No Right to Appeal Determination That a Substantial New Question of Patentability Is Raised by Re-examination Request

Cusitar v. Canada (Attorney General) 2019 FC 1641 McVeigh J

2,876,770 / Oil Sand Mining and Haulage Method

This decision, affirming a decision of the re-examination board cancelling all 15 claims of the 770 patent for obviousness [23], turned largely on the facts, but the patentee did raise one novel argument relating to the scope of an appeal. 

Re-examination is governed by s 48.1-48.5 of the Act. A request for re-examination may be made by any person who submits prior art and pays the required fee: s 48.1(1). After such a request is made and the re-examination board is established, the first task of the Board is to determine whether the request raises a “substantial new question of patentability” (SNQP) affecting any claim: 48.2(2). If not, the person who made the request is so notified, and the re-examination proceeding is closed. A negative decision is final, expressly without right of appeal or review: 48.2(3). (Dismissal of the re-examination request does not bar the requesting party from bringing a subsequent impeachment action.) If, as in this case, the Board finds that an SNQP is raised, the Board notifies the patentee and the re-examination goes ahead. At the conclusion of the process, the Board issues a certificate that may cancel, confirm or amend the claims: s 48.4(1). This is subject to appeal: specifically, the patentee may appeal any decision “set out in a certificate issued under subsection 48.4(1)” to the Federal Court: 48.5(1).

In this case, the patentee appealed the adverse decision pursuant to 48.5(1), but one of the grounds of appeal was the threshold determination by the Board that the request raised a substantial new question of patentability [29.A.1]. McVeigh J held that this is not a proper ground of appeal. As noted, the Act provides expressly that there is no appeal from a determination that there is not an SNQP; but it does not expressly state that there is no appeal from a determination that there is an SNQP. However, as McVeigh J noted, the Act only provides for an appeal from “[a]ny decision of a re-examination board set out in a certificate issued under 48.4(1) [34, original emphasis], and the decision that there is an SNQP is not a decision set out in the certificate, which merely states (in this case) that “claims 1-15. . . are unpatentable” [35]. Moreover, re-examination is intended to be a “relatively summary and inexpensive alternative to an impeachment process by litigation,” and allowing an appeal from the SNQP determination would introduce delay and undermine this aim [36]. Thus textual and purposive considerations both support the conclusion that there is no right of appeal of a determination by the Board that the re-examination request raises an SNQP.

Actavis Extended Protection Applied by EWHC

Excel-Eucan Ltd v Source Vagabond Systems Ltd [2019] EWHC 3175 (Pat) Clarke J
            GB2 489 116 / Linked ammunition carrying bag

In Actavis [2017] UKSC 48, Lord Neuberger, writing for a unanimous UKSC, held that the scope of protection afforded by a claim will sometimes “extend beyond” the meaning of the words of the claim. The decision of Clarke J in Excel v Source, finding that the defendant Source had not infringed the claims of Excel’s 116 patent as a matter of normal interpretation [75], but had infringed as an matter of extended protection [103], is an excellent example of a trial level application of Actavis. It has always been recognized that the advantage of extended protection is that it can give fairer outcomes by preventing an infringer from taking the inventive concept while avoiding infringement by a technical variant that avoids the claim language. That is on full display in this case, in which the defendant, Source, copied Excel’s patented design [58]. Excel v Source also illustrates that purposive interpretation of the language of claims alone is not always sufficient to avoid an injust result. And it also shows that the Actavis doctrine can be quite easy to apply.

The invention relates to a carrier for linked round machine-gun ammunition. Modern machine guns have a very high rate of fire, and a great deal of ammunition is required to supply the gun. In the prior art, the ammunition had typically been carried in a sand bag in the soldier’s rucksack, and had to be removed from first from the rucksack, then from the bag, and then laid on the ground to feed the machine gun. This was awkward to use and exposed the rounds to contamination by dirt etc, which was the main cause of weapon stoppages [23]-[34].

Stay Granted in Favour of Provincial Superior Court

Thermolec Ltée v Stelpro Design Inc 2019 FCA 301 Locke JA: Boivin, Nadon JJA rev’g 2019 FC 363 St-Louis J

This brief but significant decision from the FCA clarifies the circumstances in which a patent action in a Federal Court should be stayed in favour of an action in a provincial superior court. While the outcome seems right in terms of economy of judicial resources, the whole problem may be an unintended, and unwelcome, side-effect of the Federal Court’s unwillingness to grant interlocutory injunctions in patent cases.

As discussed in my post on St-Louis J’s decision, while the Federal Court has exclusive jurisdiction to annul a patent, its jurisdiction in respect of infringement is concurrent with that of the provincial superior courts (in this case Quebec): under the Federal Courts Act s 20(1)(2). When actions are brought concurrently, which, if either, should be stayed? One important consideration is that only the Federal Court can rule on the in rem validity of the patent and dispose of it at a national level. This would strongly imply that the FC action should not be stayed. To address this difficulty, the practice has arisen of the patentee giving an undertaking that if the final result in the litigation in the provincial superior court is that the patent is invalid as between the parties, the patentee would agree to the striking out of the patent by the Federal Court. This practice has now been sanctioned by the FCA in this decision [6].

If such an undertaking is given, the question largely boils down to judicial economy, which will be driven by the relative stage of proceedings in each court. In this case, St-Louis J had refused to grant a stay of the FC action, and the FCA has now reversed, giving the following list of the “most important considerations” on the facts of this case:

1) The advanced state of the Quebec proceeding relative to the Federal Court action;

2) The fact that the patent in issue, the issue of the validity thereof, and the parties are common to the two proceedings;

3) The duplication of efforts and the inefficient use of resources, both private and public, if both proceedings were allowed to proceed; and

4) In the event that the Quebec Superior Court determines that the patent in issue is invalid and the Undertaking is exercised, third parties (including the respondent) would be assured that they would not have to defend themselves from allegations of infringement in any other Canadian jurisdiction.

While this list was directed to the relevant facts of the case, it also provides more general guidance.

St-Louis J had not emphasized different factors; her decision to refuse the stay turned on her view that “the proceedings on the merits are still at an early stage in both courts” [FC 47]. The FCA pointed out that this observation is factually incorrect, and in fact the Quebec action was substantially further advanced [4]-[5], and it was primarily for this reason that the FCA reversed. This means that only the Quebec action will proceed, avoiding wasteful duplication.

While this outcome certainly seems preferable on the facts of this case, there is a larger question. In terms of efficacy of the overall judicial system, no doubt it is preferable to have a single action in provincial superior court as opposed to one there and one in the Federal Court. But arguably it would be even better to have a single action in Federal Court, which is, in effect, a specialized patent court, with trial and case management judges who are expert in patent law and the management of complex patent cases. Why are patentees foregoing these advantages? The cases on this issue show that it is typically the patentees who are seeking to avoid the Federal Court. It was a patentee who came up with the idea of giving an undertaking to allow its patent to be struck out, and a patentee who prefers to litigate in the Federal Court can tilt the scales in that direction by refusing to give such an undertaking.

So why do some patentees prefer to litigate in provincial superior court? I suspect that the choice may be motivated by the potential availability of an interlocutory injunction in provincial superior court, as opposed to the firm unwillingness of the Federal Court to grant interlocutory injunctions. That was clearly the case in Safilo v Contour Optik 2005 FC 278, and may also have been true in this case, as the patentee, Thermolec, was granted an interlocutory injunction in Quebec). Whatever the substantive merits on the Federal Court’s position on interlocutory injunctions was directing litigation to a less suitable forum, thereby undermining the efficiency of the patent litigation system as a whole.

US Solicitor General Calls for Reconsideration of Mayo v Prometheus

Hikma Pharmaceuticals v. Vanda Pharmaceuticals, 16-2707, 1887 F3d 1117 (Fed Cir 2018) petition for certiorari No 18-817
            US 8,586,610

The patentable subject-matter jurisprudence of the Supreme Court of the United States is a train wreck of historic proportions. In the brief of the United States recommending that the Supreme Court of the United States deny certiorari in Hikma Pharmaceuticals v. Vanda Pharmaceuticals, 16-2707, 1887 F3d 1117 (Fed Cir 2018). the US Solicitor General has joined the chorus of voices calling for reconsideration of SCOTUS’s framework for assessing patentable subject-matter, especially as set out in Mayo v Prometheus 566 US 66 (2012) (hat tip to Patent Docs).

The 610 patent relates to the use of iloperidone to treat schizophrenia. The drug was already known for that use, but the inventors had discovered that people with a specific genetic variant, the “CYP2D6 genotype,” did not tolerate it well. The representative claim 1, in effect claimed testing a patient for the CYP2D6 genotype and administering a reduced dose to those who did not tolerate the drug. As pointed out by Patently-O, the claim at issue in Hikma v Vanda is substantively very difficult to distinguish from the diagnostic method claim at issue in Mayo. However, in Hikma it was framed as a method of treatment claim—”A method for treating a patient” comprising testing and then administering iloperidone at a low or high dose according to the results—while in Mayo the claim was to “A method of optimizing therapeutic efficacy for treatment” of the disorder at issue, comprising a step of “determining the level” of the relevant analyte, such that the result “indicates a need” to increase or decrease the drug. In the Fed Cir, the majority in Hikma nonetheless held the claim to be patentable subject matter, distinguishing Mayo on the basis that in Hikma the claims include specific treatment steps rather than merely directing the physician to consider the test results. Prost CJ, in dissent, was of the view that Mayo was not distinguishable.

In its brief, the Solicitor General has now argued that cert should be denied, on the basis that the majority had gotten the right result on the facts (21). However, the Solicitor General (12-13, 15) acknowledged the force of Prost CJ’s logic. More importantly, the Solicitor General did not confine itself to the particular claim at hand. Throughout the brief, the Solicitor General emphasized that the logic of Mayo calling into question the patentability of many types of inventions that have long been considered to be unquestionably good subject matter:

Nevertheless, as evidenced by the dissenting opinion below, it is arguably unclear how the longstanding and entirely correct rule that method-of-treatment claims are patent-eligible can be reconciled with mechanical application of Mayo’s two-step framework. (10)

Indeed, it is arguably unclear whether even a method of treating disease with a newly created drug would be deemed patent-eligible under a mechanical application of Mayo’s two-part test. (14, original emphasis).

The brief as a whole is a sustained critique of Mayo. The question is not if Mayo should be reviewed, but when; the brief argues that this is not the right case to address the “confusion” caused by the recent SCOTUS jurisprudence: “instead should provide additional guidance in a case where the current confusion has a material effect on the outcome,” in particular a diagnostic method case such as several where the Fed Cir has indicated that it might have gone the other way but for Mayo.

I wonder if the Solicitor General has another motive in recommending that cert be denied in Hikma. While the Solicitor General is of the view that Mayo needs to be rolled back, it’s not evident that SCOTUS will agree. If they take a diagnostic methods case and affirm that diagnostic methods are unpatentable, this would be bad, but only in the same way that the status quo is bad. If they took Hikma and reversed it, holding Mayo really does apply, the situation would be even worse than it is already.

I won’t say more than that: Patent Docs provides a longer review, and the brief itself is well worth reading for those with a real interest. (I might quibble with the analysis a little bit; the brief suggests that the root of the problem is Bilski, which marked a sharp departure from prior SCOTUS jurisprudence when it added expressly non-statutory exceptions to patentability (4, 8). In my view, the roots of the problem go deeper, back to Funk Bros: see The Rule Against Abstract Claims: A Critical Perspective on US Jurisprudence, (2011) 27 CIPR 3. But this is a minor point: I do agree that Bilski was a turning point and turning the clock back that far would be an improvement.)

Unfortunately, this debate remains relevant in Canadian law. The modern SCOTUS approach is clearly inconsistent with Shell Oil [1982] 2 SCR 536, the leading SCC decision on patentable subject matter. Unfortunately, CIPO has gone its own way on the issue of patentable subject matter, and diagnostic methods in particular, apparently inspired by US case law. It seems inevitable that the issue will be litigated in Canada, and when it does, the Solicitor General’s brief should give Canadian courts fair warning that the SCOTUS jurisprudence should not be followed.

No New Cases

No new substantive patent cases were released for the week of 2 December.