Stay Pending Re-Examination Denied

Pfizer Canada ULC and Pfizer inc v uniQure BioPharma BV 2023 FC 629 Furlanetto J

2,737,094 / Modified Factor IX Polypeptide / HEMGENIX

Pfizer has a product that has undergone a Phase 3 clinical trial that would arguably infringe uniQure’s 094 patent. Pfizer therefore brought an action last fall challenging the validity of several key claims [5]. Shortly thereafter, uniQure filed a request for re-examination pursuant to s 48.1, allegedly in response to new prior art that was brought to uniQure’s attention during foreign proceedings involving Pfizer [10].

In this motion, uniQure sought a stay of Pfizer's impeachment action pending the outcome of the re-examination. There is no statutory bar to impeaching a patent that is under re-examination [42], so the decision to stay is discretionary, guided by the aim of “securing the just, most expeditious, and least expensive determination of the proceeding on its merits,” without unfairly prejudicing one of the parties [19]. In the result, Furlanetto J refused to stay the impeachment action, essentially because the outcome of the re-examination would not sufficiently simplify the impeachment proceeding to warrant a lengthy stay of up to a year.

The crux of uniQure’s argument was that the claims would likely change as a result of re-examination and it would be pointless to litigate claims that would no longer be in effect [21]. The Re-examination Board might cancel the existing claims or it might accept some or all of the amended claims proposed by uniQure. Moreover, uniQure undertook to not to defend the existing claims if the Board accepted any of its proposed claims [14].

However, uniQure acknowledged that the crux of the invention remained the same under the proposed claims [25]. Consequently, the attacks based on anticipation, obviousness and misrepresentation under section 53 would remain largely unaffected [25], [40]. The amendments certainly would not dispose of the litigation [25].

The arguments based on utility / overbreadth and patentable subject-matter might or might not be affected, depending on whether the Board accepted uniQure’s proposed claims and if so, which ones [25]–[27]. While uniQure argued that documentary discovery would be narrowed without the issues of utility and claim breadth [28], Furlanetto J found that discovery would not be significantly narrowed because the documents are issue were probably relevant to other issues put in play by the pleadings [29]-[32]. (This is aside from the question of whether the Board would adopt the proposed claims.)

Further, Furlanetto J pointed out that

[38] uniQure was and has always been free to choose its own litigation strategy. It was uniQure’s choice to wait to seek re-examination in Canada despite narrowing its claims elsewhere well in advance of the initiation of the Action. It cannot now claim prejudice from circumstances created in part by its own doing. There is also nothing preventing uniQure from making formal admissions in the Action to limit what it perceives as unnecessary areas of inquiry for discovery in view of positions it has taken in the re-examination.

Furlanetto J also found that uniQure would not be unfairly prejudiced if the action went ahead [25]–[37]. The wait for re-examination could be up to a year, and re-examination would have to have an impact that was “not. . . tenuous” to justify a stay of such length [41]. Consequently, Furlanetto J dismissed uniQure’s motion for a stay.

Potentially Conflicting Decisions of the Re-examination Board and the Federal Court

Teva Canada Innovation v Pharmascience Inc 2021 FC 367 Southcott J

2,760,802 / glatiramer acetate / GLATECT

The Patent Act s 48.1- 48.5 provide for the re-examination of granted patents by a Patent Office Re-examination Board. The Act does not, however, address the interaction between Board proceedings and parallel Federal Court litigation. As discussed here, two FC decisions, Prenbec 2010 FC 23 and Camso 2016 FC 1116, have granted a stay of re-examination proceedings pending a decision in parallel FC litigation. In the present decision Southcott J has again granted a stay of an ongoing re-examination proceeding in light of parallel FC litigation. Southcott J’s decision is entirely consistent with Prenbec and Camso, but clarifies some additional points while deliberately leaving open some other important questions. In particular, even while the re-examination proceeding is stayed, it is not terminated, and the Board will eventually render a decision [26]. What happens if the decision of the Board is inconsistent with that of the Federal Court? That is a very real prospect in this case.

A few preliminary points. The court in Prenbec held that the Federal Court has jurisdiction to order a stay of the Board’s re-examination proceedings using the standard RJR-MacDonald [1994] 1 SCR 311 test, and parties since have accepted this: [11], Camso [18]. This point therefore seems reasonably well established.

A second point is procedural. The Board in this case issued two “preliminary opinions,” the first on 17 June 2020 and the second on 22 February 2021. So far as I can tell, there is no express basis in the Act or Rules for such preliminary opinions. There is, however, an implicit basis. Section 48.3(2) allows the patentee to propose amendments as part of the procedure (so long as they do not enlarge the scope of the claims); but how can the patentee know to make an amendment unless it has some idea of what the Board thought about the original claims? So, the re-examination procedure is in effect a kind of limited re-prosecution, and the preliminary opinions were in the form of a letter to counsel for the patentee, inviting the patentee to propose new or amended claims in response.

Third, the Attorney General, on behalf of the Board, consented to the motion, and indeed made submissions in support. Evidently the AG is also concerned about the possibility of inconsistent decisions and is not seeking to prioritize the Board over the Federal Courts as a venue for patent adjudication.

On to the substantive issues. The 802 patent related to a particular dosage regimen for glatiramer acetate. Teva is the licensee of the 802 patent under the patentee, Yeda. Pharmascience is seeking to market a generic version and so served Teva with a notice of allegation [3]. While that action was underway, Pharmascience filed for re-examination. It was undisputed that the Re-examination Proceeding and the Federal Court litigation were largely duplicative, as the same issues and substantially the same prior art were at issue in both [22].

There is a twist on the facts in this case as compared with Prenbec and Camso. In those cases, there were parallel proceedings in the Board and Federal Court, but no final decision in either. In this case, a trial decision has been issued, upholding the validity of the asserted claims of the 802 patent: Teva v Pharmascience 2020 FC 1158 Kane J. That decision is under appeal, and what Teva sought was a stay of re-examination pending the outcome of the appeal.

Two main factors influenced Southcott J to grant the stay. First, he agreed with the reasoning in Camso and Prenbec that as between the two proceedings, the FC litigation should be favoured, on the basis that “Federal Court litigation generates a more comprehensive evidentiary record than does a re-examination proceeding” [35]. The main advantage of re-examination is speed and simplicity, but the more limited record means that in principle there is a trade-off with accuracy. Moreover, in this case, there has already been a FC decision, so there is not a choice as to which to stay in order to avoid inconsistent results, but only whether to stay the re-examination proceeding [36].

Pharmascience argued that the fact that the FC decision had been issued was a reason to refuse the stay, on the view that the purpose of the stay is to give the Board the benefit of the FC decision in coming to its own conclusion. Southcott J rejected this argument on the basis that to the extent the Board would be influenced by the parallel litigation, a final appellate decision would be important [37], [38].

Now, on the facts, it seems unlikely that the Board will be influenced by the FCA decision. The FC decision upholding the validity of the 802 patent was issued after the Board issued its first preliminary opinion indicating it intended to hold the patent invalid for obviousness. Kane J’s decision was released after that first preliminary decision, and Teva duly brought it to the attention of the Board. The Board then issued its second opinion, which began by expressly acknowledging that it had been notified of Kane J’s decision. The Board then said, in effect, that it would decide on the record before it, without reference to the FC decision, and it went on to again opine that the patent was invalid, without further reference to Kane J’s decision. The AG, who appeared on behalf of the Board, confirmed “the Board adjudicates matters based on the record before it, not by incorporating findings of fact by another decision-maker” [29]. Given that the Board was not influenced by the FC decision as a matter of principle, it seems very unlikely that it would be influenced by the FCA decision. This point of course did not escape Southcott J, who considered that a final appellate decision was desirable “to the extent the result in the litigation has any potential to influence the Board’s decision” [38].

So, it seems unlikely that the FCA decision will be considered by the Board, which suggests that providing the Board with the FCA decision is not a very compelling reason to grant a stay.

But there is another important factor considered by Southcott J [38]. If the Board is not inclined to take account of FC/FCA decisions, this means that there is a very real prospect of inconsistent decisions if the FCA affirms Kane J, which would be unsurprising given that her decision on the 802 patent turned largely on the facts. As just noted, it would appear that the problem of inconsistent decisions cannot be addressed by simply asking the Board to consider the FCA decision; it will have to be forced to do so, on the basis of issue estoppel, res judicata, or like principles [38]. But for issue estoppel to apply, the prior decision must be final [38]. (Apparently this includes any appeals, though I have not verified the jurisprudence on that point myself.) This was an additional reason why Southcott J decided to grant the stay [38].

Pharmascience argued that it would not be necessary to rely on issue estoppel to address the problem of inconsistent decisions, because Teva would have a right to appeal the Board decision under s 48.5 and the Board decision would be stayed pending appeal under s 48.4 [44]. However, Southcott J observed that an appeal “is not a hearing de novo and therefore does not necessarily represent a means of remedying inconsistencies resulting from the duplicative litigation” [46]. An appeal where issue estoppel cannot be argued would therefore not address the problem.

Southcott J accordingly granted the stay. Skipping over Southcott J’s careful consideration of the other aspects of the RJR-MacDonald test, this raises some interesting issues of remedy.

One relatively easy point is that Southcott J accepted the AG’s unopposed suggestion that the stay expire on discontinuance of the appeal or settlement by the parties, as well as on the appeal decision being granted [56].

The more difficult point is that the stay at best mitigates the risk of inconsistent results [36]. As noted above, the Board decision is stayed pending appeal, but not terminated [26]. If the FCA upholds Kane J’s decision, the Board will then render its decision, which will likely invalidate the claims. Apparently to address this, the AG also suggested that the Board, upon the stay being lifted, be directed to consider whether the doctrine of issue estoppel, or similar legal principle, applies to preclude the re-litigation of issues previously decided by the FC [57]. Southcott J declined to make such an order, noting that the question of the application of issue estoppel is already before the Board, having been raised by the parties, and as a matter of administrative law it would be inappropriate for the Court to weigh in on that question until it had a mandate to do so [58]. So, the real point of the stay is to ensure that when the Federal Court is faced with an appeal from a Board decision invalidating the patents, it will have the possibility of issue estoppel available in its toolkit to address the problem of inconsistent decisions. This is not to say that the Federal Court would necessarily choose to invoke issue estoppel, but it would be undesirable to foreclose that possibility.

The bottom line is that the stay was granted, but the problem of how to deal with inconsistent decisions between the Board and the Federal Court remains unresolved. The question might be answered in future installments of this litigation, if the FCA upholds Kane J’s decision in this case and the Board then issues an inconsistent decision.

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

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

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

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

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

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

Which Goes First: Litigation, or Re-examination?

Camso Inc. v. Soucy International Inc. 2016 FC 1116 Roy J
            2,822,562 / 2,388,294 / Track Assembly for an All-Terrain Vehicle

The question in this decision was whether re-examination of Camso’s ‘562 patent pursuant to s 48.1- 48.5 of the Patent Act should be stayed pending final judgment in an infringement action involving the same patent brought by Camso against Soucy. In this case, the arguments raised in re-examination, related to novelty and obviousness, were the same as those raised by Soucy in its invalidity counterclaim in the action [20], [48]. While Brouillette + Partners, the law firm which had filed the re-examination request, was not the same as Soucy’s litigation counsel [22], [57], Soucy and Brouillette + Partners were acting in concert and their interests were the same[27], [48], to the extent that Soucy’s litigation counsel appeared on this motion on behalf of Brouillette + Partners [22]. (There was no impropriety involved [23]. It seems that Soucy simply hired different firms to handle the re-examination and the litigation.)

Thus the question was really which forum was appropriate for litigating these issues, the Federal Court, or the re-examination board established by the Commissioner of Patents. In the result, Roy J granted the stay, thus giving priority to the judicial proceeding [29], [65].

The basic argument in favour of giving priority to the re-examination procedure is one of judicial economy, as the re-examination procedure is designed to be a “relatively summary and inexpensive alternative to a full blown impeachment process by litigation”: Prenbec Equipment v Timberblade 2010 FC 23 [46]; and similarly [27], [51]. The basic argument in favour of giving priority to the court action is that it allows for more complete evidence, as the evidence in a re-examination is limited to “patents, applications for patents open to public inspection and printed publications” (s 48.1(1); [4]). In other words, the re-examination process reduces cost by sacrificing accuracy.

The superior quality of the evidence in the action is the main reason given by Roy J for staying re-examination: [48], [50], [52], [53], [58], [62]. The difficulty with the judicial economy argument is that while it would simplify the litigation if certain claims were invalidated in the administrative proceeding, that simplification would not be in the interest of justice if they claims were wrongly invalidated on the basis of inferior evidence [58].

Both the result and the reasoning are consistent with Prenbec, in which de Montigny J stayed re-examination proceedings. In Prenbec, de Montigny J noted that “the invalidity arguments made by the defendants raise an issue of credibility that cannot be assessed by the Re-examination” [37], so the problem of an erroneously invalidating the patent was acute. Indeed, de Montigny J noted that the defendant in Prenbec had initiated the re-examination precisely in order to avoid having to deal with the issue of credibility [44]. Brouillette + Partners sought to distinguish Prenbec on the basis that it was confined to issues of credibility [28]. Roy J rejected this argument, noting, correctly in my view, that the principle in Prenbec was to prefer the proceeding with the better evidence [62], and the issue of credibility was simply the specific instantiation of that principle.

Taken together, Camso and Prenbec, suggest that the FC will be strongly inclined to stay a re-examination which raises the same questions as are raised in an action. Compare this with the US situation. Re-examination corresponds approximately to ex parte review in the US, and a similar question has arisen in the US both in that context and with respect to inter partes review. In the US, I believe it is not uncommon for the courts to give priority to the re-examination proceeding. However, there is an important difference in the legal context. If I understand correctly, in the US only the PTO has the ability to stay its own proceedings and it is generally disinclined to do so. The question before the US courts is therefore whether the court should stay the infringement action pending the outcome of the PTO proceeding. In Canada, in contrast, the Federal Court has the power under s 50 of the Federal Courts Act to itself stay the re-examination proceeding: Prenbec [21]-[25]. Thus in the US the question facing the courts is whether to allow potentially duplicative proceedings to both go ahead, whereas Canadian courts, given that they also control the own procedure, implicitly face the more palatable choice of which of the two proceedings should go ahead first. Thus it is understandable that the Canadian courts would prefer a single, comprehensive procedure, while at the same time the US courts prefer the simpler re-examination to go ahead in preference to allowing duplicative proceedings.

This decision does raise a couple of questions. First, if the defendant fails in its validity attack at trial, can it try again in re-examination? The proceedings are separate, so the question is whether the outcome of the litigation gives rise to an estoppel against the same party in interest in the re-examination, once the stay is lifted. Roy J raised the issue, but did not decide because it was not discussed [57]. (Note that in the US inter partes review gives rise to an estoppel in subsequent litigation, by statute, while ex parte review does not. The question here is the converse, and since the statute is silent, the answer would turn on general principles.)

Second, assuming there is no estoppel, what happens if the patentee prevails in the infringement action, then the re-examination proceeds once the stay is lifted, and the claims that were the basis for the infringement are invalidated? The effect of re-examination is to invalidate the claims ab initio (s 48.4(3)), so the defendant might in principle be subject to damages for having infringed claims that never existed. The patentee can appeal the re-examination (s 48.5) to the Federal Court, but the FC may have to show deference on the appeal [53],so it is possible in theory that the FC could hold that the patent is valid, and subsequently affirming a decision of the re-examination board that it is not. This problem will likely remain purely theoretical, but it will be an interesting conundrum if it does arise.

Deferential Review of Factual Findings of the Re-examination Board

Newco Tank Corp v Canada (Attorney General)2015 FCA 47 Ryer J: Webb, Near JJA, aff’g 2014 FC 287 Mosley J
            2,421,384

In this re-examination the Board cancelled three of the claims of the ‘384 patent as being obvious. An appeal to the FC was dismissed on the facts, as discussed here. On appeal to the FCA, the patentee argued that the Board had erred in law by construing the “information presented as background knowledge in the patent itself” as being an admission of the common general knowledge [7]. In particular the patentee argued that the invention lay in the identification of the problem (inefficiency in heating of liquid storage tanks at well sites) and so it was an error to conclude that the problem itself was known merely because it was identified in the patent.

The FCA dismissed the appeal on the basis that the Board’s finding that the common general knowledge of the skilled person included the information presented as background knowledge in the patent itself was simply a factual finding [10], and so was properly reviewed by the FC on a deferential (reasonableness) standard [12]. I do not take this as a holding that any statements in the patent are indeed to be considered to be admissions as to the state of the common general knowledge; as I read it, the FCA was only saying that in this particular case it was reasonable for the Board to have concluded that the statements in question described the common general knowledge.

Deferential Standard of Review of Re-examination Board

Newco Tank Corp v Canada (Attorney General) 2014 FC 287 Mosley J
            2,421,384

In Newco Tank the patentee unsuccessfully appealed a decision of a Re-examination Board cancelling three of the claims of the ‘384 patent as being invalid for obviousness [1]. The patentee raised a number of points which complained, in effect, that the Board had applied the obviousness test too stringently. The main points illustrated by Newco are that Canadian courts continue to apply “an expansive and flexible approach to an obviousness inquiry rather than an overly rigid rule” [27], citing Sanofi 2008 SCC 61, [61]-[63], and that a deferential “reasonableness” standard of review will be applied to decision by the Board on questions of mixed fact and law, such as the application of the test for obviousness to the facts [22].