, if any, “exist between the matter cited as forming part of the ‘state of the art’ and the inventive concept of the claim or the claim as construed.” The question then, is what constitutes the “state of the art”? Traditionally there was a distinction between the prior art which could be raised in an attack based on anticipation, and the state of the art which might form the basis of an obviousness attack. The prior art comprises all subject matter which was available to the public at the relevant date, while the state of the art was a subset of the prior art, comprising only that which was generally known to a person skilled in the art, or which would be discovered by a skilled person in a reasonably diligent search prior to addressing the problem at hand (the “reasonably diligent search test” [144]): and see eg 2006 FC 1234 [57] aff’d 2007 FCA 217 [37]; 2009 FCA 222 [73]. However, the amendment which came into effect in 1996, codifying the obviousness requirement in s 28.3, describes the subject matter which can be raised in an obviousness attack in exactly the same terms as for anticipation in s 28.2, namely information disclosed “in such a manner that the information became available to the public in Canada or elsewhere.” The question is whether this codification was intended to change the law, so that the state of the art for the purposes of an obviousness attack is now co-extensive with the prior art available for anticipation. Aux Sable, the accused infringer, and the plaintiff in this impeachment action, argued that state of the art is the same as the prior art [136], while the patentee, JL Energy, argued that the reasonably diligent search test applied in determining the state of the art for purposes of obviousness [137].

Aux Sable made a straightforward argument. The plain meaning of the text of s 28.3 – “in such a manner that the information became available to the public in Canada or elsewhere” – captures the prior art, without qualification by the reasonably diligent search test [147]. Further, it was common ground that s 28.2 does not require that a prior art reference be locatable by a reasonable diligent search in order to be citable for an anticipation allegation, and since the language is the same in both sections, this implies the test must be the same [147], [150]. In reply JL Energy, relied on jurisprudence post-dating the amendments, which it argued continued to endorse or apply the reasonably diligent search test. Southcott J carefully reviewed the case law [152]-[174], and concluded, in my view correctly, that it provided little assistance either way, generally because the point was not fully argued, or the decision was ambiguous (see the synopsis below). Southcott J therefore concluded that:

[176] I find Aux Sable’s statutory interpretation arguments compelling, and I disagree with JL Energy’s response that this issue has been settled in its favour by existing jurisprudence.

He therefore held that “a prior art reference which was disclosed to the public, prior to the applicable date prescribed by s 28.3, forms part of the prior art for purposes of an obviousness analysis, regardless of whether the reference would have been locatable through a reasonably diligent search” [176].

This analysis is sound so far as it goes. The text of the Act undoubtedly supports Southcott J’s conclusion, and while the text is not determinative of the correct interpretation, it is dominant. Consequently, a strong argument based on legislative history, policy or established case law would be required to overcome the plain meaning of the text: Canada Trustco Mortgage Co 2005 SCC 54 [10]; Biolyse Pharma 2003 FCA 180 [13].

I would suggest, however, that there is a strong argument, or at least one worth considering, based on the legislative history and policy, which supports the view that the codification was not intended to change the law. I made an argument to that effect in my article “What is the State of the Art for the Purpose of an Obviousness Attack?” (2012) 27 CIPR 385. This article was not referred to by Southcott J, presumably because it was not cited to him by JL Energy. Perhaps it was not the kind of reference that would be found in a reasonably diligent search?

I won’t go through the entire article, but I will address one point. Southcott J suggested, at [174], that:

a patent monopoly should not result from an obvious advancement upon prior art, regardless of whether the prior art would have been located in a diligent search. . . . JL Energy has not offered any policy argument as to why the locatability of a piece of prior art should matter for purposes of obviousness if it does not matter for anticipation.

I suggest that there is a relevant difference between obviousness and anticipation. In Graham v John Deere (1966) 383 US 1 at 11, the US Supreme Court explained the justification for the non-obviousness requirement as follows:

[T]he underlying policy of the patent system [is] that "the things which are worth to the public the embarrassment of an exclusive patent" ... must outweigh the restrictive effect of the limited patent monopoly. The inherent problem was to develop some means of weeding out those inventions which would not be disclosed or devised but for the inducement of a patent.

That is, an invention should be considered obvious if it would have been developed even without the lure of a patent, and conversely, it should be considered non-obvious if the patent reward was required to bring it forth.

The obviousness implements this “but for” approach on the view that the lure of a patent would not be required if the invention could easily be made by a person of ordinary skill in the art when faced with the problem at hand. It has therefore traditionally been understood as an essentially factual inquiry as to whether the invention would have been obvious to a person skilled in the relevant art. As an essentially factual inquiry, the state of the art for the purposes of obviousness must be that which an actual skilled person would have had at hand. The factual nature of the inquiry is reflected in the famous Cripps question, formulated by Sir Stafford Cripps in argument in Sharp & Dohme v Boots Pure Drug Co (1928), 45 RPC 153 (CA), at 162-63 and adopted by Lord Hanworth MR at 173, which is the basis of the test set out in the Act:

"The real question is: was it for all practical purposes obvious to any skilled chemist in the state of chemical knowledge existing at the date of the patent which consists of the chemical literature available (a selection of which appears in the Particulars of Objections) and his general chemical knowledge, that he could manufacture valuable therapeutic agents by [the process specified in the patent]

Anticipation aims at the same purpose, to weed out patents for inventions which did require the lure of the patent monopoly, but the question is in some ways simpler. Instead of asking whether a skilled person would have invented it without the patent lure, we simply ask whether it has already been made public; if so, the lure of a patent is evidently not required to deliver the knowledge to the world.

My article also discusses various points of legislative history, suggesting that these also point in the same direction. Whether such considerations are sufficient to displace the prima facie interpretation based on the text of the Act is a different issue. I must admit that I am disappointed that Southcott J did not have these arguments before him.

After all that, Southcott J considered all the references advanced by Aux Sable, including those which would not have been found in a reasonably diligent search, and he nonetheless held the claims at issue to be valid. Thus the holding that the state of the art includes the entire prior art did not ultimately affect the result.

Here is a synopsis of Southcott J’s review of the cases. Starting with the FCA cases, JL Energy sought to rely on a passage from Mishan 2015 FCA 163 [18]-[23], but Southcott J noted that the FCA at [21] had expressly left that question open, and it could not be taken as having settled the issue [155]. Southcott J then considered Ciba 2017 FCA 225. I had interpreted the majority (Pelletier and Rennie JJA) as holding that all prior art that is available in a novelty attack is also part of the state of the art for the purposes of an obviousness attack [51]-[63], though Woods JA dissented, on the view that “[t]he issue is better addressed in an appeal where it is relevant to the outcome and in which the Court has the benefit of full submissions from counsel, which was not the case here” [156]. I noted in my post on Ciba that I agreed entirely with Woods JA, and I am pleased to see that her dissent was given significant weight by Southcott J in holding that Ciba had not settled the point either, though he also discussed significant ambiguity in the interpretation of the majority decision [157-60].

Southcott J then reviewed a number of post-1996 cases which referenced or applied the reasonably diligent search test, but he agreed with Aux Sable’s position that the issue had not been squarely raised, and so were not strong authority for the proposition that the amendment had changed the law [161]-[164]. This strikes me as sound. He then noted that while Novartis 2015 FC 770 supported JL Energy’s position, it had considered only case law, and not the statutory interpretation arguments [166]. Southcott J found more comfort in Locke J’s decision in Pollard 2016 FC 883, which I described as being “clearly sympathetic to the argument that the state of the art should comprise all public prior art,” but Southcott J recognized that Locke J had canvassed the arguments [170], and while it supported Aux Sable’s position, it was more a matter of raising some persuasive considerations, than a determinative decision [174].

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