Tuesday, May 30, 2023

Case Management May be Preferrable to Summary Disposition

Noco Company, Inc v Guangzhou Unique Electronics Co, Ltd 2023 FC 208 Pallotta J2,916,782 / Portable Vehicle Battery Jump Start Apparatus

Pallotta J’s decision refusing a motion for summary disposition is an interesting contribution to the developing jurisprudence on this issue. There is no new law as such and the decision ultimately turned on the facts, but Pallotta J’s analysis is noteworthy for emphasizing that in some circumstances case management may serve the goal of just and efficient dispute resolution more effectively than summary adjudication.

As an initial point, there was a dispute as to whether the motion was actually a motion for summary judgment under Rule 215, or instead a motion for summary trial under Rule 216 ”[13]. The mere fact of the confusion illustrates that the distinction is fuzzy. While Pallotta J concluded that it was indeed a Rule 216 motion, she pointed out that there is overlap in the factors to be considered [91] and she noted that “judges faced with a motion for summary disposition based on a paper record may be guided by similar factors to decide whether the matter is suitable for summary adjudication, regardless of whether the motion is made under Rule 215 or Rule 216" [93]. On the facts, her decision to dismiss the motion did not turn on the “true nature” of the motion [95]. Her comparison of the requirements under the two Rules is very helpful in clarifying the similarities and differences in requirements for each [91]–[97].

One of the main reasons Pallotta J dismissed the motion is the standard ground that “the Moving Defendants have not presented a sufficiently narrow and well-defined non-infringement issue that is suitable for summary adjudication” [97]. She noted that:

[99] The Moving Defendants’ . . . have not limited their arguments to the claim terms that must be construed in order to make a finding of non-infringement based on a single essential element of claim 1. Instead, they have advanced what appear to be all possible non-infringement arguments for claim 1.

[105] The Moving Defendants presented multiple non-infringement arguments, and a range of possible non-infringement declarations that this Court could make, with the expectation that the Court could decide the motion on a narrower basis or re-define the relief. The issues raised and the expert and fact evidence that was adduced required NOCO to respond to a full-scope non infringement action extending beyond the allegedly infringing products in NOCO’s pleading, before any oral or documentary discovery had taken place. In my view, such an approach is inconsistent with the values underlying summary adjudication as a means for proportionate, cost effective, and timely dispute resolution that fairly balances expediency with a just resolution of the issues in dispute.

It seems that the strategy of “throw mud at the wall and see what sticks” backfired, by broadening the issues beyond what was suitable for summary disposition.

Pollatta J also referred to the importance of trial in cases where there are serious issues with respect to the credibility of the witnesses, which is another well-established factor, recently re-emphasized by the FCA in Gemak 2022 FCA 141 (see here): [122]–[124].

While these are well-established concerns, Pallotta J also noted that summary disposition is not necessarily more efficient. She emphasized that case management can also promote efficient dispute resolution, and may do so more effectively than summary disposition:

[109] Motions for summary judgment or summary trial are time-intensive, and do not necessarily provide an “express route” to resolving a dispute: ViiV at para 41. Proportionality is inevitably comparative; even slow and expensive procedures can be proportionate when they are the fastest and most efficient alternative: Hryniak at para 33.

[110] Procedural steps leading to trial, including documentary and oral discoveries, may also serve to streamline a case, narrow the issues for trial, and promote settlement. The evidence on this motion demonstrates that there are serious issues with respect to the underlying factual basis for deciding infringement, including whether the [exemplary product] is representative of [the Defendants] Products. In my view, allowing the discovery process to unfold is a more proportionate and efficient way to address these issues, particularly under case management.

[111] Restricting judgment to the [exemplary product] alone, without deciding whether it is representative of other products, is not an efficient way to proceed and amounts to litigating in slices. This approach would not narrow the issues for discovery with respect to other products at issue, including the products of defendants who are not parties to this motion. Furthermore, deciding the issues the Moving Defendants have raised without understanding how the findings would affect other products at issue may result in repetition or even complicate the issues to be determined at trial on a more complete factual record.

In concluding, she again emphasized the problem of “litigating in slices” and held that “Allowing the discovery process to unfold provides a more just and proportionate way to streamline the case and narrow the issues for trial” [131].

The entire decision is well worth reading for anyone dealing with a summary disposition motion.

Friday, May 26, 2023

Commissioner Overlooks an Essential Element

Coca-Cola Company v Canada (Attorney General) 2023 FC 424 Furlanetto J


Coca-Cola’s 279 application relates to plastic beverage and food containers and methods for making them from PET polymers, where the PET polymer comprises a component derived at least in part from bio-based materials [3]. The application was refused on the basis of obviousness [1]. In this decision Furlanetto J held that the Commissioner had erred in law in its assessment of the inventive concept of certain method claims (Claim 18 being representative), because the Commissioner had failed to consider one of the essential elements of the claims in question, namely recyclability of the container [44], [47]. Furlanetto J therefore sent the application back for reconsideration of the affected claims. The finding of obviousness was otherwise upheld.

While the error was one of law, there doesn’t seem to have been any legal principle at stake. Rather, the error seems to have arisen because of a procedural slip. The claims at issue were introduced very late in prosecution; after the Final Action, after the response to the Final Action, after the application was sent to the PAB for review, and after the PAB provided its preliminary review letter that the claims were obvious [11]–[15]. It was only in its response to the preliminary review that Coca-Cola proposed the method claims at issue, in which recyclability was an essential element [16]. After the hearing the Commissioner released the Decision, which “adopted the recommendations of the PAB” [18] and which relied on the preliminary review letter in describing the inventive concept [19]. Since the preliminary review letter had been written before the new claims had been proposed, it did not consider the inventive concept of those specific claims. So, the Commissioner’s decision seems to have been a bit sloppy in having relied on the preliminary review rather than reassessing the inventive concept of the newly proposed claims in question, though of course I don’t know the extent to which the point was emphasized in the hearing.

No Entitlement to s 8 Damages Unless the Generic Prevails on the Merits in the Underlying s 6 Proceeding

Apotex v Eli Lilly 2023 ONSC 1968 Koehnen J

2,209,735 / atomoxetine / Strattera

Under the patent linkage system set out in the PM(NOC) Regulations, a 24-month statutory stay is triggered when a patentee brings proceedings against a generic seeking to obtain an NOC by relying on a comparison between its product and the patentee’s product. Under s 8 of the Regulations, the generic is entitled to damages for having been kept off the market during that 24-month period if the proceeding is “discontinued or dismissed.” This decision holding that Apotex was not entitled to damages under s 8 of the PM(NOC) Regs is interesting for two points. First, it applies the established rule that a generic is not entitled to s 8 damages if the patent is invalidated in separate proceedings to facts which present a slight twist on the prior cases. Second, it is an interesting example of the independent application of the “would” branch of the “could and would” test for assessing damages.

Apotex had filed an ANDS for generic atomoxetine in Feb 2008. At that time, it indicated on Form V that it would not challenge Lilly’s 735 patent, and would instead wait for its expiry before launching. A few months later, Teva began an action to impeach the 735 patent. Shortly thereafter, Apotex served Lilly with an NOA challenging the validity of the 735 patent, and Lilly responded with an application pursuant to s 6 for a prohibition order (this was under the old Regs), thereby triggering the statutory stay. Both the Teva action and the Lilly application were heard before Barnes J. In the Teva action, released first, Barnes J held that the 735 patent was invalid for lack of utility: Novopharm / atomoxetine 2010 FC 915 affd 2011 FCA 220. In the Apotex proceeding, released six weeks later, he held that the Apotex’s allegations of invalidity failed: Apotex / atomoxetine 2010 FC 1065. Different evidence and a different approach to the issue meant that Apotex failed in its utility argument even though Teva had succeeded: 2010 FC 1065 [96]. But because the 735 patent had already been invalidated in the Teva action, Apotex had already received its NOC by the time the Apotex / atomoxetine decision was released. The proceeding was an application for an order of prohibition under the old Regs, and Barnes J therefore dismissed Lilly’s application “on the ground of mootness” [104]; the judgment was that “this application for an order prohibiting the Minister from issuing a NOC is dismissed.” Apotex then sought s 8 damages. Apotex argued that since the Lilly application had been “dismissed,” which is what is required under [then] s 8(1), it was therefore entitled to s 8 damages even though it had not been successful on the merits.

There is obvious merit to Apotex’s submission on the text of s 8(1). The provision says the generic is entitled to damages if “an application made under subsection 6(1) is . . .dismissed by the court hearing the application,” which indeed it was. But Koehnen J pointed out that a purely textual approach to the interpretation of the provision is not sufficient; context and the purpose of the regulation must also be taken into account [28].

Koehnen J pointed out that it is well-established that a generic cannot claim s 8 damages if the patent is invalidated in a subsequent action. This “no reach back” rule was established in cases such as Apotex / Olanzapine 2010 FC 952 and Ratiopharm 2009 FC 1165 and by the FCA in Syntex / naproxen 2010 FCA 155 affg 2009 FC 494 and re-affirmed in Ratiopharm / amlodipine 2011 FCA 215 (see here). The cases illustrated a few variations on the theme. In Syntex / naproxen, the generic seeking s 8 damages had been unsuccessful in the NOC prohibition application, and the same generic was subsequently successful in having the patent declared invalid in a different proceeding. In Apotex / Olanzapine 2010 FC 952 the generic (Apotex) had been unsuccessful in the NOC prohibition application, but the prohibition order was subsequently lifted when the underlying patent was declared invalid in an action involving a different generic (Teva).

This case presented another variation, because the invalidity holding came before the decision in the s 8 action, rather than after. Koehnen J held this was not a good basis for distinguishing the prior authorities. He noted that if Barnes J had released the Apotex decision before the Teva decision, the no reach back rule would clearly have applied to bar Apotex’s s 8 claim. The fact that Barnes J had released the Teva decision first, rather than second, was not sufficient reason to come to a different conclusion: “Results of cases should turn on matters more substantive than the order in which a judge chose to release reasons in related cases” [48].

Koehnen J also noted that “Apotex wants damages not for anything that occurred as a result of its Notice of Allegations or the prohibition proceeding that followed. It wants damages for something that Teva accomplished in a different action even though Teva is not entitled to damages for what it had accomplished” [33]. This seems to be a kind of fairness argument. While the point is reasonable enough, I don’t find it particularly persuasive, as the Regs are primarily motivated by incentives and balancing interests, rather than fairness.

I find the flip side of this point more compelling:

[47] The importance of the second person’s Notice of Allegations cannot be overstated in this analysis. When a second person decides to issue a Notice of Allegations, it chooses what allegations to make. The nature of those allegations inevitably affects the first person’s decision about whether to commence a prohibition application or whether to let the NOC issue and then pursue the second person for breach of patent. The combination of the allegations Apotex made and the prohibition application Lilly commenced led Barnes J. to conclude that the Minister should be prohibited from granting Apotex a NOC until the 735 Patent expired. Once that issue has been decided, Apotex should not get a second chance to raise new and better arguments that might have led to a different outcome.

The innovator cannot make an informed decision of whether to resist a particular generic’s application unless its exposure to s 8 liability turns on the allegations made in that particular NOA.

Koehnen J therefore concluded that Apotex’s right to s 8 damages had not been triggered [62].

Koehnen J went on to address the damages, in case he was reversed on appeal on the entitlement point. His analysis raised an interesting application of the general principle that events in the real world are good evidence of what would have happened in the but for world (see eg Teva v Sanofi-Aventis 2014 FCA 67 [83]). It is also an interesting example of the independent application of the “would” branch of the “could and would” test. On the could branch of the test, Koehnen J found that Apotex could have manufactured product and entered the market early in the s 8 compensation period [91]. However, he held that it would not have done so. Recall that when Apotex originally filed its Form V in the real world, it stated that it would not challenge the 735 patent, but would instead wait for its expiry. Presumably, this is because Apotex was of the view that the likelihood of prevailing was not great enough to offset the cost of the proceeding. Koehnen J noted that in the hypothetical world in which Apotex was not kept off the market by the statutory stay, it would still have been exposed to an infringement action brought by Lilly, and “Apotex’s risk exposure in a patent infringement action was significantly larger than its exposure in a prohibition proceeding” [96]. This implies that “[i]f Apotex preferred to wait for the 735 Patent to expire before incurring the risk of even a prohibition action, it was even more likely to wait for the 735 Patent to expire before incurring the much larger risk of a patent infringement lawsuit” [97]. Koehnen J therefore found that Apotex would not have launched any earlier in the hypothetical world that it would have in the real world [107]. (This analysis raises some interesting issues about what Teva would have been doing in the but for world, which I won’t pursue since the discussion is all strictly obiter.)

Monday, May 22, 2023

Sufficiency, Overbreadth, or Utility?

Eli Lilly Canada Inc v Teva Canada Limited 2022 FC 1398 St-Louis J

2,226,784 / tadalafil / CIALIS / NOC

I’m back to blogging again after an end of term vacation—still catching up on the backlog from my longer hiatus over the winter. In my last post on this case I discussed the meaning of “or”. This post turns to validity. St-Louis J held the 784 patent to be invalid for overbreadth [120] and insufficiency [149], while declining to address utility. I have argued that overbreadth is almost always functionally duplicative of another established ground of invalidity, and this case illustrates that point once again, as the facts supporting the finding of overbreadth were the same as those supporting insufficiency.

The facts are reasonably straightforward. The 784 patent relates to the use of tadalafil for the treatment of ED. Claim 2, which is representative for present purposes, is to a pharmaceutical composition for the treatment of ED in a male animal, comprising “[tadalafil] or a physiologically acceptable salt or solvate thereof.” All asserted claims include the phrase “or a physiologically acceptable salt.”

St-Louis J found on the facts that it is not possible to make a physiologically acceptable salt of tadalafil [118]. Tadalafil does not have an ionisable functional group and consequently it is very difficult to make a salt form [103]. It may be possible to make one or two salts, but only under extreme conditions that would result in the degradation of the tadalafil such that the resultant salt would not be sufficiently pure and stable to be considered physiologically acceptable [118]. As a result, St-Louis J held the 784 patent to be invalid for overbreadth [120] and insufficiency [149], while declining to address utility.

As discussed in my last post, St-Louis J concluded that a physiologically acceptable salt is an essential element of the claim. While I have my doubts about that conclusion, once we accept that, the claim is effectively to a physiologically acceptable salt of tadalafil, and insufficiency then follows directly from the fact that it is not possible to make even one physiologically acceptable salt. This is the classic “how to make” variety of sufficiency. If you claim “Compound X” you have to tell a skilled person how to make Compound X, or the claim is invalid for insufficiency. The traditional view is that the purpose of the disclosure is to ensure that the public would have benefit of the invention after the term expired: see eg Minerals Separation [1947] ExCR 306, 316. If a skilled person cannot make the claimed compound with the guidance provided by the specification, the patentee could get the benefit of patent protection during the term, while keeping its monopoly through secrecy after the term expired. There is an extremely difficult question as to whether the invention has to be enabled across the full scope of the claim. But that doesn’t concern us here, as the specification did not provide sufficient instruction to allow a skilled person to make any physiologically acceptable salt.

A standard statement of the sufficiency requirement is that the specification must enable the skilled person to practice “the invention” [133]; citing s 27(3) and Teva 2012 SCC 60 [51]. But what is “the invention”? That term is notoriously ambiguous: “The word ‘invention’ has many meanings and nuances,” as Henderson pointed out in Patent Law of Canada (1994) 7–8. It can mean the inventive concept, which is to say the information disclosed in the patent which is the quid pro quo for the grant; it can means the invention as claimed, which is the set of all existing or future embodiments of the claimed invention; or it can mean a particular embodiment: see British United Shoe Machinery Co Ltd v A Fussell & Sons Ltd (1908) 25 RPC 631 (CA) 649–51. This led to a debate in this case in which Lilly argued that insufficiency was not available as an attack because the Defendants had not established the nature of the invention [139]. Lilly’s argument isn’t fleshed out in enough in St-Louis J’s decision for me to fully understand it, but I suspect the point is that the inventive concept was the discovery that tadalafil is an effective treatment for ED, and not the discovery of how to make a salt form of a compound that was already known to be effective. If that is indeed what Lilly was arguing, it is effectively another angle on the “or” argument, and one which, in my view, is better framed in terms of claim construction (as discussed in my last post) rather than sufficiency. So, given St-Louis J’s conclusion on the meaning of “or”, I would say she was right to reject Lilly’s argument on this point [143], to focus on whether the specification instructed how to make the salt [144]–[148]. And since the answer to that on the facts is “no,” I agree with her conclusion that the patent is invalid for insufficiency [149] (given her conclusion on the construction of “or”).

With all that said, the ambiguity as to the meaning of “the invention” made this part of the decision more convoluted that it needed to be. Given the ambiguity of the phrase “the invention, I suggest it might be desirable for the courts to simply stop using it altogether, in any context in which precision is necessary—which is to say, especially in defining validity doctrine. Instead, the law should specify “the invention as claimed” or “an embodiment of the invention,” or “the inventive concept,” as appropriate to the particular doctrine. That is a clarification that would probably have to be done by the FCA, since many authoritative statements of the law use the ambiguous term “invention.”

On that note, I would also point out that the law of sufficient disclosure has several threads that need to be disentangled, and the meaning of “the invention” isn’t necessarily the same for each aspect of the disclosure requirement. The SCC in Consolboard [1981] 1 SCR 504, 518, noted that the statutory provision, s 27(3) “gives the impression of a mélange of ideas gathered at random rather than an attempt to enunciate, clearly and concisely, a governing principle or principles.” While the Court in Consolboard at 518 suggested that the haphazard nature of the statutory provision might be the product of amendment over a period of many years, I think the truth is that the case law gives a similar impression of a mélange of ideas. This is illustrated by Thorson P’s well-known summary of the disclosure requirement established by the case law in Minerals Separation [1947] ExCR 306, 316–17. I won’t repeat it here, but it is plain on its face that it runs together several concepts that are sometimes only tangentially related.

Moving on, St-Louis J also held the asserted claims to be invalid for overbreadth:

[120] As I conclude that it is more probable than not that physiologically acceptable salts of tadalafil cannot be made I conclude, as the Defendants argue, that such a salt was not invented. The Asserted Claims therefore claim broader than what was invented and are thus invalid for overbreadth.

In my article Overbreadth in Canadian Patent Law: Part I (2020) 33 IPJ 21 and Part II (2021) 33 IPJ 147, I argued that a finding of invalidity for overbreath is almost always redundant with another established ground of invalidity. And so it is here. All the evidence St-Louis J reviewed in the context of overbreadth went to the question of whether went to whether a physiologically acceptable salt could be made [114]–[119]. Exactly the same facts that results in a finding of insufficiency—that the claim compound could not be made—was also the basis for the finding of overbreadth.

The problem with overbreadth is that it remains ill-defined. St-Louis J noted that “There are two (2) ways that a patent claim can fail for overbreadth (or overclaiming): it can be broader than the invention disclosed in the specification, or it can be broader than the invention made by the inventor” [109]. It seems that in this case she was relying on the second prong, as she noted that

Under the claims broader than invention made, it is a question of fact as to what the inventor actually invented [112].

But what does “actually invented” mean? As I argued in my Overbreadth article, if the patentee has sufficiency disclosed and claimed subject-matter that is new, useful and non-obvious, how could it be said that they had not “invented” the claimed subject-matter? Overbreadth has an air of being something distinct only because of the ambiguity in the phrase “the invention.” It sound very reasonable to say that the patentee cannot claim more than it invented, but if we try to define exactly what is meant by “invention,” it is difficult to give this proposition any content that is independent of the standard grounds of invalidity.

In any event, as noted, this is another case in which overbreadth is redundant as turning on the same analysis as another ground of invalidity, in this case insufficiency.

The third issue is as to utility. The utility argument turned entirely on the point that a physiologically acceptable salt could not be made: the Defendants argued that “the failure of the 784 Patent to indicate which of the many possible salts can be made as a physiologically acceptable salt of tadalafil” renders the asserted claims invalid for a lack of utility [154], while Lilly argued that “the Defendants have not met their burden to establish that a physiologically acceptable salt of tadalafil cannot be made” [159]. That is, the argument was that the invention lacked utility because a physiologically acceptable salt could not be made; it really just recapitulated the sufficiency argument. To my mind, this conflates utility and sufficiency. (This is not a criticism of St-Louis J, as this is the way the case was argued.) I have to admit, this conflation is very common. There was really no distinction between the two in early English practice, before the development of claims; if the specification describes a device that is not operable, there is no distinction to be made between a case where the patentee had devised a useful invention but failed to disclose it and a case where the specification disclosed the invention precisely, and the invention itself was useless, unless recourse is had to extrinsic evidence.

But with the advent of claims, we can distinguish between the two. The utility requirement asks whether the claimed invention works (or can be soundly predicted to work). Sufficiency asks whether the claimed invention can be made. These are different. Suppose, for example, that in the early days of genetic engineering, the patentee claims “Pure human insulin.” The claimed subject-matter, pure human insulin, is undoubtedly very useful. If the patentee cannot actually make it, the patent is invalid for insufficiency, but not for lack of utility. On the other hand, it may be easy to make something that lacks utility. If the patent claims “Oregano oil for the treatment of cancer,” the claim is sufficient, because oregano oil can be made and administered with the intent of treating cancer, but invalid for lack of utility because oregano oil does not in fact treat cancer. Applications for impossible inventions, like a perpetual motion machine, are traditionally rejected for both lack of utility and insufficiency; in my view, they should be rejected for insufficiency alone. After all, a device with greater power output than input would be extraordinarily useful—if it is could be built. With all that said, I acknowledge that there is a lot of confusion in the caselaw on this issue, stemming ultimately, in my view, from the fact that the distinction could not be drawn prior to the introduction of claims.

Ultimately, St-Louis J, wisely, in my view, declined to address the utility argument. The Defendants argued that”a claim must fail if, in addition to claiming something that is useful, it also claims something that is useless” [173]. In other words, the question is whether utility has to be established across the full scope of the claim. St-Louis J reviewed the caselaw and noted the uncertainty on the question of whether a claim is invalid if it claims a single inoperable species [175]–[178]. Given that she had already held the asserted claims invalid on two other grounds, she refrained from deciding this point of law, and so she declined to rule on the utility ground [178]. This is a difficult question, which is better left to a case in which it is the focus of the argument.

Wednesday, May 3, 2023

Counterclaim Against Non-Asserted Claims Available By Right in NOC Action

Boehringer Ingelheim (Canada) Ltd v Sandoz Canada Inc 2023 FC 241 Fothergill J

2,557,801 / 2,606,650 / 2,696,558 / 2,751,833 / 2,752,435 / 2,813,661 / empagliflozin / JARDIANCE / NOC

In Janssen v Apotex 2022 FCA 184 Locke JA held that the validity of non-asserted claims may be attacked in an action under the PM(NOC) Regs with the leave of the court, but he explicitly left open the question of whether a defendant may challenge non-asserted claims “by right”:” see here. That open question was raised in this case, in which Boehringer sought summary judgment on a question of law dismissing the Defendants’ counterclaims respecting any patent claim that was not asserted in the s 6(1) actions [3].

Fothergill J noted that while the question had been left open, Locke JA's decision in Janssen v Apotex provided considerable guidance [36]. Fothergill J noted that the arguments made by Boehringer in this case were very similar to those made in Janssen [36] and Boehringer did not establish any principled basis for distinguishing the two contexts [41], [43], [51].

Fothergill J therefore granted summary judgment in favour of Sandoz, holding that the defendants “may counterclaim by right against the Non-Asserted Claims in the actions commenced by Boehringer under s 6(1) of the PM(NOC) Regulations” [59]. However, he noted that “this does not mean that the counterclaims in respect of the non-asserted claims will necessarily be permitted to proceed to trial. Boehringer remains at liberty to bring a motion pursuant to Rule 221(1) to strike the counterclaims against the non-asserted patent claims on any of the enumerated grounds” [5]; and similarly [58], [59]–[60].