tag:blogger.com,1999:blog-14540517311892680022024-03-18T06:00:33.694-03:00Sufficient DescriptionObservations on Canadian patent casesUnknownnoreply@blogger.comBlogger989125tag:blogger.com,1999:blog-1454051731189268002.post-15293973679898743042024-03-18T06:00:00.001-03:002024-03-18T06:00:00.132-03:00Indefinite Hiatus<p></p><p>I started this blog in January of 2011. As a professor, it would have been easy to work
only on projects that piqued my curiosity, but I didn’t want to write on topics of purely
academic interest. By committing myself to commenting on every patent case, I wanted
to force myself to learn every area of patent law that was of practical relevance. While I
haven’t completely succeeded, I have certainly learned a great deal over the past thirteen
years. I hope I have also provided a resource that has been useful to the profession. </p>
<p>While blogging has been rewarding in many ways, it has also taken up a great deal of my
time. Consequently, I have decided to take an indefinite hiatus in order to pursue other
projects (including trying to finish a patent law treatise that I have been working on for
almost as long as I have been blogging). I won’t be blogging for at least a few months. If
I do return to blogging, it will be with reduced frequency, perhaps focusing solely on
FCA decisions, or on select issues of particular interest.</p>
<p>Thank you to all the readers who have made this blog a success over the past decade. </p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-24025971875667699102024-03-07T05:00:00.002-04:002024-03-07T15:24:19.674-04:00Trademarks Act 7(a) Unjustified Threats Claim Fails on Second Branch<p></p><div id="WPMainDoc">
<p><i>Valley Blades Ltd v Usinage Pro-24 Inc (Nordik Blades)</i> <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/525003/index.do"><span style="color: blue;">2023 FC 1749</span></a><span style="color: black;"> St-Louis J</span></p>
<p style="margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2856940/summary.html"><span style="color: blue;">2,856,940</span></a><span style="color: black;"> </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2965426/summary.html"><span style="color: blue;">2,965,426</span></a><span style="color: black;"> </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2992233/summary.html"><span style="color: blue;">2,992,233</span></a><span style="color: black;"> / Segmented Snow Plow Blades</span></p>
<p><span style="color: black;">Valley Blades and Nordik Blades are direct competitors in the market for snowplow
blades [206]. Valley Blades brought a declaratory action seeking to have Nordik’s 940
patent declared invalid, and Nordik responded with an action claiming that Valley
Blades infringed Nordik’s 426 and 233 patents. The patents are all related — the 426 is a
divisional of the 940 and the 233 is a divisional of the 426 [46] — and the actions were
consolidated Patent [46]. The action was bifurcated and infringement was conceded [7]. </span></p>
<p><span style="color: black;">St-Louis J found that all the asserted claims were obvious in a very straightforward
decision which turned entirely on the facts [88]–[174]. </span><a href="http://www.sufficientdescription.com/2024/03/obviousness-attack-succeeds-overbreadth.html"><span style="color: blue;">A previous post</span></a><span style="color: black;"> discussed the
two other validity attacks, based on overbreadth and wilful misleading. This post deals
with Valley Blades claim under 7(a) of the Trademarks Act for damages for
business lost as a result of demand letters sent by Nordik to Valley Blades’ clients.
Unusually, in this case the claim was dismissed in part because the demand letter was
found not to discredit Valley Blades wares, even though the allegations of infringement
were in fact false.</span></p>
<p><a href="https://laws-lois.justice.gc.ca/eng/acts/T-13/page-1.html#h-450214"><span style="color: blue;">Subsection 7(a)</span></a><span style="color: black;"> of the Trademarks Act provides that “No person shall make a false or
misleading statement tending to discredit the business, goods or services of a
competitor.” The essential elements of such an action are (a) a false or misleading
statement; (b) tending to discredit the business, wares or services of a competitor; and
(c) resulting damage: <i>S&S Industries </i></span><a href="http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/6650/index.do"><span style="color: blue;">[1966] SCR 419</span></a><span style="color: black;">, 424. As McHaffie J noted in <i>Fluid
Energy</i> </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/469967/index.do"><span style="color: blue;">2020 FC 81</span></a><span style="color: black;"> [49], quoted at [233], “It has long been recognized that a false
allegation that a competitor infringes a patent may fall within subsection 7(a). This is so
even if the falsity of the allegation may not be established until later, such as after a
finding that the patent is invalid.” <i>S&S Industries</i> was itself such a case.</span></p>
<p><span style="color: black;">There are five key cases, all dealing with communications to customers of a competitor
alleging that the competitor’s product infringed the patentee’s patent. In <i>S&S Industries
</i></span><a href="http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/6650/index.do"><span style="color: blue;">[1966] SCR 419</span></a><span style="color: black;"> the SCC held the patentee liable pursuant to 7(a) for losses after a trial
holding the patent invalid. The central holding is that there is no requirement of malice,
so that an action under 7(a) may be sustained even though the falsity of the allegation —
that is, a finding that the patent is invalid — is not established until later. Then, in <i>M&I
Door Systems</i> (1989), 25 CPR (3d) 477 (FCTD) 523–24 Cullen J found the patent at
issue to be invalid, but dismissed a counterclaim based on 7(a) on the basis that the
cease and desist letters were “more informative than threatening” and apparently also
because the allegation of infringement was “sincerely believed.” Cullen J cited no
authority for this distinction—indeed, he cited no authority at all, not even <i>S&S
Industries</i>. He decision seems to to be at odds with <i>S&S Industries</i>, as discussed </span><a href="http://www.sufficientdescription.com/2016/11/informative-v-threatening-letters.html"><span style="color: blue;">here</span></a><span style="color: black;">.
There is no certainly no basis for the distinction between threatening and informative
letters in <i>S&S Industries</i>, and the reference to the patentee’s sincere belief is clearly
inconsistent with the SCC decision.</span></p>
<p><span style="color: black;">The distinction between threatening and informative letters was then picked up by
Hughes J in <i>Supertek </i></span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/179852/index.do"><span style="color: blue;">2016 FC 986</span></a><span style="color: black;"> [10]–[11] and Manson J in <i>Excalibre Oil Tools </i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/212585/index.do"><span style="color: blue;">2016
FC 1279</span></a><span style="color: black;"> [282] (discussed </span><a href="http://www.sufficientdescription.com/2016/11/no-malice-requirement-in-unjustified.html"><span style="color: blue;">here</span></a><span style="color: black;">), though in both cases the letters at issue were held to be
threatening, so that the second branch of the test was satisfied: see </span><a href="http://www.sufficientdescription.com/2016/11/informative-v-threatening-letters.html"><span style="color: blue;">here</span></a><span style="color: black;">. (In <i>Excalibre,
</i>Manson J held the patentee liable under 7(a), while in <i>Supertek</i>, Hughes J that the third
branch of the test, causation, had not been satisfied: see </span><a href="http://www.sufficientdescription.com/2016/12/are-damages-element-of-claim-under.html"><span style="color: blue;">here</span></a><span style="color: black;">.) Most recently, in <i>Fluid
Energy</i> </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/469967/index.do"><span style="color: blue;">2020 FC 81</span></a><span style="color: black;">, the defendant in an infringement action sought an interlocutory
injunction prohibiting the patentee from sending cease and desist letters to its suppliers,
on the basis that the letters were actionable under 7(a). As discussed </span><a href="http://www.sufficientdescription.com/2020/05/interlocutory-injunctions-and-cease-and.html"><span style="color: blue;">here</span></a><span style="color: black;">, McHaffie J
undertook a through review of the relevant law, again picking up the distinction between
informative and threatening letters by way of Manson J’s <i>Supertek</i> decision. On the
facts, he found the letters to be threatening and granted the injunction.</span></p>
<p><span style="color: black;">At this point, the distinction between threatening and informative letters seems to be
established, though it is difficult to reconcile with <i>S&S Industries</i>, and the only case to
actually dismiss a 7(a) action on this basis is <i>M&I Door Systems</i>. As I’ve said in posts on
<i>Excalibre</i> and <i>Supertek</i>, </span><a href="http://www.sufficientdescription.com/2016/11/no-malice-requirement-in-unjustified.html"><span style="color: blue;">here</span></a><span style="color: black;"> and </span><a href="http://www.sufficientdescription.com/2016/11/informative-v-threatening-letters.html"><span style="color: blue;">here</span></a><span style="color: black;">, I am not a proponent of this distinction. </span></p>
<p><span style="color: black;">The problem is to balance two competing concerns. If the patent is invalid, it is wrong to
allow the patentee to use a cease and desist letter to divert business away from a
competitor. If the patentee does so, it is not obtaining any legitimate reward for
innovation — if the patent is not valid, it has not delivered the quid pro quo of a new and
useful invention. If the litigation system were perfect, the competitor could bring a
declaratory action for invalidity as soon as the allegation was made, and have the patent
instantaneously declared invalid. If the patent is invalid, the business gained by the
patentee from its cease and desist letter is simply exploiting the delays inherent in a real
world litigation system, while at the same time chilling the legitimate competition which
is the lifeblood of a healthy economy. </span></p>
<p><span style="color: black;">On the other hand, if the patent is valid, the patentee is entitled to those sales, and the
customers should made aware that they exposing themselves to liability by purchasing
potentially infringing goods. The problem is to try to balance the risk of illegitimate
chilling of competition against the interest of both the patentee and the customers in the
customer being made aware of the risk of infringement.</span></p>
<p><span style="color: black;">One approach is to hold the patentee liable for threatening letters but not for
informative letters. This is appealing because delivering information about the potential
for infringement is the socially beneficial aspect of the cease and desist letter. </span></p>
<p><span style="color: black;">However, this is not a satisfactory solution. If the patent is not valid and the letter
diverts trade away from a legitimate non-infringing competitor, then the social harm
arises, no matter how politely the letter is phrased. And any letter that conveys the
necessary information — that the competitor’s product potentially infringes — will have
a chilling effect, no matter how politely it is phrased. Any customer who consults a
lawyer will be reacting to the prospect of a lawsuit, not to the tone of the letter. </span></p>
<p><span style="color: black;">As I have noted in previous posts, </span><a href="http://www.sufficientdescription.com/2016/11/no-malice-requirement-in-unjustified.html"><span style="color: blue;">here</span></a><span style="color: black;"> and </span><a href="http://www.sufficientdescription.com/2016/11/informative-v-threatening-letters.html"><span style="color: blue;">here</span></a><span style="color: black;">, the problem of balancing these
legitimate interests in the face of uncertainty over the merits is very similar to the
problem faced by courts in granting an interlocutory injunction. In the context of an
interlocutory injunction, if the injunction is granted and it ultimately turns out that the
plaintiff’s rights are not vindicated, the plaintiff will be strictly liable on the undertaking
for any loss to the defendant from having been enjoined for exercising what turn out to
have been its legitimate rights. </span></p>
<p><span style="color: black;">In my view, the same solution should be adopted in this context. If the patent is
ultimately determined to be invalid, a patentee should be strictly liable to its competitor
for any lost sales caused by an allegation of infringement made known to a customer or
other third party, which causes its competitor to lose sales, whether or not the allegation
is made in good faith. Liability should not turn on whether the letter is phrased politely
or aggressively, or whether the threat is direct or implicit. If the patentee is confident in
the validity of its patent, it can go ahead and send the cease and desist letters to its
competitor’s customers, secure in the knowledge that it will ultimately prevail. If it is
less confident in the validity of its patent, it can refrain from sending such letters, and
instead sue the competitor itself for infringement. If the patentee prevails in that
lawsuit, it can get damages for the sales that it would have made. No doubt damages are
not a perfect substitute for the sales themselves, but they are a reasonable substitute,
and a patentee with a weak patent should not expect perfection. Confining a patentee
with a weak patent to damages is surely worth it when the alternative is to allow the
patentee to exploit the delays in the litigation system to extract unjustifiably high prices
on the basis of an invalid patent.</span></p>
<p><span style="color: black;">With all that said, back to the case at hand.</span></p>
<p><span style="color: black;">Two statements were at issue. The second communication was a “Notice of patent
infringement” sent to a number of Valley Blades’s customers after the patent was issued,
threatening to sue “all entities who are purchasing or selling” infringing copies, ie the
end-users themselves. In this context, St-Louis J discussed the distinction between
informative and threatening letters [235]–[239]. She noted that it was unclear whether
this distinction went to the first element (falsity) or second element (tending to
discredit), but she in any event held that the Notice was threatening as it directly alleged
infringement and theatened legal action [240]. She consequently held that both the first
[240] and second elements of the test were satisfied [244]: the Notice was false, given
that the patent was invalid, and discredited Valley Blades product by threatening
infringement. This much is in line with the cases such as <i>Excalibre</i> and <i>Supertek</i>.</span></p>
<p><span style="color: black;">The first communication was a demand letter sent by Nordik to Valley Blades prior to
the issuance of the patent, alleging that some of Valley Blades’ products were “exact
copies” of Nordik’s product and would infringe the patent once granted [209]. This
letter was also sent to one of Valley Blades major customers [209], with the intent of
influencing that customer to buy Nordik’s product instead [218]. Ultimately the
customer ordered from Nordik, even though Valley Blades offered a steep discount
[219]. </span></p>
<p><span style="color: black;">St-Louis J held this was not enough to establish Valley Blades’ claim under s 7(a). The
first element was satisfied, as the statement was indeed false, given that an invalid
patent cannot be infringed. But St-Louis J held that the second element was not
satisfied. She held that there was “no evidence that Valley Blades’ clients have retained a
bad impression of Valley Blades following Nordik Blades’ actions,” and “Valley Blades
has not convinced me that the Demand Letter tended to discredit its product or
business” [221].</span></p>
<p><span style="color: black;">St-Louis J’s analysis on this point was very brief — a single paragraph, after reviewing
the facts [221] — and difficult to follow. She referenced the distinction between
threatening and informative letters, but it is not clear what role, if any, it played in her
reasoning. She found that the second branch was not satisfied because it was not
established that the recipients had formed a “bad impression” of the product. This could
be taken to imply that she has interpreted “disparagement” in 7(a) as requiring that the
communication results in the recipient thinking less of the quality of the wares. If so,
that is contrary to <i>S&S Industries</i>, which makes it clear that an allegation that the wares
infringe a patent can “disparage” the wares, even without calling the technical merits of
the goods into question. Moreover, I don’t see any substantial difference between the
letters at issue in this case and those that were found to be threatening in <i>Excalibre</i> and
<i>Fluid Energy</i>. Perhaps some distinction might be drawn, but none is immediately
apparent, and St-Louis J did not attempt to draw any distinction. (Note that in <i>Supertek</i>
the communications were oral.)</span></p>
<p><span style="color: black;"><span style="font-weight: bold;">Damages</span></span></p>
<p><span style="color: black;">St-Louis also held that the third element, resulting damages, had not been established in
respect of either the first or second communication. </span></p>
<p><span style="color: black;">In respect of the first communication, it was established that the letter was intended to
induce the customer to buy Nordik’s product instead of Valley Blades’ product [218],
and the customer did indeed purchase Nordik’s product, even though Valley Blades
offered a steep discount [219] for a product which Nordik itself stated was a “copy” of
Nordik’s product. This did not satisfy St-Louis J that there was a causal link between the
letter and the decision to purchase Nordik’s product. This strikes me as an
extraordinarily high evidentiary bar. </span></p>
<p><span style="color: black;">On the second communication, after receiving the Notice, one of Valley Blades
customers returned a product that it had already received — the EconoFlex-M
blades — in order to avoid any litigation risk [245]–[246]. However, Nordik argued that
Valley Blades had not lost business because Township had accepted a substitute Valley
Blades product. In light of this, St-Louis J held that she was not persuaded that Valley
Blades had established damages. As discussed </span><a href="http://www.sufficientdescription.com/2016/12/are-damages-element-of-claim-under.html"><span style="color: blue;">here</span></a><span style="color: black;">, I am inclined to think that
substantial damages should not be an element in the tort itself. In this case, it is clear
that Valley Blades had to stop selling one product, and that should be enough. The
quantum of the harm should be left to damages inquiry, rather than being used as a
substantive threshold. That is particularly important when the harm is prospective,
because if substantial damages are an element of the tort, an injunction cannot be
granted. That is why the better view is that only potential damage is required, as Manson
J noted in <i>Excalibre</i> [286].</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-54612100522949529692024-03-05T12:02:00.005-04:002024-03-07T07:26:34.916-04:00Obviousness Attack Succeeds: Overbreadth and Wilful Misleading Fail<p></p><div id="WPMainDoc">
<p><i>Valley Blades Ltd v Usinage Pro-24 Inc (Nordik Blades)</i> <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/525003/index.do"><span style="color: blue;">2023 FC 1749</span></a><span style="color: black;"> St-Louis J</span></p>
<p style="margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2856940/summary.html"><span style="color: blue;">2,856,940</span></a><span style="color: black;"> </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2965426/summary.html"><span style="color: blue;">2,965,426</span></a><span style="color: black;"> </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2992233/summary.html"><span style="color: blue;">2,992,233</span></a><span style="color: black;"> / Segmented Snow Plow Blades</span></p>
<p><span style="color: black;">Valley Blades and Nordik Blades are direct competitors in the market for snowplow
blades [206]. Valley Blades brought a declaratory action seeking to have Nordik’s 940
patent declared invalid, and Nordik responded with an action claiming that Valley
Blades infringed Nordik’s 426 and 233 patents. The patents are all related — the 426 is a
divisional of the 940 and the 233 is a divisional of the 426 [46] — and the actions were
consolidated Patent [46]. The action was bifurcated and infringement was conceded [7]. </span></p>
<p><span style="color: black;">St-Louis J found that all the asserted claims were obvious in a very straightforward
decision which turned entirely on the facts [88]–[174]. Indeed, that part of the decision
was so straightforward that I won’t bother to summarize it. This post will deal with the
two other validity attacks, while a subsequent post will address the defendant’s claim
under the Trademarks Act s 7(a) for damages for business lost as a result of demand
letters sent by Nordik to Valley Blades’ clients.</span></p>
<p><span style="color: black;"><span style="font-weight: bold;">Overbreath</span></span></p>
<p><span style="color: black;">The first of the other validity attacks was based on overbreadth. In a two part article I
have argued that the overbreadth requirement is almost always redundant:
Overbreadth in Canadian Patent Law, 33 IPJ 21 and 33 IPJ 147. But the FCA in
<i>Seedlings</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/500815/index.do"><span style="color: blue;">2021 FCA 154</span></a><span style="color: black;"> [50], held that overbreadth is indeed an independent ground of
invalidity, and since then parties attacking the patent have been trying to find a way to
use overbreadth to launch novel attacks on the patent, so far without success.</span></p>
<p><span style="color: black;">In this case, St-Louis J summarized the law of overbreadth as follows:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[175] The law of overbreadth is rooted in the patent bargain; an inventor
shall not reap the benefits of an expanded monopoly without a
corresponding sufficient disclosure to the public (<i>Seedlings Life Science
Ventures, LLC v Pfizer Canada ULC</i>, </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/458969/index.do"><span style="color: blue;">2020 FC 1</span></a><span style="color: black;"> at para 167). </span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[178] To identify whether an element goes to the “core of the invention,”
the Court ought to consider whether implementing the invention without
those elements would require inventive ingenuity (<i>Seedlings FCA</i> at para
63). </span></p>
<p><span style="color: black;">This is a fair summary of those decisions, but it is also a fair summary of the sufficiency
requirement.</span></p>
<p><span style="color: black;">On the facts, Valley Blades argued that the claims at issue were “broader than the
invention actually made by [the inventor]. It argues this is because the tapered shape of
the Nordik Blades’ blades is not claimed in any of the Disputed Claims” [180]. Valley
Blades relied on the inventor’s evidence: “during his examination for discovery in July
2020, [the inventor] was clear that he considered the shape of the Nordik Blades’ blades
to be a part of his purported invention” [181]. This passage suggests that Valley Blades
was arguing that “the invention” is what the inventor subjectively believed the invention
to be. This is an outlandish argument. In the first place, the inventor very often does not
know their true invention, because the inventor is not always aware of the complete
prior art and so is not necessarily aware of their true contribution. Second, even if the
inventor did have a more advanced invention in their head, how can that invalidate the
patent they actually were granted? If Sargon invented the wheel, but the idea of a spoked
wheel passed through his mind, a patent on the wheel would still be valid. That would be
true whether he thought of the spoked wheel either before or after he filed his
application for the wheel. It would also be true if he had said to a friend, “My invention
is the spoked wheel” after filing his patent; and the same would be true if he had said
that before filing the patent.</span></p>
<p><span style="color: black;">In response Nordik argued that “nothing demonstrates that the tapered shape is an
essential element for the invention to work as claimed in the Nordik Patents” [186]. This
seems to be saying that the patent was not overbroad because the claimed invention had
utility even without the tapered shape. On this view, overbreadth seems to be a lack of
utility argument in a different guise, which, as I explain in my article, is often the case.
St-Louis J accepted Nordik’s position, saying “when I factor in all the evidence, I am not
convinced on balance that the blades’ tapered shape was an omitted essential element of
the invention and that the claims are invalid for claiming more than the invention that
was made” [188].</span></p>
<p><span style="color: black;"><span style="font-weight: bold;">Section 53 Wilful misleading</span></span></p>
<p><span style="color: black;">Valley Blades argued that the patents were invalid for wilful misleading under s 53(1)
because some statements in the specifications exaggerated the benefits of the invention
[192]. St-Louis J had no difficulty dismissing this attack. She noted that the threshold
for establishing wilful misleading is high, and “even assuming that Nordik Blades
somehow exaggerated the blade movement, the system’s efficiency, and the blade’s
wear-and-tear, I find nothing amounts to the required threshold for statements violating
section 53" [197]. </span></p>
<p><span style="color: black;">In making this argument, Valley Blades relied on <i>Ratiopharm v Pfizer</i> </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/56975/index.do"><span style="color: blue;">2009 FC 711</span></a><span style="color: black;">,
which St-Louis J distinguished on the basis that “the misstatements referred to in
<i>Ratiopharm</i> appear considerably more serious—particularly as they relate to
pharmaceutical products—than what has been raised against Nordik Blades” [197]. I’d
also point out that the FC decision in <i>Ratiopharm</i> is not good authority in any event.
While the decision was affirmed on appeal, the s 53 analysis was not. In <i>Ratiopharm</i>
</span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/36870/index.do"><span style="color: blue;">2010 FCA 204</span></a><span style="color: black;"> noted that:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[34] Pfizer expressed concern that the trial judge’s determination pursuant
to subsection 53(1) of the Act was based on an overly broad interpretation
of that subsection. I am of the view that the determination is confined to
the unique and particular circumstances of this matter. It has limited, if
any, value as a precedent.</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-82244540436822437662024-03-01T05:00:00.003-04:002024-03-06T07:20:05.279-04:00Is a Patent Insufficient If it Requires a Minor Research Project to Practice?<p></p><div id="WPMainDoc">
<p><i>Takeda Canada Inc v Apotex Inc</i> <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524946/index.do"><span style="color: blue;">2024 FC 106</span></a><span style="color: black;"> Furlanetto J</span></p>
<p style="margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2570916/summary.html"><span style="color: blue;">2,570,916</span></a><span style="color: black;"> / dexlansoprazole / DEXILANT / NOC</span></p>
<p><span style="color: black;">As discussed in </span><a href="http://www.sufficientdescription.com/2024/02/tension-in-sanofi-disclosure-analysis.html"><span style="color: blue;">my last post</span></a><span style="color: black;">, the patent at issue in this case related to a “pulsatile”
dosage form of proton pump inhibitors (PPIs) comprising a PPI with “a first and a
second dose,” which are released from the dosage form as “discrete pulses,” resulting in
specified blood plasma concentrations [90], [92]. Takeda’s DEXILANT product is a
pulsatile release formulation of the claimed type, which includes two types of
delayed-release beads containing dexlansoprazole [6]. Apotex sought to sell a
dexlansoprazole oral dose capsule product and Takeda brought this NOC action in
response [2]. As discussed in my last post, Furlanetto J held that Takeda had not
established infringement. That aspect of her decision was entirely straightforward, and
would have been sufficient to dismiss the action [148]. Furlanetto J nonetheless went on
to address Apotex’s validity arguments, “which formed a significant portion of the
parties’ arguments at trial” [148]. The last post discussed the novelty argument. This
post deals with the remaining validity issues. It raises the thorny issue of whether the factual basis for a sound prediction must be disclosed in the patent; I review the debate, though in the end this decision adds nothing new, as the point was not contested. The other interesting issue is the treatment of sufficiency, which strikes me as problematic in apparently requiring a patentee to disclose in the patent the amount of active ingredient necessary for clinical efficacy.<br /></span></p>
<p><span style="color: black;"><span style="font-weight: bold;">Obviousness</span></span></p>
<p><span style="color: black;">There is nothing notable in the obviousness analysis, but a brief description is useful in
understanding the utility argument. While pulsatile dosage forms were known in the
prior art for dealing with the breakthrough effect, there were some differences between
the prior art and the asserted claims: in particular, the asserted claims specified the
plasma concentrations needed to prevent breakthrough [209] and also required the
second dose to be larger, to compensate for reduced absorption in the lower digestive
tract [213]–[215]. Furlanetto J held that these differences would not have been obvious,
in an analysis that turned on the facts [217]–[227]. </span></p>
<p><span style="color: black;"><span style="font-weight: bold;">Utility</span></span></p>
<p><span style="color: black;">Furlanetto J stated that “where the utility is founded on a sound prediction, the factual
basis for the prediction must be set out in the patent disclosure” to the extent it is not
based on the CGK [231]. Whether the factual basis for a sound prediction needs to be
disclosed in the patent is a long running debate seeming from an enigmatic statement in
<i>Wellcome / AZT</i> </span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2020/index.do"><span style="color: blue;">2002 SCC 77</span></a><span style="color: black;"> [70]:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">Thirdly, there must be proper disclosure. 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. . . . In this sort of
case, however, the sound prediction is to some extent the <i>quid pro quo</i> the
applicant offers in exchange for the patent monopoly. Precise disclosure
requirements in this regard 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. I therefore say no
more about it.</span></p>
<p><span style="color: black;">The Federal Courts initially understood this as requiring only the standard disclosure of
how to make and use the invention: see eg <i>Aventis Pharma v Apotex </i></span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/34817/index.do"><span style="color: blue;">2006 FCA 64</span></a><span style="color: black;">
[28]–[35] affg </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/50971/index.do"><span style="color: blue;">2005 FC 1283</span></a><span style="color: black;"> [178]–[254]. Then, in <i>Raloxifene</i> </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/54910/index.do"><span style="color: blue;">2008 FC 142</span></a><span style="color: black;"> [164] affd
</span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/36372/index.do"><span style="color: blue;">2009 FCA 97</span></a><span style="color: black;"> [15], Hughes J interpreted this paragraph of <i>Wellcome / AZT</i> as requiring
disclosure of the factual basis for the sound prediction in the patent itself. (There’s also a
separate issue as to what is meant by “this sort of case”: see <i>AstraZeneca</i> FC </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/72284/index.do"><span style="color: blue;">2014 FC
638</span></a><span style="color: black;"> [141], discussed </span><a href="http://www.sufficientdescription.com/2014/07/enhanced-disclosure-requirement-only"><span style="color: blue;">here</span></a><span style="color: black;">.)</span></p>
<p><span style="color: black;">There are two main problems with this. First, the factual basis for sound prediction was
not disclosed in the patent in the leading cases: see my post “</span><a href="http://www.sufficientdescription.com/2020/07/the-underlying-facts-were-not-in-fact.html"><span style="color: blue;">The underlying facts were
NOT in fact disclosed</span></a><span style="color: black;">,” showing that the factual basis for the sound prediction was not
disclosed in <i>Wellcome / AZT</i> itself; and see my comments to that post showing that the
factual basis was not disclosed in <i>Olin Mathieson</i> </span><a href="https://academic.oup.com/rpc/article/87/7/157/1598857"><span style="color: blue;">[1970] RPC 157</span></a><span style="color: black;"> (Ch) either, which
<i>Wellcome / AZT</i> [60] identified as the case which gave “serious shape and substance” to
the doctrine. Second, it seems clear that there is no duty to disclose the factual basis for
demonstrated utility in the patent. (Initially it was entirely clear that there was no such
duty, but after the enhanced disclosure requirement was advanced for sound prediction,
there have been some hints that there is an enhanced disclosure requirements for
demonstrated utility as well.) There is only one utility requirement in the Act, and it is
often a very fine line between demonstrated utility and sound prediction — the
difference will turn on exactly how much data has been collected. So, if the facts A, B, C
and D are enough to demonstrate utility, but the facts A, B & C are only enough to
establish a sound prediction, if the applicant is in possession of the facts A, B, C and D, it
will not need to disclose any of them, but if the applicant is only in possession of the
facts the facts A, B & C, they will need to be disclosed. It is difficult to see any rationale
for this distinction. The only rationale that has been provided for the heightened
disclosure requirement for sound prediction is the statement in <i>Wellcome / AZT</i> [70]
that “the sound prediction is to some extent the <i>quid pro quo</i> the applicant offers in
exchange for the patent monopoly.” This statement is completely opaque, which is
entirely understandable, given that it was expressly obiter. As a result, it is not clear
what the rationale is for a heightened disclosure requirement for sound prediction; and
it is double unclear as to what the rationale might be for distinguishing the disclosure
requirement in a case of sound prediction from that when utility is demonstrated. </span></p>
<p><span style="color: black;">In this case, the parties evidently accepted that the factual basis must be disclosed in the
patent, as Furlanetto J did not indicate that her statement at [231] was disputed. I’m not
convinced that the the point is settled. Furlanetto J relied on <i>Eurocopter</i> </span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/62980/index.do"><span style="color: blue;">2013 FCA 219</span></a><span style="color: black;">
[153], <i>Apotex v Allergan </i></span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/111142/index.do"><span style="color: blue;">2015 FCA 137</span></a><span style="color: black;"> [9] and <i>Pharmascience v Teva </i></span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/518823/index.do"><span style="color: blue;">2022 FCA 2</span></a><span style="color: black;"> [5].
<i>Eurocoper</i> says only that disclousre of the factual basis “may” be required and <i>Apotex v
Allergan </i>merely paraphrased this in a brief decision affirming the decision below on the
facts. <i>Pharmascience v Teva </i></span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/518823/index.do"><span style="color: blue;">2022 FCA 2</span></a><span style="color: black;"> is more directly on point, but even there Locke
JA’s remarks are ambiguous, as discussed </span><a href="http://www.sufficientdescription.com/2022/01/squeezing-through-utility-obviousness.html"><span style="color: blue;">here</span></a><span style="color: black;">. Since the parties did not dispute the
point, this decision doesn’t add any authority to the debate. The issue will eventually
have to be clarified by the FCA. </span></p>
<p><span style="color: black;">Given that position, the question was whether two examples provided a sufficient factual
basis for a sound prediction of utility. The parties agreed that the requisite utility was
simply “to give a pharmacological effect (i.e., as agreed by the parties in this context, an
effect on gastric acid pH)” [233]. Furlanetto J found that a scintilla of utility had not
been established on the facts [248], apparently because “the effect of a pulsatile release
dosage form on gastric pH could not have been predicted” [244].</span></p>
<p><span style="color: black;">I have to admit, I find this very suprising. It is very well known that PPIs are effective in
treating GI issues, at least when given in a large enough dose to meet threshold blood
plasma levels. Claim 11, which was one of the assserted claims [2], specifies blood
plasma levels of at least 450 ng/ml, which I take it is well over the threshold.
Presumably if this concentration were achieved with a single dose, it would be effective.
I find it very difficult to understand how it makes any difference if the same plasma level
is achieved with pulsatile dose. But I have to admit that I couldn’t really follow the
technical evidence reviewed by Furlanetto J, and anyway, it is a finding on the evidence.</span></p>
<p><span style="color: black;"><span style="font-weight: bold;">Sufficiency</span></span></p>
<p><span style="color: black;">Furlanetto J held the disclosure was insufficient for two reasons. </span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[258] First, Example 1 does not provide sufficient information for the PSA
to understand how the inventors arrived at the oral dosage data and steady
state plasma concentrations in the patent. As highlighted earlier and
explained by Dr. Davies, the experimentation said to underlie Example 1
yielded modelled results that would be known to the PSA to be
significantly lower than actual steady state plasma concentration values.
Further, the data was from an IV study alone at one time point and did not
include the subsequent oral dosage modelling data that was necessary for
the inventors to translate the results of the modelling to threshold
concentrations for a pulsatile release oral dosage form to be used over a 24
hour time period.</span></p>
<p><span style="color: black;">I find this passage a bit difficult to understand. The second sentence suggests that the
problem is that the data is misleading. If that is the issue, Takeda was right in saying
that this was a disguised </span><a href="https://laws-lois.justice.gc.ca/eng/acts/P-4/page-8.html#h-412994"><span style="color: blue;">s 53</span></a><span style="color: black;"> attack [260]. Alternatively, Furlanetto J might be saying
that the defect was simply the failure to disclosure how the inventors “arrived at the oral
dosage data and steady state plasma concentrations.” This seems to be saying that the
inventors must disclose in the patent the experiments and reasoning process that led
them to arrive at their invention. If that is what was meant, it is not correct. As it
happens, this point was addressed by Manson J in his very recent decision in <i>Proslide v
WhiteWater </i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/525093/index.do"><span style="color: blue;">2024 FC 175</span></a><span style="color: black;">, in which WhiteWater argued that “the key principle” of the
law of sufficiency is that “information known by the patentee may be considered in
assessing whether the disclosure is sufficient,” and that “[f]acts known by the inventor,
and intentionally omitted or not communicated in the description of a patent can result
in disclosure being insufficient”. Manson J rejected this argument, encapsulating the
established law of sufficiency as follows:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[19] WhiteWater’s position broadens the scope of sufficient disclosure
beyond what the law actually supports. Section 27(3) of the <i>Patent Act</i>,
RSC, 1985, c P-4, requires the patent to make a full disclosure, but that
requirement pertains to “the invention and its operation or use as
contemplated by the inventor” in the patent. Therefore, the extent of the
obligation to make sufficient disclosure is limited in two ways. First, the
information need only pertain to the invention as disclosed and claimed by
the patent. Second, that information must enable the skilled person to
make or use that invention (Teva at paras 50-52, 70). Further disclosure is
not necessary to meet the requirements of sufficiency as contemplated by
section 27(3).</span></p>
<p><span style="color: black;">On the whole, I suspect that what Furlanetto J was really getting at in this paragraph
was similar to her second point, which is easier to understand, so I’ll turn to that.</span></p>
<p><span style="color: black;">The second point turned on the fact that the patent claims a dosage form containing an
amount of PPI that results in a specified plasma concentration, but it does not disclose
the amount of the PPI that is required to achieve that concentration. The amount of PPI
required to achieve the specified plasma levels would depend on a variety of factors,
such as the exact dosage form, as the excipients can affect absorption [263]–[264].
Consequently, determining the exact amount of PPI to achieve the specified levels would
require a non-trivial amount of routine research, albeit not rising to the level of
invention. </span></p>
<p><span style="color: black;">Furlanetto J cited <i>Idenix v Gilead</i> </span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/233146/index.do"><span style="color: blue;">2017 FCA 161</span></a><span style="color: black;"> [19] for the proposition that “[a]
disclosure is insufficient if it necessitates the working out of a problem,” and <i>Seedlings</i>
</span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/500815/index.do"><span style="color: blue;">2021 FCA 154</span></a><span style="color: black;"> [68], <i>Leo Pharma</i> </span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/228616/index.do"><span style="color: blue;">2017 FCA 50</span></a><span style="color: black;"> [59] and <i>Teva</i> </span><a href="http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/12679/index.do"><span style="color: blue;">2012 SCC 60</span></a><span style="color: black;"> [75] for the
proposition that “a minor research project is too much,” though some non-inventive
trial and error experimentation may be permitted [257]. Applying this threshold to the
facts, she held on the facts that the effort requires was too much [268].</span></p>
<p><span style="color: black;">This is problematic. Novel drugs are often patented very early in the R&D process, often
on the basis of in vitro tests only, at a point where identifying the actual dose and dosage
form necessary for clinical efficacy is a very long way off. This is typically true when
utility is based on a sound prediction, and is often true even when utility has been
demonstrated. While the patent will typically state the quantity needed, this is normally
little more than guesswork. For example, in<i> ZYTIGA</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/493865/index.do"><span style="color: blue;">2021 FCA 45</span></a><span style="color: black;">, concerning the
</span><a href="http://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2661422/summary.html"><span style="color: blue;">2,661,422</span></a><span style="color: black;"> patent, which related to a combination of abiraterone acetate & prednisone
for treating prostate cancer (discussed </span><a href="http://www.sufficientdescription.com/2021/03/the-threshold-for-demonstrated-utility.html"><span style="color: blue;">here</span></a><span style="color: black;">), the specification stated that the amount to
be administered was “about 0.01 mg/kg/day to about 100 mg/kg/day of abiraterone
acetate” — a range of four orders of magnitude, and that for a compound that was
already known. Similarly, in <i>Rosiglitazone </i></span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/59105/index.do"><span style="color: blue;">2011 FC 239</span></a><span style="color: black;"> (discussed </span><a href="http://www.sufficientdescription.com/2011/03/what-is-promise-of-patent.html"><span style="color: blue;">here</span></a><span style="color: black;">), the
specification stated that the unit dose “normally contain an amount of the active
ingredient in the range of from 0.1 to 1000 mg.” In <i>HGS v Lilly</i> </span><a href="http://www.bailii.org/uk/cases/UKSC/2011/51.html"><span style="color: blue;">[2011] UKSC 51</span></a><span style="color: black;">,
concerning EP(UK)</span><a href="https://worldwide.espacenet.com/publicationDetails/biblio?FT=D&date=19990908&DB=&locale=en_EP&CC=EP&NR=0939804A1&KC=A1&ND=4"><span style="color: blue;">0,939,804</span></a><span style="color: black;">, relating to neutrokine alpha and related anitbodies, the
specification stated that “[0125] As a general proposition, the total pharmaceutically
effective amount of Neutrokine-α polypeptide administered parenterally per dose will be
in the range of about 1 µg/kg/day to 10 mg/kg/day of patient body weight, although, as
noted above, this will be subject to therapeutic discretion.” </span></p>
<p><span style="color: black;">It might be suggested that this case is different because the claims specified the requisite
blood plasma concentration of the active ingredient and determining this concentration
was part of the inventive concept. But sufficiency requires that the patentee disclose how
to use the invention. Even when the plasma concentration is not specified, the skilled
person still has to be able to practice the invention by determining an effective amount
of the drug, so this doesn’t seem to be a difference in principle. A patent is sufficient if some trial and error is needed to find the clinically effective dose when a new compound is claimed, and the trial and error needed to find the dose needed to find the plasma concentration in this cases seems to be of the same nature, and if anything less extensive, given that the desired concentration is specified. But maybe there is more to this point that I am not seeing.<br /></span></p>
<p><span style="color: black;">In coming to her conclusion, Furlanetto J relied primarily on the SCC <i>Teva</i> decision
[267], which invalidated the patent for requiring what the decision repeatedly referred
to as a “minor research project.” More specifically, and crucially, in <i>Teva</i> the skilled
person would have to “undertake a minor research project <i>to determine what the true
invention was</i>” [75] (my emphasis). This reference to determining the “true invention”
was repeated consistently, in all the SCC’s references to a “minor research project”: see
[17], [74], [75]. The issue in <i>Teva</i> was that the patent disclosed that one of the especially
preferred compounds had been tested in humans and found to be effective, but the
patent did not disclose which one. It was the failure to disclose which compound had
been tested that constituted the failure to disclose “the true invention.” As the SCC noted
in <i>Teva</i>, the trial judge felt that requiring the skilled person to undertake “a minor
research project in order to determine which of the claims describes the true invention. .
. plays games with the reader.” And as the FCA noted in <i>Leo Pharma</i>, the issue in <i>Teva</i>
was that “the patentee had deliberately omitted essential information, thereby obscuring
the fact that only one of the compounds claimed actually worked. Thus, the invention
itself was not even properly disclosed” [58]. (See also <i>Proslide</i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/525093/index.do"><span style="color: blue;"></span></a><span style="color: black;"> [26], to the same effect.)</span></p>
<p><span style="color: black;">Thus the disclosure requirement at issue in <i>Teva</i> was not about disclosure of how to
make the invention, it was disclosure of “the true invention.” And as the FCA pointed
out in <i>BRP v Arctic Cat</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/344950/index.do"><span style="color: blue;">2018 FCA 172</span></a><span style="color: black;"> [78], “[e]nablement (how to practice the
invention) is a concept completely distinct from the disclosure of the invention itself, the
latter of which was at issue in [<i>Teva</i>].” In this case there was no suggestion that Takeda
had tried to conceal the true invention. The disclosure requirement at issue in this case
was not disclosure of the true invention, but standard enablement, or how to practice
the invention. And as the FCA further pointed out in <i>Leo Pharma</i> [58]–[59] and in <i>BRP
v Arctic Cat</i> [78], the SCC in <i>Teva</i> did not change the traditional standard for sufficiency
of disclosure of how to make the invention. In <i>BRP v Arctic Cat</i> [78], the FCA held that
it was an error of law to apply the <i>Teva</i> standard for disclosure of the invention to the
completely distinct context of enablement. With respect, it appears that Furlanetto J may have made that error in this case.</span></p>
<p><span style="color: black;">With all that said, I would return to the </span><a href="https://laws-lois.justice.gc.ca/eng/acts/P-4/page-8.html#h-412994"><span style="color: blue;">s 53</span></a><span style="color: black;"> point. If Takeda actually knew the amount
of active ingredient necessary to achieve the specified plasma concentrations and failed
to disclose it, it is possible that there might be some kind of wilful misleading argument
to be made. I don’t want to explore this further since it wasn’t at issue; the point is
simply that a s 53 objection should be dealt with under s 53, and not by a strained
interpretation of the sufficiency requirement.</span></p>
<p><span style="color: black;"><span style="font-weight: bold;">Claims Broader</span></span></p>
<p><span style="color: black;">Apotex argued that the claims were overbroad “because the work of the inventors
established that at least 1 hour was required between the pulsed doses; however, this 1
hour was not claimed” [270]. This seems to be redundant with utility, but in any event, it
failed on the facts [274].</span></p>
<p><span style="color: black;"><span style="font-weight: bold;">Ambiguity</span></span></p>
<p><span style="color: black;">A weak ambiguity attack also failed on the facts: [275]–[279].</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-52534068715036746242024-02-27T11:44:00.005-04:002024-02-29T18:21:26.710-04:00Tension in the Sanofi Disclosure Analysis<p></p><div id="WPMainDoc">
<p><i>Takeda Canada Inc v Apotex Inc</i> <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524946/index.do"><span style="color: blue;">2024 FC 106</span></a><span style="color: black;"> Furlanetto J</span></p>
<p style="margin-left: 0.5in;"><span style="color: black;"> </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2570916/summary.html"><span style="color: blue;">2,570,916</span></a><span style="color: black;"> / dexlansoprazole / DEXILANT / NOC</span></p>
<p><span style="color: black;">Proton pump inhibitors (PPIs) are a class of compounds that decrease gastric acid level
in the stomach [5]. PPIs are now a well-established treatment for GI disorders related to
increased gastric acid [7]. It is desirable to have a once daily dosing regimen, but the
formulations known at the time of the patent could result in nocturnal breakthrough
events if used on a once-daily basis, resulting increased gastric acid production [12].
Takeda’s 916 patent aimed to address this problem with a “pulsatile” release formulation,
comprising a PPI with “a first and a second dose,” which are released from the dosage
form as “discrete pulses,” resulting in specified blood plasma concentrations [90], [92].
Takeda’s DEXILANT product is a pulsatile release formulation of the claimed type,
which includes two types of delayed-release beads containing dexlansoprazole [6].
Apotex sought to sell a dexlansoprazole oral dose capsule product and Takeda brought
this NOC action in response [2].</span></p>
<p><span style="color: black;">Furlanetto J addressed three claim construction issues, which all turned on the
evidence. One question in particular turned on the meaning of “a first and a second
dose” in the claims. Apotex argued that this means distinct amounts of PPI in the dosage
form itself [97], as with the two types of delayed-release beads in DEXILANT. Takeda
argued that the reference to two doses was not the amount of PPI in the formulation, but
the amount of PPI released from the formulation [97]. In other words Takeda argued
that even if there was only one form of PPI in the product, if it was released in two waves
resulting in two distinct blood plasma peaks, that would fall within the claims.
Furlanetto J accepted Apotex’s construction, for reasons that strike me as being
straightforward and compelling [98]–[104]. (Her conclusions on the other two claim
construction issues also strike me as being sound.)</span></p>
<p><span style="color: black;">In light of that construction, Apotex prevailed on infringement because it does not
contain two different types of dexlansoprazole: “Characteristic of a single continuous,
delayed release dosage form, each of the mini-tablets in the Apotex Product are
identical” [119]. There was also an extended discussion of various labs tests which was a
bit difficult to follow because of redactions. My impression is that Takeda was arguing
that if you squint really hard, you can see two peaks in the plasma concentration curves.
In any event, in the end Furlanetto J held that Apotex’s product would not infringe as
Takeda failed to established that Apotex’s product comprised a first and a second dose of
dexlansoprazole from the dosage form as two discrete pulses: “Rather, the evidence
indicates that there is only one dose of dexlansoprazole in each 30 mg or 60 mg capsule
of the Apotex Product that is released from the Apotex Product in a single, continuous
delayed release fashion” [147]. </span></p>
<p><span style="color: black;">To this point, the decision turned on the facts with no novel points of law. The
conclusion on claim construction and infringement would have been sufficient to
dismiss the action [148]. Furlanetto J nonetheless went on to address Apotex’s validity
arguments, “which formed a significant portion of the parties’ arguments at trial” [148].</span></p>
<p><span style="color: black;"><span style="font-weight: bold;">Anticipation</span></span></p>
<p><span style="color: black;">The anticipation argument raised a tricky point which turns ultimately on a tension in
<i>Sanofi</i> </span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2575/index.do"><span style="color: blue;">2008 SCC 61</span></a><span style="color: black;">. </span></p>
<p><span style="color: black;">The focus was solely on the disclosure branch of the two part test for anticipation [151].
The key piece of prior art was Application </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2499574/summary.html"><span style="color: blue;">2,499,574</span></a><span style="color: black;">, and in particular Example 57
which “provides a formulation that is close to DEXILANT® except that it includes the
excipient PEG as part of the formulation” [168]. Apotex introduced evidence that the
PEG would not affect the pharmacokinetics and that the blood plasma reached would
exceed the threshold specified in the claims [169]–[170]. Furlanetto J held that Example
57 did not anticipate because “the heart of the invention of the 916 Patent is the
recognition of the threshold plasma concentration and how to achieve and maintain it,”
and “There was no suggestion in the 574 Application of any recognition of these
properties, nor of their significance” [176]. Moreover, Example 57 did not disclose the
blood plasma concentrations that would result, and for that to be determined, the
capsules of example 57 would have had to be administered to humans and the PK
properties would have to be identified and studied” [176]. It is not entirely clear to me if
Example 57 comprised two different types of granules (see [202], suggesting it did), but
it is clear that Example 11 did have two types [161], and Furlanetto J held that Example
11 did not anticipate because, inter alia, “there was no disclosure of any plasma
concentration being a threshold which must be surpassed for pharmacological effect”
[166]. </span></p>
<p><span style="color: black;">So, Furlanetto J is saying that these examples did not anticipate because they did not
disclose the <span style="text-decoration: underline;">properties</span> of the compound described in the examples. This is contrary to
the basic rule that “what infringes if later, anticipates if earlier”: <i>Consolboard</i> </span><a href="http://scc-csc.lexum.com/decisia-scc-csc/scc-csc/scc-csc/en/item/2426/index.do"><span style="color: blue;">[1981] 1
SCR 504</span></a><span style="color: black;">, 534. There is no requirement that anyone at the time would know of all the
properties. As Lord Hoffmann said in <i>Synthon</i> </span><a href="http://www.bailii.org/uk/cases/UKHL/2005/59.html"><span style="color: blue;">[2005] UKHL 59</span></a><span style="color: black;"> [22], in a passage quoted
with approval in <i>Sanofi</i> </span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2575/index.do"><span style="color: blue;">2008 SCC 61</span></a><span style="color: black;"> [25], “whether or not it would be apparent to
anyone at the time, whenever subject matter described in the prior disclosure is capable
of being performed and is such that, if performed, it must result in the patent being
infringed, the disclosure condition is satisfied.” So, if a pharmaceutical company were to
market a pill that in fact had two types of PPI and resulted in plasma concentrations that
were in fact above the specified thresholds, that pill would infringe if sold after the
patent issued, regardless of whether anyone had measured the plasma concentrations
prior to litigation. By the same token, such a pill would anticipate if sold prior to the
date of the patent, also regardless of whether anyone had ever measured the plasma
levels. As Lord Hoffmann explained in <i>Merrell Dow</i> </span><a href="https://www.bailii.org/uk/cases/UKHL/1995/14.html"><span style="color: blue;">[1995] UKHL 14</span></a><span style="color: black;"> [47], “whether or
not a person is working a product invention is an objective fact independent of what he
knows or thinks about what he is doing”; similarly in <i>Synthon</i> </span><a href="http://www.bailii.org/uk/cases/UKHL/2005/59.html"><span style="color: blue;">[2005] UKHL 59</span></a><span style="color: black;"> [22],
quoting <i>Merrell Dow</i>, Lord Hoffmann noted that “[t]he flag has been planted, even
though the author or maker of the prior art was not aware that he was doing so.”</span></p>
<p><span style="color: black;">All of this is settled law, with <i>Sanofi</i> as the leading case, and indeed, it was expressly
recognized as such by Furlanetto J [153]. Why then did she hold that the plasma
concentrations had to be disclosed in order to anticipate? The problem lies in <i>Sanofi</i>
itself. The quotes from <i>Sanofi</i> that I have given above are all from the discussion of
general principles relating to anticipation. When the SCC in <i>Sanofi</i> discussed the
disclosure requirement in particular, and in applying those principles to the facts, the
SCC did indeed imply that the properties have to be disclosed in order to anticipate. </span></p>
<p><span style="color: black;">Recall that the question in <i>Sanofi</i> was whether the prior art disclosure of the racemate
anticipated the claim to the enantiomer. The answer was no. But why? Under the
general principles set out in <i>Sanofi</i>, the answer would have been that making the
racemate would not infringe a claim to the enantiomer, and so the test that “the matter
relied upon as prior art must disclose subject-matter which, if performed, would
necessarily result in an infringement of the patent” (<i>Sanofi</i> </span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2575/index.do"><span style="color: blue;"></span></a><span style="color: black;">[25], quoting <i>Synthon</i>
</span><a href="http://www.bailii.org/uk/cases/UKHL/2005/59.html"><span style="color: blue;">[2005] UKHL 59</span></a><span style="color: black;"> [22]) would not be satisfied. More broadly, the question in <i>Sanofi</i> was
framed as being whether disclosure of the genus can anticipate the species. The answer
is no, because someone practising the genus would not inevitably infringe, as the genus
might be practised without infringing, by selecting another species from the pool: see
<i>Sanofi</i> [21]. </span></p>
<p><span style="color: black;">But while that answer would have been straightforward on the general principles set out
in <i>Sanofi</i>, the SCC changed its approach when it came to the discussion of the disclosure
requirement specifically. The SCC said:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[31] Section 27(1) of the Act requires as a condition for obtaining a patent
that the invention was not “known or used” and was not “described” in any
patent or any publication more than two years before the patent
application was filed. In the context of genus and selection patents, in <i>E. I.
Du Pont de Nemours & Co. (Witsiepe’s) Application</i>, [1982] F.S.R. 303
(H.L.), Lord Wilberforce stated, at p. 311:</span></p>
<p style="margin-left: 1in; margin-right: 1in;"><span style="color: black;">It is the absence of the discovery of the special advantages, as
well as the fact of non-making, that makes it possible for
such persons to make an invention related to a member of
the class.</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">The compound made for the selection patent was only soundly predicted at
the time of the genus patent. It was not made and its special advantages
were not known. It is for those reasons that a patent should not be denied
to the inventor who made and discovered the special advantages of the
selection compound for the first time. </span></p>
<p><span style="color: black;">This is all true, but it runs together anticipation and obviousness. </span></p>
<p><span style="color: black;">The general point of <i>Witsiepe’s Application</i> is that a species may be patented over the
genus. It is now understood that two separate hurdles must be overcome. The prior art
disclosing the genus must not have specifically disclosed the species, or it will be
anticipated. This is true even if it turns out that the species had special properties that
were not appreciated in the prior art. Suppose that the genus patent specifically
disclosed five especially preferred compounds by structure, and disclosed in vitro tests
showing they were all effective in treating a disease. One of those, the lead compound,
was commercialized and sold. It would not be possible to get a subsequent species
patent on that compound, even if it was subsequently discovered, surprisingly and
unexpectedly, that it had no side effects at all, while every other known member of the
genus had significant side effects. That would be true even if no one had known that this
was the only compound with no side effects (perhaps because the lead compound was
the only one which was commercialized and the others had never been tested in
humans). The same is true if the especially preferred compound had not been
commercialized, but merely specifically disclosed, as there is no difference in principle
between prior sale and prior publication. (If it were surprisingly and unexpectedly
discovered that the compound was useful in treating an entirely different disease, it
would be possible to get a patent on the use to treat that disease. That is not because the
prior art must disclose the properties to anticipate; it is because making and using the
compound for uses known in the prior art would not infringe the new use patent.) On
the other hand, even if the species was not specifically disclosed, it must also have
special properties. There is no “invention” in picking one member of the genus at
random and finding that it has exactly the same properties as all the other known
members. If it does not have special properties, it will be obvious, even if it is not
specifically disclosed.</span></p>
<p><span style="color: black;">The quoted passage from <i>Witsiepe’s Application</i>’s runs these together: “It is the absence
of the discovery of the special advantages [non-obviousness], as well as the fact of
non-making [anticipation], that makes it possible for such persons to make an invention
[new, useful and non-obvious subject matter] related to a member of the class.” And the
following sentence from the SCC is to the same effect: “It was not made [not anticipated]
and its special advantages were not known [not obvious].” It is true that both of these
requirements must be satisfied for a selection patent to be valid. The problem is that in
the heading to that section — “i. Disclosure” — and in the following paragraph, the SCC
in <i>Sanofi</i> identified both of these separate requirements with the disclosure branch of
anticipation: </span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[32] Where there is no such disclosure [of the special advantages], there is
no discovery of the special advantages of the selection patent as compared
to the genus patent, and the disclosure requirement to prove anticipation
fails.</span></p>
<p><span style="color: black;">The SCC also ran obviousness and anticipation together in dealing with the disclosure
requirement when applying the law to the facts. The special properties of the
enantiomer were better activity and lower toxicity. The SCC said there was no
anticipation because “[t]here was no evidence that the person skilled in the art would
know from reading the [prior art genus patent] that the more active dextro-rotatory
isomer would be less toxic than the racemate or levo-rotatory isomer or any of the other
compounds made and tested” [40] and “[s]ince the ‘875 patent did not disclose the
special advantages of the dextro-rotatory isomer and of its bisulfate salt, as compared to
the levo-rotatory isomer or the racemate and their salts, or the other compounds made
and tested or otherwise referred to in the ‘875 patent, the invention of the ‘777 patent
cannot be said to have been disclosed” [41]. The approach set out on the facts in <i>Sanofi</i>
was picked up in comments in <i>Novo Nordisk </i></span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/58365/index.do"><span style="color: blue;">2010 FC 746</span></a><span style="color: black;"> [170]–[174] and in <i>Allergan
</i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/521013/index.do"><span style="color: blue;">2022 FC 260</span></a><span style="color: black;">, which were relied on by Takeda and quoted by Furlanetto J at [174], [175]. </span></p>
<p><span style="color: black;">So, the reason that Furlanetto J’s analysis of disclosure in this case was inconsistent with
the general test set out in <i>Sanofi</i>, is that the SCC’s analysis of disclosure in <i>Sanofi</i> was
also inconsistent with the general test that it had just set out. The reason for this internal
inconsistency in <i>Sanofi</i> is that it was a selection patent case. When the SCC addressed
the broad principles of anticipation, it relied on the leading cases on anticipation
generally. But when it got to the specifics, it turned to cases on selection patents
specifically, which run anticipation and obviousness together. </span></p>
<p><span style="color: black;">I can’t fault Furlanetto J for following the SCC’s lead. But this case illustrates the
problem with the view that the special properties must be disclosed in order to
anticipate. The focus on disclosure of the properties didn’t make any difference in <i>Sanofi</i>
itself because the enantiomers were not specifically described in the prior art in any
event. But in this case, the focus on the properties may have made the difference.
Because Furlanetto J held that the claims were not anticipated because the plasma
concentrations were not disclosed, it is not entirely clear to me whether she would have
held them to be anticipated on the “what infringes if later, anticipates if earlier” test. So
suppose that the prior art did indeed disclose a formulation that would indeed infringe,
so that the claims would be anticipated on that test. In particular, suppose that even
though the plasma levels were not disclosed, the formulation disclosed in the prior art
would in fact result in clinically effective plasma levels, exceeding the threshold set out
in the claims. And since there is no difference between a prior publication and prior
practice, suppose that the prior patentee had marketed its product to thousands of
patients, who had taken it to successfully treat their GI disorders, all without measuring
the plasma levels. Would the 916 patent be valid, so that the prior manufacturer would
have to withdraw its product and turn the market over to Takeda? That can’t be.</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-86500064420492416112024-02-23T14:03:00.004-04:002024-02-23T14:03:41.533-04:00The Junk Folder Ate my Patent<p></p><div id="WPMainDoc">
<p><i>Taillefer v Canada (Attorney General)</i> <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/525012/index.do"><span style="color: blue;">2024 FC 259</span></a><span style="color: black;"> Furlanetto J</span></p>
<p style="margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2690767/summary.html"><span style="color: blue;">2,690,767</span></a><span style="color: black;"> / Wide Ice Resurfacing Machine</span></p>
<p><span style="color: black;">A patentee must pay annual maintenance fees to maintain its patent in effect: </span><a href="https://laws-lois.justice.gc.ca/eng/acts/P-4/page-7.html#h-412841"><span style="color: blue;">s 46(1)</span></a><span style="color: black;">. If
the annual fee is not paid in time, the patentee has a six month grace period during
which it can pay the maintenance fee plus a late fee: s 46(2). If the fees are not paid
during the grace period, the patent will lapse: s 46(4). However, the patent can be
reinstated on request if the Commissioner determines that the failure occurred in spite
of “the due care required by the circumstances having been taken”: s 46(5). This case
discusses what “due care” looks like in the context of email communications. </span></p>
<p><span style="color: black;">The patentee’s arrangement with its Agent was that the Agent required instructions
from the patentee before paying the annual maintenance fee [10]. For many years the
fees were paid on time pursuant to those instructions [11]. In 2020 the Agent reminded
the patentee that the fees would have to be paid, a full five months before the deadline
[12]. The Agent heard nothing from the patentee. The Agent sent many email reminders
to the patentee, but never heard anything back, and so did not pay the fee. The Agent
sent more email reminders about the possibility of reinstatement, but still did not hear
anything. The six month deadline expired, and on October 20, 2020, the Agent sent the
patentee an email notifying him of this fact. Finally, nine days later, the patentee found
this correspondence in his junk mail folder [16]. The evidence indicates that this was the
problem all along – even though the Agent and the patentee had been successfully
communicating by email for almost a decade, for some reason, in 2020 the Agent’s email
started going to the patentee’s junk mail folder. </span></p>
<p><span style="color: black;">The patentee sought to have the patent reinstated pursuant to s 46(5). The
Commissioner refused, on the basis that the “due care” standard had not been met.
Furlanetto J affirmed. </span></p>
<p><span style="color: black;">The take-away is that if an Agent has been relying on email for years to communicate
with their client without any problem, and the client stops responding, the Agent needs
to double check that the emails are still getting through:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[41] In the circumstances applicable here, on a substantive review, it is my
view that it was reasonable for the Commissioner to have looked at steps
that could have avoided the communication failure and to have expected
that the Agent would have additional communication mechanisms in place
to make sure they could always correspond with the Applicant. It was
likewise reasonable to have expected that in circumstances where
numerous notices from the Agent had gone unanswered and where
non-compliance could lead to expiry of patent rights that these alternative
measures would have been used to ensure that the patentee was aware of
the deadlines at issue. Particularly as there had been a consistent pattern
of payment since 2012.</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[42] Similarly, in my view it was reasonable for the Commissioner to
expect that a reasonably prudent patentee would have a system in place to
make sure that their email was operating effectively if they were relying on
this as the primary communication means to pay their maintenance fees.
This is especially so as the Applicant retained the responsibility to instruct
the Agent on a yearly basis to pay the maintenance fee. Having retained
this responsibility, it was reasonable for the Commissioner to find that it
was incumbent on the Applicant to exercise due care to ensure that his
email was properly receiving messages so that he could provide
instructions to the Agent in a timely manner.</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-31541582100844301142024-02-20T05:00:00.005-04:002024-02-21T06:55:19.589-04:00Is a Sale Accompanied by an Unrestricted Implied Licence to Use?<p></p><div id="WPMainDoc">
<p><i>Pharmascience Inc v Janssen Inc</i> <a href="https://decisions.fca-caf.ca/fca-caf/decisions/en/item/521329/index.do"><span style="color: blue;">2024 FCA 10</span></a><span style="color: black;"> Locke JA: de Montigny CJ, Goyette JA
affg <i>Janssen Inc v Pharmascience Inc</i> </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/519793/index.do"><span style="color: blue;">2022 FC 62</span></a><span style="color: black;"> Manson J</span></p>
<p style="margin-left: 0.5in; margin-right: 0.495833in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2655335/summary.html"><span style="color: blue;">2,655,335</span></a><span style="color: black;"> / paliperidone palmitate / INVEGA SUSTENNA / NOC</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">This decision addresses a tricky and interesting point regarding implied licences
in the context of the first prong of the <i>Corlac</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/37241/index.do"><span style="color: blue;">2011 FCA 228</span></a><span style="color: black;"> [162] test for
inducement, which requires that “the act of infringement must have been
completed by the direct infringer.” Janssen’s 335 Patent relates to a dosing
regimen for long-acting injectable paliperidone palmitate formulations for the
treatment of schizophrenia and related disorders. It claims a dosage regimen
comprising a first loading dose of 150 mg-eq of paliperidone palmitate on day 1; a
second loading dose of 100 mg-eq on day 8; and subsequent maintenance doses
of 75 mg-eq monthly thereafter [2]. Pharmascience proposed to sell the loading
doses, but not the maintenance doses, which would be supplied by Janssen [17].
In this NOC proceeding, Pharmascience brought a motion for summary trial on
the basis of non-infringement, arguing that even though the end-users, such as
physicians and patients, would practice the invention, there would be no direct
infringement because any end-user must be taken to have an implied licence from
Janssen to use the maintenance dose for any purpose, including using it as part of
the patented combination.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">At first instance, Manson J held in favour of Janssen, finding that Pharmascience
would induce infringement of the 335 Patent with its generic version of INVEGA
SUSTENNA [3]: see </span><a href="http://www.sufficientdescription.com/2022/03/burden-in-summary-trial-clarified.html"><span style="color: blue;">here</span></a><span style="color: black;">. The action proceed to trial on the patent validity issues
raised by Pharmascience. Janssen again prevailed at trial, </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/522050/index.do"><span style="color: blue;">2022 FC 1218</span></a><span style="color: black;">. An
appeal has been heard and is under reserve [3]. In </span><a href="http://www.sufficientdescription.com/2022/03/burden-in-summary-trial-clarified.html"><span style="color: blue;">my post on Manson J’s
decision</span></a><span style="color: black;">, I had noted that his decision in this case was essentially a companion
case to <i>Janssen v Apotex </i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/520422/index.do"><span style="color: blue;">2022 FC 107</span></a><span style="color: black;">, which involved the same patent and the
same type of generic product. However, the issues raised on appeal were quite
different, as the <i>Apotex</i> appeal turned on the second prong of the <i>Corlac</i> test: see
</span><a href="http://www.sufficientdescription.com/2024/02/what-is-threshold-for-influence-in.html"><span style="color: blue;">here</span></a><span style="color: black;">. </span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">This appeal therefore turned on whether the end-users, who purchased the
maintenance doses from Janssen, should be taken to have an implied licence to
use those maintenance doses to practice the invention in combination with the
loading doses supplied by Pharmascience.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">Locke JA started by summarizing the basic rule as follows: “it is clear that the sale
of a patented article without restriction includes the right to use that article as the
purchaser pleases,” unless a restriction is brought home to the purchaser on sale.
He cited ample authority for this proposition [16], [15]. While Janssen did not
dispute this rule, Janssen relied on <i>MacLennan</i> </span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/35858/index.do"><span style="color: blue;">2008 FCA 35</span></a><span style="color: black;">, in which the
patent related to “a saw tooth and tooth holder combination.” The tooth and
tooth holder were separate parts, and the combination was attached to the
periphery of a circular saw disc for feller heads in the forestry industry:
<i>MacLennan</i> [4]. If the saw struck rocks while logging, individual teeth and
sometimes also the holders would be broken without damaging the saw disc. The
patentee sold both the tooth holder and the teeth themselves, and the defendant
manufactured and sold replacement teeth to be used by the patentee’s customers
with tooth holders purchased from the patentee [24]. Janssen argued that
<i>MacLennan</i> was “on all fours” with the case at hand [25]. Pharmascience tried to
distinguish <i>MacLennan</i> on the basis that the issue concerned the extent of the
implied right of a purchaser to repair [26]. Locke JA quite rightly rejected this as
being a misreading of <i>MacLennan</i> [26], [27].</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">How then can we reconcile <i>MacLennan</i> with the rule that the purchaser of an
embodiment of the patented invention has the right to do as they please with it?
Janssen argued that “the jurisprudence concerning implied license is limited to
the patented article itself” [17]. Locke JA accepted this argument, saying that in
<i>MacLennan</i> and similarly in <i>Angelcare </i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/521261/index.do"><span style="color: blue;">2022 FC 507</span></a><span style="color: black;"> (</span><a href="http://www.sufficientdescription.com/2022/04/liability-of-parent-corporation-implied.html"><span style="color: blue;">here</span></a><span style="color: black;">), “the patented
invention constituted a combination invention and therefore, the sale of a mere
component of it was insufficient to grant the implied right to use the entire
combination” [29]. He therefore held that:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[29] [T]he sale of a mere component of [a combination invention is]
insufficient to grant the implied right to use the entire combination.
To grant an implied licence, the sale of the entire combination had
to occur, or at least, as in <i>Slater Steel</i> [(1968) 55 CPR 61 (Ex Ct)],
the parties’ intended use of the component at the time of sale
contemplated its use in the patented combination.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">So, no implied licence arose in this case because Janssen sold the maintenance
doses separately and this does not imply a licence to use the combination. That
justifies the result in this case, as it means that the prescribers or patients who
use the Pharmascience loading doses in combination with the Janssen
maintenance doses are direct infringers.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">But there is a problem. When does an implied licence arise? What about when
Janssen sells a maintenance dose that is used in combination with a Janssen
loading dose? Surely the users are not infringers. Under the first clause of Locke
JA’s statement, the sale of the maintenance dose does not grant an implied
licence to the use the combination, for the same reason as when the loading doses
are sold by Pharmascience. Perhaps an implied licence is granted under the
second clause, since it is certainly true in that case that “the parties’ intended use
of the component at the time of sale contemplated its use in the patented
combination.” The problem is that is also true when Janssen sells a maintenance
dose that is then used in combination with a Pharmascience loading dose. If the
second branch saves the user when the loading dose is sold by Janssen, it also
saves the user when the loading dose is sold by Pharmascience. The only way that
it is an infringement to use the Janssen maintenance doses in combination with
the Pharmascience loading doses, but not with the Janssen loading doses, is if the
sale by Janssen is accompanied by a <i>restricted</i> implied licence, which allows the
use of the Janssen product only with another Janssen product.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">The root of the problem is the notion that when a licence is implied, it is a licence
“without restriction [that] includes the right to use that article as the purchaser
pleases.” The licence that arises in <i>MacLennan</i>, <i>Angelcare</i> and in this case, is a
restricted licence, to use the article in combination with another article that is
also sold by the patentee. There is no way to reconcile these cases with the notion
that a sale implies an unrestricted licence to use the article, no matter how the
conditions of the sale itself are qualified. If the licence to use the product is
unrestricted it doesn’t matter whether we say it arises when the product is sold,
or only when the combination is sold, or what the intent of the parties is; the only
way to get an answer that is consistent with the cases such as <i>MacLennan</i> is if the
implied licence is restricted. Moreover, we can’t even say that the general rule is
that the sale in the context of a combination invention grants a restricted implied
licence to use the article in combination with other articles sold by the patentee,
because in <i>Slater Steel</i> the patentee only sold one component of the combination
(namely a power line reinforcing rod), and the other part of the combination (the
power line) was supplied by third parties. In <i>Slater Steel</i>, the sale did convey an
unrestricted implied licence. </span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">Thus, I would suggest that the basic rule that “the sale of a patented article
without restriction includes the right to use that article as the purchaser pleases,”
while well supported by the authorities cited by Locke JA, is not sound as a
general proposition. The sale of a patented article will often imply a licence to the
use the article on the particular facts, but this is not the same as saying that it
necessarily implies an unrestricted licence to use. </span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">The difficulty arises because the proposition that the sale implies a right to use is
based on logic that conflates ownership rights with patent rights. Consider the
following passage from the decision of Pratte JA in <i>Eli Lilly v Apotex</i> (1996), 66
CPR (3d) 329, 343 which was quoted with approval by the SCC in <i>Eli Lilly </i></span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/1641/index.do"><span style="color: blue;">[1998]
2 SCR 129</span></a><span style="color: black;"> [99]:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">A patentee has a monopoly. By virtue of his patent, he has, says
section 42 of the <i>Patent Act</i>, "the exclusive right, privilege and
liberty", during the term of the patent, "of making, constructing and
using the invention and selling it to others to be used". If a patentee
makes a patented article, he has, in addition to his monopoly, the
ownership of that article. And the ownership of a thing involves, as
everybody knows, "the right to possess and use the thing, the right
to its produce and accession, and the right to destroy, encumber or
alienate it" [quoting Jowitt's Dictionary of English Law]. If the
patentee sells the patented article that he made, he transfers the
ownership of that article to the purchaser. This means that,
henceforth, the patentee no longer has any right with respect to the
article which now belongs to the purchaser who, as the new owner,
has the exclusive right to possess, use, enjoy, destroy or alienate it.
It follows that, by selling the patented article that he made, the
patentee impliedly renounces, with respect to that article, to his
exclusive right under the patent of using and selling the invention.
After the sale, therefore, the purchaser may do what he likes with
the patented article without fear of infringing his vendor's patent.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">The logic is that ownership of the thing includes the right to use it, and therefore
the transfer of the thing transfers to the right to use it. But ownership rights in
the tangible product and patent rights relating to that product are distinct, as
Pratte JA himself recognizes, and as a consequence, transfer or ownership of
tangible product embodying the patent rights does not necessarily imply any
transfer of patents rights.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">This is illustrated by <i>Eli Lilly </i>itself. The SCC held that “it is clear that, in the
absence of express conditions to the contrary, a purchaser of a licensed article is
entitled to deal with the article as he sees fit, <i>so long as such dealings do not
infringe the rights conferred by the patent</i>” [101] (my emphasis). The SCC
accepted that “the rights of use and sale” are inherent in the unrestricted
purchase of a licensed article [98], but this does not necessarily extend to the
right of making. The purchaser had bought bulk product from a licensed vendor
and reformulated it into final-dosage form. The SCC held that this reformulation
did not constitute “making” [101], but it is clear that if it had, that would have
constituted infringement. On its face, <i>Eli Lilly</i> holds only that a licence to use and
sell are implied by an unrestricted sale, not a licence of all patent rights. Now, this
is not inconsistent with the rule stated by Locke JA, which was only that the right
to use is implied. The cases cited usually include the right to sell as well. But <i>Eli
Lilly</i> shows that transfer of ownership in the tangible property embodying a
patented invention is separate from the patent rights.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">If the transfer of ownership in the thing does not necessarily transfer the right to
make, as is clear from <i>Eli Lilly</i>, on what principle does it necessarily transfer the
right to use? One answer is that the right to use is inherent in the right of
ownership. This was the position taken by the JCPC in <i>National Phonograph v
Menck</i> (1911) </span><a href="https://academic.oup.com/rpc/article/28/11/229/1611672"><span style="color: blue;">28 RPC 229</span></a><span style="color: black;"> (JCPC) 245, in which Lord Shaw began with the
principle that the owner of “ordinary goods” is entitled to “use and dispose of
these as he thinks fit,” so that a transfer of the right of ownership transfers that
right to use and sell the goods. An implied patent licence to use and sell was seen
as a way of reconciling that principle with the patentee’s patent rights: <i>Menck</i>
245.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">But it is not strictly true that the owner of ordinary goods has the right to “use
and dispose of these as he thinks fit,” because many rights and obligations
distinct from the ownership right may constrain the owner’s right to use the
goods they own. For example, if I own a car, I do not have the right to drive over
the speed limit on the highway, and by the same token, if I sell the car to you, you
do not acquire the right to exceed the speed limit. Similarly, if I own a quantity of
an unpatented drug, I nonetheless do not have the right to use it for a patented
purpose, unless I have a licence from the patentee. If I sell that drug to you, I
clearly do not transfer the right to use it for the patented purpose, because I am
not the patentee.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">In response to this, it might be said that the prohibition on speeding is imposed
by the state, not by me. My sale to you does not imply that no one else will
interfere with your use of the car, but only that I will not interfere with your use
of the car. But if I park my car in my own driveway, my sale of the car to you does
not give you the right to park in my driveway, even if you might find it convenient
to do so. That is because my ownership rights in the car and my rights in my land
are separate, and a grant of one does not imply a grant of the other.</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">The general point is that the transfer of ownership rights in a tangible product
good does not generally imply a licence to use those goods free of any other rights
that the vendor might have that potentially restrict what the purchaser wants to
do with the purchased goods. And it is clear my sale of a tangible thing that I own
cannot transfer patent rights I do not own. But what if I do own the patent rights
as well as the ownership rights? Is there something special about patent rights
such that an unrestricted licence to use must always be implied in such a case?</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">Suppose P discovers a new drug, call it ‘tramifloxin,’ which P discovered is useful
in treating ulcers. P gets a patent on the drug per se and successfully markets it
for treating ulcers under the brand name ULCEX. P’s product patent on
tramifloxin ultimately expires and P exits the market entirely, leaving it to the
generics. But because P has expertise in tramifloxin, it continues to research new
uses, and discovers, surprisingly and unexpectedly, that tramifloxin is also useful
in treating psoriasis. P then get a second patent for the use of tramifloxin in
treating psoriasis. P then successfully markets and sells tramifloxin, under the
brand name PSOREX, for treating psoriasis. In that case, P’s sale of tramifloxin
would not grant anyone else a licence to use tramifloxin to treat it psoriasis. But
suppose P did not exit the market for ulcer treatment after the product patent
expired, but instead continued to sell ULCEX. Would P’s sale of ULCEX be
accompanied by an implied licence to use it to treat psoriasis? Would it matter if
P sold ULCEX through an authorized generic? </span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">What if P discovered and patented the psoriasis use before its patent on the
tramifloxin per se expired, and while it was still actively marketing ULCEX.
Would it matter if ULCEX was the bigger market? Would the sale of tramifloxin
under the ULCEX brand imply a licence to use it to treat psoriasis? It might be
said that the answer is yes, unless P gives notice that it is to be used only for
treating ulcers. But that is not desirable either for P or for society. P does not
want the use of ULCEX to be restricted to treating ulcers. It is in the interest of
both P and society for purchasers to develop new off-label purposes, as that will
expand P’s market and cure more diseases for the benefit of society. What P
wants is for ULCEX not to be used to treat psoriasis. In response to that, it might
be said that P should give notice on the ULCEX that it is not to be used to treat
psoriasis. But how could P have given such notice before P knew that tramifloxin
could be used for treating psoriasis? Does that mean that the stock of ULCEX that
was in circulation before P obtained the patent can now be used to treat
psoriasis? Further, if it was a third party, not P, that had obtained the psoriasis
use patent, the person purchasing ULCEX from P would not get an implied
licence to use it to treat psoriasis, regardless of whether P gave any kind of notice
on the ULCEX. Why should P be in a worse position than that third party?
Whether P holds the patent or a third party does makes no difference to the
purchaser, who in either case will be is ‘surprised’ (or not) to discover that
ULCEX cannot be used to treat psoriasis. Patent rights are strict liability, and the
mere fact that a purchaser might not know that it does not have unrestricted
rights to use has never been sufficient grounds to imply a licence. For example, if
P sold the ULCEX to a intermediary subject to an express restriction that it could
not be resold or used for the purpose of treating psoriasis, a purchaser from the
intermediary would not acquire a right to use it for the patented use: <i>Isler</i> (1906)
1 Ch 605, 611 (CA). Of if P had assigned the use patent to a third party before
selling the ULCEX, the purchaser would clearly not acquire a licence to use it to
treat psoriasis: <i>Betts v Willmott</i> (1871), LR 6 Ch App 239, 244. </span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">I am not arguing for any particular answer to these questions. My argument is
only that these are difficult questions and it is not obvious that a simple rule that
the sale of the product implies a licence to use the patent. Whether a licence
should be implied is a question that should be answered on the facts, and not on
the basis of a broad rule. These examples are somewhat artificial, but that is
because it is true that a sale of a product will often imply a right to use the
patented technology embodied in that product. </span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">On that note, it might be said that the true rule is that if P sells V a product that
can <i>only</i> be used in a way that would infringe P’s patent, then a licence to use
should be implied. Most of the leading cases relied on by Locke JA were of this
type — the patent at issue claimed a product, and the use of the product would
necessarily infringe, so when the patentee sells that product, it would necessarily
be accompanied by an implied licence to use the product. But this theory runs
right into <i>MacLennan</i>, as the patentee in that case sold the tooth holder which
could only be used in the patented combination. That is why Locke JA was forced
to restrict the rule to a case in which the entire product was sold, or the entire
combination was sold, or in which the patentee sold only one component but
intended it to be used in the patented combination. At this point, we do not have
much of a general rule left. What is the difference between stating a general rule
that is tailored to a set of very specific circumstances, and simply saying that a
licence will be implied when it is reasonable to do so on the facts?</span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">This brings me back to my original point. Patent rights and rights of ownership of
an embodiment of the invention are separate rights. The transfer of ownership
does not necessarily imply any transfer of the patent rights. It is clear from <i>Eli
Lilly</i> that the sale does not imply a licence to make. There is no difference in
principle in respect of a right to use. It may be that it is more common that a
licence to use will be implied from a sale on the facts, but that is not a matter of
principle. In the context of combinations, an implied licence to use may be
restricted, or unrestricted; that turns on the facts, and is not a matter principle. I
suggest that the general point that emerges from all this is simply that there is no
general principle that sale of a product implied a licence to use. Whether an
implied licence accompanies the sale is a matter for the specific facts. </span></p>
<p style="margin-right: 0.495833in;"><span style="color: black;">Locke JA was in a difficult position. The basic rule that “the sale of a patented
article without restriction includes the right to use that article as the purchaser
pleases,” is supported by ample authority. But that rule is inconsistent with
<i>MacLennan</i>, which was clearly correctly decided. Locke JA had to find some way
to restrict the scope of the general rule. The distinction he chose is intuitively
appealing, but I have argued that it is ultimately unsatisfactory. With that said, I
can’t think of a better approach, short of recognizing that the basic rule is itself
unsound as a general proposition.</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-73232969647774859882024-02-15T05:00:00.002-04:002024-02-15T16:40:05.180-04:00Nova v Dow: What is to be Done?<p><i>Nova Chemicals Corp v Dow Chemical Co</i> <a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/19554/index.do"><span style="color: blue;">2022 SCC 43</span></a><span style="color: black;"> Rowe J: Wagner CJ, Moldaver,
Karakatsanis, Brown, Martin, Kasirer and Jamal JJ concurring; Côté J dissenting affg
<i>Nova Chemicals Corporation v Dow Chemical Company</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/485375/index.do"><span style="color: blue;">2020 FCA 141</span></a><span style="color: black;"> Stratas JA:
Near, Woods JJA affg <i>Dow Chemical Co v Nova Chemicals Corp</i> </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/230610/index.do"><span style="color: blue;">2017 FC 350</span></a><span style="color: black;">, </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/233118/index.do"><span style="color: blue;">2017 FC
637</span></a><span style="color: black;"> Fothergill J</span></p><div id="WPMainDoc">
<p style="margin-left: 0.5in;"><a href="http://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2160705/summary.html"><span style="color: blue;">2,160,705</span></a><span style="color: black;"> / film-grade polymers / ELITE SURPASS</span></p>
<p><a href="http://www.sufficientdescription.com/2023/03/nova-v-dow-intuition.html"><span style="color: blue;">The Intuition</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/03/nova-v-dow-legal-background.html"><span style="color: blue;">The Legal Background</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-causation-as-matter-of-fact.html"><span style="color: blue;">Causation as a Matter of Fact</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-concession.html"><span style="color: blue;">The Concession</span></a><span style="color: black;">
/ </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-what-role-for-but-for.html"><span style="color: blue;">What Role for “But For” Causation in Identifying the NIO?</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-summary-of-summary.html"><span style="color: blue;">Summary of the
Summary</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-causation-concept-in-absence.html"><span style="color: blue;">Causation Concept in the Absence of an NIO</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-what-is-nio.html"><span style="color: blue;">What is the NIO? / </span></a><span style="color: black;"></span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-value-of-invention.html"><span style="color: blue;">The Value
of the Invention</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-rivett-on-facts.html"><span style="color: blue;">Rivett on the Facts</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/10/nova-v-dow-three-policy-arguments.html"><span style="color: blue;">Three Policy Arguments</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/11/nova-v-dow-source-of-chilling-effect.html"><span style="color: blue;">The Source of the
Chilling Effect</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/11/nova-v-dow-miscellaneous-policy-issues.html"><span style="color: blue;">Miscellaneous Policy Issues</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/12/nova-v-dow-doctrinal-implications.html"><span style="color: blue;">Doctrinal Implications</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2024/01/nova-v-dow-will-nova-v-dow-create.html"><span style="color: blue;">Will Nova v Dow
Create a Chilling Effect?</span></a><span style="color: black;"></span></p>
<p><span style="color: black;">This is the last in a series of posts summarizing my two-part article in the IPJ on <i>Nova v
Dow</i>: 35 IPJ 249 and 36 IPJ 81. The accounting remedy as it had developed since
<i>Schmeiser</i> </span><a href="http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2147/index.do"><span style="color: blue;">2004 SCC 34</span></a><span style="color: black;"> was a useful tool that could dissuade ‘catch-me-if-you-can’
tactics, in which the infringer intentionally avoids taking a licence, knowing that if
caught the only remedy will be damages equal to the royalties it would have agreed to if
it had taken a licence in the first place. That tool has now been broken beyond repair: as
summarized in previous posts, <i>Nova v Dow</i> is unprincipled and incoherent, and is likely
to have a chilling effect that will impede innovation. </span></p>
<p><span style="color: black;">What is to be done?</span></p>
<p><span style="color: black;">The best response would be to abolish the accounting remedy entirely in the patent
context. Any attempt to use it will almost certainly do more harm than good. An
accounting remedy is not an essential part of the patent system. It was abolished in US
law in 1946 and has not been missed. It is available in the UK, but is rarely used. The
main difficulty with this solution is that the formal abolition of an accounting would
require legislative action, which is unlikely, certainly in the short term.</span></p>
<p><span style="color: black;">An alternative response would be for the courts to restrict an accounting to cases in
which the infringer is trying to game the system by avoiding taking an <i>ex ante</i> licence.
An accounting under <i>Nova v Dow</i> is quasi-punitive in effect, in that it puts the infringer
in a worse position — potentially very dramatically worse — than it would have been in
had it never infringed. The risk of the chilling effect arises because innocent infringers
may avoid an entire field rather than risk exposure to such a remedy. The chilling effect
can therefore be avoided if the remedy is confined to cases in which the infringer
actually knew of the patent or was willfully blind as to its existence. And the best
justification for an accounting is to deter the catch-me-if-you-can problem, which only
arises if the infringer actually knew of the patent or was willfully blind as to its existence.
That implies that the chilling effect can be avoided by confining the accounting remedy
to that specific context. </span></p>
<p><span style="color: black;">This implies that an accounting should not be granted against infringers who did not
know of the patent and had no reasonable grounds for knowing of it. But it is not
enough to condition the remedy on the infringer’s knowledge of the patent. A party that
actually knew of the patent but chooses to infringe, knowing an action will be brought,
with the intention of launching a validity action in response, is not trying to game the
system. A party who challenges a patent which it reasonably believes is invalid is doing
an important public service by invalidating patents that otherwise result in unjustifiably
high prices and restrictions on improvements. We do not want to disincentivize socially
beneficial challenges of that type.</span></p>
<p><span style="color: black;">In order to ensure that the accounting remedy does not have a chilling effect on innocent
infringers or dissuade challenges to suspect patents, an accounting should not be
granted unless two criteria are satisfied: (1) the infringer actually knew of the patent or
was willfully blind to its existence, <i>and</i> (2) the infringer did not have a reasonable belief
that the patent was potentially invalid. This is essentially the US requirement for
awarding treble damages; the parallel makes sense, since an accounting under <i>Nova v
Dow</i> is essentially punitive, and may result in substantially more than treble damages.
The problem with this proposal is that we know from the US experience with treble
damages that such an inquiry is likely to be very unsatisfactory, Establishing subjective
belief in the validity of the patent is very difficult. An objective test may devolve into
the formality of getting an appropriate opinion letter, and a more rigorous subjective
test risks error and arbitrariness.</span></p>
<p><span style="color: black;">But we need not follow the US treble damages approach exactly. Rather than using those
criteria as a test, so that the patentee would be entitled to an accounting when those two
criteria are satisfied, we should use those criteria as a threshold, so that an accounting
may only be granted when those criteria are satisfied, but will not necessarily be granted
when those criteria are satisfied. That would leave the courts the discretion to award an
accounting only when it is abundantly clear on the particular facts that the infringer was
trying to game the system.</span></p>
<p><span style="color: black;">Now, this can already be done with punitive damages. Moreover, punitive damages
allows the court to tailor the punitive element of the award to the degree of fault, while
the punitive element under a <i>Nova v Dow</i> accounting is essentially random, as it
depends on whether there is a non-infringing option, and on the difference between the
award under ‘but for’ causation and the award under <i>Nova v Dow</i> causation. Because
<i>Nova v Dow</i> causation is unprincipled, that difference is arbitrary. That is why I am of
the view that it would be better to abolish the accounting remedy entirely.</span></p>
<p><span style="color: black;">As noted above, it would require legislative intervention to formally abolish the
accounting remedy. But this could be done de facto if the courts were to use their
discretion inherent in the award of an equitable remedy such as an accounting to restrict
an accounting to cases of egregious bad faith by the infringer. That, in my view, is the
best course available to the courts.</span></p>
<p><span style="color: black;">I’ll finish with these observations of Edelman J, in his book on </span><a href="https://www.bloomsbury.com/ca/gainbased-damages-9781847310477/"><span style="color: blue;"><i>Gain-Based Damages
</i></span></a><span style="color: black;">(2002) 85–86, writing academically before his appointment to the High Court of
Australia, who pointed out that there is an important difference between disgorgement
as a remedy for breach of fiduciary responsibilities and as a remedy for infringement of
property rights: </span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[T]he high degree of institutional protection afforded to fiduciary
relationships can be justified as necessary to place the fiduciary on
constant alert even to the possibility of innocent breach. Such vigil is
necessary in relationships characterised by vulnerability and susceptibility
to abuse. In comparison, the possibility of an innocent commission of a
property wrong is not something against which a vigil can be maintained.
The existence of property rights is not as obvious to a defendant as the
existence of a relationship of trust and confidence or the vulnerability of
the claimant. An innocent recipient of property, no matter how alert, often
has no means to determine whether rights are held in the property by
some unseen future claimant.</span></p>
<p><span style="color: black;">Consequently, Edelman argued that there is no justification for disgorgement damages
for innocent breach of property rights. He noted also that in fact disgorgement is
generally not available for innocent breach of property rights. Edelman’s comment
regarding the difficulty of determining whether a property right has been infringed
applies <i>a fortiori</i> to patent rights. Accordingly, with respect to patent rights in
particular, Edelman wrote that “disgorgement damages should not be awarded for the
infringement of a patent unless the infringement is shown to be wilful or cynical.”</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-58854197871203469692024-02-05T07:03:00.002-04:002024-02-05T13:29:03.886-04:00What Is the Threshold for Influence in Inducement?<p style="margin-bottom: 0.104167in;"></p>
<p style="margin-bottom: 0.104167in;"><i>Apotex Inc v Janssen Inc</i> <a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/521330/index.do"><span style="color: blue;">2024 FCA 9</span></a><span style="color: black;"> Locke JA: de Montigny CJ, Goyette JA affg
<i>Janssen Inc v Apotex Inc</i> </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/520422/index.do"><span style="color: blue;">2022 FC 107</span></a><span style="color: black;"> Manson J</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2655335/summary.html"><span style="color: blue;">2,655,335</span></a><span style="color: black;"> / paliperidone palmitate / INVEGA SUSTENNA / NOC</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This decision addresses the second prong of the <i>Corlac</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/37241/index.do"><span style="color: blue;">2011 FCA 228</span></a><span style="color: black;"> [162] test for
inducement in the pharma context. In some ways it is perfectly straightforward. Manson
J found as a fact that Apotex’s product monograph (PM) was the ‘but for’ cause of direct
infringement and the FCA affirmed on that basis. Locke JA’s decision nonetheless raises
two notable issues. First, there seems to be an unresolved tension between this decision
and <i>Teva v Janssen</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/521146/index.do"><span style="color: blue;">2023 FCA 68</span></a><span style="color: black;"> as to the standard for influence on the second prong
of the <i>Corlac</i> test; while this decision endorses a high threshold of ‘but for’ causation,
<i>Teva v Janssen</i> apparently endorses a lower threshold. Second, while Locke JA explicitly
endorsed a test of ‘but for’ causation, some of his comments imply a different approach.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Manson J’s decision was heavily redacted and I did not fully appreciate the issues when I
wrote </span><a href="http://www.sufficientdescription.com/2022/03/burden-in-summary-trial-clarified.ht"><span style="color: blue;">my post on it</span></a><span style="color: black;">. The FCA decision has not been redacted and the key issues are
much easier to understand. With that said, some aspects of the FCA discussion remain
obscure to the extent that they turn on redacted discussion of the facts at trial. In my
earlier post I had noted that Manson J’s decision in this case was essentially a
companion case to <i>Janssen v Pharmascience </i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/519793/index.do"><i><span style="color: blue;"></span></i><span style="color: blue;">2022 FC 62</span></a><span style="color: black;">, which involved the same
patent and the same type of generic product. However, the issues raised on appeal were
quite different, so I’ll deal with the <i>Pharmascience </i>decision in a separate post.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Janssen’s 335 Patent relates to a dosing regimen for long-acting injectable paliperidone
palmitate formulations for the treatment of schizophrenia and related disorders. It
claims a dosage regimen comprising two loading doses of 150 mg-eq and 100 mg-eq, and
subsequent monthly maintenance doses of 75 mg-eq [2]. In this NOC proceeding,
Apotex brought a motion for summary trial on the basis that it would not infringe
because it would not provide the 75 mg-eq dose, which is an essential element of the
claimed invention [3]. That is, Apotex intended to market the loading doses but not the
maintenance doses, which would be supplied by Janssen: see <i>Pharmascience</i> [8]. This
looks like a strategy to get part of the market while trying to avoid infringing. At first
instance, Manson J held in favour of Janssen, finding that Apotex would induce
infringement of the 335 Patent with its generic version of INVEGA SUSTENNA [3].</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The direct infringers would be the prescriber (eg a physician or a nurse practitioner) or
patient [24] and Janssen therefore relied on inducement. Infringement by inducement
is governed by the three part <i>Corlac</i> test, which Manson J correctly summarized as
follows [4]:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">There is a three “prong” test for inducement: (1) direct infringement by a
third party; (2) the inducer influenced the third party to the point that the
infringing act would not have occurred without the influence; and (3) the
defendant knew that its influence would bring about the infringing act.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">All three prongs were disputed at trial, with Janssen prevailing on all three [5]. On
appeal, Apotex only took issue with Manson J’s decision on the second prong. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The second prong of the <i>Corlac</i>
test is normally satisfied if the defendant supplies a non-infringing
product accompanied by instructions to use that product in an infringing
manner. So, in a typically skinny label case in the pharma context, the
drug itself is
unpatented but a use is patented. Direct infringement and knowledge are
normally
conceded, and the case will turn on the second prong, and in particular
whether the
generic has managed to scrub its product monograph (PM) clean of any
reference to the
infringing use. This case is different, as Apotex’s PM “would
essentially be a copy of that
for INVEGA SUSTENNA” [14]. I take it from all this that Apotex did
intend to supply its
non-infringing product — the loading doses — accompanied by instructions
to use it in
an infringing manner, which is to say as part of the patented regimen.
The FCA decision
isn’t more explicit than the phrase I have just quoted, and the FC
decision isn’t clear on
this because of the redactions, but on appeal in the <i>Pharmascience</i> case, it was no longer
disputed that Pharmascience’s PM contained instructions concerning the use of the 75
mg-eq. dose (<i>Pharmascience</i> [11]) and while that is of course a difference case, my
understanding is that the facts were essentially the same. This post therefore proceeds
on that assumption.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Given that defendants are regularly found to be inducing infringement by supply of an
unpatented product accompanied by instructions to use it in an infringing manner, and
Apotex did just that, how did Apotex try to avoid liability? </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Apotex’s main argument was to the effect that no one will read Apotex’s PM and
therefore no one will be induced by it. This argument has been made before, and always
failed: see generally my paper “</span><a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3378538"><span style="color: blue;">Is 'But For' Causation Necessary to Establish
Inducement?</span></a><span style="color: black;">” But the point turns on the evidence, and it is at least plausible — no one is
arguing that physicians always consult the generic PM and prescribe strictly according
to it—so it is always worthwhile for a generic to try the argument again, to see if it can
get a better result on the facts.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The legal aspect of the argument turns on the threshold for causation at the second
prong. <i>Corlac</i> [162] itself put the test this way: “the completion of the acts of
infringement must be influenced by the acts of the alleged inducer to the point that,
without the influence, direct infringement would not take place.” This implies a test of
“but for” causation. While there is certainly considerable caselaw that articulates the test
this way, I have argued that other caselaw supports a less stringent test, along the lines
of “encouragement to infringe,” and that there is very little caselaw in which the result
actually turns on the precise test for causation at the second prong: see “</span><a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3378538"><span style="color: blue;">Is 'But For'
Causation Necessary to Establish Inducement?</span></a><span style="color: black;">” </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The threshold is important because if it is simply “encouragement to infringe,” then any
party who sells a product along with instructions to use it in an infringing manner will
be liable for inducement (if the other prongs are satisfied). But if the threshold is “but
for” causation, then it matters whether the direct infringer actually pays any attention to
the instructions. If no one actually reads the instructions and therefore no one changes
their behaviour as a result of the instructions, then any direct infringement would have
happened in any event and it cannot be said that “without the influence, the direct
infringement would not take place.”</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">So, consider a hypothetical case where the patent relates to the use of ammonia, an
unpatented bulk commodity, for a novel purpose, namely to encourage growth of
subterranean bacteria to aid in fracking. The patentee, P, sells ammonia for that
purpose. In Scenario 1, the direct infringer, DI, goes to P to buy ammonia for fracking,
and discovers it is priced at $2000/t, while the market price for bulk ammonia is
$400/t. DI politely walks out of P’s establishment and instead buys ammonia from a
different vendor, V, who sells bulk ammonia to clients who mostly use it for fertilizer
production. V does not have a licence from P to sell ammonia for fracking. DI
nonetheless uses the ammonia purchased from V for fracking. DI is therefore a direct
infringer. V did not influence the direct infringer at all. V had no idea what DI planned
to do with the ammonia; indeed, V had no idea that ammonia could be used for growing
subterranean bacteria and would have mocked the idea. It is clear law that V is not an
indirect infringer, even though V supplied the ammonia used by DI to infringe.
Doctrinally, it is the second prong—the influence requirement—that relieves V from
liability in this example, because V did not induce influence DI’s plan. This would be
true even if DI had told V what he was going to use the ammonia for, and V had replied
“Sure, buddy, whatever. It’s yours once I sell it to you.” That is why the influence prong
is separate from the knowledge prong.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Now, in Scenario 2, suppose that DI did not initially know that ammonia could be used
for fracking, but V did. DI goes in to buy ammonia for another purpose, and V says “Do
you know ammonia can also be used for fracking.” DI is curious and V hands DI an
instruction sheet on how to use ammonia for the infringing purpose. DI says “That
sounds great! I can make a bundle” — and buys some ammonia and uses it to infringe.
In that case, V is clearly inducing infringement, even on the high “but for” threshold,
since DI would not have infringed but for V’s influence. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Finally, in Scenario 3, suppose that both DI and V knew that ammonia could be used for
fracking. DI goes in to buy ammonia for that purpose. At the time of sale, V hands DI an
instruction sheet entitled “Three great things to do with ammonia.” The first thing on
the list is fracking, with detailed instructions. DI takes the sheet, glances at the title, and
thinks “I don’t need tips — I know perfectly well what I’m going to do with this
ammonia.” DI scrunches the sheet into a ball and throws it away, without reading
anything past the title. In that case, the instructions do not actually influence DI. The
test from <i>Corlac </i>is “without the influence, direct infringement would not take place.” In
this scenario, direct infringement would take place, even without the influence, and so,
on its face, the second prong of the <i>Corlac</i> test is not satisfied.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Apotex’s basic argument, as I understand it, is that this is a Scenario 3 situation. Yes, it
supplied instructions to infringe, in the form of its PM, but the direct infringers never
paid attention. They got their information from Janssen’s PM, or from the scientific
literature, but not from Apotex’s PM.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This argument rests on two pillars. The first pillar is legal. The threshold for influence
has to be high; on an encouragement standard, it is enough that Apotex sold the product
with instructions to use it in an infringement manner and it does not matter if no one
paid attention to Apotex’s PM. The second pillar is factual. It has to be established on
the evidence that the users did not pay attention to Apotex’s PM. If at least one person
was (or would be, in an NOC action) actually influenced to infringe by the PM, then it
does not matter whether the threshold is high or low. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Turning to the first pillar, what is the threshold for influence? In this case, Manson J
clearly endorsed a strict “but for” causation:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[127] The “but for” influence required in the second prong of the <i>Corlac</i>
test sets a high bar – higher than “encouragement to infringe,” a “subtle
reference” to the infringing use, or “attempting to induce others to
infringe.”</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Locke JA affirmed this high threshold:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[13] Apotex urges this Court to treat the threshold as a “but for” test, and it
cites jurisprudence that calls this a causation test. I have no objection to
Apotex’s characterization of the test, but I do not find it to be more helpful
that the “would not have occurred without” and “sine qua non”
characterizations provided in the jurisprudence of this Court. In my view,
these are merely different ways of describing the same threshold.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This clearly affirms a high “but for” threshold, pointing out some equivalent ways of
stating the same test.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">While this statement is clear, there is a problem. In <i>Teva v Janssen</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/521146/index.do"><span style="color: blue;">2023 FCA 68</span></a><span style="color: black;"> revg
Manson J’s decision in </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/470492/index.do"><span style="color: blue;">2020 FC 593</span></a><span style="color: black;">, the FCA apparently endorsed a lower threshold,
calling the “but for” threshold which Manson J had endorsed [FC 264] “unduly onerous”
[FCA 82]: see </span><a href="http://www.sufficientdescription.com/2023/04/second-prong-of-corlac-does-not-requ"><span style="color: blue;">here</span></a><span style="color: black;"> for my discussion. As just noted, in this case Locke JA clearly
endorsed a “but for” causation threshold for influence, so it looks to me like there is a
tension between these cases. Perhaps I misunderstood <i>Teva v Janssen</i> and read too
much into it. I am not going to try to sort this out in this post, except to say that it is not
clear to me how reconcile the decisions. Presumably the FCA will clarify matters in due
course. I note that the panels were different — Stratas, Gleason, Woods JJA (for the
Court) in <i>Teva v Janssen</i>, with Locke JA, de Montigny CJ and Goyette JA concurring, in
this case. Locke JA was clearly aware of the <i>Teva v Janssen</i> decision, as he referred to it,
albeit not directly on this point [8].</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">In any event, it is clear that the high “but for” threshold applies for the purposes of this
case. One pillar of Apotex’s argument is in place. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">What about the second pillar? Apotex argued that the evidence was that the direct
infringers did not pay any attention to the PM. This is how Manson J described it:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[132] The crux of Apotex’s argument related to this second prong is that
the experts all agree that the ultimate dosing decision is based on
physician skill and judgment, not the language in the product monograph.
Further, physicians have been steeped in the claimed dosing regimen
throughout their training, clinical experience, and use of the INVEGA
SUSTENNA® product. As such, the introduction of the product
monograph for the APO Product will not influence or change their
prescribing practices and will not amount to the level of influence
necessary to meet the second prong of the Corlac test.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This argument was rejected by Manson J, who said the following:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[147] Notwithstanding the exercise of skill and judgment by prescribing
physicians in selecting the dosing regimen for patients, the evidence before
the Court in this case establishes that acts of infringement will be
influenced by the acts of the alleged inducer, Apotex, to the point that,
without the influence, direct infringement will not take place. Apotex’s
product monograph will influence prescribers and patients to implement
the claimed dosage regimen, thereby directly infringing the 335 Patent.</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[148] I am satisfied, on the evidence before the Court that Janssen has
proven, on a balance of probabilities, that at least some prescribers of the
impugned APO Product will be sufficiently influenced by the Apotex
product monograph to induce infringement by those prescribing
physicians.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The details of the evidence are not clear due to the redactions, but this conclusion
certainly looks like a finding of fact that some direct infringers would be influenced,
even on a ‘but for’ test. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Apotex tried to challenge this finding, arguing that “none of the experts went so far in
their testimony as to state explicitly that any direct infringement using Apotex’s product
would not occur without Apotex’s influence” [26]. Locke JA rejected this on the
straightforward basis that this is a factual finding that Manson J was entitled to make:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[25] As indicated at paragraph 11 above, the Federal Court concluded at
paragraphs 147 and 148 of its reasons that such infringement would be
influenced by Apotex to the point that, without the influence, direct
infringement would not take place. It is in this sense that the Federal Court
was entitled to conclude that the second prong of the test for inducing
patent infringement was met.</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[27] In my view, this is a factually suffused issue on which Apotex would
have to establish that the Federal Court made a palpable and overriding
error. The Federal Court did not err in law. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">That all seems to say that in fact, on the evidence, the direct infringers would be
influenced by Apotex to the extent that the influence prong is satisfied even with a legal
threshold of “but for” causation. Thus, Apotex succeeded on the legal pillar of its
argument, but failed on the factual pillar. That is what I had understood to be the basis
for Manson J’s decision when I wrote </span><a href="http://www.sufficientdescription.com/2022/03/burden-in-summary-trial-clarified.ht"><span style="color: blue;">my post</span></a><span style="color: black;"> on it. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">That much is very straightforward, and I would not normally have devoted so much
space to it. But it is necessary context to some further, more puzzling remarks by Locke
JA. Apotex’s central argument on appeal was as follows:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[14] Apotex relies on the fact that its product monograph would essentially
be a copy of that for INVEGA SUSTENNA, and the assertion that
prescribing practices of physicians would not change if Apotex were
allowed to market its generic version of INVEGA SUSTENNA. In light of
the foregoing, Apotex argues that any influence that its product
monograph could have on any ultimate act of direct infringement could
not rise to the level required in <i>Corlac</i>.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">As we’ve just seen, Locke JA rejected this argument on the facts. Here is the puzzle — he
also rejected it on the law:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[23] The main weakness of this argument is that it depends on there being
a requirement that prescribing practices of physicians be altered because
of Apotex’s activities. In fact, this is not necessary. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">I’m not sure how to reconcile this statement with the “but for” threshold which Locke JA
endorsed. The test from <i>Corlac </i>is “without the influence, direct infringement would not
take place.” This clearly states that the influence must cause a change in outcome — with
the influence, there is infringement, without it, there is not. If nothing changes as a
result of the influence, how can it be said that the influence caused anything?</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Locke JA continued (original emphasis):</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[23] What is required is that <span style="text-decoration: underline;">the ultimate act of direct infringement occur</span>
because of Apotex’s activities. . . .</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[25]
It follows that, even if the practices of prescribing physicians were
to
remain unchanged following the introduction to the market of Apotex’s
generic version of INVEGA SUSTENNA, the fact would remain that
activities by patients (and by prescribers) that had previously been
non-infringing (because the drug was sourced from Janssen) would be
infringing once the drug was sourced from Apotex, an unlicensed
supplier.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Here, Locke JA seems to be saying that indirect infringement is established because the
direct infringers would use Apotex’s product instead of Janssen’s. That is undoubtedly
true. But that is not enough to establish infringement by inducement. It is also true in
Scenario 1. DI’s activity, that would have been non-infringing if the ammonia had been
sourced from P, is infringing because it was sourced from V instead. But that in itself
does not make V liable for inducement. It is uncontroversial and long-established law
that a party who does no more than supply a non-infringing product that is used to
infringe is not thereby an infringer, even if it causes the direct infringer to change
suppliers; that is why the second prong of the <i>Corlac</i> test requires influence by the
indirect party. This is entirely apart from the question of the specific threshold for
influence.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">What was motivating these remarks? Why did Locke JA not simply affirm Manson J on
the factual finding of “but for” causation, and leave it at that? I would speculate that
Apotex’s argument on the facts was quite strong, notwithstanding Manson J’s finding.
(As noted, the evidence supporting his finding is unclear due to the redactions.) My
impression from the evidence in the pharma inducement cases generally is that the
substantial majority of physicians and pharmacists really do not rely on the generic PM
and the courts are struggling with the evidence to make the result come out the way it
‘should’ by finding that at least some do rely on the generic PM. Perhaps Locke JA
wanted to provide an alternative basis for the decision that would not turn on the factual
finding alone. Perhaps this was to set the stage for the day that a trial judge finally
decides on the facts before them that physicians do not read the generic PM. If so, I
sympathize with Locke JA’s dilemma, but the statements in these two paragraphs seem
to go beyond endorsing a lower threshold and seem tantamount to removing the
influence requirement altogether.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">With that said, I do not disagree with the result. In my view, there are two sound and
principled bases by which the same result could be arrived at, even if it had been
established on the facts that the direct infringers did not pay any attention to Apotex’s
PM. One would be contributory infringement, a US doctrine under which the mere
supply of good especially adapted to infringe, constitutes indirect infringement, without
any need for inducement. For reasons I explain in my article “Contributory Infringement
in Canadian Law” (2020) 35 CIPR 10, I am of the view that contributory infringement is
a sound doctrine which is consistent with the bulk of Canadian caselaw. However, it is
not recognized in Canadian law: see <i>MacLennan</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/35858/index.do"><span style="color: blue;">2008 FCA 35</span></a><span style="color: black;"> [33], [38], [40]. And is
most certainly not the basis for Locke JA’s decision in this case. The other basis would
be under a lower “encouragement” threshold for influence. But that was not used by
Locke JA in this case.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">I’ll end this post on a different point entirely. As noted in </span><a href="http://www.sufficientdescription.com/2022/03/burden-in-summary-trial-clarified.ht"><span style="color: blue;">my post on Manson J’s trial
decision</span></a><span style="color: black;">, this was essentially a companion case with <i>Janssen v Pharmascience </i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/519793/index.do"><i><span style="color: blue;"></span></i><span style="color: blue;">2022 FC
62</span></a><span style="color: black;">, also before Manson J, in which Pharmascience sought to launch the same kind of
product as Apotex, ie the loading doses but not the maintenance doses. There was
considerable overlap between Manson J’s two decisions — indeed, too much. Parts of
para 138 of his <i>Apotex</i> decision were “lifted” from his <i>Pharmascience</i> decision, and
consequently contained some factual inaccuracies; for example, para 138 referred to
four experts, when there were in fact five in the <i>Apotex</i> case [17]–[18]. While Apotex
tried to make something of this on appeal, Locke JA concluded that this was a “slip of
the pen” error which did not demonstrate that Manson J had failed to fully consider the
issues [20].</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-64381971658350005372024-01-19T05:00:00.002-04:002024-01-21T08:55:37.713-04:00Nova v Dow: Will Nova v Dow Create a Chilling Effect?<p></p><div id="WPMainDoc">
<p><i>Nova v Dow</i>: Will Nova v Dow Create a Chilling Effect?</p>
<p><i>Nova Chemicals Corp v Dow Chemical Co</i> <a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/19554/index.do"><span style="color: blue;">2022 SCC 43</span></a><span style="color: black;"> Rowe J: Wagner CJ, Moldaver,
Karakatsanis, Brown, Martin, Kasirer and Jamal JJ concurring; Côté J dissenting affg
<i>Nova Chemicals Corporation v Dow Chemical Company</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/485375/index.do"><span style="color: blue;">2020 FCA 141</span></a><span style="color: black;"> Stratas JA:
Near, Woods JJA affg <i>Dow Chemical Co v Nova Chemicals Corp</i> </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/230610/index.do"><span style="color: blue;">2017 FC 350</span></a><span style="color: black;">, </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/233118/index.do"><span style="color: blue;">2017 FC
637</span></a><span style="color: black;"> Fothergill J</span></p>
<p style="margin-left: 0.5in;"><a href="http://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2160705/summary.html"><span style="color: blue;">2,160,705</span></a><span style="color: black;"> / film-grade polymers / ELITE SURPASS</span></p>
<p><a href="http://www.sufficientdescription.com/2023/03/nova-v-dow-intuition.html"><span style="color: blue;">The Intuition</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/03/nova-v-dow-legal-background.html"><span style="color: blue;">The Legal Background</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-causation-as-matter-of-fact.html"><span style="color: blue;">Causation as a Matter of Fact</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-concession.html"><span style="color: blue;">The Concession</span></a><span style="color: black;">
/ </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-what-role-for-but-for.html"><span style="color: blue;">What Role for “But For” Causation in Identifying the NIO?</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-summary-of-summary.html"><span style="color: blue;">Summary of the
Summary</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-causation-concept-in-absence.html"><span style="color: blue;">Causation Concept in the Absence of an NIO</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-what-is-nio.html"><span style="color: blue;">What is the NIO? / </span></a><span style="color: black;"></span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-value-of-invention.html"><span style="color: blue;">The Value
of the Invention</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-rivett-on-facts.html"><span style="color: blue;">Rivett on the Facts</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/10/nova-v-dow-three-policy-arguments.html"><span style="color: blue;">Three Policy Arguments</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/11/nova-v-dow-source-of-chilling-effect.html"><span style="color: blue;">The Source of the
Chilling Effect</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/11/nova-v-dow-miscellaneous-policy-issues.html"><span style="color: blue;">Miscellaneous Policy Issues</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/12/nova-v-dow-doctrinal-implications.html"><span style="color: blue;">Doctrinal Implications</span></a><span style="color: black;"></span></p>
<p><span style="color: black;">In previous posts summarizing my forthcoming IPJ article, I have argued that an
accounting based on “but for” causation avoids the risk of a chilling effect in which
parties avoid engaging in legitimate competition and investment in innovative sectors;
conversely, an accounting which results in a greater disgorgement on average than a
“but for” accounting will have a chilling effect on innovation and competition. Whether <i>Nova v. Dow</i> will have a chilling effect on innovation therefore turns on
whether it will on average result in a greater disgorgement than a “but for” accounting.
The chilling effect is always prospective—the problem is that the prospective infringer
does not take a socially desirable course of action out of fear of litigation—so the
question is which way this balance tips in expectation, which is to say on average.</span></p>
<p><span style="color: black;">There are some cases, such as <i>Schmeiser</i>, where the appropriate NIO corresponds to
what the infringer would in fact have done, in which case the result will be the same
under either a “but for” accounting or the <i>Nova v Dow</i> approach. There are other cases,
such as <i>Nova v Dow</i> itself, in which the infringer would in fact have made substantial
profits but for the infringement, but there is no appropriate NIO, so that a <i>Nova v Dow</i>
accounting will result in a greater disgorgement than a “but for” accounting. Finally, in
cases in which an NIO exists that was not in fact available to the infringer and which
would have been more profitable than the non-infringing option actually available to the
infringer, a <i>Nova v Dow</i> accounting will result in a smaller disgorgement than a “but
for” accounting. Whether the <i>Nova v Dow</i> approach will result in a chilling effect turns
on whether, on average, the excessive disgorgement in the second category of cases more
than outweighs the reduced disgorgement in the third category of cases. </span></p>
<p><span style="color: black;">In Part II of my forthcoming IPJ article, I argue that the expected accounting under
<i>Nova v. Dow</i> will be excessive for two reasons. First, cases in which the infringer will be
able to establish a reduced disgorgement are likely to be rare. A reduced disgorgement
arises when NIO was not actually available to the infringer and the NIO was more
profitable than the alternative that was actually available to the infringer. This will be
rare because the market will usually supply the infringer with the most profitable
alternative. If the NIO is more profitable, it will normally be available; and if it is less
profitable than the alternative that the infringer would in fact have used, then using the
NIO will result in excessive disgorgement. Further, the burden is on the infringer to
show the profits it would have made with the NIO. It will be difficult for the infringer to
establish profits that it would have made with an alternative that was not actually
available to it: how can the infringer establish the cost of an alternative that it could not
have purchased at any price? <i>Rivett</i> </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/56520/index.do"><span style="color: blue;">2009 FC 317</span></a><span style="color: black;"> is the exception which proves the rule
— the profitability of the non-available alternative was, unusually, established by
evidence introduced by the patentee. Second, there is a selection bias: the patentee is
entitled to damages as of right and so is less likely to seek an accounting when it expects
the accounting to result in a reduced disgorgement. </span></p>
<p><span style="color: black;">The article goes through the implications of these points in detail, discussing issues such
as how likely it is that there will be an NIO that existed but which was not in fact
available to the infringer, which the infringer will nonetheless be able to use to establish
its profits in the hypothetical world. I won’t review those details here, as the argument is
a bit intricate, going through a variety of scenarios, and I don’t think that I can
meaningfully compress it. Suffice it to say that I am very confident that the Nova v Dow
approach will result in a chilling effect. I will leave it to the reader to review my
arguments in detail when the article is published, and see if you agree.</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-55080178704925019492024-01-17T05:00:00.004-04:002024-01-20T15:30:19.405-04:00An Action under the PM(NOC) Regs Has the Same Effect as an Action under the Act<p></p><div id="WPMainDoc">
<p><i>Janssen Inc v Apotex Inc</i> <a href="https://decisions.fca-caf.ca/fca-caf/decisions/en/item/521319/index.do"><span style="color: blue;">2023 FCA 253</span></a><span style="color: black;"> Locke JA: de Montigny CJ, Goyette JA revg
</span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/523799/index.do"><span style="color: blue;">2023 FC 912</span></a><span style="color: black;"> Manson J</span></p>
<p style="margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2655335/summary.html"><span style="color: blue;">2,655,335</span></a><span style="color: black;"> / paliperidone regimens / INVEGA SUSTENNA / NOC</span></p>
<p><span style="color: black;">This decision addresses two issues of interest: abuse of process under the PM(NOC)
Regs and the kinds of activities that may properly be enjoined. This post deals with each
in turn.</span></p>
<p><span style="color: black;">Apotex sought to launch a generic version of Janssen’s INVEGA SUSTENNA. To that
end, Apotex served an NOA alleging non-infringement. Janssen responded by bringing
an action pursuant to </span><a href="https://laws.justice.gc.ca/eng/regulations/SOR-93-133/page-2.html#h-950139"><span style="color: blue;">s 6</span></a><span style="color: black;"> of the PM(NOC) Regulations. Apotex lost: </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/520422/index.do"><span style="color: blue;">2022 FC 107</span></a><span style="color: black;">
discussed </span><a href="http://www.sufficientdescription.com/2022/03/burden-in-summary-trial-clarified.html"><span style="color: blue;">here</span></a><span style="color: black;">. (An appeal has been heard and the FCA decision is pending [4]). After
losing that action, Apotex served a second NOA in respect of the same product, this time
alleging invalidity instead of non-infringement. Janssen again brought an action
pursuant to s 6, which Apotex defended on the same invalidity basis as in its NOA.
Janssen moved for summary judgment on the basis that this is an abuse of process by
relitigation. Manson J </span><a href="http://www.sufficientdescription.com/2023/07/are-successive-noas-permitted-in.html"><span style="color: blue;">held it was not</span></a><span style="color: black;">, and dismissed Janssen’s motion for summary
judgment. The FCA has now reversed.</span></p>
<p><span style="color: black;">The overarching point emerging from Locke JA’s decision is that “an action under
section 6 of the Regulations is to proceed and have an effect much like a normal patent
infringement action” [46]. In the absence of special circumstances, a defendant in a
normal patent infringement action that defended itself on the basis of non-infringement,
without challenging the validity of the patent, would not be allowed to commence a
separate impeachment action concerning the same patent [47]. The same reasoning
applies to actions under the Regulations [47]. That follows from the general principles of
“judicial economy, consistency, finality and the integrity of the administration of justice”
which underpin the law related to abuse of process by relitigation: [10]–[11], citing
<i>C.U.P.E.</i> </span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2097/index.do"><span style="color: blue;">2003 SCC 63</span></a><span style="color: black;"> [37]. While Manson J’s decision relied on a rather technical
reading of the Regulations (see </span><a href="http://www.sufficientdescription.com/2023/07/are-successive-noas-permitted-in.html"><span style="color: blue;">here</span></a><span style="color: black;">) to distinguish actions under the Regulations from
actions under the Act, this distinction is not sound. There is no tension between general
principles of abuse of process and the principles applicable under the Regulations. On
the contrary, the RIAS to the 2017 amendments “makes it clear that a principal aim was
to avoid multiple proceedings concerning patents on medicines, regardless of whether
those proceedings are within or outside the Regulations” [44]; moreover, “the aim of
avoiding multiple proceedings was front and centre” [45]. </span></p>
<p><span style="color: black;">Under the old Regs, the second person was held strictly to its NOA, and this might have
provided a reason for distinguishing NOC proceedings from a regular action. But Locke
JA noted that under the new Regs, it is now established that it is permissible to amend
the pleadings in an action under s 6 so as to introduce issues not raised in the underlying
NOA: [46], citing <i>Sunovion v Taro </i></span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/498444/index.do"><span style="color: blue;">2021 FCA 113</span></a><span style="color: black;"> (see </span><a href="http://www.sufficientdescription.com/2021/06/second-person-not-strictly-bound-by-noa.html"><span style="color: blue;">here</span></a><span style="color: black;">).</span></p>
<p><span style="color: black;">Locke JA pointed out that the other arguments made by Apotex as to why there are good
reasons to permit sequential NOAs can equally be made in the context of normal patent
infringement actions, and are no more persausive in the NOA context [48].
Consequently:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[53] In my view, it was intended that the second person should raise all of
its allegations in its NOA, and it should not to keep some in reserve in the
event that it is not initially successful. Though this might lead to more
complicated proceedings, it would meet the explicit goal of addressing all
issues in a single action.</span></p>
<p><span style="color: black;">Locke JA therefore held that Manson J had erred in law by not recognizing that the
same principle applies in the context of an action under the Regs as in an action under the
Act [43]. Neither party asked that the matter be remitted, and Locke JA consequently
considered Janssen’s motion anew [59] and declared that Apotex’s invalidity defence to
be an abuse of process [60]. If Apotex wished to raise an invalidity argument, it should
have done so in the first action [60]. Janssen was accordingly granted the relief it sought
[71].</span></p>
<p><span style="color: black;">An entirely separate point of interest was raised regarding the remedy. Janssen
requested an injunction prohibiting Apotex from making, selling or using the
invention; these are the patentee’s express rights under </span><a href="https://laws-lois.justice.gc.ca/eng/acts/P-4/page-7.html#h-412836"><span style="color: blue;">s 42</span></a><span style="color: black;">. This much was
uncontroversial. But the injunction sought by Janssen also included prohibitions on “(i)
offering for sale, (ii) marketing, (iii) having marketed, (iv) importing, (v) exporting, (vi)
distributing, or (vii) having distributed” [64]. The exclusive right to engage in these
activities is not explicitly granted by the Act. Apotex objected to the inclusion of these
acts in the injunction on the basis that they fall outside the scope of the patentee’s rights. </span></p>
<p><span style="color: black;">Locke JA dismissed Apotex’ objection. He noted that injunctions in such terms had been
granted in other cases [65]–[66] — though I don’t think much weight can be put on that
unless the terms were contested. More significantly, he noted that “[w]hile section 42 of
the Patent Act refers specifically to the patentee having ‘the exclusive right, privilege and
liberty of making, constructing and using the invention and selling it to others to be
used’, it is well understood that this does not constitute a definition of infringement”
[67]. The SCC in <i>Monsanto v Schmeiser</i> </span><a href="http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2147/index.do"><span style="color: blue;">2004 SCC 34</span></a><span style="color: black;"> [34] defined infringement as
being “any act that interferes with the full enjoyment of the monopoly granted to the
patentee.” As Locke JA noted [68], the SCC in <i>Schmeiser</i> [58] also held that “[i]f there is
a commercial benefit to be derived from the invention, it belongs to the patent holder.”
Consequently, Locke JA held that</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[69] I am satisfied that the wording proposed by Janssen for the injunctive
relief is appropriate. All of the activities that Apotex objects to including in
the injunction are commercial in nature, and would presumably be done
for a commercial benefit. The activities of distributing and having
distributed are essentially sales and are thus clearly infringing. The other
activities involve commercial use of the patented invention as
contemplated in <i>Schmeiser</i>, and would therefore presumably also be
infringing. The principle goal of the injunction is to prevent future
infringement of the exclusive rights granted by the 335 Patent. In my view,
the proposed injunction achieves this, and in clear terms.</span></p>
<p><span style="color: black;">Locke JA is of course quite right to say that the rights of the patentee are not limited to
the rights enumerated in s 42, per <i>Schmeiser</i>. But there remains a question as which
specific non-enumerated rights are exclusive to the patentee. Locke JA’s discussion
might well be taken as holding that the activities listed in the injunction and objected to
by Apotex — (i) offering for sale, (ii) marketing, (iii) having marketed, (iv) importing, (v)
exporting, (vi) distributing, or (vii) having distributed — are <i>per se</i> infringement, at least
when done for commercial purposes. While there is caselaw that comes close to saying
that activities such as importing and exporting are infringing, I don’t think the point is
quite settled. While it would certainly be consistent with <i>Schmeiser</i> to hold that these
activities are infringing, it does not flow inexorably from <i>Schmeiser</i>, and there are some
issues with so holding that were not addressed in this brief paragraph.</span></p>
<p><span style="color: black;">So, Locke JA stated that “distributing and having distributed,” are “clearly infringing”
because they are “essentially sales.” This strikes me as potentially problematic,
depending on what is meant by “distributing.” Does this mean that the common carrier
which transports infringing goods from the manufacturer’s warehouse to a retailer is an
infringer? Is a logistics company which organizes distribution of infringing goods on
behalf of the manufacturer an infringer which can be named as a defendant in an
infringement action? These activities do not seem to me to be “essentially sales.”
Perhaps these activities should be considered infringing, but this is a different question
from whether Apotex, which has been found to infringe on the enumerated grounds,
should be prohibited from engaging in distribution.</span></p>
<p><span style="color: black;">Locke JA also said that the other activities are “presumably” also infringing. There is
some difficulty with “offering for sale” in particular. In <i>Domco Industries v Mannington
Mills </i>(1990) 29 CPR(3d) 481 (FCA) 492, the FCA held that a sale was not established
even though “[t]here is no doubt that [the defendant] offered infringing goods in
Canada” (491). It might be argued that <i>Domco</i>, which predates Canada’s accession to
TRIPS, is no longer good law in light of TRIPS </span><a href="https://www.wto.org/english/docs_e/legal_e/trips_e.htm#art5"><span style="color: blue;">Art 28</span></a><span style="color: black;">, which requires that a patent shall
confer on its owner the exclusive right of “offering for sale.” On the other hand, a treaty
such as TRIPS has to be implemented in legislation, and the statutory language defining
the patentee’s exclusive rights has not changed since <i>Domco</i>. It might also be argued
that <i>Domco</i> is no longer good law because it is inconsistent with <i>Schmeiser</i>. Or <i>Domco</i>
might be distinguished because of the cross-border nature of the activity in that case.
But it is difficult to accept that Locke JA intended to hold definitively that “offering for
sale” is infringing in a decision that didn’t even mention <i>Domco</i>. I don’t mean to
comment on the scope or continued vitality of <i>Domco</i>, one way or the other, but I don’t
think Locke JA meant to either.</span></p>
<p><span style="color: black;">Consequently, I think it is probably better to read Locke JA’s decision more
conservatively, as holding only that an injunction is properly granted to prohibit these
activities, even if they are not infringing per se, essentially on a <i>quia timet</i> basis. That
does not imply any change in the law. Even under <i>Domco</i> it is clear that once
infringement has been established, the infringer may be enjoined from offering to sell:
see eg <i>AlliedSignal </i>(1995) 61 CPR(3d) 417 (FCA) 446. And in appropriate circumstances
offering to sell or marketing may form the basis for a <i>quia timet</i> injunction: see eg <i>No-Fume </i>(1935) </span><a href="https://academic.oup.com/rpc/article/52/7/231/1603914"><span style="color: blue;">52 RPC 231</span></a><span style="color: black;"> (CA) 251–52. This interpretation implies that an infringer, like
Apotex, which has been found to infringe on the basis of the enumerated grounds, might
properly be enjoined from “distributing and having distributed,” while leaving open the
question of whether a logistics company or common carrier engaged in distribution
would itself be an infringer.</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-68389577175988285472024-01-15T05:00:00.001-04:002024-01-15T05:00:00.172-04:00The Public Interest Factor in Norwich Orders<p>
</p><p><span style="font-family: 'Georgia', serif;"><i>Seismotech IP Holdings Inc v Apple Canada Inc</i> </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524681/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2023 FC 1649</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> Grammond J</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Seismotech owns patents related to intelligent thermostats and it wishes to sue
consumers who bought and used such devices in their homes [1]. In a previous motion
in the same litigation, </span></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524218/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2023 FC 1335</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, Seismotech resisted adding the manufacturer of
the allegedly infringing product to the action it brought against the consumers. As
discussed in </span></span><a href="http://www.sufficientdescription.com/2023/10/adding-manufacturer-to-suit-against-end.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">my post on that motion</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, Seismotech appears to be a patent assertion entity
(PAE), which is focusing on consumers as they will be soft targets who will prefer to
enter into nuisance value settlements rather than defending the patent vigorously.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">This decision relates to a <i>Norwich </i>order sought by Seismotech which would have
required Apple to disclose the names and addresses of consumers who downloaded the
apps controlling such intelligent thermostats from the App Store [1]. The factors usually
taken into consideration for granting a <i>Norwich</i> were recently summarized in <i>Voltage
Pictures</i> </span></span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/17254/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2018 SCC 38</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [18], quoted at [12]. Grammond J refused to grant the order, on
the basis that Seismotech failed to show that it has a <i>bona fide</i> claim (the first factor),
and because the public interest does not favour the granting of a <i>Norwich</i> order (the
fifth factor) [2]. Grammond J’s analysis on both points is of interest, but I will start with
the public interest analysis as it bears on Seismotech’s litigation strategy and will be
relevant to PAE litigation more broadly. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The thrust of the decision is that the courts will not exercise their discretion to facilitate
a litigation strategy that is designed to extract settlements from consumers who are not
in a position to effectively defend the claims made against them and so will settle simply
to avoid getting embroiled in litigation. I entirely agree with his analysis, and I can’t do
any better than to reproduce the key paragraphs. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Grammond J noted that while the public interest prong typically focuses on privacy
concerns, that is not the only relevant consideration [40]. More broadly, “a <i>Norwich</i>
order facilitates the search for the truth” [41].</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[42] This, however, works both ways. Access to justice is important not
only for plaintiffs, but also for defendants. Civil litigation is an adversarial
process. Truth is expected to emerge from the process because assertions
made by one party are subject to challenge by the other. For this to
happen, both parties must have a genuine opportunity to put their cases
forward. There is a serious risk that a matter will not be correctly
adjudicated if the defendant is deprived of access to justice or is ill
equipped to assert available defences.</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[44] Special considerations arise when a party proposes bringing an action
in patent infringement against a large number of individual consumers,
each having a relatively modest amount at stake. Patent infringement
cases are inherently complex. Patents are intended to be read by a person
of skill in the art, not by persons who lack technical skills, such as judges
and lawyers and, a fortiori, individual consumers. For this reason,
prosecuting or defending an action in patent infringement almost always
requires the presence of expert witnesses. In a large proportion of such
cases, the validity of the patent is challenged on a number of grounds,
which reinforces the need for expert evidence. The quantification of
damages also often raises complex issues. For all these reasons, patent
litigation is costly. Costs awards made by this Court provide a glimpse of
the magnitude of the financial resources needed to defend such an action,
which are often measured in millions of dollars. . .</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[45] The nature of the technology at stake in this case compounds the
difficulty of defending the claim. Very broadly, Seismotech’s patents
involve the use of information technology to provide sophisticated
manners of controlling devices such as heaters, gas fireplaces and the like.
End-users of intelligent thermostats cannot be expected to read the
patents at issue and to construe their claims. Moreover, they do not have
access to the inner workings of the device they own or the app they
downloaded. Without the assistance of the manufacturer, it would require
considerable effort and expertise to disassemble the device and its code to
ascertain whether it infringes the claims of Seismotech’s patents. This is
unlike simpler mechanical inventions that a layperson may more easily
understand. . . .</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[46] It is obvious that meaningfully defending Seismotech’s action is
entirely out of reach for the individual consumer. Even accepting
Seismotech’s theory that it is entitled to recover each consumer’s utility bill
savings, the amount at stake for each defendant is unlikely to exceed a few
thousand dollars. The Court is not aware of any realistic manner of
providing individual consumers with adequate legal representation in the
defence of such an action that would be proportionate to their own
potential liability. Seismotech explicitly declined to attempt to certify this
action as a reverse class action. Seismotech’s suggestion that defendants
could pool their resources to defend the action appears out of touch with
reality, given the number of individual consumers involved and the
amount at stake for each of them.</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[47] Given the practical impossibility of defending the action, it is
foreseeable that many defendants will feel compelled to accept an offer to
settle regardless of the merits of the case. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">With all that said, in some circumstances the end-users are appropriately named as
defendants.</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[48] The complexity of mounting a defence sets this case apart from
copyright infringement cases in which a <i>Norwich</i> order was issued to
identify a large number of individual defendants. In those cases, there is
rarely any debate about the plaintiff’s copyright over the musical or
cinematographic work that was copied or downloaded by the defendants.
It appears that the defence is usually that the owner of the IP address is
not the person who illegally copied the work. It stands to reason that the
factual and legal complexity of such a defence bears no relationship to a
patent infringement action.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">While I agree that complexity is a distinguishing factor, there is another difference that I
would suggest is relevant to the public interest analysis. The consumer in most patent
cases — certainly in this one — is an innocent infringer, who purchases the goods from a
mainstream outlet in the reasonable belief that any intellectual property issues have
been dealt with. In copyright cases, the individual defendants typically know full well
that the uploading or downloading is illegal, even if they might express ‘information
likes to be free’ style arguments as to why the law is wrong. (I recall the horror on the
face of one of my students after we discussed the reverse class action copyright cases.)
Another distinguishing feature is that the copyright owners in such cases have made
very considerable efforts to go after larger entities, such as ISPs, and they have been led
to pursue individual defendants because their strategies aimed at ISPs have not proven
entirely satisfactory. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Another example where end-users are appropriately pursed is where the end-user is a
large entity, with the resources and interest to defend the case on the merits:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[49] Seismotech also relied upon <i>Wobben Properties GmbH v Siemens
Public Ltd Co</i>, </span></span><a href="https://www.bailii.org/ew/cases/EWHC/Patents/2014/3173.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">[2014] EWHC 3173 (Pat)</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, to argue that a Norwich order can
properly be used to reveal the identity of the end-users of patented
technology. It is obvious, however, that the proposed defendants in that
case were large businesses that, one can assume, had the resources to
defend a patent infringement action involving complex technology. If
anything, this case shows that the character of the parties and the manner
in which the proposed litigation is likely to unfold are relevant factors for
deciding whether a Norwich order should be issued.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">In some cases, where a small entity inventor supplies a crucial patented component to a
large entity end-user, the end-user may even be better placed to defend the action.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">When I say that in some cases it is appropriate to pursue the end-user while in others it
is not, I am of course not saying that the plaintiff does not have a legal right to pursue
the end-user in the latter category. The question is whether it is appropriate in the sense
of being in the public interest, so as to properly come into play in a discretionary order
such as a <i>Norwich</i> order. The difficulty of drawing any bright line between cases in
which it is, or is not, appropriate shows the wisdom of making this one factor in a
holistic consideration.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">On the first point, the requirement of a <i>bona fide</i> case, Seismotech sought to have the
motion granted on the basis of a bare assertion of belief that the defendants infringed,
without any supporting evidence [23]; Seismotech’s owner refused to even explain the
basis for his belief [25]. Seismotech argued that evidence that a wrongful act has been
committed is not necessary to obtain a <i>Norwich</i> order and that all that is required is to
show that the plaintiffs really do intend to bring an action [15]. Grammond J rejected
this argument, holding that while a plaintiff need not show that the claim is likely to
succeed [14], “the mere assertion of a cause of action, without any factual foundation, is
insufficient” [16]. I won’t go through Grammond J’s analysis of the cases except to say I
agree with it, but I will highlight one comment:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[29] A useful way of looking at the matter is to ask whether the statement
of claim, together with [Seismotech’s owner’s] evidence, would withstand a
motion to strike. The test for striking out a claim does not have the exact
same purpose as the requirement for a <i>bona fide</i> claim in the test for a
<i>Norwich</i> order. Nevertheless, it is difficult to contemplate the issuance of a
<i>Norwich</i> order where the statement of claim is so deficient that it is liable
to be struck.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">This does strike me as a very useful test, at least for the minimum evidentiary threshold.
If a statement of claim would be struck when asserted against a defendant, how can it be
the basis for an order against a third party? </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">On the facts, Grammond J found the claim to be “purely speculative” and hence it was
not <i>bona fide</i> [35]. He also helpful distinguished this case from the typical copyright
infringement cases:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[36] Typically, the plaintiff provides a forensic investigation report
showing that a person using a certain IP address downloaded a file
containing music or a movie, in which the plaintiff holds the copyright. In
such a case, the report provides a plausible basis for assuming that there
was a copyright infringement, as the very act of unlawfully downloading
the copyrighted work is the infringing act. The investigator is able to report
that the work downloaded by the user and the copyrighted work are the
same. In contrast, the mere fact that consumers downloaded the apps in
this case does not give any indication that the apps, the devices or their use
by the consumers infringe Seismotech’s patents.</span></span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-70411952263691703362024-01-11T05:00:00.002-04:002024-01-13T12:53:16.225-04:00The Limits of Sufficiency<p><span style="font-family: 'Georgia', serif;"><span style="color: black;"><i>Allergan Inc. v. Juno Pharmaceuticals Corp</i> </span></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524656/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2023 FC 1686</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> Pentney J</span></span></p>
<p style="margin-left: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;"> </span></span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2585691/summary.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2,585,691</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> / bimatoprost formulation / LUMIGAN RC / NOC</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Glaucoma and ocular hypertension are serious medical conditions that can lead to
blindness. It can be controlled by medications which lower the pressure inside the eye,
referred to as intraocular pressure (“IOP”) [4]. “[T]aking glaucoma medication is boring,
because it requires a daily dose of one or more medications, often for the rest of a
person’s life. And the patient will usually not notice any improvement in their vision,
because the medication is actually only stopping further decline” [48]. For this reason,
patient compliance is very important. (I must say that I enjoyed Pentney J’s lucid
discussion of the physiology of the eye and drug transport through it [29]–[49]. One of
the reasons I specialize in patent law is that the science is interesting and Pentney J’s
discussion was particularly clear and informative.)</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Allergan’s old LUMIGAN product was used to treat IOP. It contained 300 ppm
bimatoprost, the active ingredient, and 50 ppm BAK, a preservative. It was successful in
lowering IOP but had unwanted side effects, which impacted compliance. “Allergan
therefore sought to develop a formulation that was similarly effective in lowering IOP
but did not cause the unwanted side effects” [17]. The result was the claimed invention,
embodied in LUMIGAN RC, which contained 100 ppm bimatoprost and 200 ppm
BAK—that is, it had less of the active ingredient and more preservative. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The main question was whether this formulation was obvious. Pentney J helds on the
facts that it was not. While reducing the concentration of bimatoprost might be expected
to reduce side effects, the skilled person would also expect it to reduce efficacy [203].
While BAK is generally safe at the levels in both the old and new formulations, there was
nonetheless a trend to decreasing BAK levels, to minimize its potentially inflammatory
and cytotoxic effects [241], [243]. The key to the formulation is that BAK also worked as
a “penetration enhancer” which meant that the lower amount of bimatoprost in the
claimed formulation achieved equal or better IOP reduction than old formulation [245].
This effect was not obvious. It was known that BAK could be a penetration enhancer
for some molecules, in particular hydrophilic molecules, but it was not expected to be a
penetration enhancer for lipophilic substances such as bimatoprost [302]–[305]; and
see [319]. Consequently, Pentney J found the claimed formulation was not obvious after
an obvious-to-try analysis [380]–[382].</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">There was a fairly extended discussion of the inventive concept and whether it should be
determined from the claims alone or by considering the disclosure as well. Pentney J
rejected an approach based on the claims alone, noting that <i>Shire </i></span></span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/494142/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2021 FCA 52</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [72] held
that it is necessary to turn to the specification, at least in the case of a claim to a
chemical compound [158]. Pentney J noted that <i>Shire</i> was particularly pertinent to the
case at hand [153], because a chemical formulation is no different from a chemical
compound in that respect. Consequently, Pentney J embarked of a fairly lengthy
examination of the disclosure in light of the expert evidence in order to identify the
inventive concept. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">I won’t go through his discussion in detail, but I will point out that looking at the claims
and looking at the specification are not the only two possible choices. The problem with
looking at the claims is that a claim to a compound does not tell us what the inventive
step was: the compound might be easy to synthesis, but with no previously known use,
in which case identifying the use might be inventive. Or a compound might be known to
be useful, but difficult to synthesize (eg early biologics), in which case the method of
synthesis might be the inventive step. We cannot tell which by looking at the claims
alone.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The problem with looking at the disclosure to determine the inventive concept is that the
inventor does not always know what they have invented, because the inventor does not
normally know all the prior art, and may well not know the entire state of the art (which
now includes all the prior art). So, the inventors who discovered that sildenafil could be
orally administered to treat ED because it was a PDE V inhibitor, thought their real
discovery was that PDE V inhibitors can be orally administered to treat ED, but in fact at
least one was already known (epimedium aka ‘horny goat weed’ aka ‘yin yang huo’).
Consequently, all they really discovered was that sildenafil can be orally administered to
treat ED. If the inventors do not know what they have discovered, they might not
identify the true inventive concept in the disclosure.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">In my view, elaborated at more length in </span></span><a href="http://www.sufficientdescription.com/2021/05/focus-of-obviousness-inquiry-should-be.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">my post</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> on <i>Shire</i>, the focus should be on the
solution to the objective problem facing the inventors. In this case, the objective
problem, identified in Pentney J’s discussion of the facts, was “to develop a formulation
that was similarly effective [to the old Lumigan] in lowering IOP but did not cause the
unwanted side effects” [17]. The question should be whether the claimed invention was
an obvious solution to that problem. This didn’t make any difference on the facts,
because in this case the inventors were essentially correct about what they had invented,
and so the inventive concept derived from the specification was more or less the same as
the objective inventive concept — similar enough to make no difference in the
obviousness analysis [181]. But that will not always be true.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Pentney J also dismissed four insufficiency attacks in brief reasons. It was clear that the
specification disclosed sufficient information to allow the skilled person to make and use
the invention [390] and all four attacks were premised on the incorrect idea that
sufficiency somehow requires more than that.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">First, Juno argued that the patent failed to disclose information which would allow the
skilled person to conclude it was safe for human use [386]. Pentney J pointed out the
claim doesn’t say anything about the safety profile, so failure to disclose any such
information is irrelevant [391]. Further, “It is well-established in the jurisprudence that
the standard required to obtain a patent cannot be equated to that needed to obtain
regulatory approval” [391] quoting <i>Novo Nordisk v Cobalt </i></span></span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/58365/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2010 FC 746</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [352].</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Second, Juno argued that the patent “fails to fully describe the advantage of the 0.01%
dose formulations to enable the POSITA to understand its benefits over old LUMIGAN”
[386]. Pentney J dismissed this by saying “I find that the specification in the 691 Patent,
and in particular the data shown in the examples, is sufficient to establish that the
formulation in Claim 16 would deliver comparable or better IOP reduction as compared
to old LUMIGAN, and that is all that is required” [393]. I’m sure that even that much is
required. The claim is simply to a formulation. The claim says nothing about its benefits,
namely increased efficacy with reduced side effects. I don’t see why the specification has
to establish comparable efficacy; it’s enough that the specification discloses how to make
and use the invention so as to achieve whatever benefits it might have. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Third, Juno argued that the disclosure was insufficient because it did not disclose that
the 200 ppm BAK served as a penetration enhancer [395]. Pentney J dismissed this on
the basis that “a patent does not have to explain how the invention works as long as it
explains how to work the invention” [395]. That is a straightforward application of
<i>Consolboard</i> </span></span><a href="http://scc-csc.lexum.com/decisia-scc-csc/scc-csc/scc-csc/en/item/2426/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">[1981] 1 SCR 504</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, which Pentney J cited.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Finally, Juno argued that “since Allergan has asserted that data based on rabbit studies
cannot be directly extrapolated to the effects on humans, the Patent’s disclosures
regarding permeability are not sufficient” [386]. This strikes me as another version of
the third argument, arguing that the patent must disclose why the invention works.
Pentney J dismissed it for similar reasons.</span></span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-34852547181900811532024-01-09T11:49:00.001-04:002024-01-09T11:49:25.961-04:00What Is the Evidentiary Threshold for Denying a Permanent Injunction on Public Interest Grounds?<p></p>
<p style="margin-bottom: 0.104167in;"><i>AbbVie Corporation v JAMP Pharma Corporation</i> <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524560/index.do"><span style="color: blue;">2023 FC 1520</span></a><span style="color: black;"> McVeigh J</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2504868/summary.html"><span style="color: blue;">2,504,868</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2801917/summary.html"><span style="color: blue;">2,801,917</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2904458/summary.html"><span style="color: blue;">2,904,458</span></a><span style="color: black;"> / adalimumab / HUMIRA / SIMLANDI</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">As discussed in </span><a href="http://www.sufficientdescription.com/2024/01/when-can-range-anticipate-point.html"><span style="color: blue;">a previous post</span></a><span style="color: black;">, in this decision McVeigh J denied a permanent
injunction to AbbVie even though she found that its 458 patent was valid and infringed.
This is very unusual. While it is clear that an injunction is a discretionary remedy, it is
also well-established that a permanent injunction will only be refused in “very rare
circumstances” (<i>Valence v Phostech</i> </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/59068/index.do"><span style="color: blue;">2011 FC 174</span></a><span style="color: black;"> [240]), as McVeigh J acknowledged
[642]. Indeed, I believe this is the only decision apart from <i>Unilever</i> (1993) 47 CPR(3d)
479 (FCTD) to entirely refuse a permanent injunction to a successful patentee. In
<i>Jay-Lor</i> </span><a href="http://decisions.fct-cf.gc.ca/en/2007/2007fc358/2007fc358.html"><span style="color: blue;">2007 FC 358</span></a><span style="color: black;"> [263], Snider J declined to grant a permanent injunction on the
basis that it was unnecessary, as the defendant had not manufactured an infringing
product for over two years; and in <i>Janssen v Abbvie</i> </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/71845/index.do"><span style="color: blue;">2014 FC 489</span></a><span style="color: black;"> Hughes J granted a
partial injunction, for reasons I will return to. There have also been a few cases in which
the permanent injunction was tailored with a short run-off period in which infringing
sales or delivery was allowed: <i>Janssen-Ortho v Novopharm</i> </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/53057/index.do"><span style="color: blue;">2006 FC 1234</span></a><span style="color: black;"> and
<i>Weatherford </i></span><a href="http://decisions.fct-cf.gc.ca/en/2010/2010fc667/2010fc667.html"><span style="color: blue;">2010 FC 667</span></a><span style="color: black;">; in the UK see similarly <i>Virgin Atlantic v Premier Aircraft</i>
</span><a href="https://www.bailii.org/ew/cases/EWCA/Civ/2009/1513.html"><span style="color: blue;">[2009] EWCA Civ 1513</span></a><span style="color: black;">.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">As a matter of law, property rights of all kinds are normally protected by injunctive
relief. Why? That question was famously answered by Calabresi & Melamed in one of the
most cited law review articles of all time: “Property Rules, Liability Rules, and
Inalienability: One View of the Cathedral” (1972) 85 Harv L Rev 1089. Calabresi &
Melamed argued that when a right is protected by injunctive relief the owner of the right
can set the price at which the right is purchased in a voluntary negotiation, whereas
when a right is protected only by damages it is the court that determines the value of the
right. The advantage of property rights is that the parties will always know the true value
of the right better than the court; the advantage of liability rules is that transaction costs
and related problems, such as holdout, may mean that a voluntary negotiation does not
reflect the true value of the property. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">With that in mind, we can divide cases in which an injunction is properly refused into
two broad categories. One is where the grant of an injunction would allow the patentee
to extract substantial sunk costs. The classic article is Lemley & Shapiro, “Patent Holdup
and Royalty Stacking” (2007)</span><a href="https://faculty.haas.berkeley.edu/shapiro/stacking.pdf"><span style="color: blue;"> 85 Tex L Rev 1991</span></a><span style="color: black;">. This is well-recognized as the main
issue in the FRAND context, as well as with patent assertion entities (PAEs) aka ‘patent
trolls.’ As a result, injunctions are regularly refused to PAEs in the US. Tailoring of
injunctions to allow a runoff period or to allow for redesign, such as in <i>Janssen-Ortho v
Novopharm </i>and <i>Weatherford</i>, may be an appropriate partial solution to this problem:
see generally Contreras & Husovec (eds), </span><a href="https://www.cambridge.org/core/books/injunctions-in-patent-law/E71B1C31332F27130D427E5022F0E20F"><span style="color: blue;">Injunctions in Patent Law</span></a><span style="color: black;">: Trans-Atlantic
Dialogue on Flexibility and Tailoring (Cambridge University Press, 2022) (and see my
</span><a href="https://www.cambridge.org/core/books/injunctions-in-patent-law/canada/AF53A120C6E5353AEBC6F9E758788464"><span style="color: blue;">Canada chapter</span></a><span style="color: black;"> in that volume for a discussion of <i>Unilever</i>).</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The second is a more amorphous category of cases turning on traditional equitable
principles, such as clean hands, laches etc. <i>Jay-Lor</i> is an example of the application of
the maxim that ‘equity does not act in vain.’ Sometimes these cases can be explained in
sunk cost terms: for example, undue delay in bringing an action may give time for an
innocent infringer to invest substantial sunk costs in the infringing goods; while the
injunction might be refused on the basis of laches, the result would be the same on a
sunk cost analysis. This case, in which the injunction was refused on public interest
grounds, falls into the second category. While JAMP no doubt has incurred some sunk
costs in developing its biosimilar, costs of that nature are regularly incurred by
infringing pharmaceutical companies and are never in themselves grounds for refusing
an injunction.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">When should an injunction be refused on public interest grounds? The premise of the
patent system is that the return to the patentee is beneficial to society by inducing
innovation. So, on the one hand, the return to the patentee must be protected. Harm to
the public interest may be taken into account on the other side of the balance. This does
not include harm in the form of higher prices, which is inherent in the patent exclusivity:
the premise of the patent system is that the harm from higher prices for a limited term is
more than outweighed by the concomitant incentive to innovate. The harm to the public
that might warrant refusing an injunction is typically more idiosyncratic, turning on the
facts of the case. In the US, harm to medical patients for whom the patentee’s product is
not an adequate substitute for the infringer’s product is one of the more common
reasons for refusing a permanent injunction, particularly in the context of medical
devices: see Seaman “Permanent Injunctions in Patent Litigation After eBay: An
Empirical Study,” (2016) </span><a href="https://ilr.law.uiowa.edu/print/volume-101-issue-5/permanent-injunctions-in-patent-litigation-after-ebay-an-empirical-study"><span style="color: blue;">101 Iowa Law Review 1949</span></a><span style="color: black;">, 1991. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">In Canada, the point is illustrated by Hughes J’s decision in <i>Janssen v Abbvie</i> </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/71845/index.do"><span style="color: blue;">2014 FC
489</span></a><span style="color: black;"> (discussed </span><a href="http://www.sufficientdescription.com/2014/06/permanent-injunction-not-available-as.html"><span style="color: blue;">here</span></a><span style="color: black;">), which also related to HUMIRA. Janssen’s infringing product was
STELARA, a biologic used to treat psoriasis, which, in its severe form, can be disabling
[17]. While HUMIRA is used to treat psoriasis, and has significant market share, it is not
a perfect substitute for STELARA: STELARA operates by inhibiting IL-12, while
HUMIRA targets TNF-α [21]. There were also two other TNF-α drugs on the market. A
common treatment scenario was for the physician to switch the patient among the
TNF-α drugs before going to the sole IL-12 drug (STELARA) [23]. A permanent
injunction would therefore have allowed AbbVie to prevent the sale of a drug which
AbbVie itself does not supply, and which for some patients is the only effective
treatment for a disabling condition. On these unusual facts, AbbVie did not even seek a
complete permanent injunction. Instead, AbbVie sought a tailored injunction with an
exception for existing patients and restrictions on new patients. The basic idea was to
ensure that any patient who could effectively be treated by HUMIRA would be, and
STELARA could only be used for patients who responded better to it. This is a classic
example of the kind of case in which a permanent injunction might properly be denied
for public interest reasons. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">In this case, there were two key reasons why McVeigh J refused the permanent
injunction. First, AbbVie has licensing agreements with seven other pharmaceutical
companies in Canada that offer adalimumab biosimilars [632], [638]; second, JAMP’s
SIMLANDI is the only product available as a low-citrate high-concentration (80 mg/0.8
mL) formulation [633]–[636].</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The first point goes to the need to preserve the incentive to innovate. In lieu of an
injunction, McVeigh J granted a AbbVie a reasonable, running royalty on future sales of
SIMLANDI, saying “[t]his rate should easily be determined given the licensing
agreements it has with seven other biosimilar pharmaceutical companies” [643]. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">With respect, the matter is not quite so simple. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">There are broadly two reasons that AbbVie might have licensed. First, it might not have
wished to enter the Canadian market directly. It is very common for innovative
patentees to exploit their inventions by licensing, especially in secondary markets.
Royalty rates paid by a voluntary licensee in such a situation are not directly comparable
to the reasonable royalty assessed by a court. A voluntary licensee normally performs
some kind of value-added services for the patentee, such as product development,
reverse tech transfer, clinical trials, marketing, manufacturing or distribution, and may
also receive additional value from the licensor, such as supporting IP such as trademarks
or trade secrets relevant to the patented technology, or ongoing technical support. The
royalty paid by the licensee reflects the value of those services in both directions, as well
as the value of the patented technology itself. A compulsory licensee under a running
royalty will not generally perform all the same services, though it may perform some.
This means the royalty paid by the voluntary licensee cannot simply be applied to the
compulsory licensee. Instead, the royalty should be adjusted to account for differences
in the services provided by the infringer as compared with those provided by the
voluntary licensee. See generally my article with </span><a href="https://law.umn.edu/profiles/tom-cotter"><span style="color: blue;">Professor Cotter</span></a><span style="color: black;">, A New Framework
for Determining Reasonable Royalties in Patent Litigation, (2016) </span><a href="http://www.floridalawreview.com/volume-68-%E2%80%A2-july-2016-%E2%80%A2-number-4/"><span style="color: blue;">68 Florida Law
Review 929</span></a><span style="color: black;">, esp 954ff and </span><a href="https://www.cambridge.org/core/services/aop-cambridge-core/content/view/F0ED1D77D32964618EF2EABD4E0E027A/9781108426756c1_6-49.pdf/reasonable_royalties.pdf"><span style="color: blue;">Ch 1 Reasonable Royalties</span></a><span style="color: black;"> § 1.3.6 Comparable Licenses in
Biddle, Contreras, Love & Siebrasse (eds), </span><a href="https://www.cambridge.org/core/books/patent-remedies-and-complex-products/9856A1DB614D1E4A155E0D7B1748384B"><span style="color: blue;">Patent Remedies and Complex Products:
Towards a Global Consensus</span></a><span style="color: black;"> (Cambridge University Press, 2019).</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Another complication is that the value of a license will generally depend on the degree of
exclusivity. The per unit rate the licensor charges to a single licensee will be higher than
the rate it can ask if it licenses to two licensees who compete with each other in the same
market. If the licensor does license to multiple licensees, it will typically provide some
kind of territorial or product exclusivity to each. One way or the other, unless the market
is already perfectly competitive, the entry of a new unrestricted competitor into the
market will affect the rate that can be charged to voluntary licensees. So, even if the
AbbVie now demands a royalty of $1/mg from its current licensees (to pick an arbitrary
number), the entry of JAMP may reduce the value of the licence to those licensees, so
future renewals may be at a lower rate due to the reduction in market power. This is a
loss to AbbVie that must be compensated in the reasonable royalty paid by JAMP to
AbbVie if the incentive to innovate is to be preserved. Further, it is not obvious that the
current licenses will reflect some simple rate, such as $1/mg. The licenses may reflect
individual bargaining power, or idiosyncratic advantages of the licensees, so that even if
the voluntary licensees provide the same services, their royalties may be different.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Another possibility is that the current licenses were negotiated under the threat of
litigation. In that case, the royalty rate would be discounted by the parties’ estimate that
the patentee would prevail against the potential infringer / licensee in an infringement
action. But after litigation, such as in this case, we know with certainty that the patent is
valid and infringed, and the reasonable royalty must therefore be higher than the
negotiated royalty to avoid the problem of double discounting. As we explained in </span><a href="https://www.cambridge.org/core/services/aop-cambridge-core/content/view/F0ED1D77D32964618EF2EABD4E0E027A/9781108426756c1_6-49.pdf/reasonable_royalties.pdf"><span style="color: blue;">Ch 1
</span></a><span style="color: black;">of Patent Remedies and Complex Products at 22-23:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">it is well established in U.S. law that the parties to the hypothetical
negotiation are assumed to have known that the patent was valid and
infringed, even though actual parties would not. This rule is required to
achieve just compensation, because the opposite view – that the parties
should be assumed to discount the royalty to allow for the probabilistic
nature of the patent (as would presumably be done by parties to an actual
negotiation) – would result in so-called double discounting; not only
would the court-approved royalty derived from the hypothetical
negotiation include a discount for the risk of nonliability, but then
pre-litigation negotiations in which royalties were based on the
expectation of such a court award occurring with a less than 100 percent
probability would include a further discount for risk of non-liability. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Further, the rates in the various licenses might be quite idiosyncratic — there is no
particular reason that each ‘generic’ would arrive independently at the same estimate of
its probability of prevailing. And these royalties would also reflect the pricing issues with
truly voluntary licenses, discussed above. It is also entirely possible that the current
licensing situation is a combination, where AbbVie has entered into some licenses on a
truly voluntary basis and others in contemplation of litigation. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">There are some cases in which it is indeed easy to calculate an accurate reasonable
royalty, such as when the patentee offers a licence to all comers on demand at a standard
rate. This is clearly not such a case. With that said, it is possible that it will be easy to
calculate an accurate reasonable royalty; not all of the difficulties described above will
arise in every cases. But the mere fact that there are seven other licensees of similar
products certainly does not give any guarantee that the reasonable royalty calculation
will be easy. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The other side of the coin is the effect on patients of an injunction. McVeigh J relied on
two points. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">One is the potential that “non-medical switching” could negatively impact patients,
through the “nocebo effect” which could result in a perception of increased injection site
pain. It seems to me that if we give the nocebo effect any weight at all, a permanent
injunction would never be granted against any infringing pharmaceutical that has
actually been launched, as the effect, by definition, does not turn on any real difference
in the product, but on the mere knowledge that the product is different [636].</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The other point is that JAMP’s formulation is the only high-concentration / low volume,
citrate-free product on the market. (It’s not clear to me whether YUFLYMA is on the
market, but I’ll assume it’s not.) It is possible that the greater volume and / or the citrate
could cause increased injection site pain for some patients, and “[t]hough the evidence is
scant for those few patents, it could be very harmful” [635]. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This raises two points of law. One is the threshold for the harm to the public interest.
Though the point is not normally made explicitly, it is clear enough that we are willing to
tolerate some degree of harm to the public beyond the increase in prices. For example, in
<i>Valence v Phostech</i> </span><a href="http://decisions.fct-cf.gc.ca/en/2011/2011fc174/2011fc174.html"><span style="color: blue;">2011 FC 174</span></a><span style="color: black;">, Gauthier JA refused to even tailor a permanent
injunction by allowing a two year grace period for the completion of a new factory
designed to use a non-infringing process. Presumably, requiring the infringing factory to
shut down immediately would entail significant disruption to the workers, such as
temporary or even permanent unemployment. (Moreover, in that case a strong
argument can be made that tailoring would have been appropriate on substantive
grounds, as the infringement appears to not have been intentional and the infringer had
incurred very substantial sunk costs.) The question then is how much non-price harm to
the public we are willing to allow. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">It is not clear what McVeigh J meant by “very” harmful and “few” patients, but this
seems to be a far cry from <i>Janssen v AbbVie</i> in which it was uncontested that there were
a significant number of patients whose potentially debilitating psoriasis could only be
effectively treated by the infringing product. In this case, as I understand it, it is not
disputed that the non-infringing alternatives will treat the disorder just as effectively as
SIMLANDI, and the harm is increased injection site pain. (Since there are several
citrate-free alternatives [638], it seems that the main issue is the increased volume.) In
principle, the issue is not the pain from the alternative as such that is important, but the
incremental pain of the alternative over SIMLANDI. So, SIMLANDI is available in a 40
mg/0.4 mL pre-filled syringe where most of the alternatives are a 40 mg/0.8 mL — so,
double the volume for a 40mg dose. As I understand the evidence (as well as from
people I know), many people do not find the 0.8 mL dose to be at all painful or even
uncomfortable, so presumably those who do are unusually sensitive to dose volume and
might find a 0.4 mL dose to be painful as well, though presumably less so. The harm if
the injunction is granted is not the pain to those patients from the 0.8 mL dose, but the
additional pain as compared with the 0.4 mL dose. It is not clear to me from McVeigh J’s
reasons whether the “very harmful” pain refers to the pain of the larger dose, or the
incremental pain. (Perhaps the main harm is to those who are particularly sensitive to
both citrate and injection volume, which would imply a smaller subset of affected
patients.) Now, perhaps the harm is more significant than intuition suggests. It may be
that there are some patients for whom the additional pain is so substantial that they
would skip injections and impair their treatment rather than endure the injections with
HUMIRA or one of the licensed alternatives. That would align this case more closely
with <i>Janssen</i>.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Of course, the degree of harm is a matter for evidence. My point here is that it seems
reasonable that there should be some substantive threshold for the nature of the harm
suffered in order to warrant denying an injunction on public interest grounds. If
evidence established that 10 patients in Canada would suffer arm soreness for two
minutes after an injection rather than for one minute, I would suggest that should not be
a sufficient harm to warrant refusing a permanent injunction on public interest grounds.
From McVeigh J’s brief description, the harm in this case appears to be substantially
less, both in its nature and its extent, than the harm at issue in <i>Janssen v AbbVie</i>.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">As noted, the extent of the harm is not clear from McVeigh J’s reasons. This raises the
second point: what is the proper evidentiary threshold for refusing injunctive relief on
public interest grounds? In this case, we do not know how many patients would be
affected and how serious the harm is, because the evidence is “scant” and “limited”
[635]. All we know is that it “could” be very harmful. When evidence is scant, any degree
of harm is possible. Suppose an expert witness was asked whether the injection site pain
might dissuade some of patients from following the correct dosage schedule, and the
answer was “Anything’s possible.” Would that be enough to warrant refusing the
permanent injunction on public interest grounds? More generally, can a permanent
injunction be denied on the basis of a speculative harm? Surely the presumption in
favour of granting injunctive relief to a successful patentee is strong enough that more
than mere speculation should be required to overcome it. The more difficult question is
whether the standard should be something like the balance of probabilities, or a lower
threshold, such as evidence which is clear and not speculative. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The substantive threshold and the evidentiary threshold are distinct issues. It might be
uncontested that 1% of the patients would suffer soreness for two minutes instead of one
minute; or one expert might provide unsupported opinion evidence that large numbers
of patients would fail to comply to their injection schedule dosage. Given McVeigh J’s
explicit acknowledgment of the limited nature of the evidence, it might be easier for the
FCA to address evidentiary threshold. It will be difficult to address the question of
whether the substantive threshold has been met when the extent of the harm is not
actually established in the evidence.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">On the whole, the reasons given by McVeigh J strike me as very tenuous grounds for
denying a permanent injunction. Further, even if some kind of significant harm to some
patients could be established on a non-speculative basis, this does not strike me as a
good case for denying a permanent injunction entirely. A tailored injunction, along the
lines of that granted in <i>Janssen v AbbVie</i>, which would allow the use of SIMLANDI by
the specific patients who cannot tolerate HUMIRA or one of the other licensed
biosimilars, would seems to me to strike a better balance. </span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-81697665640700037662024-01-04T05:00:00.002-04:002024-01-06T15:42:21.649-04:00When can a range anticipate a point?<p></p><div id="WPMainDoc">
<p><i><span style="font-family: 'Georgia', serif;">AbbVie Corporation v JAMP Pharma Corporation</span></i><span style="font-family: 'Georgia', serif;"> </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524560/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2023 FC 1520</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> McVeigh J</span></span></p>
<p style="margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2504868/summary.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2,504,868</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> / </span></span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2801917/summary.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2,801,917</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> / </span></span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2904458/summary.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2,904,458</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> / adalimumab / HUMIRA / SIMLANDI</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The most important aspect of this case was McVeigh J’s refusal to grant a permanent
injunction to the successful patentee. I will discuss that in a separate post. McVeigh J
also had a brief discussion of double patenting, which I discussed in </span></span><a href="http://www.sufficientdescription.com/2024/01/double-patenting-and-divisionals.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">a previous post</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> that
focused on <i>NCS v Kobold</i> </span></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524484/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2023 FC 1486</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">. This post provides an overview and addresses
some miscellaneous issues, including McVeigh J’s brief but helpful discussion of as to
when prior art that discloses a range can anticipate a point within a range. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">This case involved three patents related to adalimumab, which is well known under the
brand name HUMIRA for treatment of rheumatoid arthritis, inflammatory bowel
disease (IBD) and psoriasis. The 868 patent relates to a dosing regimen for a known use
(the treatment of IBD). McVeigh held the 868 patent to be invalid as being obvious to
try [303], though an attack based on patentable subject matter failed [339]. The 917
patent relates to a second medical use — the treatment of hidradenitis suppurativa (HS)
— and a dosing regimen. It seems that the use of adalimumab to treat HS was known
[400], so the key issue, as with the 868 patent, was whether the dosing regimen was
obvious. McVeigh J held on the facts that it was [402]. An attack based on patentable
subject matter failed [413]–[415]. There was also an unusual attack based on “Claim
term not described” which I will come back to. The 458 patent related to an adalimumab
formulation, which McVeigh J found on the facts to be not anticipated [559] and not
obvious [591]. Attacks based on overbreadth [592]–[603] and double patenting
[604]–[620], also failed. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;"><span style="font-weight: bold;">Identical Witness Statements</span></span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">As discussed </span></span><a href="http://www.sufficientdescription.com/2023/06/collaboration-of-counsel-in-preparing.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">here</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, in <i>dTechs</i> </span></span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/521182/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2023 FCA 115</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [32], [34], the FCA addressed the role of
counsel in the preparation of expert reports. Gauthier JA noted that while it is not
unusual for expert reports to be prepared “in close collaboration with counsel,” this is
not normally a significant problem, so long as the Court is ultimately “presented with
the substantive and objective opinion of the expert.” Gauther JA also noted that “While
counsel may make mistakes and overstep the bounds of what is permissible
involvement, this will normally be revealed on cross-examination at trial, and will be
considered by trial courts in assessing the evidence” [34]. Something along those lines
happened here, albeit with a fact witness:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[210] Dr. Noertersheuser suffered significant credibility issues. It became
apparent during his cross-examination that much of his statement was
nearly identical, or word-for-word the same, as a witness statement made
by Dr. George Richard Granneman on December 18, 2017 in US litigation.
While this is not, in and of itself, hugely problematic, his responses on
cross-examination reduced his credibility. He attempted to explain that
perhaps he and Dr. Granneman had written identical statements because
of how closely they had worked together in the past. He said they worked
side by side and discussed things back then, and that must have been the
reason they wrote identical statements. He was asked several times and
confirmed that he independently came up with the exact same words but
that he never copied. This is clearly inaccurate, and he would have better
served the Court by admitting the statements were copied, instead of
trying to claim that it was sheer coincidence.</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[212] Unlike in Rovi, Dr. Noertersheuser was not an expert witness.
Nonetheless, the word-for-word copying of Dr. Granneman’s report raised
significant concerns about Dr. Noertersheuser’s impartiality. His inability
to accept or acknowledge the paragraphs were word-for-word the same
greatly impugned his credibility and reliability.</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[215] The similarity between Dr. Noertersheuser (fact witness) and Dr.
Granneman’s expert report went well beyond the appropriate limits. I will
assess Dr. Noertersheuser’s evidence with some caution when it is in
disagreement with other witnesses.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Treating his evidence with “some caution” is a very measured response.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;"><span style="font-weight: bold;">Blinding the Witness</span></span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Over the past decade there have been various attempts to enhance the credibility of an
expert on issues such as claim construction or obviousness by not informing the expert
of the party’s position when they write their report. While some earlier decisions
supported this practice, </span></span><a href="http://www.sufficientdescription.com/search/label/Blinding%20Expert"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">the trend more recently</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> has been to be skeptical, generally on
the view that the substance of the report is more important than whether the witness
was blinded. Another concern is that it may impossible to truly blind a person who is an
expert keeping abreast of developments in a particular field: see eg <i>Hospira</i> </span></span><a href="https://decisia.lexum.com/fc-cf/decisions/en/item/307010/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2018 FC
259</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [203]. That problem arose in a particularly acute form in this case, when one of the
experts who had been ‘blinded’, forgot that she had previously provided expert evidence
in another matter involving the 868 patent [247]–[249], [252]. McVeigh J expressed skepticism of the
worth of the blinding process, saying “I rely on Dr. Baughman’s evidence, not for the fact
that it was blinded but for the reasoning it provides” [250]. McVeigh J did not fault Dr.
Baughman, whom McVeigh J found to have sincerely failed to recall her prior
involvement”; nonetheless, while she did accept the evidence as credible and reliable,
she only assigned a moderate weight to it [252].</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;"><span style="font-weight: bold;">When can a range anticipate a point?</span></span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The parties disagreed “as to whether prior art that discloses a range can anticipate a
point within a range or embodiment. For example, has disclosure occurred if the range is
0.2-400 mg in the prior art, and the subsequent patent claims about 10 mg or a
narrower range such as 0.10-100 mg” [157]. JAMP relied on several recent cases in
which “the Federal Court held a range or a broad disclosure can anticipate a point within
a range or an embodiment” [158]. After reviewing those cases, and discussing several
blog posts in which I have argued that these decisions were clearly wrong, McVeigh J
concluded as follows:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[173] I find that the law has developed that, where the evidence presented
at trial shows that the range is narrow enough, such that a flag can be
planted based on the context and examples given, then it is anticipated. If
the evidence shows a very broad range that the Judge, with the experts’
assistance (if needed), does not see it as a precise enough to plant the flag
before proceeding to the enablement stage, then it fails at the disclosure
stage.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">This statement of the law strikes me as sound and helpful (though I’m not sure it
actually explains the prior cases or whether McVeigh J intended it as doing so). It is
consistent with the EPC </span></span><a href="https://www.epo.org/en/legal/guidelines-epc/2023/g_vi_8.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">Examination Guidelines G.VI.8</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, which also strike me as sound:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">A sub-range selected from a broader numerical range of the prior art is
considered novel if both of the following two criteria are satisfied (see T
261/15):</span></span></p>
<p style="margin-left: 1in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">(a) the selected sub-range is narrow compared to the known range; </span></span></p>
<p style="margin-left: 1in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">(b) the selected sub-range is sufficiently far removed from any
specific examples disclosed in the prior art.</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">The meaning of "narrow" and "sufficiently far removed" has to be decided
on a case by case basis.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">McVeigh J also applied her analysis to the facts in two instances, both holding that there
was no anticipation. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">JAMP argued that the asserted claims of the 917 Patent were anticipated by the 868
application [383]. Recall that the 917 patent relates to the use of adalimumab, a TNFα
inhibitor, to treat HS according to a specified dosing regimen. The 868 application
disclosed the use of TNFα inhibitors as a means of treating 16 broad categories of
disorders, including HS, and presenting a large class of dosing elements with numerous
choices for the specific TNFα inhibitor, the number of loading doses, the amount for
each loading dose, the interval between loading doses, the interval between loading and
maintenance dose (one hour, one day, one week, two weeks) and the amount of
maintenance dose [387]. So, “a skilled person reading the 868 Application would have a
range of dose amounts, dosing intervals, and durations of treatment to choose from
when creating a multiple variable dosing regimen to treat an inflammatory-related
disorder” [388]. In contrast, the 917 Patent claimed a much more specific dosing regime
[389]. McVeigh J invoked her para 173 analysis [385] and concluded:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[390] Given the number of dosing elements disclosed in the 868
Application, it is not clear that a POSITA would know to select
adalimumab and to administer it using the specific dosing regimen
claimed in the 917 Patent. If the POSITA reading the prior art reference
must adopt a specific way forward in order to infringe, yet there are
numerous other ways to perform the prior art without necessarily
infringing, then there is no disclosure: <i>Shire</i> [</span></span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/494142/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2021 FCA 52</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">] at para 50.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">This strikes me as straightforwardly correct, and consistent both binding jurisprudence,
such as <i>Shire</i> and with McVeigh J’s summary statement at [173].</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">JAMP also argued that the asserted claims of the 458 Patent, claiming a formulation of
adalimumab, were anticipated by the 181 Application, titled “Self-Buffering Protein
Formulations” [539]. The 181 Application listed adalimumab among the proteins:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[545] The most preferred protein concentration range in the 181
Application is 20-150 mg/mL. This is a very large range. For the four
proteins tested whose test results appeared in the 181 Application, there
were concentrations of 90 mg/mL and 110 mg/mL which proved to be
self-buffering within pH ranges which included 5.2. But there were other
ranges tested too, and none of these proteins were adalimumab. Moreover,
in the claims section of the 181 Application, these proteins are not
introduced in the same claim as adalimumab and there is no indication of
dependency between the claims that introduce these proteins and the
claim which refers to adalimumab.</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[546] As mentioned above, a range does not always anticipate a point, but
it could if dependant on the facts of the particular patent. This is even
truer where the range is very large or broad. Accordingly, I do not see how
a range of protein concentration from 20-150 mg/mL can plant a flag at
the specific concentration of 100 mg/mL, especially where specific
examples of formulations given do not include the relevant protein.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Accordingly, she held the 181 application did not anticipate. Again, this strikes me as
straightforwardly correct, and consistent both the binding jurisprudence and with
McViegh J’s summary statement at [173].</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;"><span style="font-weight: bold;">Methods of medical treatment</span></span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">It is still black letter law that methods of medical treatment are not patentable subject
matter, though the jurisprudential basis for that proposition is shaky: see <i>Hospira </i></span></span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/461018/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2020
FCA 30</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [48]–[49] (discussed </span></span><a href="http://www.sufficientdescription.com/2020/02/patentability-of-methods-of-medical.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">here</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">). However, no one really knows what a “method of
medical treatment” is. That’s because there is no clear principle underpinning the rule.
The rule was originally set out by the SCC in <i>Tennessee Eastman</i> </span></span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/5172/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">[1974] SCR 111</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">,
primarily on the very logical basis that allowing patentability of methods of medical
treatment would allow an end-run around what was then s 41, which restricted patents
for medicine to product-by-process claims. Section 41 has since been repealed, but
<i>Tennessee Eastman</i> had a tantalizing dictum — “I do not think so” — suggesting there
might be more to it than that. Subsequent decisions of the SCC suggested that the bar
might turn on the “essentially non-economic” nature of the methods of medical
treatment: see <i>Hospira </i></span></span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/461018/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2020 FCA 30</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [49], discussing <i>Shell Oil</i> </span></span><a href="http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/5515/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">[1982] 2 SCR 536</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, 554
and <i>Wellcome / AZT</i> </span></span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2020/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2002 SCC 77</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [49]. But no one really knows what it means to say
that professional skills are essentially non-economic. (Try telling that to a lawyer.) </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">In any event, the best current theory is that a claim that encompasses the skill of a
medical professional is unpatentable. To say it’s the best theory is not to say it’s a correct
theory, or even a good theory — see <i>Hospira</i> [51]–[52] — but that’s more or less where
we are now. The problem is that no one really knows what it means for a claim to
encompass the skill of a medical professional. As a result, we are all flailing in trying to
give some kind of content to the putative rule that methods of medical treatment are
unpatentable. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">In this case, JAMP argued that the claims of the 868 and 917 patents, both directed to
dosage regimens, were invalid as being directed to a method of medical treatment that
requires the exercise of professional skill or judgment [332] saying that:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[333] where there is evidence that the dose would be changed over time in
response to a patient’s needs, then that regimen is vulnerable to an attack
on the basis that is an unpatentable method of medical treatment. In
JAMP’s view, the dosing regimen must be appropriate for all.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">McVeigh J rejected this argument, quoting the decision of Manson J in <i>Janssen </i></span></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/522050/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2022 FC
1218</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [171] (discussed </span></span><a href="http://www.sufficientdescription.com/2022/08/fixed-dosage-regimen-is-patentable.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">here</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">) to the effect that if a physician departs from the claimed
dosage regimen “they would no longer be practicing the claimed invention” [338]. She
followed this reasoning, concluding that “to the extent a minority of physicians wish to
deviate from the claimed regimens at some point, this does not render the claims
unpatentable; rather, it takes their conduct outside the scope of the patents like in
<i>Janssen</i>” [339]. See similarly [413]–[415] respecting the 917 patent. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">More broadly, this suggests that the incoherent state of the law has made the Federal
Court wary of striking down patents on the basis that they claim unpatentable methods
of medical treatment. This wariness strikes me as being entirely appropriate. This bar on
patentability has no basis in the Act. While the courts can and do read text into a statute,
this is normally done only after a careful purposive interpretation shows that adhering
to the text would lead to an absurd or otherwise unacceptable result. The courts are right
to be reluctant to use a judge-made doctrine to strike down a patent for an invention
which is otherwise new, useful and non-obvious, without some clear principled basis for
doing so.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;"><span style="font-weight: bold;">Doses not subject to discretionary adjustment </span></span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The 917 patent claimed a dosage regimen “wherein said multiple doses are not subject to
any discretionary adjustment by a physician or medical practitioner” [380]. This phrase
was added by AbbVie during prosecution to overcome an examiner objection that the
claim was to a method of medical treatment because it limits the professional skill or
judgment of a physician [441]. The issue came up as part of an added matter attack,
which I will return to below. For now, I’ll just point out McVeigh J’s remark that
“AbbVie’s addition did not change claim 1, nor does it broaden the claim. Claim 1 would
have had the same effect, with or without the additional statement” [443]. This is a
relief. I don’t want to get too far into the weeds of how this phrase might be construed.
(Surely any dosage regimen is subject to discretionary adjustment in some cases, eg if
the patient has an unexpected life-threatening reaction to the first dose—would that
mean all claims with that phrase would be invalid?) The larger point is that McVeigh J’s
statement suggests that the issue of patentability of methods of medical treatment will
be decided on substantive grounds, not by trying to make the issue disappear with
drafting slight of hand. When the law is settled, but unworkably, it may be necessary to
allow the use of drafting methods to get around the black letter law, as was done with
Swiss form claims. But that is a second best solution. It is better to get the substantive
law right in the first place, and the law on patentability of methods of medical treatment
is currently sufficiently unsettled to allow us to try to do that. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;"><span style="font-weight: bold;">Added matter</span> </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">JAMP attacked the 917 patent for failure to comply with </span></span><a href="https://laws-lois.justice.gc.ca/eng/acts/P-4/page-6.html#h-412816"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">s 38.2(2)</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">: see [192]–[197],
reviewing the law, and [416]–[444], further reviewing the law and applying it to the
facts. This attack was referred to as a “Claim Term Not Described,” but I’ll call it an
“added matter” attack, as is this the conventional term for the parallel issue in UK law.
The issue arises regularly in UK law, because claim amendments are permitted in
litigation, and the question is whether the amended claim impermissibly adds new
matter. There is limited Canadian caselaw on this provision, with the main authority
being <i>Western Oilfield</i> </span></span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/492562/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2021 FCA 24</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> (discussed </span></span><a href="http://www.sufficientdescription.com/2021/02/caution-in-following-uk-caselaw.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">here</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">).</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">38.2(2) provides as follows:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">The specification and drawings contained in an application, other than a
divisional application, may not be amended to add matter that cannot
reasonably be inferred from the specification or drawings contained in the
application on its filing date.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">One issue that was raised was whether this provision can be the basis for an invalidity
attack, or whether it is purely procedural. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">After reviewing the authorities, including <i>Western Oilfield</i>, McVeigh J concluded that
“the law currently stands, it is unclear whether a patent is invalid when a party adds a
claim term that cannot be reasonably inferred from the specification or drawings”
[197]. <i>Western Oilfield</i> is perhaps a bit ambiguous. The main issue was the nature of the
test for whether the new matter could be inferred, and specifically whether the Canadian
courts should follow the “strict” UK test. One reason for wariness given by the FCA was
that “the U.K. provision provides explicitly for patent revocation. Section 38.2 does not”
[143]. McVeigh J took this as a hint that perhaps invalidity is not a remedy for failure to
comply with s 38.2(2), as I did I in </span></span><a href="http://www.sufficientdescription.com/2021/02/caution-in-following-uk-caselaw.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">my post</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> on that aspect of <i>Western Oilfield</i>, where I
said that Locke JA’s statement “raises the question of whether added matter contrary to
s 38.2 is a basis for invalidating a claim in a granted patent, or whether it is only ground
for refusing an amendment during prosecution.” </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">On re-reading, I don’t think that is what Locke JA was suggesting. As noted, the
discussion was in the context of whether the strict UK test for inferability should be
followed. The full paragraph was:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[143] The third reason to be wary of the strict U.K. test is that the U.K.
provision provides explicitly for patent revocation. Section 38.2 does not.
On the contrary, subsection 38.2(1) provides that, subject to certain
limitations, a patent application may be amended. The provision of
particular interest in the present appeal, subsection 38.2(2), provides for
one of the contemplated limitations.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">I think Locke JA’s point is that because an amendment is explicitly permitted, we should
be wary of being too restrictive in permitting such amendments. That does not imply
that invalidity is not the remedy when the amendment is not permitted, even under a
more relaxed test. The FCA in <i>Western Oilfield</i> went on to hold that the amendment was
reasonably inferable [147], so the Court did not explicitly address the remedy for failure
to comply with this provision.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">I’d also note that </span></span><a href="https://www.legislation.gov.uk/ukpga/1977/37/section/72"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">s 72</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> of the UK Act exhaustively states the grounds for invalidity of a
patent, including that the invention is not patentable (72(1)(a)), which includes
anticipation or obviousness, as well as added matter (72(1)(d)). The Canadian Act has no
equivalent. </span></span><a href="https://laws-lois.justice.gc.ca/eng/acts/P-4/page-9.html#h-413134"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">Section 60</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> simply provides that patent may be declared invalid or void, but
without listing the specific grounds, and s 59 is the same. And </span></span><a href="https://laws-lois.justice.gc.ca/eng/acts/P-4/page-5.html#h-412637"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">s 28.2</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, for example,
dealing with novelty, only says that subject matter “must not” have been disclosed, but
does not say explicitly that a claim may be invalidated on that basis. So, given that there
is no provision in the Canadian Act expressly stating that a patent may be held invalid
for anticipation, obviousness, inutility or insufficiency, the fact that there is no provision
expressly providing that a patent may be held invalid on the basis of 38.2 does mean
much. This is another reason for thinking that this comment by Locke JA was not
intended to question whether invalidity was the appropriate remedy for failure to
comply with 38.2(2).</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">In any event, while McVeigh J did not consider the matter settled by <i>Western Oilfield</i>,
she went on to hold that when an amendment is made in violation of 38.2(2), a claim is
indeed invalid [434]. This seems to me to be clearly correct. Suppose I invent the wheel
and file an application fully disclosing and claiming the wheel. Then, after I filed, but
before my patent is granted, someone else publicly discloses how to make and use
mRNA vaccines. I then amend my application to disclose and claim how to make and
use mRNA vaccines. My claim can’t possibly be valid, even if it somehow slips through
the patent office. There isn’t any other provision that would clearly prohibit this kind of
amendment, since the mRNA vaccine is new and non-obvious as of my filing date.
Section 38.2(2) provides a straightforward basis for invalidating such a patent. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The issue arose on the facts because of the addition of the phrase “wherein said multiple
doses are not subject to any discretionary adjustment by a physician or medical
practitioner” to the 917 patent during prosecution, as discussed above. McVeigh J held
that amendment did not result in invalidity:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[443] In my view, AbbVie’s addition did not change claim 1, nor does it
broaden the claim. Claim 1 would have had the same effect, with or
without the additional statement.</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[444] However, that is not the issue. The issue is whether the added claim
term was reasonably inferable from the 917 Patent disclosure. I find that
though it does conflict with the disclosure, AbbVie has not gained anything
more than it originally had.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">It’s not clear to me what McVeigh J meant when she said the added term “does conflict
with the disclosure” but the main point seems to be that since the amendment did not
change the claim scope, nothing at all was added, so it follows that nothing that was not
reasonably inferable was added. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;"><span style="font-weight: bold;">Claim construction</span></span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The only real dispute between the parties was the definition of “treating” in Claim 1</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[296] I agree and adopt JAMP’s experts’ construction, as, even given its
ordinary meaning, treating does not always achieve a meaningful result.
Treating means attaining some therapeutic results but does not demand a
particular duration or result.</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[297] Treating does not mean achieving a meaningful clinical response and
I do not accept Dr. Marshall’s definition that there must be a “certain
therapeutic effect” (Dr. Marshall Report at para 91). “Treating” means a
physician administering or prescribing adalimumab to an IBD patient
according to the dosing regimen of the patent.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">This seems right to me, not just on the text. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The question goes to utility. Generally, clinical efficacy does not have to be established at
the time of filing. If the research has proceeded to the point where there is sufficient
information to support a valid patent, the patent agent will want to draft a valid claim.
The drafter will never specify “clinical efficacy” in the claim unless it is crucial to validity,
because doing so needlessly raises the bar for utility. It seems to be consistent with a
purposive interpretation to construe the claims on the presumption that the drafter did
not intend to draft the claim in a way that would undermine its validity.</span></span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-90918727701264397302024-01-02T05:00:00.022-04:002024-01-06T16:15:50.154-04:00Double Patenting and Divisionals<p></p><p style="margin-bottom: 0.104167in;"><i>NCS Multistage Inc v Kobold Corporation</i> <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524484/index.do"><span style="color: blue;">2023 FC 1486</span></a><span style="color: black;"> McVeigh J</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2693676/summary.html"><span style="color: blue;">2,693,676</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2820652/summary.html"><span style="color: blue;">2,820,652</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2738907/summary.html"><span style="color: blue;">2,738,907</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2766026/summary.html"><span style="color: blue;">2,766,026</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2820704/summary.html"><span style="color: blue;">2,820,704</span></a><span style="color: black;"> (NCS) / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/3027571/summary.html"><span style="color: blue;">3,027,571</span></a><span style="color: black;">
(Kobold) </span></p>
<p style="margin-bottom: 0.104167in;"><a href="http://www.sufficientdescription.com/2023/12/throwing-mud-at-wall.html"><span style="color: blue;">My first post</span></a><span style="color: black;"> on this case provided an overview of this decision and addressed some
miscellaneous issues, while </span><a href="http://www.sufficientdescription.com/2023/12/redundancy-between-overbreadth-and.html"><span style="color: blue;">my second post</span></a><span style="color: black;"> addressed the overbreadth argument. This
post addresses the issue of double patenting and the <i>Consolboard</i> </span><a href="http://scc-csc.lexum.com/decisia-scc-csc/scc-csc/scc-csc/en/item/2426/index.do"><span style="color: blue;">[1981] 1 SCR 504</span></a><span style="color: black;">,
536–37 safe harbour for so-called ‘forced’ divisionals. Specifically, the question is
whether the safe habour for forced divisionals is triggered by an examiner requisition
raising a unity of invention objection, or only by a Final Action, or by something in
between. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This is the most important legal aspect of the decision. It is unfortunate that NCS’s
‘throw mud at the wall’ litigation strategy meant it was crammed in with dozens of other
issues. The entire discussion of divisionals was 40 paragraphs in a 1684 paragraph
decision dealing with myriad other matters. As a result, McVeigh J’s analysis left several
loose ends unresolved. This post, which is twice as long as McVeigh J’s discussion,
tracks down these loose ends in some detail. It might seem unreasonable of me to do so,
given that there is now clearly a split in the case law. No doubt future cases will provide more guidance, so it might be said that we need only let the law unfold.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">But that is a litigation perspective and this is a patent prosecution problem. There are
many legal issues that make no difference in prosecution. A question as to the threshold
for obviousness might make it more or less likely that the patent will ultimately be found
invalid for obviousness in litigation, but there is nothing a patent agent can do to affect
whether the invention is obvious; that means that any change in the rule will not affect
how patent agents prosecute current applications. It is not unreasonable to allow the law
to unfold slowly on such issues. But the law relating to divisionals affects hundreds of
applications every week. Patent agents need to know what steps to take today, to protect
the patents they are prosecuting now from double patenting attacks ten years from now,
when the issued patents are finally tested in litigation. The patent agent has a more
difficult job than the litigator in that respect; the litigator needs to know what the law is
today, the agent needs to know what it will be ten years from now.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">An inventor cannot have two patents for the same invention: <i>Comm'r of Patents v
Hoechst</i> </span><a href="http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2758/index.do"><span style="color: blue;">[1964] SCR 49</span></a><span style="color: black;">. The rule applies when the claims are “identical or
conterminous,” referred to as “same invention” double patenting, and also when the
claims of the second patent are not “patentably distinct” from those of the earlier patent,
called “obviousness” double patenting: <i>Whirlpool</i> </span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/1833/index.do"><span style="color: blue;">2000 SCC 67</span></a><span style="color: black;"> [63]–[67]; <i>Sanofi</i> </span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2575/index.do"><span style="color: blue;">2008
SCC 61</span></a><span style="color: black;"> [108]–[115]. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The rule applies also to divisional patents, with the caveat that in <i>Consolboard</i> </span><a href="http://scc-csc.lexum.com/decisia-scc-csc/scc-csc/scc-csc/en/item/2426/index.do"><span style="color: blue;">[1981] 1
SCR 504</span></a><span style="color: black;">, 536–37, the SCC carved out an exception for what is sometimes call a ‘forced’
divisional, as a opposed to a voluntary divisional:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">As I noted earlier, the appellant originally filed a single patent application
for letters patent, but was required by the Commissioner of Patents to
divide his application into two parts. It may be open to question whether
the Commissioner of Patents should have split off the wafers and treated
them as the subject of a separate patent but in my view <span style="font-weight: bold;">a patentee is not
to be prejudiced by enforced divisional applications. If patents
are granted on divisional applications directed by the Patent
Office</span>, none of them should be deemed invalid, or open to attack, by
reason only of the grant of the original patent. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">A question then arises as to what constitutes an “enforced” or ‘forced’ divisional, which
permits the patentee to take advantage of this safe harbour [226]–[245], as opposed to a
so-called ‘voluntary’ divisional, which is not. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The SCC’s <i>Consolboard</i> statement does not provide any guidance on this issue. The SCC
was speaking loosely, because a divisional is never “enforced” or “directed” by the Patent
Office. If an examiner raises a unity objection, refusing to grant the patent with the full
set of filed claims, and the applicant deletes some of the claims in response, the patentee
may choose to file a divisional in respect of those claims, but the Patent Office will never
require the applicant to file the divisional. In that sense, all divisionals are voluntary. In
another sense, all divisionals are forced, because the applicant obviously wanted a
patent with the full set of original claims, or it would have filed two entirely different
applications in the first place. The SCC must have meant that a divisional is to be
considered forced if the Patent Office would have refused to grant the parent application
with the full set of claims, so that the only way to get a patent with the claims found in
the divisional would have been to file the divisional. The forced / voluntary terminology
seems established, so I will continue to use it, but the real question is what it means for
the Patent Office to refuse the parent application.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">With that terminology in mind, the substantive question is which divisionals can take
advantage of the <i>Consolboard</i> safe harbour (‘forced’) and which cannot (‘voluntary’). Is
a divisional considered forced if it is a response to a unity of invention objection by the
examiner, or it is considered forced only if it is a response to a Final Action? The
question arose on the facts on the issue of whether the 652 and </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2749636/summary.html"><span style="color: blue;">2,749,636</span></a><span style="color: black;"> patents were
voluntary divisionals of the 676 patent. (The 636 patent was not asserted but McVeigh J
found it necessary to address it nonetheless [1229].)</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">In her review of the limited caselaw, McVeigh J [234], noted that in <i>Abbott FC</i> </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/56875/index.do"><span style="color: blue;">2009 FC
648</span></a><span style="color: black;"> [193], Heneghan J indicated that it was enough that the division was a response to
an examiner’s unity of invention objection, saying:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[193] I am satisfied that the [</span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2358395/summary.html"><span style="color: blue;">2,358,395</span></a><span style="color: black;">] Patent should not be found
invalid for double patenting over the [</span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2285266/summary.html"><span style="color: blue;">2,285,266</span></a><span style="color: black;">] Patent. The Applicants
provided evidence to show that claims respecting the improved taste
profile were divided out of the ‘266 Patent at the request of the
Commissioner of Patents. That was an administrative action lying within
the mandate of the Commissioner of Patents. In my opinion, it would be
unfair and inequitable to find that the ‘395 Patent should be invalidated,
only because the Applicants had followed the directions of the
Commissioner.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">In <i>Abbott FC</i> [27], Heneghan J noted that “during the prosecution of the ‘266 Patent,
the Commissioner of Patents required Abbott to divide out any claim relating to
improved taste profile into a separate application,” which led to the 395 patent. This
evidently refers to the examiner’s requisition of 28 March 2000
(02285266-2000-03-28-PRO). This was the extent of the objection; in particular, there
was no Final Action in the file. This means that for Heneghan J, for the applicant to be
able to take advantage of the safe harbour it is enough that the divisional was filed after
a requisition by the examiner making a unity objection. For convenience, I’ll call this a
‘requisition only’ approach to the safe harbour. (Note that it is the examiner, not the
Commissioner, who issues a requisition, but I take it that Heneghan J is using “the
Commissioner” is a synecdoche for the Patent Office as a whole.)</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">On the other hand, McVeigh J [236] noted that in <i>Biogen FC</i> </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/470862/index.do"><span style="color: blue;">2020 FC 621</span></a><span style="color: black;"> [106], [197],
relating to the </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2562277/summary.html"><span style="color: blue;">2,562,277</span></a><span style="color: black;"> patent, Manson J suggested that a divisional is not considered
forced if it is merely a response to a requisition:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[106] Throughout the trial, Biogen characterized the divisional application
as “forced.” This is an overstatement, as the August 26, 2011 Office Action
was an objection, rather than a rejection by way of a “final action.” At this
point in the prosecution process, Acorda’s election to proceed with the use
claims and file a divisional for the method claims was voluntary. If Acorda
felt that the unity of invention objection was not merited, it could have
advocated that the responder method was indeed part of the claimed use
invention.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The thrust of Manson J’s remark was that a divisional filed as a response to an
examiner’s unity objection is not considered voluntary. The examiner requisitions at
issue in <i>Abbott FC</i> and <i>Biogen FC</i> were in substantially similar terms, so it is clear that
the two decisions are indeed at odds on this point. Manson J’s statement also suggests
that a divisional should be considered forced only if it is in response to a Final Action. I’ll
call this a ‘Final Action’ approach.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">I should note that strictly a unity objection is never resolved by a Final Action. In
response to a unity objection, and prior to a Final Action, the Examiner may refer the
application to the Commissioner of Patents for review by a Unity Review Board: see
MOPOP </span><a href="https://manuels-manuals.opic-cipo.gc.ca/w/ic/MOPOP-en#!fragment/zoupio-_Toc112149590/"><span style="color: blue;">21.07</span></a><span style="color: black;"> and </span><a href="https://manuels-manuals.opic-cipo.gc.ca/w/ic/MOPOP-en#!fragment/zoupio-_Toc112149596/"><span style="color: blue;">21.07.06</span></a><span style="color: black;">. (This is an administrative procedure not specifically
contemplated in the Rules.) If the applicant is unsuccessful before the URB, the matter
is referred to the Commissioner who may issue a Notice of Direction to the applicant
under authority of 36(2.1): “the applicant shall, on the direction of the Commissioner,
limit the claims to one invention only.” While 36(2.1) uses mandatory “shall” language,
what is mandatory is limiting the claims in the application to a single invention. There is
no positive obligation to then pursue a divisional: 36(2.1) provides that any other
invention disclosed “may” be made the subject of a divisional application. In any event,
notwithstanding the mandatory language, even after a Notice of Direction has been sent
to the applicant, this does not in itself terminate prosecution. The applicant can then
respond to the Notice of Direction, presumably normally by deleting the objectionable
claims. But if the applicant chooses instead to continue the fight, the application will be
forwarded to the Patent Appeal Board in a process that “resembles the review of a Final
Action”: MOPOP 21.07.06. After the referral to the PAB, an unsuccessful applicant has
the option of pursuing the matter through the courts. So, under the current procedure a
unity objection is never resolved by a Final Action as such. With that said, this entire
scenario was not before Manson J, and presumably his reference to a “final action” can
be taken to mean the functionally equivalent referral to the PAB under the unity
procedure. With that said, Manson J made no reference to the URB, and it is likely that
he did not have the procedural context in mind, given that the divisional at issue was a
response to a requisition. It is therefore entirely possible that he would consider a
divisional responding to a Notice of Direction to also be forced, even though it precedes
the equivalent of a Final Action. It also seems clear enough that he would not require the
applicant to go so far as to appeal to the PAB.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">With all that out of the way, back to the case at hand. After reviewing <i>Abbott FC</i> and
<i>Biogen FC</i>, McVeigh J was of the view that:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[245] The preferred approach is an informed middle ground. Where an
inventor can trace the origin of the divisional back to a direction of the
Commissioner, it will be immune from double patenting attacks.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">It’s not clear from this passage alone what kind of “middle ground” McVeigh J is
endorsing. McVeigh J’s language referring to “a direction of the Commissioner” echoes
Heneghan J’s reference to “the directions of the Commissioner.” This suggests McVeigh
J contemplated a variation on Heneghan J’s approach. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Seemingly confirming this, on the facts McVeigh J did review the prosecution history to
see if the 636 divisional was forced or voluntary, even though there was no referral to
the URB or PAB [1228]–[1236]. This in itself implies that she would not require a
referral to the URB or PAB as a prerequisite to considering a divisional to be forced. NCS
relied on two Examiner Requisitions in the 676 file dated October 19, 2010
(02693676-2010-10-19-PRO) and June 16, 2011 (02693676-2011-06-16-PRO) [1234],
both of which were requisitions which contained unity objections in fairly standard
terms. McVeigh J found these requisitions insufficient to establish that the divisional
was forced. This means that, contrary to the ‘requisition only’ approach, for McVeigh J a
unity objection by an examiner is not in itself enough to establish that division was
forced. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Specifically, McVeigh J noted that while the examiner had made two requisitions, “[a]
review of the file history leaves it unclear whether NCS divided the 676 Patent [to form
the 636 Patent] due to these objections from the Patent Office” [1235]. So, for McVeigh
J, while a referral to the URB is not required, a requisition based on a unity objection
alone is not enough either. It appears that she would require some evidence connecting
the divisional to the objection. This might be called a ‘requisition plus’ approach. It is
not enough that a unity objection was made; there must be something more that
establishes a causal connection between that objection and the filing of the divisional.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">What kind of evidence could establish the necessary connection? Here is the text of the
June 16, 2011 requisition that NCS relied on. (The first was in similar terms.)</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">The application does not comply with subsection 36(1) of the <i>Patent Act</i>.
The claims are directed to a plurality of alleged inventions as follows:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[. . . ]</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">According to subsection 36(2) of the <i>Patent Act</i>, after limiting the claims
of the present application to one invention only, the applicant may make
any other invention disclosed the subject of a divisional application.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This in itself was not enough to persuade McVeigh J of the necessary connection. So, it
would seem that for McVeigh J, a divisional that is simply a response to this language in
a requisition does not constitute a forced divisional, and so cannot take advantage of the
safe harbour. This is fairly standard language for a unity objection. The language in the
28 March 2000 requisition (02285266-2000-03-28-PRO ) in <i>Abbott FC</i> was in very
similar terms:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">The claims are directed to a plurality of alleged inventions as follows:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[. . . ]</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">The claims must be limited to one invention only as set out in Section 36 of
the Patent Act. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">From this we see that McVeigh J sets a higher bar than Heneghan J in that she came to a
different conclusion on essentially the same facts. I don’t think that anything can be
made of the difference of the wording between these requisitions, or whether a
divisional is forced or not would turn on vagaries of the examiner’s drafting style. But
her “middle ground” remark implies she would not go so far as to require a Final Action. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The foregoing tells us what evidence McVeigh J considers is <i>not</i> adequate to establish
the necessary connection between the requisition and the divisional, but it does not tell
us what kind of evidence <i>is </i>adequate. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The next paragraph offers a hint. In coming to the conclusion that “there is nothing in
the record to indicate the 636 Patent is a forced divisional” [1236], McVeigh J stated:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">I acknowledge that there are two Examiner Requisitions on October 19,
2010 and June 16, 2011. However, there is no indication as there was
above, in the case of the 652 Patent that NCS created a new patent
application based on these objections or even in response to these
objections.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The reference to the “above” case of the 652 patent is evidently a reference to [1233],
where McVeigh J screenshotted the following from the 652 file history correspondence
(02820652-2013-07-11-PRO):</span></p>
<p style="margin-bottom: 0.104167in;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMpBzIze-FCr3ZJypKqSBlSbXtLiPmTzCOK50yk2loA0jUXacyUfpz4p-ThCmTr2kP6TGHz2IYdrkQILpEokNtOeIKObPZFO6j5hdAGCtFtcH0bgF8v6nsvHdnYiSE-WJNPTcfHfe0C9GgtkdyQYOwAWnVX7DjylI5KyBSZn3DM6xRjN2BF3nr2BtVdnM/s859/VA%20636.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="403" data-original-width="859" height="188" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgMpBzIze-FCr3ZJypKqSBlSbXtLiPmTzCOK50yk2loA0jUXacyUfpz4p-ThCmTr2kP6TGHz2IYdrkQILpEokNtOeIKObPZFO6j5hdAGCtFtcH0bgF8v6nsvHdnYiSE-WJNPTcfHfe0C9GgtkdyQYOwAWnVX7DjylI5KyBSZn3DM6xRjN2BF3nr2BtVdnM/w400-h188/VA%20636.jpg" width="400" /></a> </p><p><span style="color: black;"> </span></p><p><span style="color: black;"> </span></p><p><span style="color: black;"> </span></p><p><span style="color: black;"> </span></p><p><span style="color: black;"> </span></p><p><span style="color: black;">So, it appears that McVeigh J took this to be an indication that the 652 Patent was
created as a response to the examiner objections. I must say that it is not clear to me
what it is about this document that warrants that inference. I am given to understand
that a “voluntary amendment” (VA) of this type is not unusual, but neither is it entirely
standard. A divisional is typically filed with the intended claims. In some cases, however,
perhaps if the applicant has not decided which claims to pursue in the divisional, the
applicant may file the divisional with placeholder claims, perhaps the original claims
from the parent or claims to the unelected subject matter that was cancelled after the
unity objection in the parent. The applicant may then amend the claims after filing by a
VA. The VA is usually filed after the initial filing of the divisional, though in this case it
was filed at the same time as the divisional application itself was filed. It not clear why
that was done; filing a VA adds some expense and an additional step that could have
been avoided by simply filing the intended claims as part of the application itself. In any
event, the VA is an amendment to the claims that were filed as part of the divisional
application, which is considered an entirely separate application (s 36(4)). I can’t see
how an amendment to the claims of the divisional establishes a connection to the
examiner’s requisition relating to the parent.</span></p><p></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">In any event, this at least implies that something in the correspondence with the Patent
Office during the prosecution of the divisional indicating that the divisional is being filed
in response to the objection is the extra step that McVeigh J would require to show that
the divisional was filed as a result of that objection. Second, it implies that the above
language is sufficient to establish that inference, even though it is not entirely clear why
that language is sufficient.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">There is a problem, however. As quoted above, McVeigh J held that in contrast to the
652 patent, the file history of the 636 patent left it unclear as to whether the 636
application was also was a response to the examiner requisition. However, the 636 file
history (02749636-2011-11-30-PRO) has a very similar VA:</span></p>
<div class="WPParaBoxWrapper" style="clear: left; float: left; width: 724px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_b3SdEmyikwOfeTBOVvUIc4DanaGpbHmc6tXNsPYJWw2GQ1BHgzjPDtPwz2YwuQpWE9lMUdnEzkJ1OViCZezKfJ-DfbPXT478skLDzhjSOOEBqCd9Z2icTG9vclMj87NCJSYtntXbZlAfVk2is9ZXuut7n2hwGm-ziuCwz_tOQMOcXClxjF8n7aR7YtA/s1632/VA%20636.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="826" data-original-width="1632" height="203" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_b3SdEmyikwOfeTBOVvUIc4DanaGpbHmc6tXNsPYJWw2GQ1BHgzjPDtPwz2YwuQpWE9lMUdnEzkJ1OViCZezKfJ-DfbPXT478skLDzhjSOOEBqCd9Z2icTG9vclMj87NCJSYtntXbZlAfVk2is9ZXuut7n2hwGm-ziuCwz_tOQMOcXClxjF8n7aR7YtA/w400-h203/VA%20636.jpg" width="400" /></a></div><br /><span class="WPParaBox" style="border: none;"></span></div>
<p style="margin-bottom: 0.104167in;"> <span style="color: black;">I don’t see any substantive distinction between these. There is a difference in that the
652 VA was filed at the same time as the divisional itself was filed, whereas the 636 VA
was filed about ten weeks after the divisional application was itself filed (as is more
usual). I don’t know why this would make any difference in McVeigh J’s analysis, but I
also don’t see any other difference that might be relevant. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The bottom line from the analysis so far is that that McVeigh J would require something
more than a unity objection to establish that the divisional was forced; there must be
something in the file history of the divisional to indicate it was filed in response to the
requisition. However, it is not clear what it is about the VA that allowed McVeigh J to
draw that inference. The confusion about the role of the VA is compounded by the
apparent inconsistency between the treatment of the 652 and 636 divisionals.
Consequently, it is not clear what evidence is needed to establish the connection that
McVeigh J would require.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The foregoing relates to McVeigh J’s discussion of whether the 636 divisional was
forced. She then turned to the question of whether the 652 divisional was forced [1236].
In that context, her analysis turned on what appears to be an entirely separate point: </span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[1244] As can be seen, Parliament created two avenues for the Patent
Office when objecting to a multiplicity of invention. Subsection 36(2)
allows the inventor to voluntarily divide, whereas subsection 36(2.1)
enforces a division.</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[1245] NCS adopts the position that both voluntary and forced divisional
applications are possible under subsections 36(2) and 36(2.1) of the Patent
Act.</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[1246] However, I am of the view that subsection 36(2.1) is comparable to
the Supreme Court’s wording of “enforced divisional application” in
<i>Consolboard</i> at paras 536-537. This further supports adopting the
approach in <i>Biogen FC</i>.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This seems to be saying that only a divisional issued pursuant to 36(2.1) would be
considered forced. As noted above, 36(2.1) is used by the Commissioner after a review by
the URB. This means that only a divisional that went to the URB is to be considered
forced. As McVeigh J notes [1246], this is similar to the <i>Biogen FC</i> approach of requiring
a Final Action, with the caveat that a referral to the URB is not strictly a Final Action,
though it follows a similar procedure. While neither McVeigh J nor Manson J
mentioned the URB, I expect they would both consider it sufficient if the divisional were
filed as a consequence of a Notice of Direction pursuant to 36(2.1) without requiring the
applicant to continue resisting so as to provoke a true Final Action.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">It is not clear to me how to reconcile McVeigh J’s analysis of the 636 and 652
divisionals. The “middle ground” language [245], and the discussion at of the 636 patent
at [1233]–[1236], implies a ‘requisition plus’ approach, while the discussion of the 652
patent at [1244]–[1246] implies a ‘final action’ approach. These seem to be two entirely
different tests. McVeigh J held the 636 patent to be a ‘voluntary’ divisional on the basis
of the first test [1236], and she held the 636 patent to be a ‘voluntary’ divisional on the
basis of the second test [1247], thus confirming that these two lines of reasoning are
indeed distinct grounds for holding that the division is voluntary. One way to reconcile the tests would be to say that both tests must be satisfied to take advantage of
the safe harbour, but this seems strained — if McVeigh J had intended a two-pronged
test, one would have expected her to say so explicitly.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">To this point I have been trying to unpack McVeigh J’s decision. Now we can turn to
policy considerations. There are a few points at which the divisional might be considered
forced: (1) if made as a response to an examiner’s requisition; (2) after a referral to the
URB and a subsequent Notice of Direction by the Commissioner pursuant to 36(2.1); (3)
after the subsequent Final Action by the examiner; (4) after an adverse PAB decision; (5)
after an adverse court decision. All of these might additionally be combined with
McVeigh J’s suggestion that there must be something extra in the divisional file to
establish a connection between the requisition and the divisional. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Regardless of the point where we draw the line in the prosecution of the parent, it is
difficult to see any policy justification for requiring something extra in the file to
establish a causal connection with the divisional. First, I must say that I have difficulty
understanding why the standard sequence of events is not sufficient to establish a causal
connection. Typically, a unity objection is made to the parent patent, identifying two
groups of claims, and instructing the applicant to elect Group A or Group B; the
applicant does indeed delete Group B; the applicant subsequently files a divisional
claiming Group B (or substantively similar claims); the divisional application explicitly
indicates that it is a divisional of the parent, as is required to claim divisional status and
the benefit of the same filing date. What else is really needed to establish that the
division was caused by the requisition?</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Further, if a ‘requisition plus’ rule is established, patent agents will simply add the
necessary wording, once they find out what it is. That will be pure formalism, and it is
difficult to see what is gained. If the special words are already standard boilerplate, then
it won’t make any difference. If new words need to be used – for example, if it is
necessary to file placeholder claims and a VA simultaneously — there will be a period of
potentially prolonged uncertainty before we find out what the special words are. And
there is also the question of existing divisional patents. If agents need to add new words
that are not now normally included, this would effectively mean that all past divisionals
are deemed to be voluntary. This is effectively a retroactive change in the law with the
injustice that entails, for no apparent benefit. The broader point here is that specific
words in the divisional file will never be a reliable indication of a causal connection
(assuming some evidence is necessary beyond the requisition), because the patent agent
will use whatever words are necessary to invoke the safe harbour. For simplicity, in the
remainder of this policy discussion I will assume there is no such requirement, though
we cannot rule it out as a legal requirement.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Now we can return to the question of where to draw the line. We can rule out options (4)
and (5). No one so far has suggested going so far as to requiring the applicant to go to the
PAB or beyond. The outcome of a PAB decision may be an outright rejection of the
application: see </span><a href="https://manuels-manuals.opic-cipo.gc.ca/w/ic/MOPOP-en#!fragment/zoupio-_Toc112149731/"><span style="color: blue;">MOPOP 26.08</span></a><span style="color: black;">. It unreasonable to require the applicant to risk rejection
of the application as a prerequisite to taking advantage of the safe harbour. Moreover,
requiring a PAB decision would appear to be contrary to <i>Consolboard</i>, as there was no
mention of a PAB decision requiring the division, though it is conceivable that there was
one and it was not mentioned. I included options (4) and (5) nonetheless for
completeness, and to point out that there is no reason in principle to draw the line at a Final
Action rather than a PAB rejection; whether the applicant decides to withdraw claims
from the parent and file a divisional after any of these steps, the reason is always that the
cost and inconvenience of filing a divisional is outweighed by the cost of fighting the
objection.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The real question, then, is whether the safe harbour should be triggered by a requisition
only, or whether the applicant needs a URB referral or a Final Action. Since a URB
referral and a Final Action are closely linked, we can treat them together. These are very
onerous requirements. Final Actions, or a trips to the URB, are rare. This is because a
Final Action is intended as a last resort when a true impasse is reached. Indeed, an
applicant is required to respond “in good faith” to a requisition: </span><a href="https://laws-lois.justice.gc.ca/eng/regulations/SOR-2019-251/page-7.html#h-1182900"><span style="color: blue;">Rule 86(3)</span></a><span style="color: black;">. A refusal to
divide in response to a unity objection solely to provoke a referral to the URB so as to
protect the safe harbour, would arguably not be made in good faith. Moreover, I am
given to understand that in practice unity objections tend to be raised early in
proceedings and the examination does not take place until any perceived lack of unity
issue is resolved. That means that a trip to the URB and possibly a Final Action would be
provoked at the very outset of examination, before any of the substantive objection have
been raised. That is clearly not the function of a Final Action. Further, while unity
objections are routinely made very early in prosecution on the basis of the application
submitted by the applicant, it also happens that a unity objection is made later in
prosecution, based on new prior art discovered by the examiner or submitted by a third
party pursuant to 34.1(1). In such a case, the applicant may agree with the examiner that
the unity objection is appropriate. It seems wrong to require the applicant to disagree
with the examiner in order to provoke a Final Action so as to take advantage of the safe
harbour. It might be said that if the examiner and the applicant agree the parent claims
two patentably distinct inventions, then there is no need for the safe harbour. But it is
one thing for the examiner and the applicant to agree, and it is another for the applicant
to be confident that a court ten years from now will agree. And just because the
applicant agrees that division is appropriate, it does not necessarily mean that the
applicant believes that the parent contains two distinct inventions. It is enough that the
applicant is of the view that there are arguably grounds for believing the application contains two
inventions; that is enough to warrant examining the two putative inventions separately.
This is not to suggest that provoking a referral in order to take advantage of the safe
harbour is conduct that should be sanctioned; that would put applicants in an even more
impossible position. The point is that a rule requiring a Final Action or URB referral in
order to take advantage of the safe harbour incentivizes conduct that is harmful to the
patent system as a whole by increasing cost and delay.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Thus, the Final Action / URB approach would dramatically restrict the availability of the
safe harbour. It would be tantamount to abolishing the safe harbour, or dramatically
increasing the cost of the patent system. That in itself does not imply the Final Action
approach is wrong. We need to ask whether it would be desirable to dramatically restrict
the safe habour. This would be harsh for the applicant, but that might be justified if
there is an offsetting benefit to the public.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">There is a straightforward argument in favour of restricting or abolishing the safe
habour. The safe harbour may protect what is in fact a second patent for the same
invention, which should properly have been included in the parent application. Indeed,
that is the whole point — if the divisional is patentably distinct, a safe harbour is not
needed. It is unfair to the applicant to penalize them for double patenting that was not
their fault, but regardless of whose fault it might be, the public will suffer the
consequent harm of double patenting. We might therefore want to restrict the
availability of the safe harbour, accepting the unfairness to the applicant, in order to
protect the public from the harms of double patenting. Requiring the applicant to
pursue more onerous steps before taking advantage of the safe harbour effectively
restricts the availability of the safe harbour and therefore provides more protection to
the public against the harms of double patenting.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">How difficult should it be for the applicant to take advantage of the safe harbour? How
hard should the applicant have to fight in resisting the Patent Offices improper unity
objection? That depends on how much the public is harmed by double patenting. We
should require the applicant to fight hard—all the way to a URB referral or a Final
Action, if the harm to the public is large; in other words, we are willing to tolerate
significant unfairness to the patentee if the harm to the public is substantial. On the
other hand, if the harm to the public from double patenting is minimal, then we should
not tolerate as much unfairness to the patentee. It follows that to decide where to draw
the line for the safe harbour, we need to assess the harm to the public from double
patenting in the context of divisionals.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">How bad is the double patenting problem? The double patenting doctrine “is aimed at
the problem of evergreening; extending the monopoly that was granted on the first
patent by filing a new patent that does not offer a new invention to the public”: <i>Mylan v
Lilly </i></span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/143645/index.do"><span style="color: blue;">2016 FCA 119</span></a><span style="color: black;"> [26]. When <i>Consolboard</i> was decided, the evergreening problem
was substantial. The term ran from grant and applications were not published until
grant, so if the inventor could file two patents for the same invention, it could get early
protection by vigorously prosecuting the first application and potentially many years of
extended protection by delaying prosecution of the second. The problem is now
substantially mitigated because applications are now laid open after 18 months, so the
inventor can get at most an extra 18 months, after which the first application will be
prior art against the second. I will discuss this in a subsequent post.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">More importantly for the present purposes, the evergreening problem does not arise at
all in respect of divisionals. A divisional will necessarily have the same expiry date as the
parent. This is because the divisional necessarily has the same filing date as the parent
(</span><a href="https://laws-lois.justice.gc.ca/eng/acts/P-4/page-11.html#h-413320"><span style="color: blue;">78.2(b)</span></a><span style="color: black;">). That is the point of a divisional. Otherwise, in response to a unity objection,
the applicant would have to withdraw some claims and file an entirely new patent
application with a new priority date, with the attendant risk that invalidating prior art
would have arisen in the interim. That would be unfair to the applicant, which did after
all actually file a sufficient specification fully disclosing the second invention on the
original filing date, so there is no reason to deny the applicant the benefit of the original
filing date. The solution to the problem is to allow a divisional, which has the same
priority date as the parent (per 78.2(b)), thereby avoiding the problem of intervening
prior art. In all other respects the divisional is like an entirely separate application: s
36(4). Since the divisional necessarily has the same filing date as the parent, it
necessarily has the same expirty date, under the current rule that the term runs from
filing. The mischief of term extension through double patenting simply cannot arise in
respect of a divisional under current law, as McVeigh J recognized in <i>AbbVie v JAMP
Pharma </i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524560/index.do"><span style="color: blue;">2023 FC 1520</span></a><span style="color: black;"> [609]–[610]: see also <i>MIPS v Bauer Hockey </i></span><a href="https://decisia.lexum.com/fc-cf/decisions/en/item/310343/index.do"><span style="color: blue;">2018 FC 485</span></a><span style="color: black;"> [302]
and <i>GlaxoSmithKline v Apotex </i></span><a href="http://www.canlii.org/en/ca/fct/doc/2003/2003fct687/2003fct687.html"><span style="color: blue;">2003 FCT 687</span></a><span style="color: black;"> [89].</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The same objection can be made to McVeigh J’s argument that “[a]n applicant should
not be penalized for electing for a divisional, but such an election should not be a mere
attempt to secure the claims and take advantage of the earlier priority date of the parent
patent” [245]. This implies that the safe harbour should be denied when the applicant is
trying to game the system by using a divisional to take advantage of the earlier priority date of the
parent patent. The problem with that reasoning is that the applicant can never “take
advantage of the earlier priority date of the parent,” because the parent never has an
earlier priority date; the priority date of the parent and the divisional are always the
same: s 78.2(b).</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Another type of harm was noted by Kelen J in <i>GlaxoSmithKline v Apotex </i></span><a href="http://www.canlii.org/en/ca/fct/doc/2003/2003fct687/2003fct687.html"><span style="color: blue;">2003 FCT 687</span></a><span style="color: black;">
[89]–[90]. He acknowledged that the original rationale for the rule against double
patenting did not apply in respect of divisionals under the new Act [89], but he went on
to make the following observation:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[90] I cannot agree with GSK that "the sin of double patenting" has
evaporated. GSK has overlooked the impact that a second patent can have
under the Regulations. Under paragraph 7(1)(e) of the Regulations, the
Minister is prohibited from issuing the requested NOC for 24 months once
the owner of a patent has applied for an order under subsection 6(1). The
effect of this provision is to put in place a mandatory injunction that
remains in force until either the case is disposed of or the 24-month period
expires. The existence of additional patents allows the patent-holder to
bring additional applications, thereby obtaining multiple injunctive
periods. There is no need to look further than the case at bar for an
excellent example of this practice. Even though Apotex successfully
invalidated the '637 patent in 2001, the filing of this application by GSK
has prohibited Apotex from bringing its product to market for the past two
years.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">I’ll call this the “NOC problem”. It arose in that case because GSK filed an application
claiming dry formulation paroxetine and carved out a divisional claiming dry
formulation paroxetine without microcrystalline cellulose. The patent based on the
parent issued and was added to the patent register. Apotex promptly filed an NOA and
the NOC litigation over the parent ensured. Then the divisional claiming dry
formulation paroxetine without microcrystalline cellulose issued and was added to the
patent register, and the litigation started all over again. If the two are not patentably
distinct, the patentee would surely lose in the second litigation if it lost in the first. But
as Kelen J pointed out, it can nonetheless get the benefit of the statutory stay (though
there is a second order disincentive because of the prospect of s 8 damages). So, the
NOC problem was real.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">I say it “was” real, because the NOC problem that arose in <i>GlaxoSmithKline v Apotex </i>no
longer exists, as McVeigh J recognized in <i>AbbVie v JAMP Pharma </i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524560/index.do"><span style="color: blue;">2023 FC 1520</span></a><span style="color: black;"> [613].
As a result of 2006 amendments, SOR/2006-242, the patent list is now ‘frozen.’ The
generic is now only required to respond to patents that were listed at the time it filed its
NOA: NOC Regs </span><a href="https://laws.justice.gc.ca/eng/regulations/SOR-93-133/page-2.html#docCont"><span style="color: blue;">5(4)</span></a><span style="color: black;">. Consequently, the statutory stay cannot be triggered by a
divisional patent added to the list after the generic files its NOA. The generic can be sued
in an ordinary infringement action on the basis of a subsequent divisional — whether or
not that divisional was patentably distinct from the patent — but that doesn’t cause
substantial harm because there is no equivalent of the statutory stay. Under current FCA
jurisprudence, the patentee will never get an interlocutory injunction. (Even if the law
were relaxed, it is unlikely that a patentee would get an interlocutory injunction in a case
in which its action was based on a patent that was prima facie the same as the patent at
issue in litigation which it had already lost.) Without the statutory stay, there is no
benefit to bringing an action based on a patent which is not patentably distinct from the
earlier patent; if it lost on the first, it will almost certainly lose on the second. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">So, the evergreening problem no longer exists in respect of divisionals, and the NOC
problem no longer exists either.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">McVeigh J raised another objection:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[1239] First, following the approach in <i>Abbott FC</i> [ie requisition only], this
assertion potentially opens a door to misuse the patent prosecution
process. Every inventor could file as many patents as they desire in a single
application, and then when the Patent Office suggests division, the
inventor has protection from double patenting attacks because the
divisionals were “forced.”</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[1240] The underlying policy rationale of double patenting must be kept in
mind. Allowing inventors to expand their domain via decisions that are
made by the patentees themselves is counterintuitive to the rationale
underpinning double patenting. Accepting NCS’s approach means
inventors can benefit from accidental misuse of the system, or worse,
knowingly expand their domain in the knowledge that forced divisional
applications are immune from double patenting attacks.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">I’ve quoted this argument in full because I don’t understand it. When McVeigh J says
“Every inventor could file as many patents as they desire in a single application,” I take it
she means that an inventor could file a single application claiming many different
inventions. In that case, yes, under the ‘requisition only’ approach the inventor would
indeed have protection from double patenting attacks because the divisionals were
‘forced.’ But the inventor would have protection from double patenting attacks even
without the safe harbour because the inventions are patentably distinct. Moreover, I fail
to see how the patentee can be said to have expanded their domain. If the patentee
discloses multiple inventions in the application, the patentee is entitled to protection for
those multiple inventions. The patentee’s domain is defined by the claims, the patentee
is entitled to claim all the inventions that it disclosed, and so far as the scope of the
domain is concerned, it makes no difference whether those claims are found in single
patent or multiple patents. The only thing the applicant gains by filing a single
application with multiple inventions is filing fees. That is why the examiner can object
based on lack of unity; the unity objection is really an administrative mechanism for
ensuring that the fees charged for examination are commensurate with the work
involved. That is why the s 36(1) provides that a patent is not invalid simply because the
examiner fails to raise a proper unity objection.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">McVeigh J raised yet another argument in <i>AbbVie v JAMP Pharma </i></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524560/index.do"><span style="color: blue;">2023 FC 1520</span></a><span style="color: black;">:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[614] However, I am not convinced that this amendment [freezing the
patent register] completely removes the potential for unfair advantage
from double patenting under the Regulations. As JAMP points out, a first
person with more patents under a given drug on the Register will make
more work for a second person seeking a NOC for a biosimilar. This is
ordinarily not a problem where several patents correspond to the same
drug on the Register, but it may constitute an unfair advantage for a first
person where more work is created than a single invention warrants, i.e.
where a generic manufacturer has to do a disproportionate amount of
work due to a double patent.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">If I understand this argument correctly, the idea is that it is more work for a second
person to address two patents for the same invention rather than one. This is not correct
in the context of divisionals. First suppose that the divisional was prompted by a unity
objection made by the examiner. If the claimed subject-matter of the divisional is
patentably distinct from the parent, then there is no grounds for complaint. The
problem can only arise if the unity objection was improper. If the improper objection
had not been made, then the claims of the divisional would have issued as claims in the
parent. Since the disclosure of the patent and divisional are the same, it is no more work
for the second person to address those claims in two patents (with the same disclosure),
rather than one. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The
objection is no stronger even as applied to an entirely unprompted
divisional, for
exactly the same reason. The double patenting objection only bites when
the subject-matter claimed by the divisional is not patentably distinct
from the parent. In that case,
the patentee might have included the claims of the divisional along with
the parent, but
chose not to; but because it is a divisional, the disclosure is the
same. Again, it is no
more difficult for the second person to address claims in two patents
with the same
disclosure than if those same claims had been found in a single patent
with that same
disclosure. That is true because the disclosure is the same either way;
whether the
divisional was forced or voluntary doesn’t matter. Further, even if we
suppose that the
claims of the divisional somehow would not have been filed at all, so
that there were
some inconvenience of having to address new claims, it cannot possibly
be very much
inconvenience to address claims that are not patentably distinct, based
on the same
disclosure; certainly not enough to justify making the applicant fight
through to the
URB or a Final Action. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Finally, there is the argument that even if there is no harm to the public, it is just wrong
to allow two patents for the same invention: see <i>GlaxoSmithKline v Apotex </i>[91]. Maybe
so, but it is so wrong that we want to deny the applicant the protection of the safe
harbour which the SCC endorsed in <i>Consolboard</i>, even in the absence of any harm to the
public? To my mind, that would be contrary to a purposive interpretation of the Act. The
Patent Act is intended to benefit the public. Throwing sand in the gears of the system
without any corresponding benefit will simply harm the public. Kelen J adverted to
36(2) of the Act in support of his position. I fail to see how that provision supports his
view that granting two patents for the same invention is a grievous sin.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">To summarize, the question is how hard we should require the applicant to fight in
opposing a unity objection before permitting it to take advantage of the <i>Consolboard</i>
safe harbour. The safe harbour can result in the divisional being valid even though it is
not patentably distinct from the parent. If this causes substantial harm to the public, we
should require the patentee to fight hard; if there is not much harm to the public, then
we should be more lax in allowing the applicant the benefit of the safe harbour. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">As it turns out, this is not a difficult question to answer. There is no harm to the public
at all in the context of a divisional. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">There was substantial harm when <i>Hoechst</i> and <i>Consolboard</i> were decided, because the
divisional might have a later expiry date (and still the SCC was willing to allow a safe
harbour). That harm is now gone. There was still some harm, albeit less, under the old
PM(NOC) Regs. That harm is also now gone. So now we are left with the argument that
there is some inconvenience to the second person in an PM(NOC) action, although
surely there is very little — I have argued that there is none at all. And then there is the
argument that it is just wrong to allow two patents for the same invention. We seem to
be clutching at straws to preserve double patenting as a ground of invalidity.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">We can now return to the question of how difficult it should be for the applicant to take
advantage of the safe harbour. If the public is seriously harmed by double patenting, a
more stringent approach might be desirable, requiring the applicant to fight all the way
to a URB referral or a Final Action. If the harm to the public from double patenting is
minimal, then we should not tolerate as much unfairness to the patentee. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">It turns out that this question is very easy to answer. As we have seen, there is simply no
double patenting problem at all in respect of divisional patents. This clearly implies that
a relaxed approach to the safe harbour is best. Nothing in the SCC authority requires
otherwise.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Indeed, given that there is no harm at all from double patenting in the context of
divisionals, it would be preferable to abolish the doctrine entirely, so that a divisional
patent would never be subject to a double patenting attack based on the parent,
regardless of whether it is forced or voluntary. We should recall that double patenting
doctrine is entirely the creation of the courts. It has no basis whatsoever in the Act.
Suppose that double patenting doctrine did not exist and it was now argued for the first
time that a divisional patent is invalid if it is not patentably distinct from the parent.
Would the courts today be willing to read language into the Act to invalidate the
divisional? Surely not. While the the courts will sometimes read language into
legislation as a matter of statutory interpretation, a strong justification is required to
depart from the text, such as absurd consequences, or a result that is inconsistent with
the purpose of the Act. Neither of remaining arguments for the double patenting
doctrine in the context of divisionals — inconvenience to the second party, if any, and
‘it’s just wrong’ — is remotely strong enough to justify reading language into the Act. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">The courts created the double patenting doctrine. Now that the problems it was
intended to address have been eliminated in the context of the divisionals, the double
patenting doctrine should also be eliminated in that context. It might be said that now it
is established law, and we are stuck with it, for better or for worse. I don’t find that
persuasive. The courts created double patenting doctrine of their own initiative to
address a specific problem. If the courts have the authority to create the doctrine, how
can it be said that they do not have the authority to abolish it, now that the rationale for
the doctrine has vanished? (What could the legislature even do to abolish a doctrine that
isn’t found in the Act in the first place?) I don’t see any impediment to this in the SCC
juriprudence. <i>Hoechst</i>, <i>Consolboard,</i> and <i>Whirlpool</i> were all decided under the old Act.
<i>Sanofi</i> held that a selection patent is not invalid for obviousness type double patenting
over a genus patent because a species is not obvious over the genus [113]. The double
patenting doctrine was not applied, it was not challenged, and divisionals were never
mentioned. This can’t be taken to affirm the continued vitality of double patenting
doctrine in the divisionals context.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">I would note that in <i>Consolboard</i> 537 the SCC cited <i>JR Short Milling</i> </span><a href="https://reports.fja-cmf.gc.ca/fja-cmf/j/en/item/400225/index.do"><span style="color: blue;">[1941] Ex CR 69</span></a><span style="color: black;">
and Fox 4<sup>th</sup> at 270, as authority for the proposition that patents granted on divisional
applications directed by the Patent Office should not be open to attack by reason of the
grant of the original patent. Fox in turn cited <i>Lovell Mfg v Beatty Bros</i> (1962) 41 CPR 18
(Ex Ct) 68, in which Thorson P held as follows:</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">Finally, the basic objection to double patenting is that it would extend the
life of the monopoly if a patent were granted for a device and a patent for
the same device were granted subsequently. This did not happen in the
present case for the two patents referred to, indeed, the plaintiff's three
patents, were issued on the same day. This puts an end to the matter.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This seems to me to be both common sense and good authority for the proposition that a
double patenting objection cannot be raised in respect of patents which expire on the
same day. At the time, it would have been a matter more or less of coincidence that the
patents expired on the same day, because they were issued on the same day. (The
complete file history for the patents at issue in <i>Lovell</i> is not available online, but so far
as I can tell, the patents were for related but distinct inventions, with different
specifications, that had been filed at the same time by the same applicant. Presumably
they were examined together and issued on the same date for that reason.) With
divisionals under current law, it is matter of necessity, since the parent and the
divisional will always have the same filing date. But in either case, the principle is the
same: if the second patent cannot extend the life of the monopoly “that puts an end to
the matter,” and the double patenting objection is not available.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">In summary, there is simply no double patenting problem at all in respect of divisional
patents. Double patenting has nonetheless grown into a complex area of law that is
especially problematic in patent prosecution. There is no reason to ever hold a divisional
is invalid for double patenting over its parent, so the best approach would be to simply
hold that double patenting doctrine does not apply at all to divisionals, on the authority
of <i>Lovell Mfg</i>. But at the very least, the FCA should clearly affirm the ‘requisition only’
approach to the <i>Consolboard</i> safe harbour. Nothing in <i>Consolboard</i> or any other SCC or
FCA authority requires otherwise. We do not need strict rules around the safe harbour
in order to protect the public from a double-patenting harm that does not exist. There
are some issues in patent law that are truly difficult, such as how to deal with </span><a href="http://www.sufficientdescription.com/2023/11/inducement-in-pharma-context-is.html"><span style="color: blue;">indirect
infringement in the pharma context</span></a><span style="color: black;">. The safe harbour for divisionals is not one of those
issues.</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-81946891710512101412023-12-18T13:47:00.003-04:002023-12-18T13:47:42.240-04:00Blogging Break<p>I'll be taking a break until early in the new year, when I'll be back with a long post on the double patenting issues raised by <i>NCS Multistage v Kobol</i>d <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524484/index.do">2023 FC 1486</a> and <i>AbbVie v JAMP Pharma</i> <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524560/index.do">2023 FC 1520</a>. Enjoy the holidays!</p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-5176165426243704192023-12-15T05:00:00.114-04:002023-12-20T07:54:36.985-04:00Nova v Dow: Doctrinal Implications<p><i>Nova Chemicals Corp v Dow Chemical Co</i> <a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/19554/index.do"><span style="color: blue;">2022 SCC 43</span></a><span style="color: black;"> Rowe J: Wagner CJ, Moldaver,
Karakatsanis, Brown, Martin, Kasirer and Jamal JJ concurring; Côté J dissenting affg
<i>Nova Chemicals Corporation v Dow Chemical Company</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/485375/index.do"><span style="color: blue;">2020 FCA 141</span></a><span style="color: black;"> Stratas JA:
Near, Woods JJA affg <i>Dow Chemical Co v Nova Chemicals Corp</i> </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/230610/index.do"><span style="color: blue;">2017 FC 350</span></a><span style="color: black;">, </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/233118/index.do"><span style="color: blue;">2017 FC
637</span></a><span style="color: black;"> Fothergill J</span></p><div id="WPMainDoc">
<p style="margin-left: 0.5in;"><a href="http://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2160705/summary.html"><span style="color: blue;">2,160,705</span></a><span style="color: black;"> / film-grade polymers / ELITE SURPASS</span></p>
<p><a href="http://www.sufficientdescription.com/2023/03/nova-v-dow-intuition.html"><span style="color: blue;">The Intuition</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/03/nova-v-dow-legal-background.html"><span style="color: blue;">The Legal Background</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-causation-as-matter-of-fact.html"><span style="color: blue;">Causation as a Matter of Fact</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-concession.html"><span style="color: blue;">The Concession</span></a><span style="color: black;">
/ </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-what-role-for-but-for.html"><span style="color: blue;">What Role for “But For” Causation in Identifying the NIO?</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-summary-of-summary.html"><span style="color: blue;">Summary of the
Summary</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-causation-concept-in-absence.html"><span style="color: blue;">Causation Concept in the Absence of an NIO</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-what-is-nio.html"><span style="color: blue;">What is the NIO? / </span></a><span style="color: black;"></span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-value-of-invention.html"><span style="color: blue;">The Value
of the Invention</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-rivett-on-facts.html"><span style="color: blue;">Rivett on the Facts</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/10/nova-v-dow-three-policy-arguments.html"><span style="color: blue;">Three Policy Arguments</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/11/nova-v-dow-source-of-chilling-effect.html"><span style="color: blue;">The Source of the
Chilling Effect</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/11/nova-v-dow-miscellaneous-policy-issues.html"><span style="color: blue;">Miscellaneous Policy Issues</span></a><span style="color: black;"> </span></p>
<p><span style="color: black;">In <i>Nova v Dow</i>, Rowe J, writing for an 8-1 majority, addressed the proper method of
calculating an accounting of profits in the patent context. I have a two-part article on the
decision forthcoming in the IPJ. Part I of that article analyzes <i>Nova v Dow</i>
at a
doctrinal level. What did Rowe J mean by “cause”? What did he mean by
“the non-infringing option”? What did he mean by “the value of the
invention”? I summarized
Part I in a series of blog posts, listed above. Part II addresses the
policy implications of
<i>Nova v Dow</i>. In </span><a href="http://www.sufficientdescription.com/2023/10/nova-v-dow-three-policy-arguments.html"><span style="color: blue;">the first post</span></a><span style="color: black;"> summarizing Part II, I argued that the policy arguments
advanced by Rowe J in support of his approach are either entirely misguided, or
support a “but for” approach to an accounting. Further, while Rowe J asserted that his approach
would not chill legitimate non-infringing competition because his approach is not
intended to be punitive, the chilling effect does not depend on the label we attach to a
remedy. In </span><a href="http://www.sufficientdescription.com/2023/11/nova-v-dow-source-of-chilling-effect.html"><span style="color: blue;">the next post</span></a><span style="color: black;"> I discussed the source of the chilling effect and showed that
Rowe J’s departure from “but for” causation does indeed risk a chilling effect. That post left aside the
question of the extent of that chilling effect and the appropriate policy implication, which will be discussed in the post following this one. In this, the fourth post on Part II, I will summarize my thoughts on the likely doctrinal
implications of <i>Nova v Dow</i>. A subsequent post will consider the policy implications and
the appropriate response to the decision. </span><span style="color: black;">(The </span><a href="http://www.sufficientdescription.com/2023/11/nova-v-dow-miscellaneous-policy-issues.html"><span style="color: blue;">third post</span></a><span style="color: black;"> on Part II dismisses two minor policy
arguments made by Rowe J.) </span></p>
<p><span style="color: black;"><span style="font-weight: bold;">The accounting context </span></span></p>
<p><span style="color: black;">The most basic question is how <i>Nova v Dow</i> will impact the accounting of profits
remedy in the patent context. This question is remarkably difficult to answer given that
it was the focus of the entire decision. The problem is that Rowe J did not provide any
guidance on the key issues. While he implicitly rejected “but for” causation, he did not
specify any alternative. On the central issue of what constitutes an appropriate
a non-infringing option, the key holding is that the NIO is “any product that helps courts
isolate the profits causally attributable to the invention” [58]. In the absence of any clear
causation concept, saying that the NIO is anything that is helpful is, well, unhelpful.
Moreover, he held that both causation and the nature of the NIO are matters of fact. Since Rowe J did not articulate any guiding principle it is difficult to predict how the law will evolve. Ultimately, my best guess is that the courts will develop a non-exhaustive list of
factors, including market substitutability, technical similarity, and “but for” causation,
which are all considered and balanced in light of the facts of the case. </span></p>
<p><span style="color: black;">Many doctrines involve balancing a list of factors. This does not raise any problems in
itself—so long as the factors are all relevant to some principled underlying inquiry. For
example, a variety of factors may be relevant to reconstructing the hypothetical
negotiation in assessing reasonable royalty damages, with more or less weight given to
any particular factor on the facts of a case. That does not necessarily result in
unpredictability, because the various factors all address the same principled
question, namely what are the terms of the licence the parties would have entered into
had they bargained ex ante. The weight to be given to each factor turns on the degree to
which, on the facts, that factor is relevant to the ultimate inquiry. The difficulty in with
<i>Nova v Dow</i> is that there is no underlying principle. This means that even if the courts develop a list of
“relevant” factors, those factors will not be relevant to any underlying principle, because there is no underlying principle. This means that there will be no way
to predict whether one factor rather than another will have more weight in any given
case; that will likely turn on arbitrary and idiosyncratic factors such as the mannerisms
and persuasiveness of the expert witnesses.</span></p>
<p><span style="color: black;">Consequently, if I suspect that <i>Nova v Dow</i> will result in long-term uncertainty, where
there is really no way of predicting whether an NIO is appropriate other than going to
trial. </span></p>
<p><span style="color: black;">In her dissent, Côté J stated that “[t]here must be some legal requirements or standards
[for a non-infringing option] that guide courts and the parties to the litigation” [193].
The “must” in that sentence is aspirational rather than descriptive. There <span style="text-decoration: underline;">should</span> be
some legal requirements or standards to provide guidance—but, since <i>Nova v Dow</i>, there aren’t. No doubt
the FCA would like to provide guidance, but only time will tell whether that will be
possible in the face of Rowe J’s holding that it is purely a matter of fact as to whether a
particular alternative is an NIO. </span></p>
<p><span style="color: black;">There will also be uncertainty as to the applicability of Rowe J’s approach to different
heads of profit. Rowe J explicitly endorsed “but for” causation in the context of
springboard damages, while he used a different causation concept in the context of the
non-infringing option. So “but for” causation is used sometimes, but not always, when
assessing the amount to be disgorged. There is an open question as to whether “but for”
causation will be used in assessing products from convoyed goods (unpatented goods
normally sold with the patented product), fixed costs (which were addressed in the FCA
but not the SCC), and the cost of capital. The most likely scenario is that these heads of
profits will be addressed on an <i>ad hoc</i> basis, in which “but for” causation may or may not
be applied in each case. However, we can expect clarity to emerge as courts specifically
address these heads of profit. </span></p><p><span style="color: black;">In particular, in the <i>Nova v Dow</i> FCA decision Stratas JA held that "the full costs approach [to deduction of fixed costs] is principled and sound" [154]. This means that the infringer will always be able to deduct some portion of its fixed costs. This issue was not addressed by the SCC, but if the SCC had addressed some coherent causation principle, then Stratas JA's approach to fixed costs might have been subject to revision. As it is, I expect it will stand, even though it is not based either on "but for" causation or on whatever causation concept was being used by Rowe J. While we now have doctrinal clarity regarding the deductibility of fixed costs, I doubt this will lead to predictability. While Stratas J A clearly held that some proportion of fixed costs are always deductible, he did not provide any principle to determine what that proportion might be — except that whatever the principle is, it is not "but for" causation. <a href="http://www.sufficientdescription.com/2020/10/deduction-of-fixed-costs-in-nova-v-dow.html">In my view</a>, "but for" causation is the only principled approach and consequently, Stratas JA's full costs approach is likely to also lead to long-term unpredictability and arbitrary results. I am coming around to the view that this may even more important in practice than the question of the appropriate NIO. An infringer will always be able to point to very substantial fixed costs and if any significant proportion of those costs is regularly deducted, this may significantly reduce the quantum of the accounting.</span></p><p><span style="color: black;">Further, in the article, I point out that there is a real puzzle in allowing for the cost of capital. It is
possible that deductibility of the cost of capital will turn on whether the infringing
product is funded with retained capital or external capital, even though this clearly has
no bearing on whether the profits are caused by the invention.</span></p>
<p><span style="color: black;"><span style="font-weight: bold;">The patent damages context</span></span></p>
<p><span style="color: black;">The next question is whether Rowe J’s approach to the NIO will extend to patent
damages. The straightforward argument for extending it to the damages context is that prior to <i>Nova v. Dow</i>, patent damages and an accounting were symmetrical. As the
Court of Appeal stated in <i>Merck</i> </span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/110882/index.do"><span style="color: blue;">2015 FCA 171</span></a><span style="color: black;"> [60] in the course of holding that the
<i>Schmeiser</i> differential profits approach extends to damages, “the significance of
[<i>Schmeiser</i>] is that if a court may consider a defendant’s resort to a non-infringing
alternative when calculating the infringer’s profit, there is no reason in principle to
ignore such conduct when calculating the patentee’s lost sales.” If the <i>Schmeiser</i>
approach applies to damages as much as an accounting, then it would seem to follow that
the <i>Nova v Dow</i> approach does also. On the other hand, Rowe J focused throughout his
decision on the accounting remedy, and there is not the slightest hint of a suggestion
that the principles would extend to damages as well. Further, Stratas JA, whose
judgment in the Court of Appeal was affirmed by the Supreme Court, expressly held that
his approach to an accounting did not apply in the damages context: <i>Nova v. Dow FCA</i>
</span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/485375/index.do"><span style="color: blue;">2020 FCA 141</span></a><span style="color: black;"> [45], [67], [76]. Consequently, it would be entirely fair to read the SCC
decision as being confined to the accounting context. I suspect that whether the Court of
Appeal decides to extend Rowe J’s approach to the NIO to the damages context depends
on the view it takes of the soundness of his decision. A similar question arises with
respect to s 8 damages under the PM(NOC) regime. I expect that will go the same way as
damages more generally.</span></p>
<p><span style="color: black;"><span style="font-weight: bold;">Beyond patent law</span></span></p>
<p><span style="color: black;">An accounting or disgorgement of the wrongdoer’s profits is a remedy that is not limited
to patent law, but I very much to doubt that <i>Nova v Dow</i> will have any influence beyond
patent law. It is difficult to identify any principle which might be extended to other
cases, and Rowe J’s focus on the profits causally attributable to “the invention” is a
straightforward basis for holding that <i>Nova v Dow</i> does not apply more broadly.</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-13375493998164826002023-12-11T05:00:00.004-04:002023-12-12T10:34:19.955-04:00Redundancy between Overbreadth and Utility<p></p><p><i>NCS Multistage Inc v Kobold Corporation</i> <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524484/index.do"><span style="color: blue;">2023 FC 1486</span></a><span style="color: black;"> McVeigh J</span></p>
<p style="margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2693676/summary.html"><span style="color: blue;">2,693,676</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2820652/summary.html"><span style="color: blue;">2,820,652</span></a><span style="color: black;"> / 2,738,907 / 2,766,026 / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2820704/summary.html"><span style="color: blue;">2,820,704</span></a><span style="color: black;"> (NCS) / 3,027,571
(Kobold)</span></p>
<p><span style="color: black;">My <a href="http://www.sufficientdescription.com/2023/12/throwing-mud-at-wall.html" target="_blank">last post </a>provided an overview of this decision and address several miscellaneous
issues. This post addresses the overbreadth argument. McVeigh J held a number of
claims of the 704 patent to be invalid for overbreadth. I have argued that overbreath in
Canadian law is almost always redundant with some other ground of invalidity. In this
case, McVeigh J held most of the overbroad claims to also be invalid for lack of utility,
and I will argue that overbreadth was indeed redundant. The details are interesting to
see how the two separate tests for overbreadth and utility ended up functionally
converging, and to see why some claims were overbroad but nonetheless useful. </span></p>
<p><span style="color: black;">The key question on overbreadth is whether a feature of the invention is essential, not in
the sense of claim construction, but “whether that feature is so key to the invention
described in the disclosure that a Claim that omits it encompasses embodiments that
were not contemplated in the disclosure”: <i>Seedlings</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/500815/index.do"><span style="color: blue;">2021 FCA 154</span></a><span style="color: black;"> [54], quoted at [167].
McVeigh J summarized this as asking whether the whether the feature in question is “at
the core of the invention actually invented or disclosed” [1458]. This strikes me as a
good summary of <i>Seedlings</i>, which puts the question in a positive form. In utility, the
question is whether the invention is useful, which in this case boiled down to whether it
was operable, ie whether it worked. In principle, these are two distinct questions. But
what does it mean to ask whether the feature lies “at the core of the invention”?</span></p>
<p><span style="color: black;">To see how McVeigh J answered this question, we need to turn to the facts. There were
five features implicated in the overbreadth and utility attacks, namely three components
of the fracturing valve — the wedge, plug, and seal — as well as the the alignment
mechanism and the means for holding the mandrel stationary. We can ignore the wedge,
as both attacks failed. </span></p>
<p><span style="color: black;"><i>Seals</i></span></p>
<p><span style="color: black;">On overbreadth, McVeigh J held as follows:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[1467] The placement of the seals and the number of seals goes to the very
core of the 704 Patent invention. The 704 Patent discloses a fracturing
valve and both parties agree that the lower seal is essential to allow the
fracturing valve to operate as disclosed. The 704 Patent does not disclose
any method by which the invention could operate without the described
lower seal placement. The lower seal is an essential element that goes to
the very core of the invention.</span></p>
<p><span style="color: black;">The claims that did not specify a seal were therefore invalid for overbreadth [1470]. That
means that those claims were overbroad because they were inoperable. The claims
without seals were also invalid for lack of utility [1514] for the same reason: “There are
no operable embodiments of the 704 Patent Claims that do not include a seal” [1511]. It
is not just that the claims happened to be invalid on both grounds: they were invalid on
both grounds for the same reason, namely inoperability. Thus overbreadth was
functionally redundant in light of the utility requirement.</span></p>
<p><span style="color: black;">(Note that Claim 15 was listed as being invalid for overbreadth [1470] but not lack of
utility [1514], but in light of McVeigh J’s reasoning, I think this must have been an
inadvertent omission from the utility list.)</span></p>
<p><span style="color: black;"><i>Equalization Valve or Plug</i></span></p>
<p><span style="color: black;">The equalization plug “goes to the very core of the invention, such that the fracturing
valve cannot operate without an equalization plug” [1475]. Again, it is “core” because it
is necessary for operability. Consequently, “those claims that do not explicitly claim an
equalization plug are invalid for overbreadth” [1478]. Those claims were invalid for lack
of utility for the same reason: “the 704 Patent Claims that do not claim an equalization
plug cannot perform the claimed fracturing function; they will not operate” [1517].
Again, overbreadth and the lack of utility are functionally the same — both turn on
inoperabilty — and the overbreadth attack is redundant.</span></p>
<p><span style="color: black;"><i>Alignment Mechanism</i></span></p>
<p><span style="color: black;">Similarly, McVeigh J found that the alignment mechanism goes to the core of the
invention because it was necessary for the tool to work [1483], and the claims at issue
lacked utility for exactly the same reason [1520]. Again, overbreadth was functionally
redundant. </span></p>
<p><span style="color: black;">(In the listing of invalid claims at [1486], [1521] claims 24–27 were listed as being
invalid for overbreadth but not lack of utility. In light of the reasoning, this seems to
have been an oversight.)</span></p>
<p><span style="color: black;"><i>Stationary Mandrel</i></span></p>
<p><span style="color: black;">McVeigh J found that a component for holding the mandrel stationary was core to the
invention because “there must be some kind of component that provides frictional
resistance against the wellbore that allows the mandrel to remain stationary for the
invention to operate” [1494]. Claims that did not specify a means for holding the
mandrel stationary were therefore invalid for overbreadth [1495]. </span></p>
<p><span style="color: black;">However, lack of utility was not proven:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[1525] There was insufficient evidence on this issue to demonstrate that
the 704 Patent will not work where the mandrel is not held stationary. This
is likely due to the fact that Kobold raised this issue in construction and it
was not argued substantively by either party in closing.</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[1526] Therefore, without more evidence on this specific issue, I find that
Kobold has not met its burden to demonstrate inutility on this issue.</span></p>
<p><span style="color: black;">So, in discussing overbreadth, McVeigh J found that the tool would not operate if the
mandrel was not held stationary, but in discussing utility she could not arrive at that
conclusion on the evidence. It is not clear to me why the evidence that McVeigh J relied
on in the overbreadth context did not allow her to come to the same conclusion in
respect of lack of utility. Nonetheless, it is clear that the functional question was the
same under both overbreadth and utility — would the invention work if the mandrel was
not held stationary — and the only difference was in respect of the evidence. </span></p>
<p><span style="color: black;">In summary, notwithstanding that McVeigh applied separate analyses with separate
tests for overbreadth and utility, overbreadth is functionally redundant in light of the
utility requirement. I would expect similar results in contexts where there is overlap
with novelty or anticipation: eg it seems very reasonable to say that a feature that is the
only point of distinction between the prior art and the claimed invention would be
considered “core” to the invention.</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-78767908151548356472023-12-07T12:09:00.004-04:002023-12-09T07:52:47.832-04:00Throwing Mud at the Wall<p></p><p style="margin-bottom: 0.104167in;"><i>NCS Multistage Inc v Kobold Corporation</i> <a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/524484/index.do"><span style="color: blue;">2023 FC 1486</span></a><span style="color: black;"> McVeigh J</span></p>
<p style="margin-bottom: 0.104167in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2693676/summary.html"><span style="color: blue;">2,693,676</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2820652/summary.html"><span style="color: blue;">2,820,652</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2738907/summary.html"><span style="color: blue;">2,738,907</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2766026/summary.html"><span style="color: blue;">2,766,026</span></a><span style="color: black;"> / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2820704/summary.html"><span style="color: blue;">2,820,704</span></a><span style="color: black;"> (NCS) / </span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/3027571/summary.html"><span style="color: blue;">3,027,571</span></a><span style="color: black;"> (Kobold)</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This case concerns six patents relating to downhole tools used in fracking. NCS sued
Kobold for infringement of five NCS patents. In response, Kobold sued NCS for
infringement of Kobold’s 571 patent. It did not go well for NCS — all the claims in issue
for all five patents were declared invalid, while Kobold was successful in its infringement
counterclaim. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">In broad brush terms, this strikes me as a case where a major new technology created
new problems with obvious solutions. Horizontal fracking is relatively recent. It
presents some new problems, such as clearing debris away from the tool. In a vertical
well, this is accomplished largely by gravity — debris falls to the bottom of the well —
but in horizontal wells, some other methods are necessary. The methods claimed by NCS
were generally obvious or had already been tried: for example, if debris is getting stuck
in a moving part, machine out a bit more clearance to allow free movement of the debris
[1191]. Several ancillary arguments were raised along the way, of which the most
important is the discussion of double patenting. I’ll deal with double patenting and
overbreadth in subsequent posts. This post will provide an overview and briefly address
a few of the other legal issues.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This is a very long decision. That is a direct result of an “everything but the kitchen sink”
approach: “[a]fter closing submissions, the parties had narrowed the scope of claims at
issue down from approximately 145 claims across seven patents to approximately 123
claims at issue across six patents, still with 128 separate issues.” McVeigh J was not
impressed. She quoted Locke JA’s comments in <i>Western Oilfield</i> 2021 FCA 24 [9] as to
“the lack of wisdom of raising so many issues on appeal,” with the result that “the
appellants’ approach suggests that they themselves cannot identify any issues that are
particularly strong” [5]. She reiterated that “putting all these issues before the Court was
an unwise litigation strategy” and warned that </span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[9] Lest this become a trend for this Court, or for the parties before it, I
feel compelled to state that, in my view, putting these countless issues
before the Court for simultaneous determination was detrimental to the
aims of the parties in presenting the most clear and effective arguments. It
is also contrary to the general principle of this Court to secure the just,
most expeditious and least expensive outcome of every proceeding.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">While McVeigh J directed her general comments at both parties, the fault lay primarily
with NCS. Kobold successfully asserted one patent and four claims, which depended on
three further claims [1623]. NCS asserted five patents and put over 120 claims in issue.
NCS was comprehensively unsuccessful. All claims at issue — 128 in total — were
declared invalid. Costs consequences followed: “There is a clear window here for an
elevated lump sum costs award to incentivize efficiencies while sanctioning conduct with
so many issues making it more complex.” Accordingly, McVeigh J awarded Kobold a
lump sum of 45% of actual fees, up from the baseline of 37.5%, in significant part
because “the multitude of claims and issues in this case unnecessarily enhanced the
complexity of this case” [1671], [1674]. I must say that the 7.5% bump in the costs award
strikes me as a modest sanction given the waste of judicial resources occasioned by
NCS’s strategy. But maybe I am just inclined to be unsympathetic after having waded
through 200 pages of claim construction.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">While NCS’s strategy was certainly annoying, that doesn’t make it unwise. And while it
failed in this case, that doesn’t necessarily mean it was a bad strategy; if you make a bet
with good odds, it was a still a good bet to make, even if you lose. This is one of the most
extreme versions of the kitchen sink strategy aka the “throw mud at the wall” strategy
that I’ve seen, but that strategy is common enough in a more restrained form. This raises
an interesting question about the ‘kitchen sink’ strategy: it makes the judges mad and
risks an adverse costs award, but maybe that is worth it if it increases your chance of
winning. I think it is pretty clear that the kitchen sink strategy sends a message to the
court that you have a weak case. But given that you do have a weak case, is the kitchen
sink strategy a good bet?</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Of course, we can’t do a controlled study to see whether a more focused strategy is
better, but I have to admit my eyes glazed over while reading hundreds of pages of claim
construction, with each claim getting only a few paragraphs of analysis. And while I can’t
see inside McVeigh J’s head, I have to suspect that it would have been easy for a few
meritorious points to have been swamped by the routine of dismissing the
unmeritorious arguments. This is particularly so because McVeigh J often found the
evidence of NCS’s expert, Mr Lehr, to be wanting. He “took several positions which
appeared at odds with expertise and historical facts” [92], and his arguments were
regularly inconsistent with the documentary evidence: see eg [1286]. In some instances
Mr. Lehr would read in new elements that were not in the claim at issue at all [1424]. I
suspect NCS’s kitchen sink strategy had the effect of undermining the credibility of their
own expert by inducing him to take unsupportable positions on weak claims that should
never have been raised, rather than allowing him to take a stronger position on a smaller
number of claims.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">On the other hand, there were one or two places where the sheer volume of issues may
have worked to NCS’s advantage. For example, Kobold did not carry its burden of
showing that the 704 patent was obvious, because Kobold’s experts provided only
conclusory statements and did not address inventiveness at the claim-by-claim level
[1450]–[1452]. It is possible that these weaknesses in Kobold’s submissions were due to
the sheer volume of arguments it had to deal with. (The claims were nonetheless invalid
on other grounds.)</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Some of the discussion was a bit difficult to follow because McVeigh J’s analysis
sometimes plunged right into the weeds without making it clear why the issue mattered.
Most of the hundreds of pages of claim construction were like that. While claim
construction is antecedent to validity, without knowing “where the shoe pinches” it can
be difficult to stay awake while reading about whether a “wedge” has to be wedge-shaped.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;"><span style="font-weight: bold;">Priority and the use of file history</span></span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">One argument that was particularly difficult to follow related to priority dates and the
use of file history [1302]–[1337]. The Ravensberger patent (</span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2730695/summary.html"><span style="color: blue;">2,730,695</span></a><span style="color: black;">), filed 11 Feb
2011 claimed an almost identical invention to the NCS 907 patent [1302], and claimed
priority from US applications 12/842,099 (23 June 2010) and 12/971,932 (17 Dec 2010).
The 907 patent was filed on 4 May 2011 and claimed priority to an 18 Oct 2010 US
application (61/394,077). During prosecution of the 907 patent a protest was filed
arguing that if the 907 patent could not claim priority from the US 077 application, then
it was anticipated by the Ravensberger patent. (McVeigh J referred to the protest as
being filed on 6 March 2012 [1305], but it appears she is referring to the protest filed on
26 March 2012.) The 907 patent nonetheless was granted, from which it might be
inferred that the examiner had decided that it properly claimed priority from the 077
application. (Though I should say here that it is not clear to me why any of this
mattered.) There was also a protest against the Ravensberger patent based on the 907
patent, apparently also raising a priority issue. NCS wanted to introduce the file history
of the Ravensberger patent [1309]. (Again, I don’t understand what argument was being
pursued and so I don’t know how the file history was supposed to be relevant.) McVeigh
J reviewed this file history, and while she was of the view that the file history might in
principle be used for purposes other than claim construction pursuant to s 53.1(1), she
decided that she would not use the file history “essentially to re-argue the same protest
in relation to the Ravensbergen when the Patent Office issued the patent with those
priority dates” [1325]. That seems like a very reasonable conclusion, with the caveat that
I don’t understand where the argument was going.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">McVeigh J then stated that “[a]lthough Canadian jurisprudence does not appear to have
directly addressed this question, priority can be asserted on a claim-by-claim basis”
[1331]. I’m not aware of any caselaw on that point either, but nonetheless the point
seems perfectly clear on the face of s 28.1(1): “The date of a claim . . . is. . . .” I expect that
is why there is no jurisprudence on the point.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">Then McVeigh J stated (my emphasis):</span></p>
<p style="margin-bottom: 0.104167in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[1335] As such, it is possible for different claims to be subject to different
priority dates relating to different, previously filed applications. <span style="text-decoration: underline;">However,
I interpret this as taking place during the application process and not at
the stage in an action where validity is being determined</span>. This would
amount to an ex post facto prosecution of the patent, and contrary to the
role of this Court.</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">This is puzzling. On its face, the underlined sentence seems to to say that the Court
cannot assess whether a claim can properly claim priority from a foreign filing.
However, in the next paragraph McViegh J stated that “on this record with very limited
argument and no expert assistance, I am not prepared to do a claim-by-claim review of
priority dates” [1336]. That indicates that she would be prepared to assess priority, just
not in the context of this particular patent and in particular given the (puzzling) reliance
on the Ravensberger claim history. Further, in discussing Kobold’s 571 patent, McVeigh
J did determine different claim dates for different claims [1586], saying “As stated
earlier, I agree that it is possible to evaluate the claim date in the way NCS requests”
[1580]. I take it the “earlier” is a reference to her discussion at [1302]–[1337] relating to
the 907 patent. So, on the whole, it seems clear enough that McVeigh J is not suggesting that the claim date of different claims cannot be determined by the court. I would speculate
that the underlined sentence was addressed to the specific argument being made by NCS
— maybe to the effect that she was not prepared to review the priority date
determinations made by the examiner in light of the prosecution history. That is a very
reasonable position, which does not exclude the court reviewing the priority dates
directly. I’ll just conclude by saying that it is perfectly clear from 28.2(1)(b) and 28.2(1),
which governs anticipation generally, not just in the context of prosecution, that the
claim date may be assessed by the court. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;"><span style="font-weight: bold;">Grace Period</span></span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">An invention must not have been obvious in light of the state of the art. Section 28.3(a)
gives a one-year grace period which excludes information derived from the applicant
from the state of the art. Kobold wanted to rely on a presentation referred to as “What
up?” in attacking NCS’s patent. NCS objected that the presentation contained
information derived from NCS and so could not be used [1258]. McVeigh J held that
even if the presentation contained <span style="text-decoration: underline;">some</span> information derived from NCS, 28.3(a) could
not be used to exclude <span style="text-decoration: underline;">all</span> information in the “What up?” presentation [1281]. That
seems to be to be clearly correct. Both on the face of the Act and on a purposive analysis,
it is only the information derived from the patentee that is excluded, not all information
that is somehow associated with the information derived from the patentee. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;"><span style="font-weight: bold;">Mosaicing art from different experts</span></span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">NCS argued that in attacking the patent for obviousness, Kobold could only rely on
references that were discussed by both of its experts, apparently on the view that where
a piece of prior art is obvious, it should be obvious to both experts [1417]. McVeigh J
rejected this: “I reject the proposition that references must be discussed by both (or all)
experts where there is more than one expert giving their opinion for a single party. Once
a piece of prior art forms part of the record, the Court is able to consider it under the
obviousness analysis” [1418]. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;"><span style="font-weight: bold;">Inventive Concept</span></span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">There has been a lot of controversy over the use of the inventive concept in claim
construction: see </span><a href="http://www.sufficientdescription.com/2021/05/a-new-framework-for-construing.html"><span style="color: blue;">here</span></a><span style="color: black;"> and </span><a href="http://www.sufficientdescription.com/2021/05/focus-of-obviousness-inquiry-should-be.html"><span style="color: blue;">here</span></a><span style="color: black;">. My own view is that the EPO objective problem and
solution approach is probably the best way: see </span><a href="http://www.sufficientdescription.com/2021/05/focus-of-obviousness-inquiry-should-be.html"><span style="color: blue;">here</span></a><span style="color: black;"> for my argument to that effect, and
</span><a href="https://www.epo.org/en/legal/guidelines-epc/2023/g_vii_5.html"><span style="color: blue;">here</span></a><span style="color: black;">, </span><a href="https://www.epo.org/en/legal/guidelines-epc/2023/g_vii_5_2.html"><span style="color: blue;">here</span></a><span style="color: black;"> and </span><a href="https://www.epo.org/en/legal/guidelines-epc/2023/g_vii_4.html"><span style="color: blue;">here</span></a><span style="color: black;"> describing the EPO approach. In this case, it seems that NCS’s
expert generally wanted to characterize the inventive concept at a very abstract level, as
being “active debris relief” [1097] (and see eg [1441]), but any real trouble was avoided
by McVeigh J’s (clearly correct) insistence that obviousness must be addressed on a
claim by claim basis: see eg [1435]–[1436]. In other instances, NCS’s expert described
the inventive concept by simply paraphrasing the claims: see eg [1343]. That is a
common approach, which is not necessarily a problem, but one has to ask what is gained
by focusing on an ‘inventive concept’ that is just a paraphrase of the claims, as opposed
to focusing on the claims themselves. </span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;"><span style="font-weight: bold;">Ambiguity</span></span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">It is difficult to establish ambiguity and consequently a successful attack based on
ambiguity is rare, but in this case McVeigh J held two claims to be invalid as being
“incapable of being meaningfully interpreted” [1530]; and see [1527]–[1532]. There is no
new law here, but successful ambiguity attacks are rare enough that this one is
noteworthy. (I did not review the claims myself so I do not have any independent
opinion as to whether they were incapable of being meaningfully interpreted.)</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;"><span style="font-weight: bold;">Utility related to the nature of the invention</span></span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">In <i>AstraZeneca</i> </span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16713/index.do"><span style="color: blue;">2017 SCC 36</span></a><span style="color: black;"> [53], the SCC stated that the utility of an invention must be
“related to the nature of the subject-matter,” saying “a proposed invention cannot be
saved by an entirely unrelated use. It is not sufficient for an inventor seeking a patent for
a machine to assert it is useful as a paperweight.” We don’t see this argument used very
often, but in this case NCS sought to save the 704 patent, which McVeigh J found to lack
utility because it could not function without seals, by arguing that it would nonetheless
be useful for cleaning the casing, presumably by pushing it through to shove debris, in
the same way that a completely inoperative tool could be used. McVeigh J rejected this
argument on the basis that cleaning did not relate to the nature of the invention [1512].
There is no new law, but as with ambiguity it’s noteworthy just because we don’t see this
point raised very often. (NCS’s argument was a bit less absurd than the foregoing
summary suggests, because an operable tool would clean the casing as part of its
perforating and fracturing capabilities — but it was a desperate argument nonetheless.)</span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;"><span style="font-weight: bold;">Remedy</span></span></p>
<p style="margin-bottom: 0.104167in;"><span style="color: black;">McVeigh J allowed the successful patentee, Kobold to elect between an accounting and
damages, saying “With respect to an accounting of profits, no evidence has been
advanced to suggest the parties may not be entitled to this relief. With the bifurcated
phase with respect to damages ahead, there is no reason to deny such relief given the
Defendants came to the Court with clean hands” [1659]. The direct implication is that
the successful patentee is presumptively entitled to an accounting, barring some reason
for denying it, such as unclean hands. As I noted in </span><a href="http://www.sufficientdescription.com/2023/11/can-election-between-damages-and.html"><span style="color: blue;">a post on an earlier case</span></a><span style="color: black;">, in a two
part article forthcoming in the IPJ and summarized in a series of blog posts, I have
argued that <i>Nova v Dow</i> </span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/19554/index.do"><span style="color: blue;">2022 SCC 43</span></a><span style="color: black;"> wrought such a major change in the principles on
which the quantum of an accounting is assessed that the courts should revisit the
principles on which an accounting is granted. </span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-1340894769883986352023-11-21T06:00:00.001-04:002023-11-21T06:00:00.141-04:00Threshold for Sound Prediction<p></p><p><span style="font-family: 'Georgia', serif;"><i>Sandoz Canada Inc v Janssen Inc</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/521284/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2023 FCA 221</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> Locke JA: Mactavish, Monaghan JJA
affg </span></span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/521576/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2022 FC 715</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> Pallotta J</span></span></p>
<p style="margin-left: 0.5in;"><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2659770/summary.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2,659,770</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> / macitentan / OPSUMIT / NOC</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">In this brief decision, Locke JA has provided a useful summary of the law related to the
threshold for a “sound” prediction of utility. The case also implicitly raises an interesting
issue relating to the standard of appellate review.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;"><span style="font-weight: bold;">Threshold for a sound prediction</span></span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">At trial, Pallotta J held that Janssen’s 770 patent was valid in the face of a variety of
attacks: see </span></span><a href="http://www.sufficientdescription.com/2022/06/overbreadth-overlaps-with-utility-on.html"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">here</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">. The only argument pursued on appeal related to lack of utility [2].
Pallotta J had held that while utility had not been demonstrated, it was soundly
predicted. Sandoz appealed on the basis that Pallotta J has erred in law by applying too
low a threshold in concluding that the prediction was “sound.” Sandoz acknowledged
that Pallotta J has not explicitly misstated the law, but argued that she must have
applied the wrong threshold because, according to Sandoz, the evidence could not
support a finding of sound prediction based on a correct statement of the law [18]. Locke
JA rejected this argument, on the basis that the threshold for sound prediction “is not
high” and the facts as found by Pallotta J were sufficient to support her holding. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Locke JA’s decision provides a useful summary of the law related to the threshold for
sound prediction. The leading case on sound prediction is of course <i>Wellcome / AZT</i>
</span></span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2020/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2002 SCC 77</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">. The leading case on the threshold is <i>Novopharm / olanzapine </i></span></span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/36863/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2010 FCA
197</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, quoted by Locke JA at [8]:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[84] [<i>Wellcome / AZT</i> </span></span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2020/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">2002 SCC 77</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">] does not define the threshold
required for sound prediction. However, Binnie J. states that more than
mere speculation is required (para. 69). He also provides the following
indicia:</span></span></p>
<p style="margin-left: 1in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">• the requirement is that the claims be fairly based on the patent
disclosure (para. 59);</span></span></p>
<p style="margin-left: 1in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;"> • it must be <i>prima facie</i> reasonable that the patentee should have a
claim (para. 60);</span></span></p>
<p style="margin-left: 1in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;"> • it cannot mean a certainty (para. 62);</span></span></p>
<p style="margin-left: 1in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">• the desired result must be able to be inferred from the factual
basis (para. 70).</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[85] In my view, these indicia signify that a sound prediction requires a
<i>prima facie</i> reasonable inference of utility. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The requirement of “a <i>prima facie</i> reasonable inference of utility” is the best known
summary statement of the threshold. Pallotta J did not mention this wording explicitly,
but that in itself “is not remarkable, and does not amount to an error of law” [30].
(Indeed, Sandoz itself did not explicitly refer to this wording in its written submissions
before Pallotta J [31].)</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Locke JA noted that Sandoz cited several additional passages from <i>Wellcome / AZT</i> that
indicate what is not sufficient for a prediction to be sound:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">1. No more than a mere belief that something might be useful (para. 25);</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">2. Little more than an announcement of a research project (para. 64); and</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">3. Only a promise that a hypothesis might later prove useful (para. 84).</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Locke JA concluded:</span></span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="font-family: 'Georgia', serif;"><span style="color: black;">[16] In my view, there is nothing in [<i>Novopharm / olanzapine</i>] that
represents any kind of departure from what one would glean from a
complete reading of <i>Wellcome</i>. While it is not necessary that the prediction
be certain (see <i>Wellcome </i>at paragraph 62), or to a regulatory standard (see
<i>Wellcome </i>at paragraph 63), the public is entitled to a teaching that is solid
(see <i>Wellcome </i>at paragraph 69) and accurate and meaningful (see
<i>Wellcome </i>at paragraph 83), and based not on speculation but exact
science (see <i>Wellcome </i>at paragraph 84).</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">In affirming Pallotta J, Locke JA stated that “I am not prepared to conclude that it
overlooked the guidance therein that the teaching in a patent based on a sound
prediction must be solid, accurate and meaningful, and based on exact science (not
speculation),” citing <i>Wellcome / AZT</i> [69], [83], [84]. Given his reliance on <i>Novopharm
/ olanzapine</i>, the description of the threshold for sound prediction as being as being
“solid, accurate and meaningful, and based on exact science (not speculation),” is an
explanation of what it means for an inference to be “a <i>prima facie</i> reasonable,” and is
not intended as a departure from the threshold set out in <i>Novopharm</i>.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;"><span style="font-weight: bold;">Standard of appellate review</span></span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Sandoz’s argument also raises an interesting issue as to how to distinguish a holding of
law from a finding of fact in applying the standard of appellate review. Sandoz
characterized Pallotta J’s putative error as an error of law in order to invoke a
correctness standard of review [11]. Sandoz did not argue that Pallotta J made a
palpable and overriding error of fact. While Sandoz acknowledged that Pallotta J did not
explicitly misstate the law, it argued that Pallotta J must have failed to actually apply the
correct law because the evidence could not support her finding that the prediction was
sound [18]. Sandoz characterized this as an extricable error of law [11].</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Sandoz’s argument was along the following lines. Suppose the law is that “Facts A, B and
C are all relevant to establishing sound prediction.” If the trial judge says “C is not
relevant and I have not considered it,” this is clearly an error of law. Now suppose the
trial judge correctly states the law, and then says “I find that facts A, B and C are not
proven,” yet nonetheless concludes that sound prediction has been established. The
finding that sound prediction has been established is a mixed finding of law and fact,
and so is to be reviewed on a deferential standard unless there is an extricable error of
law. But the law itself was correctly stated. And it doesn’t seem to be an error of fact,
because no one is disputing the factual findings that A, B and C were not proven.
Sandoz’s argument was that this kind of error is an error of law, on the view that since
the facts are undisputed and the result was clearly erroneous, we can infer that even
though the trial judge stated the law correctly, the trial judge cannot actually have
applied the correct law to the facts. Sansoz’s argument seems right in an extreme case
such as I have described. The difficulty is that on that argument, the only way for an
appellate court to decide whether the trial judge made an error of law is to delve into
how the facts were applied to the law; and how the law was applied to the facts is a
classic issue of a mixed finding of fact and law, which is reviewed on a deferential
standard. </span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">So, suppose a case involved a tort action in which the question was whether the
defendant had been driving negligently, and the court stated “The law is that the
defendant must act as a reasonable driver would in the circumstances. I find as a fact
that the defendant was driving at 45kph in a 50kph zone, while sober, on dry roads, at
noon, in heavy fog. I find that the defendant was not negligent.” If the factual findings
are not disputed, this is a classic example of a question of mixed fact and law, to be
reviewed on a deferential standard: <i>Housen</i> </span></span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/1972/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">[2002] 2 SCR 235</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [28]. Now suppose the
court had instead stated “The law is that the defendant must act as a reasonable driver
would in the circumstances. I find as a fact that the defendant was driving at 160kph in a
50kph zone, while drunk, on black ice, at dusk, in heavy fog. I find that the defendant
was not negligent.” This must be an error of some kind; but the law is correctly stated
and no one is disputing the specific factual findings. Is it an extricable error of law, as
Sandoz argued in this case? It is true that an extricable error of law need not be explicit
and can be inferred from the result on the facts, but an extricable error law is typically
capable of being articulated as a specific legal rule, even if the trial court did not do so.
For example, in <i>Galaske v O’Donnell</i> </span></span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/1122/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">[1994] 1 SCR 670</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, discussed in <i>Housen</i> [31], the
trial judge had found the driver of a car not negligent in failing to ensure that his young
passenger wore a seat belt. This implies that the driver did not owe a duty of care to his
underage passenger. The failure to identify this duty was an extricable error of law.
Similarly, in <i>Rhône (The) v Peter A.B. Widener (The)</i> </span></span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/967/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">[1993] 1 SCR 497</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;">, discussed in
<i>Housen</i> [34], the extricable error of law was failure to recognize that the key factor
distinguishing directing minds of a corporation from normal employees “is the capacity
to exercise decision-making authority on matters of corporate policy, rather than merely
to give effect to such policy on an operational basis.” Again, the extricable error can be
separately articulated as a rule of law. In my negligent driving example, there is no
separate rule that can be extracted.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Now, in this case, Sandoz did suggest that there is an extricable rule, namely the
threshold for sound prediction. This argument makes sense. A threshold is a point on a
continuum, so there may be cases that are so far from the threshold that we can say that
the trial judge must have applied the wrong threshold, even if the trial judge articulated
the threshold correctly. The same can be said about my negligent driving example. So
far, so good.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">The problem is that even if we accept that the threshold is a matter of law, actually
extracting the threshold that was implicitly applied by the trial judge may be impossible
except in the easiest cases. Put another way, in <i>Galaske </i>and <i>The Rhône</i>, there was a clear
rule that could be extracted and a specific error identified. When the legal rule is a
threshold that turns on a holistic consideration of the facts, it will not be possible to
extract the rule from its application in any case which is anywhere close to the line. So,
in the tort example I gave above with the extreme set of facts, we can say holistically that
there must have been an error of law, even if we cannot specifically identify it. But as we
get closer to the line (what if it was dusk, the driver was going slightly over the speed
limit etc), it becomes increasingly difficult to extract any legal error, even though one
may have been made. Put another way, the trial judge who found the driver was not
negligent on the extreme facts clearly had an erroneous conception of reasonableness in
their mind. As the facts get closer to the line of ‘true’ reasonableness, the trial judge’s
decision will become more and more defensible, even though the trial judge is applying
exactly the same erroneous legal concept. When the facts are anywhere close to the line,
an appellate court will say “We affirm on the basis that the holding that there was no
negligence is a question of mixed law and fact to be reviewed on a deferential standard.”
But as the facts get further from the line, it becomes clear at some point that the trial
judge must have been making an error of law all along.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">Maybe this is all a long-winded way of saying what the SCC said in <i>Housen</i> [28], that the
distinction between an error of law and an error of mixed law and fact “can be difficult in
practice because matters of mixed law and fact fall along a spectrum of particularity.”
But it seems to me that <i>Housen</i> was making a somewhat different point, namely that we
call something a rule of law when it is broadly applicable to a range of facts and we call a
finding a question of mixed law and fact when it is unique to the circumstances of the
case: “If a court were to decide that driving at a certain speed on a certain road under
certain conditions was negligent, its decision would not have any great value as a
precedent” [28], quoting <i>Southam</i> </span></span><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/1493/index.do"><span style="font-family: 'Georgia', serif;"><span style="color: blue;">[1997] 1 SCR 748</span></span></a><span style="font-family: 'Georgia', serif;"><span style="color: black;"> [37]. My point is somewhat
different. Even when we can state a generalizable precedent, it may be difficult to extract
that rule from its application, particularly when the rule involves a threshold (or more
generally, any kind of line drawn along a continuum, such as reasonableness in tort),
and the facts of the case are somewhere close to the line. In that context, it makes sense
to say that a rule of law of is involved, as there are cases at either extreme that we can
say are clearly correctly decided one way or the other, even without disputing the facts.
But it is nonetheless problematic to apply a correctness standard to a decision involving
the application of that law to the facts in a case which is close to the line.</span></span></p>
<p><span style="font-family: 'Georgia', serif;"><span style="color: black;">This was arguably such a case, which tested the limits of what exactly constitutes a
sound prediction. How should the courts deal with such a case? Locke JA held that the
threshold for establishing sound prediction is “not high” and “[t]he terms ‘<i>prima facie</i>’
and ‘reasonable inference’ leave considerable space for a fact-finding body in reaching
its conclusion” [24]. He further noted that “[t]he fact that more experimentation was
required after the rat studies did not necessarily take the utility of the invention outside
the scope of a sound prediction” [25]. This “considerable space” remark, in combination
with his look at the facts, strikes me as being a kind of intermediate level of review. It
seems to me that Locke JA did take a look at the facts, albeit somewhat cursorily, to
satisfy himself that Pallotta J had not obviously misapplied the law to the facts. That is
not exactly standard doctrine on the standard of appellate review—Locke JA doesn’t
seem to have been applying either an entirely deferential standard, or a correctness
standard—but it strikes me as a sound approach.</span></span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-34669534527502359182023-11-17T05:00:00.001-04:002023-11-17T05:00:00.139-04:00The UK Approach to Electing an Accounting<p></p><p>In <a href="http://www.sufficientdescription.com/2023/11/can-election-between-damages-and.html"><span style="color: blue;">a recent post</span></a><span style="color: black;"> I noted that <i>AlliedSignal</i> (1995), 61 CPR (3d) 417 (FCA) 444 held that an
entitlement to an accounting “certainly cannot depend on whichever amount would turn out, on
inquiry, to be more profitable.” I should point out that in UK law is to the contrary. In UK law, as
I understand it, the successful patentee is entitled to elect between damages and an accounting as
of right, unlike in Canadian law where it is clear that an accounting, as an equitable remedy, is
discretionary: <i>Beloit v Valmet-Dominion</i> </span><a href="https://reports.fja-cmf.gc.ca/fja-cmf/j/en/item/332852/index.do"><span style="color: blue;">[1997] 3 FC 497</span></a><span style="color: black;"> (FCA) ¶ 111. Further, in UK law, the
patentee is entitled to some information from the defendant to allow it to make an informed
election between the two remedies: see <i>Lufthansa v Panasonic Avionics</i> </span><a href="https://www.bailii.org/ew/cases/EWCA/Civ/2023/1273.html"><span style="color: blue;">[2023] EWCA 1273</span></a><span style="color: black;">, in
which Birss LJ explained [3]:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">If an IP rights holder's business is in licensing their rights then the damages would
be measured by the loss of royalty on the defendant's infringing goods, which, if
the infringements were highly profitable, may be a lower sum than the amount of
profit the infringer earned from the infringement. The rational choice might then
be to choose an account of profits. On the other hand if the infringer's business
was unprofitable, perhaps trying to break into a new market, and the rights
holder's business was a profitable one making direct sales to customers, which
were lost due to the infringement, then a damages enquiry might be more sensible. </span></p>
<p><span style="color: black;">I am not persuaded. The question is not which remedy is more rational from the perspective of
the patentee, it is which remedy is more rational in light of the purpose of the patent system. The
primary purpose of patent remedies is to preserve the incentive to invent. Damages serve that
purpose. That is why damages are available as of right in Canada and that is why an accounting is
not available at all in the US. An accounting that exceeds damages must be justified by some
independent principle, such as sanctioning bad faith behaviour. So, in my article on <i>Nova v Dow</i>
(forthcoming in the IPJ), I argue that an accounting should only be granted if the infringer was
deliberately avoiding taking a licence in a game of “catch-me-if-you-can.” Simply putting more
money into the pocket of the patentee is not an adequate principle. Indeed, an award that exceeds
damages can be counter-productive, as it may encourage needless litigation by giving the
patentee an incentive to disguise its patent rights in the hopes of trapping an unwary infringer,
thereby getting a better outcome that if it had sought to make a licence easily available ex ante.
This is all the more reason why the grant of an accounting must turn on the behaviour of the
parties and not simply on which remedy is most favorable to the patentee.</span></p>
<p><span style="color: black;">With that said, I can understand that if the bad behaviour of the infringer warrants the grant of an
accounting, it is reasonable for the patentee to want to know whether that remedy will exceed its
damages. The patentee is entitled to damages to make it whole and should not have to accept a
lesser amount because the infringer behaved badly. My objection is to allowing the patentee to
elect an accounting simply because the quantum of the accounting would exceed the quantum of
damages. The FCA in <i>AlliedSignal</i> did not say that a patentee is never entitled to information
allowing it to judge which remedy is greater before making an election; <i>AlliedSignal</i> said that the
grant of an accounting cannot turn on which remedy is greater. This is consistent with the view
that a successful patentee must establish its entitlement to an accounting on independent
substantive grounds, such as the bad behaviour of the infringer, but once it has established that it
should be granted an accounting on substantive grounds, it may be granted an inquiry allowing it
to make an informed choice so as to ensure that it is at least made whole.</span></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-12735894824997258822023-11-15T05:00:00.001-04:002023-11-15T05:00:00.151-04:00Inducement in the Pharma Context is an Inherently Hard Problem<p></p><div id="WPMainDoc">
<p><i>Apotex Inc v Janssen Inc</i> <a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/521283/index.do"><span style="color: blue;">2023 FCA 220</span></a><span style="color: black;"> Locke JA: Mactavish, Monaghan JJA affg </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/521815/index.do"><span style="color: blue;">2022 FC 996</span></a><span style="color: black;">
(reasons) </span><a href="https://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/521814/index.do"><span style="color: blue;">2022 FC 995</span></a><span style="color: black;"> (judgment) Pallotta J</span></p>
<p><span style="color: black;"><span> </span></span><a href="https://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2659770/summary.html"><span style="color: blue;">2,659,770</span></a><span style="color: black;"> / macitentan / OPSUMIT / NOC</span></p>
<p><span style="color: black;">This brief decision, affirming Pallotta J’s finding at trial that Apotex’s sale of Apo-Macitentan
would induce infringement of Janssen’s 770 patent, deals with a difficult issue of inducement in
the pharma context. Two main doctrinal points emerge: first, explicit instructions to infringe are
not necessary to establish inducement, and second, it may sometimes be effectively impossible
for a generic to avoid inducement by scrubbing its product monograph (PM) clean of references
to the infringing use. More broadly, this case illustrates why indirect infringement in the pharma
context is an inherently difficult problem that does not appear to have any good solution.</span></p>
<p><span style="color: black;">As discussed </span><a href="http://www.sufficientdescription.com/2022/08/skinny-label-and-swiss-claims.html"><span style="color: blue;">here</span></a><span style="color: black;">, this is in many ways a typical ‘skinny label’ case, in which a generic seeks to
sell a drug that is itself unpatented, but which may be used in a manner that is patented. In this
case, Janssen’s 770 patent covers the use of macitentan in a combination therapy with a PDE5
inhibitor in the treatment of pulmonary arterial hypertension (PAH). Apotex sought to sell
macitentan, which is itself unpatented, for monotherapy treatment of PAH. Combination therapy
is about 80% of the market and monotherapy is about 20% [FC 162]. </span></p>
<p><span style="color: black;">In such cases, the generic is not a direct infringer, so infringement by inducement must be
established under the three-part Corlac test, </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/37241/index.do"><span style="color: blue;">2011 FCA 228</span></a><span style="color: black;"> [162]. This typically reduces to the
question of whether the generic’s PM will induce infringement by prescribing physicians, who
will read the PM and thereby be induced to prescribe the generic product for use in an infringing
manner. A central question is therefore whether the generic’s skinny label has been sufficiently
scrubbed clean of any reference to the infringing use. This turns on the details of the generic PM. </span></p>
<p><span style="color: black;">In this case, the details are a bit difficult to follow because of redactions, but the key point is that
much of the information in the Apo-Macitentan PM is clinical trial data from a landmark
SERAPHIN study, which established the efficacy of macitentan for <span style="text-decoration: underline;">both</span> monotherapy and
combination therapy [12], [FC 186]. PAH is a rare disease and macitentan can only be prescribed
by about 30 specialists who work in recognized PAH centres [FC 184]. All of these specialists
would be aware of the landmark SERAPHIN study and so even though the Apotex PM was
scrubbed clean of explicit references to combination treatment, specialists reading the Apotex
PM would recognize it referenced the SERAPHIN and so would understand that Apo-Macitentan
is also suitable for combination therapy. This was the basis on which Pallotta J found that
Apotex’s PM would induce infringement.</span></p>
<p><span style="color: black;">The first key doctrinal point is that explicit instructions to infringe are not necessary to establish
the second prong of the <i>Corlac</i> inducement test:</span></p>
<p style="margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">[17] The weakness of Apotex’s position in this regard is that it assumes that an
absence of explicit instruction and of intention that direct infringement should
result equals an absence of influence sufficient to satisfy the second prong. That is
not necessarily the case. While explicit instruction and intention may be relevant
to the issue of influence, I do not accept that either is required. Even without
explicit reference to combination treatment, the Federal Court was entitled to find
that the Apo-Macitentan PM would influence use of macitentan in that way.</span></p>
<p><span style="color: black;">In <i>Novopharm </i></span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/35574/index.do"><span style="color: blue;">2007 FCA 167</span></a><span style="color: black;"> [11], the FCA remarked that “an inducement to infringe generally
cannot be inferred from a mere reference to the new use in the product monograph, for example,
in the course of explaining contraindications or drug interactions, or as part of a list of scientific
references.” Locke JA [13]-[14] distinguished this on the basis that in <i>Novopharm</i> the unpatented
use of the drug in question was for an entirely different use, whereas in this case, the unpatented
use was for the same indication. This is consistent with the qualifier “generally” in <i>Novopharm</i>
and this holding may be explained by the unusual expertise of the end-users in this case who
would recognize the indirect allusion. Nonetheless, the point remains that in some cases a “mere
reference” to an unpatented use may indeed suffice to establish inducement. </span></p>
<p><span style="color: black;">The second doctrinal point is implicit. So far as I can tell, there is nothing that Apotex could have
done to avoid inducement. Certainly there was no suggestion in either the FC or FCA decision
that Apotex could have done more to scrub its PM of references to the combination therapy. And
in this case, there was no suggestion that there would have been any way for Apotex to have
avoided such a reference. The implication is that it is simply not possible for Apotex to sell
macitentan for the unpatented use.</span></p>
<p><span style="color: black;">The broader point illustrated by this case is that the problem of inducement in the pharma context
is inherently very difficult. Ideally we want to allow free generic entry in the market for the
unpatented use while at the same time giving the patentee exclusivity in the market for the
patented use. The obvious way to do that is to sue the direct infringer, which allows the patentee
to control how the product is used after it is sold. But sometimes it is not practical or desirable to
sue the direct infringer, as is particularly the case with respect to pharma. That is when
inducement is most important.</span></p>
<p><span style="color: black;">The law of inducement tries to target the direct infringer indirectly. The theory underpinning the
<i>Corlac</i> test is that the product sold by the defendant will be used in accordance with the
instructions, so the product will only be used to infringe if the instructions supplied by the
defendant instruct infringement. This is a second-best solution, but it can work tolerably well if
the end-users generally read and follow the instructions provided by the defendant. But that
theory appears to be substantially wrong in the pharma context. The basic problem is that
physicians are to some extent experts, with their own independent sources of information. The
situation in this case, where there are only a handful of prescribing physicians who are truly
expert in this area, is just an extreme version of a pervasive problem. Of course, there will be
some people who are experts in almost any field, but the problem of general end-user (physican)
expertise means that the standard theory is particularly weak in the pharma context. </span></p>
<p><span style="color: black;">The result under the <i>Corlac</i> approach is that the generic will only be allowed to sell its
unpatented product if it scrubs its PM clean of any references to the infringing use. The generic
will also argue that even if its PM does instruct an infringing use, that doesn’t constitute
infringement because the prescribers don’t pay any attention to the generic PM in any event,
though I don’t believe that argument has ever prevailed on the facts. This approach has an air of
unreality about it. I can’t help but imagine a scenario in which no doctor ever reads the PM for a
generic product, except one scrupulous physician in a rural community where there is nothing
else to do, who compulsively reads and follows the PM for any drug she prescribes. If the generic
PM instructs infringement, she will be induced, so it is essential to scrub the generic PM clean in
order to avoid liability. And then one day she retires, and now the generic PM can say whatever it
wants. </span></p>
<p><span style="color: black;">In any event, even if there is some substantial number of physicians who pay attention to the
generic PM, it seems clear enough that most do not. (And my understanding is that physicians
normally prescribe generically and pharmacists do not normally know the indication, so even if
the physician knows that the generic drug is not indicated for the patented use, it may be
dispensed for that use nonetheless.) This means that if the generic is permitted to sell its product,
we will get desirable competition in the unpatented market, but at the price of substantial
infringement in the market for the patented use. </span></p>
<p><span style="color: black;">What can be done? One approach would be to favour one side or the other. In <i>AB Hassle v
Apotex</i> </span><a href="http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/31798/index.do"><span style="color: blue;">2002 FCA 421</span></a><span style="color: black;"> [57], the FCA gave a strong policy statement suggesting we should favour
competition in the unpatented market:</span></p>
<p style="margin-bottom: 0.166667in; margin-left: 0.5in; margin-right: 0.5in;"><span style="color: black;">Thus [the defendant] cannot be prevented from obtaining [marketing
authorization] solely on the basis that it will sell [the known compound]. If it were
otherwise, then serious policy issues would arise. If there was any likelihood that
a patient would consume a generic product for a patented use, then the generic
product would not be approved. This would prevent new uses from being
approved for existing drugs because there is always the possibility that someone
somewhere will use the drug for the prohibited, patented purpose. This would
result in a real injustice: since a generic company cannot possibly control how
everyone in the world uses its product, the prevention of the generic from
marketing the product would further fortify and artificially extend the monopoly
held by the patent holders. The patent holder would, therefore, effectively control
not just the new uses for the old compound, but the compound itself, even though
the compound itself is not protected by the patent in the first place. The patent
holders, as a result, would obtain a benefit they were not meant to have. In the
end, society would be deprived of the benefit of new methods of using existing
pharmaceutical medicines at a lower cost.</span></p>
<p style="margin-bottom: 0.166667in;"><span style="color: black;">This logic is sound, but we have to keep in mind that we are striking a balance between the right
of the patentee to exclusivity for its patented use and the need to incentivize development of new
and useful treatment, and the right of the generic to sell the unpatented product for unpatented
purposes and the desirability of competitive prices in the unpatented market. That balance is easy
to strike if the only problem is that “someone somewhere will use the drug for the prohibited,
patented purpose.” But what if the problem is that everyone everywhere will use the drug for the
patented purpose?</span></p>
<p style="margin-bottom: 0.166667in;"><span style="color: black;">Suppose a drug has long been generic, like aspirin, and the patentee invents a new use that
represents 0.1% of sales. It seems clearly wrong as a matter of policy to prohibit the generic from
selling aspirin, even if we know with certainty that it will be used for the infringing purpose. The
benefit to the public of allowing generic prices for 99.9% of uses more than outweighs need for
an incentive to innovate for niche uses. But conversely, if the patented use represents almost all
of the market, it seems wrong to undermine that exclusivity simply because there is an
unpatented niche use. The need to provide an incentive to develop major innovations that
constitute the primary use for the compound outweighs the desire to allow generic prices in the
niche market. So, if we can’t control direct infringement either through a direct action against the
end-user or by restrictions on the product instructions, it is reasonable on policy grounds to say
that the generic should be allowed to sell the product if the unpatented uses predominate but
should not be permitted to sell the product if the patented uses predominate. </span></p>
<p style="margin-bottom: 0.166667in;"><span style="color: black;">If we apply that reasoning to the facts of this case, in which the unpatented use is only about 20%
of the market, it seems reasonable on policy grounds to prohibit the sale of the generic product.
Yes, this is a bad solution and it shuts down competition in the market for the unpatented use, but
all the solutions are bad—the question is which solution is the least bad. In </span><a href="http://www.sufficientdescription.com/2022/08/skinny-label-and-swiss-claims.html"><span style="color: blue;">my post on Pallotta
J’s decision</span></a><span style="color: black;">, I suggested that her finding may have been motivated by “the fact that combination
therapy is the primary use for macitentan, with only 10–30% of patients getting monotherapy
[162]. If the opposite were true, so that eg only 10% of the use was in the patented combination,
then I wonder if it would have gone the other way.” This view is consistent with the two
doctrinal points emerging from Locke JA’s decision on appeal. Taken on its own, the idea that a
mere indirect reference to the patented use can support a finding of inducement is novel and
somewhat extreme, as is the notion that it may be impossible for Apotex to sell a generic version
of this drug. But both are readily understandable if the FCA was stretching existing doctrine in
order to strike an appropriate balance by protecting the primary market.</span></p>
<p style="margin-bottom: 0.166667in;"><span style="color: black;">I don’t really know where to go from there. I am reluctant to suggest abandoning the <i>Corlac</i>
approach, which focuses on the instructions, even in the pharma context. The <i>Corlac</i> approach is
logical and principled, and it works reasonably well in many contexts. The rule just doesn’t work
as well in the pharma context, where most physicians do not get their information about how to
use a generic drug from the manufacturer’s instructions. But it would be difficult to implement a
market share approach in the pharma context, even if this could be done doctrinally. If the market
shares for the patented and unpatented uses are 1%/99% or vice versa, it seems easy to say
whether we should allow the generic sales. But where is that line to be drawn? Any firm
line—50/50? 30/70?—seems arbitrary, but any line that turns on the facts will likely be both
arbitrary and unpredictable. All I can say is that this case illustrates that the problem of
inducement in the pharma context is very difficult, and I don’t see any easy solution.</span></p>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-81703566450781384392023-11-13T09:36:00.000-04:002023-11-13T09:36:18.580-04:00TIPG on November 23rd<p>On November 23 I'll be discussing comparative overbreadth at a Toronto IP Group dinner. <a href="https://tipg.ca/event-5457605">Here is a link to the event details.</a> I hope to see some of you there. <br /></p>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-1454051731189268002.post-59373682175189929342023-11-08T09:19:00.003-04:002023-11-08T09:19:51.364-04:00Nova v Dow: Miscellaneous Policy Issues<p></p><p><i>Nova Chemicals Corp v Dow Chemical Co</i> <a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/19554/index.do"><span style="color: blue;">2022 SCC 43</span></a><span style="color: black;"> Rowe J: Wagner CJ, Moldaver,
Karakatsanis, Brown, Martin, Kasirer and Jamal JJ concurring; Côté J dissenting affg <i>Nova
Chemicals Corporation v Dow Chemical Company</i> </span><a href="https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/485375/index.do"><span style="color: blue;">2020 FCA 141</span></a><span style="color: black;"> Stratas JA: Near, Woods JJA
affg <i>Dow Chemical Co v Nova Chemicals Corp</i> </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/230610/index.do"><span style="color: blue;">2017 FC 350</span></a><span style="color: black;">, </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/233118/index.do"><span style="color: blue;">2017 FC 637</span></a><span style="color: black;"> Fothergill J</span></p>
<p style="margin-left: 0.5in;"><a href="http://brevets-patents.ic.gc.ca/opic-cipo/cpd/eng/patent/2160705/summary.html"><span style="color: blue;">2,160,705</span></a><span style="color: black;"> / film-grade polymers / ELITE SURPASS</span></p>
<p><a href="http://www.sufficientdescription.com/2023/03/nova-v-dow-intuition.html"><span style="color: blue;">The Intuition</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/03/nova-v-dow-legal-background.html"><span style="color: blue;">The Legal Background</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-causation-as-matter-of-fact.html"><span style="color: blue;">Causation as a Matter of Fact</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-concession.html"><span style="color: blue;">The Concession</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/04/nova-v-dow-what-role-for-but-for.html"><span style="color: blue;">What
Role for “But For” Causation in Identifying the NIO?</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-summary-of-summary.html"><span style="color: blue;">Summary of the Summary</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-causation-concept-in-absence.html"><span style="color: blue;">Causation
Concept in the Absence of an NIO</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-what-is-nio.html"><span style="color: blue;">What is the NIO? / </span></a><span style="color: black;"></span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-value-of-invention.html"><span style="color: blue;">The Value of the Invention</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/09/nova-v-dow-rivett-on-facts.html"><span style="color: blue;">Rivett on
the Facts</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/10/nova-v-dow-three-policy-arguments.html"><span style="color: blue;">Three Policy Arguments</span></a><span style="color: black;"> / </span><a href="http://www.sufficientdescription.com/2023/11/nova-v-dow-source-of-chilling-effect.html"><span style="color: blue;">The Source of the Chilling Effect</span></a><span style="color: black;"> </span></p>
<p><span style="color: black;">In a previous post I discussed the </span><a href="http://www.sufficientdescription.com/2023/10/nova-v-dow-three-policy-arguments.html"><span style="color: blue;">three main policy arguments</span></a><span style="color: black;"> raised by Rowe J in support of his
approach to an accounting of profits, arguing that they in fact support an accounting based on “but for” causation. My last
post then addressed the crucial policy issue of </span><a href="http://www.sufficientdescription.com/2023/11/nova-v-dow-source-of-chilling-effect.html"><span style="color: blue;">the chilling effect</span></a><span style="color: black;">. There are two more policy arguments
raised by Rowe J. While I address them at more length in Part II of my forthcoming article for
completeness in canvassing the policy issues, I will mention them only briefly here as they did
not seem to play a major role in Rowe J’s reasoning. </span></p>
<p><span style="color: black;">First, Rowe J said that an accounting “discourages efficient infringement: when an infringer’s
profits exceed the damages suffered by the patentee” [47]. This is probably a reference to the
“catch-me-if-you-can” problem, described by Zinn J at first instance in <i>Rivett</i> </span><a href="http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/56520/index.do"><span style="color: blue;">2009 FC 317</span></a><span style="color: black;"> [23].
As I explain in more detail in the article, this argument does not support Rowe J’s approach to an
accounting because a “but for” accounting is entirely adequate to address the problem and does
so without risking a chilling effect.</span></p>
<p><span style="color: black;">Second, Rowe J also asserted that “smaller businesses would be disproportionately
disadvantaged by [“but for” causation]” [64]. With due respect, this argument is simply not
serious, for reasons I discuss in detail in Part II of my the article. The only explanation for it is
that Rowe J was casting about for additional arguments to bolster a decision he had already made
for other reasons. </span></p>Unknownnoreply@blogger.com0