Friday, September 11, 2020

CIPO's Approach to Patentability of Computer-Implemented Inventions

 Choueifaty v Canada (Attorney General) 2020 FC 837 Zinn J rev’g and remanding CD 1478

            Application 2,635,393

The vexed issue of patentable subject matter has reared its head once again. Choueifaty applied for a patent for a computer-implemented method for selecting an investment portfolio with the lowest level of risk for a given return [CD 25]; in brief, a computer-implemented business method. CIPO, applying its problem-solution approach to claim construction set out in MOPOP 12.02.02e [13], determined that the “essential elements” of the invention “are directed to a scheme or rules involving mere calculations used to construct the anti-benchmark portfolio and thus not directed to patentable subject matter” [CD 52], [16]. In CIPO’s view, the computer itself was not an essential element; had it been, the claim would have been allowed [17]: PN 2013-03.

In a brief decision, Zinn J reversed on the basis that the problem-solution approach is not the correct way to determine the essential elements of the claim; rather, the approach set out by the SCC in Whirlpool 2000 SCC 67 and Free World 2000 SCC 66, must be used [40]. CIPO relied on Genencor 2008 FC 608 for the proposition that the Whirlpool test is not applicable to patent examiners [34]. In light of the subsequent FCA decision in Amazon 2011 FCA 328, [43] which expressly held that CIPO must use the Whirlpool approach, Zinn J held that Genencor “is no longer good law” [35]. Zinn J therefore remitted the application to the Commissioner for reassessment in accordance with his reasons.

In my view, Zinn J’s decision is entirely correct so far as it goes, but in this post I want to step back and take a brief look at the bigger picture.

Wednesday, September 9, 2020

Default Judgment Requires Evidence

 Tatuyou, LLC v H2Ocean Inc 2020 FC 865 Little J

            2,739,837


In this decision, Little J dismissed a motion for default judgment on the basis of insufficient evidence to meet the burden of proof on the balance of probabilities.


It is well established that “On a motion for default judgment in [the Federal] Court, all of the allegations in the statement of claim are to be taken as denied” [9]; Little J noted that “This standard is different from the requirements for default judgment under the rules in some provincial superior courts in Canada” [10], several of which provide that a defendant noted in default is deemed to have admitted the facts alleged in the statement of claim.


Consequently, even if the defendant has not filed a statement of defence, the plaintiff must provide evidence sufficient to establish infringement on the balance of probabilities [12]: “bald assertions” are not sufficient [14]. Little J indicated that the evidence must go to both validity and infringement [16], [17], [19], but presumably in the absence of evidence to the contrary, validity would be adequately established by the presumption of validity under s 43(2). In any event, the reference to validity was merely in passing, as the specific deficiencies noted by Little J went to infringement. In particular, there was no evidence from a skilled person on claim construction [19], but only statements by the plaintiff’s CEO that the defendant’s product is “substantially similar” to the plaintiff’s product and that it “includes all of the elements” of the asserted claims [20]. These statements amounted to little more than bald assertions, particularly given that the CEO “does not profess to be a person ordinarily skilled in the art” and there was no explanation as to how she arrived at these conclusions.


The evidence was also insufficient to establish that the defendant, an American company, had been selling the product in Canada [22]. There was an assertion to that effect, but again, no explanation of the basis for that assertion. A reference on the defendants’ .com website to “where customers in Canada can purchase [the allegedly infringing product],” unsupported by other evidence of actual sales, was not sufficient establish that anyone has actually purchased or attempted to purchase the product from the defendants’ website using a computer in Canada.


The bottom line is that because allegations in the statement of claim are taken to be denied, the mere fact that the defendant did not file a statement of defence after being served is not sufficient to obtain a default judgment in the Federal Court. Bald assertions of infringement are not sufficient to support a default judgment; at the very least, the plaintiff must provide an explanation for the basis for those assertions.

Friday, September 4, 2020

Silos or Not?

 Canada (Health) v Glaxosmithkline Biologicals SA 2020 FCA 135 Rivoalen JA

TFI Foods Ltd v Every Green International Inc 2020 FC 808 McHaffie J


In Canada (Health) v Glaxosmithkline [Shingrix] Rivoalen JA refused to grant the Minister of Health’s request for a stay of pending appeal of 2020 FC 397 (here). In TFI Foods McHaffie J granted an interlocutory injunction in a trademark case. Both, of course, use the same tri-partite test from RJR-MacDonald [1994] 1 SCR 311. I won’t go into the details of either case (for what it’s worth, I agree with both decisions).


Rather, I’ll make one observation. In TFI Foods, McHaffie J stated that “The elements of the RJR-MacDonald test are conjunctive, in that the moving parties must satisfy all three to obtain relief. However, they are not independent silos, and a stronger finding on one or more of the elements may lower the threshold for the other elements” [5]. In Shingrix, Rivoalen JA stated that “All three questions must be answered in the affirmative, and failure on any single question is fatal to the motion for the stay” [9]. Both positions have ample support in the case law. The silos approach is the normal in the Federal Courts, with the irreparable harm factor being the most prominent hard silo, which applicants often fail to escape. The “no silos” approach is dominant in most other Canadian jurisdictions: see eg Potash Corp 2011 SKCA 120 [57]-[58]; Apotex Fermentation 1994 CANLII 16694 (Man CA); Circuit World 100 OAC 221 (ON CA); Imperial Sheet Metal 2007 NBCA 51 [7].


So, silos or not?

Wednesday, September 2, 2020

Rule 420 Doubling Applies to Lump Sum Costs

 Bauer Hockey Ltd. v. Sport Maska Inc. (CCM Hockey) 2020 FC 862

2,214,748


In recent years we have seen costs awards turn away from the outdated and inadequate tariff, in favour of lump sum awards. This decision by Grammond J provides a nice summary of the principles that are emerging to guide the determination of quantum in awarding lump sum costs. Grammond J’s decision also clarifies the impact of an offer to settle on lump sum costs. I expect parties seeking or resisting lump sum awards will want to review this decision carefully, so I will just hit some highlights. This decision is consequent on Grammond J’s determination in 2020 FC 624 (here) that CCM had not infringed any valid claims of Bauer’s 748 patent.


● The tariff is dead

At least in complex patent cases. “Where the nature of the case is such that the parties are justified in expending a significant amount of legal fees, the tariff simply does not provide a level of indemnification sufficient to further the purposes of costs awards” [10].


● 25% of fees is the baseline

While there is “no rigid guideline. . . . In the interests of consistency and predictability, I proposed to set the starting point at 25% and to analyze whether the circumstances of a specific case warrant a higher or lower number” [14].


● Litigation conduct does not necessarily affect the percentage

This is not because litigation conduct is irrelevant to costs, but rather because a percentage costs award already captures an element of litigation conduct: “For example, if a party fails to admit facts that should have been admitted, this presumably results in an increase of the other party’s legal fees” [17].

 

● Do not reargue the merits

This further supports the view that litigation conduct does not necessarily affect the percentage of fees awarded. Parties are often tempted to argue that the other side should be penalized for having run an argument that was without merit, or for having failed to admit certain facts. However, “one should always remain conscious of the difficulties associated with judging litigation conduct. After a judgment on the merits is rendered, it is tempting to criticize steps taken by the parties in the proceedings with the benefit of hindsight. During the trial, however, parties must make decisions in a state of uncertainty” [18]. Further, trial judges “are not expected to keep a tally of penalties to be reflected in a costs award,” [20] and judging litigation conduct, in particular, pre-trial conduct, “requires information that is often unavailable to the trial judge” [20]. Moreover, “it does not assist a party to suggest that the case was close or that it did not expect to lose. Neither are costs awards a way to obtain an opinion on issues that the Court did not need to address in its judgment on the merits” [21]. See also his application of these principles to the facts [31]-[32].

 

I particularly like Grammond J’s pithy statement that a costs decision is not the occasion for an “autopsy of the trial” [20].


● Litigation conduct does not normally preclude a lump sum

“[Bauer] it asserts that CCM’s litigation conduct disentitles it from claiming a lump sum. I disagree with Bauer. Litigation conduct is taken into account when determining the percentage of recovery” [23].


● Complexity does not generally justify an increased percentage

Increased costs resulting from increased complexity will automatically be reflected in a higher costs award, even if the percentage itself is not adjusted [28].


● Percentage recovery doubled when Rule 420 applies

On this point, Grammond J clarified the law. Rule 420 provides that if a defendant makes an offer to settle that is refused, the defendant is entitled to doubled costs if the judgment is less favourable. Rule 420 was triggered in this case [40], but the case law was not clear as to how an offer to settle should be considered in the context of a lump sum costs award, and in particular whether it should be only one factor to be considered [37]. Grammond J noted that the purpose of Rule 420 is to provide an incentive to settlement, and “[t]his incentive will be ineffective if the doubling of costs is subject to unstructured discretion.” He therefore held that Rule 420 is indeed applicable in the context of lump sum costs, and “when rule 420 applies, the percentage of recovery should be doubled for the period after the refusal of an offer, save in exceptional circumstances” [38]. I am persuaded by Grammond J’s point that predictability is important to ensure that Rule 420 has the intended effect [36] [38]. It will be interesting to see whether other members of the court follow his lead on this point.


● A modest offer may nonetheless embody an element of compromise

The case law on Rule 420 requires a genuine offer that includes an element of compromise [39]. Grammond J held that the mere fact that the offer is very low does not in itself imply there is no element of compromise. (CCM’s offer in this case was $500k, against Bauer’s claim of $80m [41]; $500k is nonetheless substantially better than nothing, which is what Bauer ended up with.) “The parties’ decisions are based on their assessment of their chances of winning and the value of the claim. By nature, this assessment is probabilistic. By raising the stakes, however, rule 420 prompts the parties to be as objective as possible, although some uncertainty inevitably remains” [42].


The fact that the offer is less that the legal fees expended to the time of the offer is not relevant [40].


“[T]he doubling of costs provided by rule 420 does not depend on an after-the-fact evaluation of the reasonableness of the parties’ positions. All that matters is that the offer be genuine and contain an element of compromise. In this case, it did” [42]. On the facts, this led Grammond J to double the percentage award, from 25% to 50%, for the period after the refusal of the offer [43].


A final point of interest is that Grammond J denied Bauer’s request that the obligation to pay the cost award be spread evenly over a period of twelve months, in light of financial distress caused by the shutdown of the sports industry as a result of Covid-19 [60]. Grammond J noted that “[i]It must be assumed that the situation described by Bauer affects all players in the sporting goods industry, including CCM. One fails to see why the financial burden of the costs award should be borne, for the next year, by the party who won the case, even though it must be equally affected by the COVID-19 pandemic” [64].

Thursday, August 27, 2020

Blogging Break

 I'll be taking a short break from blogging for some end of summer vacation and to get ready for classes. 

Thursday, August 20, 2020

Data Protection Provisions Triggered by Indirect Comparison with Innovative Drug

Natco Pharma (Canada) Inc. v. Canada (Health) 2020 FC 788 McHaffie J


This application for judicial review addressed whether the data protection provisions of the Food and Drug Regulations are triggered when an ANDS is based on a comparison to a drug product that was in turn approved based on a comparison with an “innovative drug,” even though the direct comparator is not itself an innovative drug. McHaffie J held Health Canada’s decision refusing Natco’s ANDS to be reasonable and indeed “inevitable” [4], and he consequently dismissed Natco’s application for judicial review.


The decision is interesting for three reasons. First is the substantive holding, that the data protection provisions are triggered on the basis of “indirect” comparison, when the generic product is compared to a drug product that was in turn approved on the basis of a comparison to an innovative drug. Secondly, this decision follows close on the heels of ViiV Healthcare 2020 FC 756 (here) and Shingrix 2020 FC 397 (here), which held the Minister of Health to have adopted an unreasonable approach to statutory interpretation of the CSP Regulations. The contrast in Health Canada’s approach to these provisions is noteworthy. Finally, the decision raises a narrow point of statutory interpretation, holding that the same phrase may have a different meanings in different but broadly related regulations, in light of purposive and contextual considerations.


The key operational provisions of the data protection regulations provide for a six year “no file” period and an eight year market exclusivity period if a manufacturer seeks an NOC on the basis of a “direct or indirect comparison” between the new drug and an innovative drug: [10], C.08.004.1(3)(a),(b). Natco submitted an ANDS for a generic version of Gilead’s DESCOVY, a HIV/AIDS drug that contains a combination of tenofovir alafenamide hemifumarate (TAF) and emtricitabine. The ANDS accordingly identified DESCOVY as the Canadian reference product [26]. DESCOVY is not an “innovative drug” under the data protection regulations. However, TAF is also contained in Gilead’s GENVOYA, along with emtricitabine and two other medicinal ingredients [2], and GENVOYA is an “innovative drug” [14]. DESCOVY was approved after GENVOYA, which is why it is not an “innovative drug.” Crucially, in McHaffie J’s view, the data to support DESCOVY was based on a comparison with GENVOYA [68], [80]. Health Canada refused Nacto’s ANDS on the basis that it “makes comparisons to DESCOVY, which benefits from the data protection term for GENVOYA, an innovative drug,” and as such the ANDS cannot be accepted until the expiry of the “no file” period for GENVOYA, in November 2021 [38].


McHaffie J ultimately held that by seeking an ANDS using DESCOVY as the reference product, Natco was making an indirect comparison with GENVOYA:

 

[108] That is, the “direct or indirect comparison” to an innovative drug that forms the trigger for data protection provisions may include a manufacturer’s comparison to a drug product that in turn was compared to the innovator product for approval


The parties agreed that the standard of review under Vavilov 2019 SCC 65 was reasonableness, so question at issue was not the interpretation of the data protection provisions as such, but whether the Health Canada’s decision was reasonable [8]. Health Canada’s analysis focused primarily on the intent of the regulations and the obligations under the trade agreements [43]-[50]. These are important considerations, and Health Canada’s analysis was reasonable “as far as it went” [50], but the decision jumped directly from there to the conclusion that drugs containing the same medicinal ingredient must benefit from the same period of data protection, without full consideration of the text of the provisions itself [51], [56]. This led Health Canada to the questionable conclusion that data protection of an innovative drug “necessarily extend[s] to these additional products also containing the new chemical entity during the data protection term for the original innovative drug” [56]. That is, the main thrust of Health Canada’s decision was that the data provision provisions protect the new chemical entity itself – “The obligations to protect the new chemical entity exist for the entire duration of the data protection term” [33] – and therefore a combination drug containing a new chemical entity that was the basis for an innovative drug designation will also benefit from any term of the data protection for the innovative drug [35]. However, as McHaffie J noted, it is the data, not the new chemical entity itself that is protected: for example, the data protection regulations would not be triggered if Natco had filed an NDS based on independent clinical trials [57], or if DESCOVY had been approved based on independently filed studies rather than on the basis of a comparison with GENVOYA [59].


Consequently, if Health Canada had arrived at its conclusion solely on the basis of the fact that DESCOVY contained TAF, the decision would have been unreasonable [60]. However, as “further support,” for its conclusion, Health Canada noted that the approval of DESCOVY had relied on the data for GENVOYA [69]. This was not a secondary consideration, as suggested by Health Canada’s decision, but a crucial point: it was unchallenged that the data to support DESCOVY was based on comparative bioavailability studies for DESCOVY as compared to GENVOYA [68], [80]. Because of this, Natco’s comparison of its product with DESCOVY constituted an indirect comparison with GENVOYA [72]. And while Health Canada’s analysis was not as clear as it might have been, McHaffie J concluded that, read contextually and with due allowance for the administrative context [75], the decision is “fairly read as Health Canada making the determination that Natco’s ANDS indirectly compared its drug to GENVOYA” [73], without impermissible ex post addition of arguments on judicial review that are not contained in its decision [78]. McHaffie also pointed out that in some places Health Canada did recognize that the obligations under the treaties was to protect “undisclosed test or other data,” and so he concluded that Health Canada did not misunderstand the intent of the regulations [67], though its conclusions were poorly expressed.


The ultimate issue was the interpretation of subsection C.08.004.1(3). While Health Canada’s decision did not actually address that question directly, it did implicitly base its decision on a reasonable interpretation of the provision [108]. Indeed, not only was the interpretation reasonable, this was the type of case, adverted to in Vavilov 2019 SCC 65 [124], in which “the ‘interplay of text, context and purpose leaves room for a single reasonable interpretation’” [108]. Consequently:

 

[108] [T]he “direct or indirect comparison” to an innovative drug that forms the trigger for data protection provisions may include a manufacturer’s comparison to a drug product that in turn was compared to the innovator product for approval.


Given that it was undisputed that this was true on the facts [108], “the outcome that Natco’s ANDS could not be accepted for filing was inevitable” [108].


What, if anything, can we make of the difference between Health Canada’s approach in this case, and the unreasonable decisions in ViiV Healthcare 2020 FC 756 and Shingrix 2020 FC 397? The two unreasonable interpretations by the Minister related to the Certificate of Supplementary Protection Regulations and went against the patentee, while the decision at issue in this case related to the data protection provisions, and went in favour of the innovator. Also, in ViiV Healthcare the Minister erred in her interpretation by ignoring the trade agreement that the CSP Regulations were intended to implement (see here), while in this case, Health Canada’s interpretation put too much emphasis on the underlying trade agreements ([4], [51]), though the interpretation was ultimately reasonable nonetheless. Maybe there is no overarching lesson, other than that the Health Canada doesn’t always get its statutory interpretation right; but my sense, especially in light of ViiV Healthcare, is that, for some reason, the Minister is antipathetic to the CSP regulations in particular.

The third point of interest in this decision is that it illustrates that the same textual phrase may have a different meaning in different regulations, once purpose and context are taken into account, even when the regulations are related. At the same time that the data protection provisions were amended to introduce the requirement of a “direct or indirect” comparison, the PM(NOC) Regulations were also amended, such that the provisions are triggered under s 5(1) when the generic seeking an ANDS “directly or indirectly compares” its drug with an innovative drug. In the NOC Regs, the phrase is interpreted as meaning that the provisions are triggered only when generic compares its product to the equivalent innovative drug [97-98]; Natco’s “strongest argument” was that a similar interpretation should apply to the same phrase in the context of the data protection provisions [86]. While this is a good argument prima facie, McHaffie J noted that a “different purpose informs the interpretation of the language of the provisions in the two regulations” [93]. This is revealed through the structure of the provisions [94-95], and also in light of the trade agreements which they implement [96], as well as through the jurisprudential background [99]. The NOC Regs were amended to add the directly “or indirectly” language because of concerns that a generic seeking an NOC might compare its product to a previously approved generic drugs, rather than to the original product; that is, the word “indirectly” encompasses a comparison mediated by an intervening generic product that is also equivalent to the same innovative product [101]. The data protection provisions, on the other hand, were amended because the earlier trigger required the Minister to “examine” and “rely on data” contained in the application for the innovative drug. In fact, when a generic drug is approved based on an ANDS, Health Canada does not normally directly rely on the data originally submitted with the innovative product, but only verifies that the generic product is pharmacologically equivalent to the innovative product [99]. Thus, the comparison is “indirect” because it is mediated by the innovative drug itself; the RIAS accompanying the data protection provisions nonetheless made it clear that the intent was to protect the underlying data [99-100]. Given that statutory interpretation requires consideration not just of the text, but also context and purpose, it is not unprincipled to attribute different meaning to very similar text, but it is nonetheless unusual, particularly when the provisions are broadly related. 

Monday, August 10, 2020

Jurisdiction of the Federal Court to Interpret Contracts Relating to Patents: A Fresh Start

SALT Canada Inc v Baker 2020 FCA 127 Stratas JA: Near, Woods JJA rev’g 2016 FC 830 Boswell J

            2,222,058

In a direct and vigorous decision, Stratas JA for the FCA has held that the Federal Court always has jurisdiction to determine who has title to a patent in an application under s 52 of the Act [12], [47], [49], expressly repudiating a line of cases holding that the FC does not have jurisdiction if determination of ownership of the patent is “primarily” a matter of contractual interpretation [27]-[31]. This a very welcome development that will simplify litigation in this area. This issue has been a pet peeve of mine ever since the trial decision in SALT v Baker four years ago and I am very pleased to see the issue dealt with so clearly. There is, however, one loose end, namely the effect on Innotech (1997) 74 CPR (3d) 275 (FCA) rev’g 72 CPR(3d) 522 (FCTD), holding that the Federal Court does not have jurisdiction when a contract relating to patent ownership is used as a sword, rather than a shield. Innotech is formally distinguishable, in that it did not involve an application under s 52, but the holding is extremely difficult to reconcile with Stratas JA’s reasoning in this case. In my view, Innotech is no longer good law, but some uncertainty remains, as it is an FCA decision and was not directly addressed in SALT v Baker.

As discussed here, SALT v Baker involved conflicting assignments of rights in the ‘058 patent from the inventor, Dr Markels. The first was a complex series of assignments which ultimately led to the respondent, Baker. Baker registered his ownership with the Patent Office. Some of the assignments in this series included provisions requiring the ‘058 patent to be reassigned to Markels if certain conditions were breached. Believing that the conditions had indeed been breached, in 2015 Markels assigned title to the Applicant, SALT. Markels also prepared a reassignment from Baker to Markels, which was, however, never executed by Baker. SALT sought to have its ownership registered, but the Patent Office refused on the basis that the assignment was not executed by Baker, the registered owner [3]-[9]. SALT then brought this application for a declaration under s 52 that the register be varied to list SALT as the owner of the ‘058 patent (as well as other additional and alternative relief). A key substantive question related to the interpretation of the various agreements, and whether the conditions in the first series of assignments had been breached, such that Markels was entitled to a reassignment [24].

Boswell J at first instance, relying primarily on Lawther (1995), 60 CPR(3d) 510 (FC), held that the Federal Court “lacks jurisdiction where determination of the ownership of a patent depends upon the application and interpretation of contract law principles” [20]. The question is whether the matter at hand “relates primarily to contract or to patent law: this Court will have jurisdiction over a case that primarily concerns the latter, but not the former” [21].

The FCA has now reversed. The reasoning of Stratas JA was straightforward. The basis of the FC jurisdiction is the grant by Parliament. The text of s 52 of the Patent Act is clear [8]:

[5] Section 52 of the Patent Act provides that the “Federal Court has jurisdiction…to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged”. The application before the Federal Court sought just that. On the plain language of . . . section 52 of the Patent Act, the Federal Court had jurisdiction over the appellant’s application.

There is no constitutional objection to the grant of jurisdiction under s 52 [49].

Wednesday, August 5, 2020

Is Harm to Third Parties Taken into Account at the Second or Third Step of the RJR-MacDonald Test?

Arctic Cat, Inc v Bombardier Recreational Products Inc 2020 FCA 116 Rivoalen JA

2,350,264


Yesterday’s post provided an overview of the facts in Rivoalen JA’s decision to deny Arctic Cat’s application for a stay pending appeal. This posts focuses on a purely legal issue: is harm to third parties taken into account at the second or third step of the RJR-MacDonald test for an interlocutory injunction / stay? Why does it matter?


To recap the facts, AC and BRP are competitors in the snowmobile market. BRP sued AC for infringement of various patents and finally prevailed in a decision released in June: 2020 FC 691 (here). AC then sought a stay pending an appeal, which is the subject of this decision. The stay will determine whether AC can ship infringing machines for the upcoming winter season (summer-fall 2020 is the crucial window [13]). Since the patent expires next June, AC will be able to return to this design for the following season, regardless of the outcome of any appeal, which will affect only damages. The sleds that are affected have already been manufactured and are stored in US warehouses [9]. AC submitted that it would not be be possible to redesign them for the upcoming season [9] and Rivoalen JA’s decision proceeded on that basis [34], [35].


As usual in the FC approach to the RJR-MacDonald [1994] 1 SCR 311 test, whether AC would suffer irreparable harm was a key issue. In addition to the harm that AC argued it would suffer directly, AC argued that their dealers would suffer irreparable harm, especially because many are single-line dealers who may not be able to supply a competing product because of territorial exclusivity agreements [27].

On this issue, Rivoalen JA found that irreparable harm to the dealers had not been established on the facts [31], but:


[32] More importantly, whatever harm the dealers may suffer personally cannot be relied upon by the appellants to establish irreparable harm. Only harms suffered directly by the appellants can be considered in the second branch of the RJRMacDonald test. This Court has refused attempts to rely on third-party harms, other than by charities.


As authority, Rivoalen JA cited Glooscap 2012 FCA 255 at [29-30], [33-34]; Air Passenger Rights v Canada 2020 FCA 92 at [30], and Chinese Business Chamber of Canada 2006 FCA 178 at [6-7]. These decisions (none of which concern patents), do indeed state that the interests of third parties can only be considered at the third stage of the test, the balance of convenience, relying on RJR-MacDonald [1994] 1 SCR 311 at 341, in which the Court stated that the public interest, and by implication harm to third parties, “is more appropriately dealt with in the third part of the analysis.” (Metropolitan Stores [1987] 1 SCR 110 at 128 is also relied upon, but that statement is much more ambiguous.)


On the other hand, there are cases such as Marketing International (1977) 35 CPR(2d) 226 at 231 (FCA), Procter & Gamble Co v Bristol-Meyers Canada Ltd (1978), 39 CPR(2d) 171 at 177 (FCA) and, post-RJR-MacDonaldAstraZeneca Canada 2005 FCA 208 [20], holding that it is proper to take harm to the public into account at the irreparable harm stage.

Monday, August 3, 2020

Stay Pending Appeal Denied in the Absence of an Undertaking

Arctic Cat, Inc v Bombardier Recreational Products Inc 2020 FCA 116 Rivoalen JA

2,350,264

In this decision, Rivoalen JA denied Arctic Cat’s application for a stay pending appeal. That in itself is not so unusual, but what is odd is that there is no suggestion that the patentee, BRP, provided an undertaking in damages to address the issue of irreparable harm. From the complete absence of any discussion of the point, I have to suspect that an undertaking was not even requested by AC, or offered by BRP. In any event, the absence of an undertaking substantially affects the analysis, and accordingly, I will focus on that issue in this post.

As discussed here, the patents at issue related a “significant breakthrough” in snowmobile design made by BRP, that moved rider weight forward. BRP’s “Rider Position Patents” covered the forward position itself, and the 264 “Frame Construction Patent” relates to a frame assembly that facilitates the construction of sleds with the rider forward position. The litigation started when BRP filed its statement of claim in December of 2011 [43]. The trial started in 2015, with Roy J’s decision 2017 FC 207 following in 2017. Roy J held the Rider Position Patents to be invalid, and the Frame Construction Patent to be not infringed. On appeal, Roy J’s decision on the invalidity of the Rider Position Patents was upheld, but the FCA 2018 FCA 172 reversed on claim construction in respect of the Frame Construction Patent and remanded to Roy J to determine validity and infringement on the correct construction. Finally, on 15 June 2020, eight years after litigation started, and with less than a year left on the term of the 264 patent, BRP prevailed, with Roy J’s decision on remand, 2020 FC 691, holding the Frame Construction Patent to be valid and infringed. Roy J granted a permanent injunction, as is normal, over the objections of AC: see here.

Wednesday, July 29, 2020

Minister Intends Narrow Interpretation of CSP Regulations

ViiV Healthcare ULC v Canada (Health) 2020 FC 756 Fuhrer J

2,606,282 / JULUCA / dolutegravir and rilpivirine

In this judicial review of the Minister of Health’s decision denying ViiV’s application for a Certificate of Supplementary Protection (CSP) in respect of its 282 patent, Fuhrer J, applying reasonableness review [9], found the Minister’s approach to the interpretation of the relevant statutory provisions to be unreasonable. Fuhrer J’s legal analysis was straightforward: s 3 of the CETA Implementation Act provides that the regulations implementing the CSP regime must be interpreted harmoniously with CETA itself, but the Minister failed to consider CETA at all, relying instead on the RIAS for the CSP Regs and associated the Guidance Document, neither of which are law. This is the second decision relating to the new CSP regime, following Glaxosmithkline 2020 FC 397, and it is the second decision in which the Federal Court has found the Minister to have adopted an unreasonable interpretation of the relevant provisions: see here. Moreover, in this case the Minister has clearly signaled that she intends to interpret the CSP Regulations as restrictively as possible. Unfortunately, in light of these decisions, we cannot say that she intends to interpret them as restrictively as reasonably possible; it appears rather that the Minister intends to interpret the provisions as restrictively as the courts will allow. The CSP forecast is calling for a steady rain of judicial review applications.

Friday, July 24, 2020

Routine Correction of Inventorship

Alfasigma SPA v Canada (Attorney General) 2020 FC 561 Grammond J

            2,538,546


This was a routine correction of inventorship under s 52. One inventor has been named on the Italian priority application, but his name had inadvertently been left off the PCT application [3]. The application was supported by affidavits of all the other inventors [4]. No interesting issues were raised and the application for correction was granted [5].

Monday, July 20, 2020

Summary Trial Instead of Markman Hearing in the US

IPKat has a post today about order made by Judge Alsup canceling a Markman hearing and effectively ordering a summary trial instead. This may be of interest in light of recent emergence of summary trial / judgment decisions we have seen here.

Wednesday, July 15, 2020

The underlying facts were NOT in fact disclosed

Apotex Inc v Wellcome Foundation Ltd / AZT 2002 SCC 77, aff’g [2001] 1 FC 495 (FCA), var’g T-3197-90, 79 CPR (3d) 193 (FC) Wetston J

            1,238,277

The law of utility has become much quieter since AstraZeneca 2017 SCC 36, so I’ve been spending some time reviewing the case law to see where we have ended up. One issue that remains contentious relates to the enhanced disclosure requirement that arises when utility is established on the basis of a sound prediction. In Wellcome / AZT 2002 SCC 77 at paragraph 70 the SCC remarked that:

Normally, it is sufficient if the specification provides a full, clear and exact description of the nature of the invention and the manner in which it can be practised. It is generally not necessary for an inventor to provide a theory of why the invention works. Practical readers merely want to know that it does work and how to work it. In this sort of case, however, the sound prediction is to some extent the quid pro quo the applicant offers in exchange for the patent monopoly.

This suggests that something other than the normal disclosure is required, though the SCC did not go on to explain what that might be. This passage has been interpreted as requiring a heightened disclosure requirement in the case of a sound prediction, such that the factual basis for the prediction must be disclosed, or at least referred to, in the patent itself: Raloxifene 2011 FCA 220 [46]-[47] aff’g 2010 FC 915 [116]-[17]. This enhanced disclosure requirement is substantively controversial: see Gauthier JA’s remarks in Clopidogrel 2013 FCA 186 [132] and Rennie J’s remarks in Nexium 2014 FC 638 [158-59]. Even parsing the SCC’s statement is not easy: see Rennie J’s careful discussion in Nexium [139-60] arguing that “this sort of case” refers to a new use, not sound prediction generally.

In this post, I am not going to tackle either the interpretation of paragraph 70 or the substantive merits of an enhanced disclosure requirement. Instead, I will focus on a purely factual point. The reason the SCC gave for not elaborating further is that the precise disclosure requirements “do not arise for decision in this case because both the underlying facts (the test data) and the line of reasoning (the chain terminator effect) were in fact disclosed, and disclosure in this respect did not become an issue between the parties” [70, my emphasis]. Similarly, the SCC said that “[t]he trial judge has found that the inventors possessed and disclosed in the patent both the factual data on which to base a prediction,” as well as the line of reasoning necessary to support a sound prediction [75, my emphasis]. In this post I will show that the SCC’s statement that the underlying facts supporting the sound prediction “were in fact disclosed,” is, in fact, false.

This is a purely factual point, involving a comparison between what was disclosed in the patent with the evidence that was found to support a sound prediction. The bulk of this post is devoted to supporting my claim that the factual basis was not disclosed by going through the decision and the patent in rather pedantic detail. It may seem at times that I am belabouring the obvious, but since I am arguing that the SCC made a factual error, I would like to be clear as to the basis for my assertion. I’ll finish by considering the doctrinal implications of this observation.

I should stress that I am not disagreeing with any of the key holdings in AZT. I am arguing that the SCC’s statement at [70] was based on a factually erroneous premise; but that statement was expressly obiter. Given that the remarks were obiter, it is understandable that the SCC was perhaps not as careful in dealing with the issue as it might have been. An obiter comment of this type is clearly not binding in any event: R v Henry 2005 SCC 76 [57]. My argument is that the underlying factual error is one more reason for not placing significant weight on this obiter comment in the future development of the law on this point.

Monday, June 22, 2020

Overbreadth in Canadian Law: Revised Version

A revised version of my paper “Overbreadth in Canadian Patent Law” is now available on SSRN. It is substantially revised from the previous version, though the underlying message is the same. Here is the abstract:

Under the overbreadth doctrine, a claim that exceeds the scope of the invention disclosed in the specification is invalid. While the doctrine is well established, it is redundant in the great majority of cases in which it is invoked, as an overbroad claim typically encompasses subject-matter which is not new, lacks utility, or is obvious. When overbreadth is not redundant, a puzzle arises: what is the principled justification for striking down a claim to an invention which is in fact new, useful, non-obvious and sufficiently disclosed? In such a case, how can it be said that the claim is broader than the invention? This article argues that overbreadth properly arises as an independent ground of invalidity in the context of the “roads to Brighton” problem, in which the question is whether the first inventor to achieve a result known to be desirable may claim the result itself or only their particular method of achieving it, but current Canadian law on this point does not require or invoke an independent overbreadth doctrine. Overbreadth was also applied as a truly independent ground of invalidity by the Federal Court of Appeal in Amfac Foods Inc. v Irving Pulp & Paper, Ltd. This article argues that Amfac was wrongly decided, both on its facts, and in its approach to overbreadth. The article warns that the Amfac approach, if widely adopted, risks invalidating patents for inventions which are new, useful and non-obvious, on the basis of an arbitrary parsing of the disclosure, in a manner reminiscent of the promise doctrine.

Wednesday, June 17, 2020

Display to the Public Not Enabling

Bombardier Recreational Products Inc v Arctic Cat, Inc 2020 FC 691 Roy J
            2,350,264
This litigation originally concerned four patents, three rider position patents and one frame construction patent. In his initial trial decision, 2017 FC 207 Roy J held the rider position patents to be invalid for insufficiency (see here), and this was upheld by the FCA: 2018 FCA 172 (here). Roy J had held that the frame construction patent was not infringed, but the FCA reversed on a point of claim construction, held that the frame construction patent was infringed, and remanded to Roy J for determination of validity and remedies [3]. No new law was applied, but there are a few points of interest: Roy J was strongly disinclined to apply issue estoppel based on foreign litigation to a question of validity; he was inclined to view claim construction points that had not been appealed as res judicata; the prior art was not enabling because public display after races without opportunity for inspection was not disclosure to the public; and lost profits were refused because of the difficulty of establishing a causal link between the single infringed patent and the lost sales.

Foreign issue estoppel
An initial question arose because Arctic Cat sought to argue that the frame construction patent was anticipated as a matter of issue estoppel, which applies to preclude re-litigation of an issue which has been conclusively and finally decided in previous litigation between the same parties or their privies [23]. In particular, Arctic Cat argued that issue estoppel applied because of a jury verdict in US District Court in Minnesota, finding that the asserted claims were anticipated and obvious [23], [30]. After carefully reviewing the relevant cases on foreign issue estoppel, Roy J held that this argument had no reasonable prospect of success [71]. He noted that while some cases had suggested that issue estoppel based on a foreign decision might be potentially be applicable regarding purely factual findings [52], [64], no cases had actually gone so far as to apply foreign issue estoppel even on a factual issue. Further, the great weight of authorities is to the effect that determinations of validity of a patent in a foreign court are not helpful and cannot be the basis for an estoppel argument [51], [66]. In short, Arctic Cat “has not been able to refer to one patent case where the proposition it advances has had even a measure of success” [64]. Nonetheless, Roy J did not (quite) hold that foreign issue estoppel could never apply to a determination of validity, but rather that:

It would take, it seems to me, a very strong demonstration in order to accept that the issue has been conclusively decided by a jury in a foreign jurisdiction with its own law applied by its own courts, such that the verdict would bar litigation before a Canadian court, preventing it from considering the validity of a Canadian patent, using its own substantive and procedural laws, and hearing Canadian admissible evidence.

On the facts, there was not nearly enough evidence, in particular related to whether the US law of anticipation is the same as that in Canada, for the argument to have any prospect of success [68].

Reconsideration of claim construction on remand?
An interesting procedural issue was raised. The construction of several terms was at issue in the first trial [77], but only the term “engine cradle” was considered on appeal [FCA 13], and it was on the construction of that term that the FCA reversed. The question therefore arose as to whether the construction of other contentious terms should be reconsidered in light of the FCA’s construction of “engine cradle.” The issue was important because one element of prior art, the “T/S sled,” did not anticipate on the original construction of the key issues, but might if the construction of certain terms was reconsidered. Roy J was inclined to the view that the construction of the other terms was res judicata [79], but he did not need to decide as he concluded, after reconsideration of the other terms, that the outcome was the same [80], [103]. The argument that the T/S sled anticipated therefore failed in light of the claim construction [108].

Disclosure to the public
One interesting point arose in respect of anticipation. Roy J held that even if the T/S sled embodied the claimed invention (which it did not), it would not anticipate because the enablement branch of anticipation was not satisfied. This is because the evidence was that the T/S sled was only on display after races and the essential elements of the invention would not have been apparent to a skilled person on mere visual inspection [112]. This strikes me as correct; anticipation requires that the invention be made available “to the public,” and while it is enough that the public had opportunity to access the invention, in this case even that opportunity was not established. This case is quite similar to Bauer v Easton 2010 FC 361 aff’d 2011 FCA 83 in which hockey skates embodying the invention were worn in a public arena by skaters subject to an obligation of confidence; this was held not to anticipate as visual inspection at a distance was not sufficient to provide an enabling disclosure of the invention, and members of the public were not free in law and equity to carry out a close examination of the skates that would have disclosed the essential elements of the invention.

The obviousness attack failed on the facts [124]. Roy J therefore held the frame patent to be valid and infringed [125]. 

Remedies
Turning to remedies, BRP sought lost profits for sales that it would have made but for the infringement and a reasonable royalty in respect of the remaining sale. 

The claim for lost profits failed, because BRP’s case on damages “was largely built on the four patents-in-suit having been infringed.” In light of the holding that only one patent was infringed, it was too difficult to make out the necessary causal link between the infringement of that single patent and the lost sales, as the rider position patents that had been held to be invalid, were a major driver of the lost sales [128], [136], [138], [144], [151].

The parties agreed that the hypothetical negotiation methodology was appropriate for establishing a reasonable royalty with a 50% split of the incremental profits attributable to the infringed patent [166], [174]. The key issue was therefore the assessment of the incremental profit. On this point Roy J preferred the evidence of BRP’s expert.

BRP sought the usual permanent injunction. Unsually, Arctic Cat resisted, not merely on the basis that there was no prospect of future infringement; on the contrary, it appears that it was Arctic Cat’s position that it should be permitted to continue to infringe: [183]. Arctic Cat advanced a variety of reasons why a permanent injunction should not be granted [183], all of which were rejected by Roy J [184]-[191], noting that “(a)n injunction normally will follow once the Court has found that a patent is valid and has been infringed” [185], quoting Abbvie 2014 FC 489 [35]. Roy J’s analysis was brief and I agree entirely, so I won’t recap it. I will plug the recent book I co-edited with Brad Biddle, Jorge Contreras, an d Brian Love, “Patent Remedies and Complex Products: Toward a Global Consensus” (open access) and especially Chapter 4 on Injunctive Relief, where we recommend that a permanent injunction be refused “if the negative effects of the injunction on enjoined parties would be disproportionate to the nature of the infringement and any noncompensable harm that the patentee will experience as a result of the absence of an injunction.”

Monday, June 8, 2020

"Foreign Prosecution History Is Inadmissible"

Gemak v Jempak 2020 FC 644 Lafrenière J
            2,276,428 / 2,337,069

After a decade in which it was almost unheard of for the Federal Court to grant a contested motion for summary trial or summary judgment in a patent case, it seems they are now raining down upon us, with Lafrenière J’s summary judgment decision in Gemak v Jempak following Manson J’s decisions in Viiv v Gilead 2020 FC 486 (here) and Canmar 2019 FC 1233 (here). Lafrenière J’s decision in this case is a good example of summary judgment being used to dispose expeditiously of a far-fetched claim construction argument. It is also notable for holding expressly that foreign prosecution history is not admissible under s 53.1. This is in tension with Manson J’s holding in Canmar that foreign prosecution history should be admissible, albeit only in “extraordinary circumstances” [73], [74], [77].

Gemak’s 428 patent at issue was to a dishwasher detergent pod. These pods commonly use percarbonate as a bleaching agent which is activated on exposure to water. Percarbonate is susceptible to degradation by contact with other detergent ingredients or by moisture. For that reason, the percarbonate must be coated to protect it prior to actual use of the pod. Claim 1 is representative [13]:

A detergent composition comprising a granulated percarbonate and a blend which encapsulates the percarbonate, the blend comprising . . . carboxymethyl cellulose [CMC]

Jempak’s detergent pods included percarbonate encapsulated in a protective coating. It was not really disputed that the use of CMC was an essential element of the claim [119]. It was also established that the protective coating used by Jempak did not comprise CMC. Gemak’s main argument was that CMC was present in the other detergent ingredients in Jempak’s pods, and that once the pod was assembled, the CMC in the other ingredients could adhere to the percarbonate coating, and that the resulting coating with CMC adhering to it would constitute “a blend” comprising CMC which encapsulates the percarbonate [121]. Lafrenière J rejected this on the view that “encapsulation refers to a protective coating (a blend) that is applied to the percarbonate during its manufacture to maintain the stability of the percarbonate and to prevent it from decomposing prematurely before use” [123]. Gemak’s position was not helped by its “evasive and defiant” expert witness [104].

It strikes me that this is an excellent example of the kind of argument that should not be allowed to proceed to a full trial. The patent system is rife with the potential for abuse, in large part due to the cost and complexity of patent litigation. The cost-effective disposition of weak claims is essential to ensuring that the patent system encourages innovation, rather than impeding it.

The other notable point is that Jampak sought to adduce evidence of the US prosecution history. Lafrenière J refused to allow this evidence, in part because it was introduced too late [77] and in part because it would not assist the court [78]. But he also held expressly that “foreign prosecution history is inadmissible” under the new s 53.1 of the Act: [86], and generally [82]-[86]. This holding was primarily based on a straightforward textual argument:

[83] Subsection 53.1(1) provides that the prosecution history may be admitted into evidence in an action to rebut any representation made by the patentee regarding claim construction, but only when specific conditions are met. In particular, subparagraph 53.1(1)(b)(ii) provides that the communication must be between the applicant and “the Commissioner, an officer or employee of the Patent Office or a member of a re-examination board.”

[84] The definition of “Commissioner” is set out in section 2 of the Patent Act as meaning the Commissioner of Patents, who is appointed by the Governor in Council and exercises the powers and performs the duties conferred and imposed on that officer by or pursuant to the Patent Act. The Patent Office described in section 3 as an office attached to the Department of Industry, or to such other department of the Government of Canada as may be determined by the Governor in Council.

Further,

[86] There is a further presumption against the legislature impliedly changing established law, particularly the common law. If Parliament had intended that communications prepared in respect of the prosecution of the application for a foreign patent could be admitted, clearer language would be required to effect that result. In the circumstances, I conclude that section 53.1 did not change the existing rule, as enunciated in Free World Trust, that foreign prosecution history is inadmissible.

I made some similar points in my blog post on Manson J’s decision in Canmar 2019 FC 1233 [77], which held that in “extraordinary” circumstances foreign prosecution history should be admissible to aid in construction of the Canadian claims.

On the other hand, “[t]he language of section 53.1 is limited to communications between the patentee and the Canadian Patent Office” [70]. In particular, per s 53.1(b)(ii), the communication must be between the applicant and “the Commissioner, an officer or employee of the Patent Office or a member of a re-examination board.”

Further, prior to the enactment of s 53.1, it was clear law that “statements made during prosecution of Canadian patent applications or corresponding foreign patent applications were neither relevant nor admissible with respect to construing terms used in issued Canadian patents” [58]; and Free World 2000 SCC 66 [66]. As a matter of statutory interpretation, “[i]t is presumed that the legislature does not intend to make any change in the existing law beyond that which is expressly stated in, or follows by necessary implication from, the language of the statute in question”: R v T (V) [1992] 1 SCR 749, quoting with approval Maxwell on the Interpretation of Statutes; and see also Parry Sound v OPSEU [2003] 2 SCR 157 [39]. This implies that s 53.1, in providing for admissibility of communications to the Canadian examiner, did not change the existing rule that foreign prosecution history is inadmissible.

I’d say that someone owes me a beer.

In any event, there is evidently some tension with Manson J’s holding in Canmar that foreign prosecution history should be admissible, albeit only in “extraordinary circumstances” [73], [74], [77]. Lafrenière J did not directly discuss Manson J’s holding on this point.

Friday, June 5, 2020

Restrained Approach to Patentability of Methods of Medical Treatment

Biogen Canada Inc v Taro Pharmaceuticals Inc 2020 FC 621 Manson J

            2,562,277 / fampidrine sustained release / FAMPYRA / NOC action


The claims at issue in the 277 patent were to the use of sustained release fampidrine for improving walking in a person with multiple sclerosis (MS) for a time period of at least two weeks at a unit dose of 10 mg twice daily” (Claim 17 is exemplary: [22]). These were attacked as being to an unpatentable method of medical treatment. The topic of the patentability of methods of medical treatment is incoherent, with authorities taking a variety of inconsistent positions, as I discuss here. The area is in need of thorough review, as the FCA has noted in Hospira 2020 FCA 30 [51-53], and Cobalt v Bayer 2015 FCA 116 [101]. In this case Manson J declined to follow some authorities that aggressively applied a rule against patenting of methods of medical treatment. This strongly suggests that Manson J favours a more moderate position.


In this case, the defendants drew analogies to Mylan 2010 FC 1123 and Novartis 2013 FC 985 aff’d 2014 FCA 17 in which similar claims had been held invalid. Manson J rejected these analogies, but without exactly distinguishing the cases. Dealing with Mylan, he effectively accepted the analogy — “I agree with the Defendants that the 277 Patent claims the use of a known compound for an established purpose using a known treatment methodology” [206] — but he noted that the claims at issue in Mylan would have been obvious, and he indicated that that was the more appropriate basis for the decision: “these general facts formed the basis of the obviousness finding, above. I do not agree that they also ground a separate finding of invalidity on the basis of unpatentable subject matter” [206]. Since Mylan itself was expressly decided on the basis that the claims at issue were directly to unpatentable methods of medical treatment, this seems to be a polite way of saying that he would not follow the holding in Mylan (which is of course not binding).


Dealing with Novartis, Manson J noted that “The Federal Court of Appeal summarily dismissed the appeal [in a four paragraph decision], finding that in order to allow the appeal, it would be necessary to conclude in the face of Tennessee Eastman that a method of medical treatment is patentable subject matter, or conclude that the Federal Court had misconstrued the patent” [208]. That is an entirely accurate description of the holding in Novartis FCA, but it is not clear how it distinguishes the case. Perhaps the suggestion is that the FCA did not fully consider the issue?


Manson J concluded that “I . . . do not accept the Defendants’ argument that Mylan and Novartis stand for a general proposition that any patent claim to ‘how and when’ a drug is administered covers unpatentable subject matter” [211]. That’s fair enough, but he didn’t explain what they do stand for.


I’m not faulting Manson J in this respect. The jurisprudence in this area is incoherent, and there are other authorities to the opposite effect that Manson J might have cited if he been inclined to delve more deeply into the issue. Because of the conflicting case law, there are a range of positions that might be justified, depending on which line of authority a judge chooses to follow. Overall, Manson J’s treatment of these cases strongly suggests that he favours a moderate position and is not inclined to be aggressive in invalidating patents on this basis.

Thursday, June 4, 2020

Making a Mosaic of Obscure Prior Art Is Permissible in Obviousness Attack under Hospira

Biogen Canada Inc v Taro Pharmaceuticals Inc 2020 FC 621 Manson J
            2,562,277 / fampidrine sustained release / FAMPYRA / NOC action

As outlined in my last post, the 277 patent, owned by Acorda and licenced to Biogen, relates to the use of sustained release fampidrine for improving walking in a person with multiple sclerosis (MS). In this decision Manson J held the 277 patent, to be anticipated and obvious, ultimately because the inventors had themselves disclosed the invention in a financial filing prior to the claim date. My last post dealt with anticipation. This post deals with obviousness. This case is the first clear application of the FCA’s holding in Hospira that the state of the art for the purpose of an obviousness attack includes all prior art, not just that which would be reasonably discoverable. For convenience, I’ll refer to prior art that is not part of the cgk or reasonably discoverable, as “obscure prior art.” Importantly, Manson J appears to have been of the view that it is permissible to mosaic various pieces of obscure prior art.

The prior art included a financial filing referred to as Acorda S-1, that disclosed results from a small clinical trial undertaken by Acorda, the MS-F201 trial, as well as the protocol for a second trial that was planned (the MS-F202 trial) [36, 122]. This was held to anticipate. It was also invoked in support of obviousness, along with the Goodman References (also disclosing the same trials), and a publication reporting the pharmacokinetic properties of fampridine SR (“Hayes”). Given the very small gap between this prior art and claimed invention, the holding that the claims were obvious in light of these references followed fairly directly [181-200].

The key issue on obviousness was not bridging the gap between the prior art and the claimed invention, but whether the prior art references were properly part of the state of the art. In particular, it was not established that any of these references would have been part of the common general knowledge or discoverable in a reasonably diligent search. As Manson J noted, prior to codification of the non-obviousness requirement in s 28.3, “citable prior art for obviousness was limited to that which would have been found by the POSITA in a reasonably diligent search” [152]. However, in Hospira 2020 FCA 30 the FCA held that “it is an error to exclude prior art from the obviousness analysis simply because it would not have been located in a reasonably diligent search” [153]. Biogen objected to this as being contrary to the intent of s 28.3, but as Manson J pointed out, “The Federal Court of Appeal’s decision in Hospira is both clear and binding on this Court. Prior art will not be excluded from the obviousness analysis solely because the POSITA would not have found it after a reasonably diligent search” [154]. Consequently, Manson J considered the prior art at issue to be part of the state of the art for an obviousness attack, without consideration of whether it would have been reasonably discoverable [163-64, 166].

That much follows directly from Hospira. But there was an important point left open in Hospira, where the FCA stated (my emphasis):

[86] The likelihood that a prior art reference would not have been located by a PSA may be relevant to consideration of step 4 of the obviousness analysis (whether differences between the state of the art and the inventive concept constitute steps which would have been obvious to the PSA) in that the uninventive PSA might not have thought to combine that prior art reference with other prior art to make the claimed invention.

In my post on Hospira, I said the following:

This indicates that there can be no mosaicing of prior art that is not available in a reasonably diligent search. Thus, obviousness can be assessed over the common general knowledge alone, or over one item of broader prior art plus cgk, but not over two items of broader public art plus cgk. I believe that this is essentially the UK position.

In other words, I read Hospira as saying that while one element of obscure prior art could be combined with the traditional state of the art (cgk or material reasonably discoverable), it was not necessarily permissible to combine two elements of obscure prior art, on the view that a POSITA who did not know about a piece of obscure prior art would not think to combine it with another piece of obscure prior art which she also did not know about.

However, Manson J did not read this paragraph the same way. He stated

[193] Following the Federal Court of Appeal’s guidance in Hospira that it may be relevant to consider the likelihood that a prior art reference would not have been located by the POSITA at this stage of the obviousness analysis, I am satisfied that the POSITA would have combined the pharmacokinetic parameters taught in Hayes 2003 with the fixed doses of 10 mg bid taught in the Acorda S-1. Both references report information on the Elan fampridine SR composition, and the Acorda S-1 states that the pharmacokinetic characteristics of fampridine SR in subjects with MS had been established in earlier trials sponsored by Elan.

There was no suggestion that either Hayes 2003 of Acorda S-1 were part of the cgk or were reasonably discoverable: in light of Manson J’s holding that it was wrong to exclude prior art from the obviousness analysis for that reason, he simply never addressed the question.

Consequently, in Biogen v Taro, Manson J did mosaic two elements of obscure prior art. He was evidently of the view that the only inquiry mandated by Hospira [86] is whether the POSITA, with both elements of prior art in hand, would find it obvious to combine them.

Manson J’s interpretation of Hospira [86] is certainly reasonable, but I like to think my interpretation is reasonable as well, so it’s not clear, at least to me, what the FCA intended. Presumably the point will be clarified by the FCA soon enough. If Manson J’s reading is correct, then the state of the art available for an obviousness attack in Canadian law now goes beyond what is available in either the US or the UK (at least as I understand the law in those jurisdictions.)