Throwing Mud at the Wall

NCS Multistage Inc v Kobold Corporation 2023 FC 1486 McVeigh J

2,693,676 / 2,820,652 / 2,738,907 / 2,766,026 / 2,820,704 (NCS) / 3,027,571 (Kobold)

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.

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.

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 Western Oilfield 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

[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.

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.

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?

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.

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.)

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.

Priority and the use of file history

One argument that was particularly difficult to follow related to priority dates and the use of file history [1302]–[1337]. The Ravensberger patent (2,730,695), 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.

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.

Then McVeigh J stated (my emphasis):

[1335] As such, it is possible for different claims to be subject to different priority dates relating to different, previously filed applications. However, I interpret this as taking place during the application process and not at the stage in an action where validity is being determined. This would amount to an ex post facto prosecution of the patent, and contrary to the role of this Court.

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.

Grace Period

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 some information derived from NCS, 28.3(a) could not be used to exclude all 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.

Mosaicing art from different experts

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].

Inventive Concept

There has been a lot of controversy over the use of the inventive concept in claim construction: see here and here. My own view is that the EPO objective problem and solution approach is probably the best way: see here for my argument to that effect, and here, here and here 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.

Ambiguity

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.)

Utility related to the nature of the invention

In AstraZeneca 2017 SCC 36 [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.)

Remedy

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 a post on an earlier case, in a two part article forthcoming in the IPJ and summarized in a series of blog posts, I have argued that Nova v Dow 2022 SCC 43 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.

Puzzles of Disclosure and Support

Paid Search Engine Tools, LLC v Google Canada Corporation 2021 FC 1435 McDonald J

2,415,167 / Paid Search Engine Bid Management

In my earlier post on this decision, I noted that McDonald J held that in light of the parallelism between 28.1(1), the claim date provision, and 28.2(1), the novelty provision, priority can only be claimed if the priority application discloses the same invention; it is not enough that the claimed subject matter is reasonably inferable from priority document [221]. Specifically, 28.1(1) says priority may only be claimed to a prior application “disclosing the subject-matter defined by the claim.” But as a comment on that post noted, 38.2 prohibits amendments that “add matter that cannot reasonably be inferred from the specification. . . on its filing date”; that means, conversely, that an amendment is permitted if the added matter can be reasonably inferred from the original application. Since the specification is part of the claim, it seems that 38.2 means a new claim is permitted so long as the subject-matter can be reasonably inferred from the original specification. On its face, there seems to be a gap between “reasonably inferred” and “disclosed” with the latter being more stringent than the former: see Western Oilfield 2021 FCA 24 on the difference between the Canadian and UK standards for added matter, discussed here. How can these differing standards be reconciled?

There is a straightforward answer, which is that 38.2 goes to amendments, and 28.1 goes to priority. So it is consistent to have a claim which is permitted (under the less stringent 38.2 standard), but which is not entitled to priority (under the more stringent 28.1 standard).

But problems lie not far below the surface. Consider a scenario in which the description in the application as filed is identical to that in the priority document. A claim is amended during prosecution in response to an objection by the examiner. The amended claim is reasonably inferable from the application as filed, so is permitted by 38.2, but it is not disclosed by the application as filed. The claim date for that claim must be either the filing date or the priority date: there are no other options. In particular, it is not an option under the Act or Rules for the claim date for that claim to be the date on which it was amended. (Compare the old Rule 53 under the old Act.) Section 28.1 provides that the claim date is the filing date unless priority is claimed. If the applicant does not claim priority, then the claim date is the filing date. The claim must also be supported by the description, per Rule 60. It must be implicit that if the amended claim can reasonably be inferred from the description, it is also supported by the description. Otherwise, the “reasonably inferred” standard for permitted amendment would be pointless, as any amended claim that was only reasonably inferred from the description would be invalid for lack of support. This is supported by Hughes J’s passing statement in Bartley 2011 FC 873 [15] equating “supported” with “reasonably inferred.” Because the description is the same in the two documents, this means that the priority document also supports the amended claim.

Now suppose the applicant does claim priority. If the amended claim is not disclosed by the application as filed, it is not disclosed by the priority document, given that in our scenario the descriptions are same in the two documents; but because the descriptions are the same, it also follows that the claim is supported by the priority document. It seems very counter-intuitive that a claim should be properly supported by the application as filed, and yet not entitled to claim priority to a priority document with exactly the same disclosure.

Now change the scenario slightly, and suppose that the claim in question was present in the application as filed. The added matter provision (38.2) is now irrelevant; but by hypothesis, the claim is not disclosed in the priority document even though it is supported by the Canadian application with exactly the same description, which means that priority cannot be claimed.

Refusing a claim to priority on that basis is pointless formalism. The quid pro quo for which the patent exclusivity is granted is the new and non-obvious information disclosed in the description: see Pope Appliance (1929) 46 RPC 23 (JCPC) 55; Halocarbon [1979] 2 SCR 929, 944-45; Pfizer v Ratiopharm 2006 FCA 214 ¶ 23; American Cyanamid Co (Dann's) Patent [1971] 88 RPC 425 (HL) 452; Consolboard [1981] 1 SCR 504, 517; Amazon.com 2011 FCA 328 ¶ 36. The new information disclosed in the specification—the “mental result” or “new idea” or “novel mental concept”—cannot be patented as such: “A disembodied idea is not per se patentable. But it will be patentable if it has a method of practical application”: Shell Oil [1982] 2 SCR 536, 554. The claims define practical embodiments of that information: as the SCC said long ago: “A patentable invention is a mental result. . . . The machine, process or product is but its material reflex and embodiment”: Ball v Crompton Corset Co (1887) 13 SCR 469, 477 quoting with approval Smith v Nicholls, 88 US (21 Wall) 112 (1874) 118. The requirement that the claims are supported by the description ensures that the claimed subject matter reflects the new information: an inventor cannot disclose a new way of peeling potatoes, and claim a cure for cancer. But if the original disclosure was sufficient to support the claim, the patentee has met its part of the bargain, and that is just as true whether the disclosure was made in a foreign filing or in a Canadian application in exactly the same terms. In this scenario, the information content of the two documents is exactly the same; the only difference is that the exact words of the claim do not appear in the priority document. This is an absurd basis for refusing priority—and I mean that in the statutory interpretation sense, that it cannot possibly be right. A claim that is fully supported by the Canadian application should be able to claim priority to a priority document with exactly the same disclosure.

However, this absurdity flows from a fairly straightforward reading of the text of the Act. Of course, while the text is dominant in statutory interpretation, the text must be read in light of context and purpose to arrive at a harmonious result. So, I looked more deeply into the context, including the modern and historical case law, the history of the rule changes, the concept of support, the law in other jurisdictions and so on. That context provided some insights, but added some complexity, and while I have some leads, I have found no easy answer, at least at this point. Unfortunately, I am not in a position to chase this down right now. Instead, I’m just adding this update to say that the position I stated in the post above follows from the text of the Act, but it leads to enough problems down the road that I no longer have the same confidence in it that I did when I wrote the post.

Now consider another implication of the above hypothetical, in which the priority document and the Canadian application have exactly the same description, and the Canadian application has a claim that is supported by the description but is not disclosed by the description. As discussed, that means that the claim is valid but priority cannot be claimed. But at the same time, it is almost certain that a description sufficient to support the claim would also be sufficient to anticipate the claim, with the counter-intuitive result that the priority document would anticipate the claim (but for the grace period), even though priority cannot be claimed. This result is very difficult to reconcile with the view that “disclose” has the same meaning in 28.1 as in 28.2. That is not to say that disclose has different meanings in those two provisions, as the analysis also turns on the meaning of “priority”. The point is only that this is another absurd result flowing from a straightforward reading of the text.

I should emphasize that in the foregoing, I do not mean to endorse any particular test or definition for “disclose” and “support” and “reasonably infer.” So, in agreeing with McDonald J that “disclose” has the same meaning in 28.1 as in 28.2, this was not to endorse the practice of any particular patent office as to the interpretation of that term. I am given to understand that some patent offices interpret “disclose” to require a verbatim or almost verbatim reproduction of the claim in the description. I doubt that is right; I am inclined to prefer the approach taken by Jacob LJ in Unilin Beheer [2004] EWCA Civ 1021 [48].“Disclose” of course is subject to extensive caselaw in the context of anticipation, but even if it has the same meaning in the priority context, it is not obvious how it should actually be applied. For example, a claim to “PDEV inhibitors for the treatment of erectile dysfunction” would be anticipated by the prior use in traditional medicine of epimedium to treat ED; but that does not mean that the disclosure in the priority document of the use of epimedium to treat ED would disclose the use of PDEV inhibitors to treat ED. More broadly, there is very little caselaw on the meaning of any of these terms: see the very interesting discussion of the meaning of “support” in CA/PL 27/99, part of the Travaux préparatoires for the EPC 2000. I expect a proper resolution of this problem will show that some aspects of current practice, or implicit understandings of the key terms, are wrong.

Finally, I note that the result in this case does not seem to have turned on the point. PSETs experts argued that certain claims were “reasonably inferable” from the 976 patent [216]–[217]. McDonald J rejected this argument in terms which seem to me to reject the argument of reasonable inference [218]–[219]. McDonald J did go on to say that the priority document must “disclose” the invention [220]–[221] as discussed above, but, so far as I can tell, this was not necessary to the result. (I want to emphasize that I am not saying that I am of the view that reasonably inferable is the test for claiming priority—simply that the point was not determinative in this case.)

“Disclose” Has the Same Meaning in Claim Date and Novelty Provisions

Paid Search Engine Tools, LLC v Google Canada Corporation 2021 FC 1435 McDonald J

2,415,167 / Paid Search Engine Bid Management

In this decision, McDonald J held all the asserted claims of PSET’s 167 patent were invalid for insufficiency, anticipation, or obviousness [5] in a decision that turned largely on the facts. (If I’m counting right, PSET asserted 64 claims from 6 independent claims.)

The patent relates to a system for search engine bid management. In the early 2000s advertisers were reaching internet users by paying search engines to have their information or advertisements displayed in response to user searches for sites for specified keywords. Advertisers could bid on search keywords, so that a higher bid would get the advertiser a higher place in the search results for that keyword [11]. Advertisers wanted to manage their bids to get the best placement for the least money. This could be cumbersome for an advertiser managing a large number of keywords. The inventors of the 167 patent developed what they called a Keyword Bid Optimizer tool (KBO). The KBO collected information from the search engine on their customers’ keywords and the bids on those keywords, and produced a report showing: the keyword(s), the number of times it was searched (views), the top 20 bids for the keyword, and where the advertiser’s bid (in red) ranked relative to others, as shown in this figure from the patent [17]:

With the report in hand (or on-screen), the advertiser could then easily scan the table and see, for example, that they could reduce their bid on “earth friendly product” from 5¢ to 4¢ while still maintaining their first place ranking. The claimed invention seems to have been an automated version of the KBO tool, which incorporated automatic bid reduction as an essential element [236].

McDonald J held on the facts that two of the key independent claims (1 and 17) were undoubtedly obvious:

[260] This is not a case where the application of the obviousness analysis strains credulity. The evidence is clear that even on a rigid application of the obviousness considerations there were multiple other commercial products that performed the same essential features, and in some cases more, as those described in claims 1 and 17 of the 167 Patent.

This is a classic obviousness scenario, where the development of a new product or technology drives a demand for complementary technologies. There were no doubt many new and useful products that were nonetheless obvious, as companies rushed to pluck the low hanging fruit from the new opportunities opened up by search engine advertising, which was relatively new at the time [62].

A number of the claims were also anticipated. The 167 patent claimed priority from a US provisional patent application, which was referred to as the 976 patent. McDonald J held that a number of the claims were not entitled to claim priority from the 976 patent as the claimed invention was not sufficiently disclosed [222]. PSET argued that the claim to priority is met “if an ‘inference’ can be drawn that the 976 Patent discloses the 167 Patent” [220]. McDonald J rejected this, pointing out that “The word “disclose” appears in various sections of the Patent Act. I do not accept that a different meaning should apply to disclosure as it is used in subsection 28.1(1) such that disclosure is achieved merely if an inference can be drawn” [221]. This holding strikes me as clearly correct. Section 28.1(1), the claim date provision, refers to “a patent disclosing the subject-matter defined by the claim”; s 28.2(1), the novelty provision, states “The subject-matter defined by a claim . . . must not have been disclosed.” It is not just the word “disclosed” that is the same; the two provisions have parallel construction, both dealing with the relationship between disclosure and the claimed subject matter, and of course the claim date defined in s 28.1(1) is incorporated into s 28.2(2). Surely the same meaning was intended. PSET conceded that many of the asserted claims were anticipated if they could not rely on the priority claim [231]. Other claims were anticipated by the prior art [245].

McDonald J also held that a number of the claims were not sufficiently disclosed, particularly those based on automatic reduction of a bid based on the demographic information of searchers, as the patent did not provide sufficient description of how to actually use that information: see eg [199], [204]. In effect, patent says “Check out these cool stats and then optimize.” We don’t see successful insufficiency attacks very often, but this strikes me as a pretty clear case, at least judging from McDonald J’s relatively brief discussion.

Finally, I’ll note that the patentee appears to be a variety of patent assertion entity. PSET did actually implement and sell the KBO tool, but it was not commercially successful, and they stopped selling it in 2003 [20]–[22]. As noted, the invention claimed by the 167 patent is an improved version of that tool, with automated bid adjustment, and it doesn’t seem that PSET ever implemented an embodiment of the invention. So far as I can tell, PSET was one of many firms that jumped into an exploding new market, but they didn’t survive the shake out. This litigation was an (unsuccessful) attempt to monetize the patent.

 UPDATE: See further discussion of the priority point here.

Effect of Errors in Priority Application

Amgen Inc v Pfizer Canada ULC 2020 FC 522 Southcott J
            1,341,537 / filgrastim / NEUPOGEN / NIVESTYM

Yesterday’s post gave an overview of the facts and discussed the main substantive holding in this decision, namely that the invention was obvious. This post turns to two priority issues: the effect of errors in the priority application; and disclosure of data in the priority application.

The 537 patent claimed priority from a prior US application — the 959 application — and there was a significant debate as to whether priority could properly be claimed. It is unusual to see this issue discussed at length in Canadian cases (here’s the only other case I’ve seen since this blog started), so the decision on this point is interesting for that reason alone. Because the 537 patent is governed by the old Act, the question was whether the prior application was for “the same invention” [186]. Under the new Act, s 28.1(1)(a)(i), the question is whether the prior application “disclos[es] the subject-matter defined by the claim.” Because of the different wording, it is not entirely clear that Southcott J’s analysis would apply under the new Act, but his analysis did not turn on the precise wording, so it may well provide useful guidance.

Errors in priority application
As discussed in yesterday’s post, the invention relates to filgrastim, which is a recombinant DNA version of the naturally occurring “granulocyte colony-stimulating factor” or “G-CSF” [12]. The 959 priority application listed (i) the amino acids sequence of the naturally occurring G-CSF; (ii) the corresponding DNA codons; (iii) the corresponding cDNA. There were admittedly typographical errors in all three sequences [198]. These errors had been corrected in the application as filed. The parties did not identify any jurisprudential guidance on the issue of whether such errors implied that the priority application does not disclose “the same invention” [198]. Relying on the principle that the skilled person reads the invention with a mind willing to understand [204], Southcott J held that the skilled person would be capable of “resolving” the errors [202], would not be “stymied” [204] and would not conclude that the two applications “are in substance directed to different inventions” [203]. On the facts, this conclusion strikes me as sound for the reasons given by Southcott J.

More broadly, Southcott J’s holding means that the mere presence of errors in the priority application does not preclude claiming priority from it. However, he did not purport to set out a specific test. On the facts, it seems that the errors were relatively easily corrected [199]-[200], so his decision would be consistent with a rule that a skilled person must be able to correct the errors without undue effort. But his decision is also consistent with a more relaxed rule; given that the errors could be readily resolved, it was not necessary for Southcott J to address the question of whether misleading errors would preclude a priority claim.

I would suggest that the case law on prior disclosure for purposes of anticipation might be relevant. Under the current Act, the test for claiming priority is whether the priority application “disclos[es] the subject-matter defined by the claim,” while the test for anticipation under 28.2 (1) is whether “[t]he subject-matter defined by a claim” has been “disclosed.” The similarity in text of the provisions suggests that the applicable test for “disclosure” might be the same (subject to purposive considerations to the contrary). The leading case on disclosure for the purposes of anticipation is Sanofi 2008 SCC 61, which adopted the two part “enabling disclosure” test set out in Synthon [2005] UKHL 59. In Synthon the question was whether Smithkline Beecham's (SB) patent, claiming a particular polymorph pf paroxetine methanesulfonate ("PMS") [8], was anticipated by Synthon's prior application which also described how to make PMS [4]. However, the disclosure in the prior application was quite misleading: “A person skilled in the art, reading both documents, would think that they identified different polymorphs” [9]. The House of Lords nonetheless held that the disclosure requirement was satisfied. If the same “disclosure” test applies to claiming priority, this suggests that priority might properly be claimed even if the errors in the priority document were misleading, so long as it “disclos[es] the subject-matter defined by the claim,” in the sense that “disclosure” is used in Sanofi and Synthon. This also seems reasonable on policy grounds. Otherwise, in a case like Synthon, where Synthon's prior application anticipated SB's patent notwithstanding the errors, it would seem that Synthon should be able to claim priority for its own subsequent filing based on that prior application, notwithstanding the errors. Were that not the case, SB's patent would be anticipated by Synthon's prior application, and Synthon's filing would be anticipated by SB's patent, and neither party would be able to obtain a patent for lack of novelty, even though it was uncontested that the compound itself was new. (I say "in a case like Synthon," because this scenario did not arise on the facts, as Synthon's prior application was a PCT application.)

Disclosure of data
A second point of interest relates to disclosure of data in the priority document. It was agreed that one of the claims, Claim 47, included a requirement for biological activity (in particular, granulocyte colony-stimulating activity). The parties seemed to have proceeded on the assumption that this meant that in order to disclose the same invention, the priority application had to disclose tests establishing the biological activity. While the tests disclosed in the priority application were not the same as those disclosed in 537 patent, Southcott J held that the tests disclosed in the priority application adequately established the biological activity; the same tests do not have to be disclosed, so long as the same activity is disclosed [211]. That holding seems right to me, so far as it goes.

While that disposed of the point on the facts, I’d question the assumption that it was necessary for the tests establishing the activity to be disclosed in the priority application at all, even though the claim includes a requirement for biological activity. While an invention must be useful, if utility can be demonstrated, the data establishing that utility need not be disclosed in the patent itself. If the data need not be disclosed in the patent, it is difficult to see why it must be disclosed in the priority application. So, suppose that granulocyte colony-stimulating activity had been demonstrated before either the priority date or the filing date, but the 537 patent itself did not disclose any data supporting utility. Aside from any priority issues, Claim 47 would nonetheless be valid, because it is not necessary to disclose evidence of demonstrated utility in the patent itself. Now suppose the disclosure in the priority application was exactly the same as that in the 537 patent, which is to say that neither of them disclosed any data. It would seem that if the disclosure in the priority application is exactly the same as in the Canadian patent, the same invention / same subject matter requirement must be satisfied. So, if biological activity is demonstrated, the Canadian application can properly claim priority from the priority application, even if neither the priority application nor the Canadian application discloses the data. This suggests that if the Canadian application disclosed the data, but the priority application did not, the Canadian application should still be able to claim priority; it doesn’t seem reasonable that the Canadian applicant should be a worse position because of having disclosed more information.

Burden of Proving Priority

Hospira Healthcare Corporation v. Kennedy Trust for Rheumatology Research 2020 FCA 30 Locke JA: Rivoalen, Nadon JJA var’g 2018 FC 259 Phelan J
            2,261,630 / infliximab / INFLECTRA

An apparently novel issue raised in this appeal was the burden of proving priority. The application for the 630 Patent was filed on August 1, 1997, and a priority claim was made based on a US application filed in 1996 [59]. However, s 28.4(4) provides that where there are two or more previous applications on which priority could be claimed, the earliest must be used. The 1996 US priority application itself claimed priority from another US application which was filed in 1992. Hospira argued that the priority claim to the 1996 application was therefore invalid (with the result that the claim date would be the Canadian filing date, making additional prior art relevant) [60].

Per s 28.1, priority cannot be claimed from the 1996 application unless it discloses the same subject-matter as the 630 patent; and the effect of 28.4(4) is that priority must be claimed from the 1992 application if the 1992 application discloses the same subject-matter as the 630 patent. The question for both was therefore whether they disclosed the same subject matter as the 630 patent. Neither priority application was in evidence. Thus the argument, and Locke JA’s holding, turned on the burden of proof.

Hospira argued that the patentee had the burden to establish the priority claim, and it failed to meet that burden because it did not put the 1996 application into evidence. Kennedy Trust, on the other hand, argued that the burden of proof was instead on Hospira in light of the presumption of validity per s 43(2) of the Act.

Locke JA rejected both these positions [63]. He held that that Hospira’s reliance on the 1992 priority “is remote enough from the issue of the priority claim on the 630 Patent” that Hospira had the burden to prove the contents of the 1992 priority” [64]. It seems reasonable to me that the party asserting a particular priority date should have the obligation to prove it. Given that burden, there is a separate question of how to actually prove the contents of the earlier priority application. At trial Hospira seemed to have relied on the fact that Kennedy Trust had actually pursued an appeal to the USPTO to establish that the 1996 application was entitled to claim priority to the 1992 priority, essentially on the basis that it disclosed the same subject-matter [FC 157]. Locke JA did not specifically discuss why this was not sufficient to carry the burden (and it's not clear that issue was even raised on appeal). Given that the 1996 application was not in evidence, evidence that the 1992 priority disclosed the same subject matter as the 1996 application may not be sufficient proof that either disclosed the same subject matter as the 630 patent.

Turning to Kennedy Trust’s argument, Locke JA held that the presumption of validity does not extend to the priority claim because the claim date only affects the prior art, and does not go directly to validity [63]. That seems right to me on the text of s 43(2). But if the presumption of validity does not apply and the 1996 application itself was not introduced into evidence, what is the basis for holding that the 1996 priority claim was valid? Locke JA held that “With no dispute that the 1996 priority supports the subject matter of the claims in issue” and in the absence of evidence of the contents of the 1992 priority, he saw no error in recognizing the 1996 claim date [65]. I must say that this looks to me like the application of some kind of presumption of validity, given that there was no evidence at all about the contents of the 1996 application. (Hospira’s position at trial was that both the 1992 and the 1996 disclosed the same subject matter, but that doesn’t necessarily imply that either discloses the same subject matter as the 630 patent.) Would the result have been different if Hospira had asserted, without any evidence, that the 1996 application did not disclose the same subject matter as the 630 patent? Would that have been enough of a dispute to require the patentee to introduce the 1996 application? If not, it would seem that some kind of presumption is at work. But, as noted, Locke JA expressly held that the presumption of validity does not extend to a priority claim.

In any event, in either case it does seem that the best way of establishing the content of the priority application is directly, by introducing it into evidence.