Is a Patent Insufficient If it Requires a Minor Research Project to Practice?

Takeda Canada Inc v Apotex Inc 2024 FC 106 Furlanetto J

2,570,916 / dexlansoprazole / DEXILANT / NOC

As discussed in my last post, 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.

Obviousness

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].

Utility

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 Wellcome / AZT 2002 SCC 77 [70]:

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 quid pro quo 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.

The Federal Courts initially understood this as requiring only the standard disclosure of how to make and use the invention: see eg Aventis Pharma v Apotex 2006 FCA 64 [28]–[35] affg 2005 FC 1283 [178]–[254]. Then, in Raloxifene 2008 FC 142 [164] affd 2009 FCA 97 [15], Hughes J interpreted this paragraph of Wellcome / AZT 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 AstraZeneca FC 2014 FC 638 [141], discussed here.)

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 “The underlying facts were NOT in fact disclosed,” showing that the factual basis for the sound prediction was not disclosed in Wellcome / AZT itself; and see my comments to that post showing that the factual basis was not disclosed in Olin Mathieson [1970] RPC 157 (Ch) either, which Wellcome / AZT [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 Wellcome / AZT [70] that “the sound prediction is to some extent the quid pro quo 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.

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 Eurocopter 2013 FCA 219 [153], Apotex v Allergan 2015 FCA 137 [9] and Pharmascience v Teva 2022 FCA 2 [5]. Eurocoper says only that disclousre of the factual basis “may” be required and Apotex v Allergan merely paraphrased this in a brief decision affirming the decision below on the facts. Pharmascience v Teva 2022 FCA 2 is more directly on point, but even there Locke JA’s remarks are ambiguous, as discussed here. 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.

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].

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.

Sufficiency

Furlanetto J held the disclosure was insufficient for two reasons.

[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.

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 s 53 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 Proslide v WhiteWater 2024 FC 175, 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:

[19] WhiteWater’s position broadens the scope of sufficient disclosure beyond what the law actually supports. Section 27(3) of the Patent Act, 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).

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.

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.

Furlanetto J cited Idenix v Gilead 2017 FCA 161 [19] for the proposition that “[a] disclosure is insufficient if it necessitates the working out of a problem,” and Seedlings 2021 FCA 154 [68], Leo Pharma 2017 FCA 50 [59] and Teva 2012 SCC 60 [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].

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 ZYTIGA 2021 FCA 45, concerning the 2,661,422 patent, which related to a combination of abiraterone acetate & prednisone for treating prostate cancer (discussed here), 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 Rosiglitazone 2011 FC 239 (discussed here), 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 HGS v Lilly [2011] UKSC 51, concerning EP(UK)0,939,804, 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.”

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.

In coming to her conclusion, Furlanetto J relied primarily on the SCC Teva decision [267], which invalidated the patent for requiring what the decision repeatedly referred to as a “minor research project.” More specifically, and crucially, in Teva the skilled person would have to “undertake a minor research project to determine what the true invention was” [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 Teva 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 Teva, 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 Leo Pharma, the issue in Teva 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 Proslide [26], to the same effect.)

Thus the disclosure requirement at issue in Teva was not about disclosure of how to make the invention, it was disclosure of “the true invention.” And as the FCA pointed out in BRP v Arctic Cat 2018 FCA 172 [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 [Teva].” 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 Leo Pharma [58]–[59] and in BRP v Arctic Cat [78], the SCC in Teva did not change the traditional standard for sufficiency of disclosure of how to make the invention. In BRP v Arctic Cat [78], the FCA held that it was an error of law to apply the Teva 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.

With all that said, I would return to the s 53 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.

Claims Broader

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].

Ambiguity

A weak ambiguity attack also failed on the facts: [275]–[279].

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.

Threshold for Sound Prediction

Sandoz Canada Inc v Janssen Inc 2023 FCA 221 Locke JA: Mactavish, Monaghan JJA affg 2022 FC 715 Pallotta J

2,659,770 / macitentan / OPSUMIT / NOC

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.

Threshold for a sound prediction

At trial, Pallotta J held that Janssen’s 770 patent was valid in the face of a variety of attacks: see here. 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.

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 Wellcome / AZT 2002 SCC 77. The leading case on the threshold is Novopharm / olanzapine 2010 FCA 197, quoted by Locke JA at [8]:

[84] [Wellcome / AZT 2002 SCC 77] 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:

• the requirement is that the claims be fairly based on the patent disclosure (para. 59);

• it must be prima facie reasonable that the patentee should have a claim (para. 60);

• it cannot mean a certainty (para. 62);

• the desired result must be able to be inferred from the factual basis (para. 70).

[85] In my view, these indicia signify that a sound prediction requires a prima facie reasonable inference of utility.

The requirement of “a prima facie 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].)

Locke JA noted that Sandoz cited several additional passages from Wellcome / AZT that indicate what is not sufficient for a prediction to be sound:

1. No more than a mere belief that something might be useful (para. 25);

2. Little more than an announcement of a research project (para. 64); and

3. Only a promise that a hypothesis might later prove useful (para. 84).

Locke JA concluded:

[16] In my view, there is nothing in [Novopharm / olanzapine] that represents any kind of departure from what one would glean from a complete reading of Wellcome. While it is not necessary that the prediction be certain (see Wellcome at paragraph 62), or to a regulatory standard (see Wellcome at paragraph 63), the public is entitled to a teaching that is solid (see Wellcome at paragraph 69) and accurate and meaningful (see Wellcome at paragraph 83), and based not on speculation but exact science (see Wellcome at paragraph 84).

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 Wellcome / AZT [69], [83], [84]. Given his reliance on Novopharm / olanzapine, 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 prima facie reasonable,” and is not intended as a departure from the threshold set out in Novopharm.

Standard of appellate review

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].

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.

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: Housen [2002] 2 SCR 235 [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 Galaske v O’Donnell [1994] 1 SCR 670, discussed in Housen [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 Rhône (The) v Peter A.B. Widener (The) [1993] 1 SCR 497, discussed in Housen [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.

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.

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 Galaske and The Rhône, 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.

Maybe this is all a long-winded way of saying what the SCC said in Housen [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 Housen 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 Southam [1997] 1 SCR 748 [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.

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 ‘prima facie’ 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.

Sufficiency, Overbreadth, or Utility?

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

2,226,784 / tadalafil / CIALIS / NOC

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Anticipation and Non-Infringement Affirmed on the Facts

Swist v MEG Energy Corp 2022 FCA 118 Laskin JA: Mactavish, Monaghan JJA affg 2021 FC 10 Fothergill J

2,800,746 / Pressure Assisted Oil Recovery

Swist’s 746 patent relates to a method of extracting oil from oil sands. Swist’s infringement action against MEG Energy failed at first instance, with Fothergill J holding that the 746 patent was not infringed and invalid for anticipation and lack of utility: see here. The FCA has now affirmed on the basis that the patent was invalid for anticipation and not infringed [5].

On appeal, Swist argued that Fothergill J erred by construing only claim 1 and a single term in claim 2 when claims 1 to 8 were all in issue, and by not addressing dependent claims 3 to 6. Laskin JA noted that the most significant issue was the construction of the term “generating” in claim 1, and claims 2–8 are all dependent claims [12], [15]. He held that it is appropriate for the FC to focus on the issue in dispute [21], and when the validity of dependent claims rests on the validity of the independent claim, it is not necessary to construe elements of the dependent claim that are not actually in dispute [22]. Consequently, “[g]iven the manner in which the parties approached the construction issues, and the centrality of claim 1 in the validity analysis, the Federal Court was entitled to focus its construction on the disputed terms . . . without explicitly construing the other claims” [30].

The finding that the patent was not infringed turned largely on claim construction. On appeal, Swist also argued that Fothergill J had made a variety of other errors, but the FCA dismissed these arguments on the basis that they were supported by the evidence or involved a misunderstanding of Fothergill J’s reasons [39]–[51].

The only question on anticipation was whether the disclosure requirement was met by the three prior art patents which Fothergill J had found to be anticipatory [53]. Laskin JA held that there was evidence to support that conclusion [54]–[56] and it is not the role of the Court of Appeal to reweigh the evidence [59]. Swist again argued that Fothergill J erred by failing to consider the dependent claims, which in principle might narrow the invention to avoid anticipation. But Laskin JA observed that on the facts of this case, the focus of the argument was on claim 1 [66], and Fothergill J had in any event considered the dependent claims were relevant [62]. The general point I take from this is that if you are going to rely on a dependent claim, you need to actually pursue it at first instance, not merely plead it.

At first instance, Fothergill J had also found the claims at issue to be invalid for lack of utility, but he rejected an obviousness attack and found it unnecessary to consider MEG’s allegation of invalidity for overbreadth. In view of his conclusions on anticipation, Laskin JA declined to consider any of these issues. This limits the weight that should be given to Fothergill J’s analysis of utility, which, in my view, is somewhat problematic.

Squeezing Through the Utility / Obviousness Gap

Pharmascience Inc v Teva Canada Innovation 2022 FCA 2 Locke JA: Stratas, Monaghan JJA affg 2020 FC 1158 Kane J

2,702,437 / 2,760,802 / glatiramer acetate / Copaxone / Glatect / NOC / FC Anticipation

In this decision, Locke JA, writing for the FCA, affirmed Kane J’s holding that the 802 patent was valid and that it would be infringed by Pharmascience’s generic product. The 802 patent at issue in this case relates to the use of glatiramer acetate for the treatment of multiple sclerosis, and in particular a dosing regime of 40mg three times a week [11]. Pharmascience argued that the 802 patent was invalid either for lack of sound prediction of utility or obviousness. (Kane J’s holding that the 447 patent was novel, but invalid for obviousness, was not appealed.)

Locke JA’s decision of sound prediction began by mentioning the putative enhanced disclosure requirement for utility based on sound prediction, which would require the factual basis for the sound prediction to be disclosed in the patent itself.* However, it was not necessary for Locke JA to engage with this issue because he found that Kane J had not in any event relied on a factual basis that was not disclosed; her holding that a sound prediction of utility was established was based on the common general knowledge and the logic disclosed in the specification [21]–[22].

This gave rise to a squeeze: “Pharmascience argues that, if the common general knowledge was sufficient to support a sound prediction of utility of the invention of the 802 Patent, then the same common general knowledge would make the invention obvious to try, and therefore invalid for obviousness” [6]. Locke JA rejected the squeeze on the basis that there is a gap between the two requirements:

[38] There is no necessary inconsistency between the finding, on the one hand, that an idea is sufficiently described in the patent disclosure and the common general knowledge to support a sound prediction that it will be useful. . . and, on the other, that the idea is not sufficiently known in the prior art (including but not limited to the common general knowledge) to lead the PSA directly and without difficulty to the solution taught in the patent.

In effect, an expert might say “I would never have thought of trying that, but now that you mention it, yes, I would say that it would probably work.” This makes sense to me, particularly in a case where the inventive concept lies in the insight that a particular approach is worth trying.

*Locke JA prefaced his comments by noting that “the parties do not disagree on the question of whether there is indeed a heightened disclosure requirement applicable to inventions based on sound prediction. Accordingly, it is not necessary to comment on that question here” [16]. I take this to be saying that he is not commenting on whether the law actually requires a heightened disclosure requirement. But in the next paragraph he went on to say that “In my view, the Trial Judge did not misunderstand the disclosure requirement under the sound prediction doctrine” [17]; this evidently says she was correct, not just that it was not necessary to address whether she was correct, given that the parties were in agreement. Locke JA contined by saying “at paragraph 874, she discussed the disclosure requirement specific to the context of the doctrine of sound prediction,” quoting from Eurocopter 2013 FCA 219 [153], which is ambiguous, at least as I read it. I find all this a bit opaque, but it at least seems clear that this decision does not change anything one way or the other in respect of the putative heightened disclosure requirement.

The Threshold for Demonstrated Utility

Apotex Inc v Janssen Inc 2021 FCA 45 Locke JA: Webb, Boivin JJA affg Janssen Inc v Apotex Inc 2019 FC 1355 Phelan J

            2,661,422 / abiraterone acetate & prednisone / ZYTIGA / old NOC

The invention at issue in this case relates to the use of the combination of abiraterone acetate (AA) & prednisone for the treatment of prostate cancer. Today’s post will discuss the utility aspects of this decision, which touches on three different issues: (1) the nature of the utility requirement for a combination, (2) the requirement to disclose the factual basis for a sound prediction; and, (3) most importantly, the threshold for demonstrated utility namely that it is sufficient if the results are “strongly suggestive” of utility, and no other explanation is likely. (See Monday’s post on obviousness.)

Yesterday’s post sets out the facts in more detail; for this post it is enough to say that androgen produced in the adrenal gland promotes the growth of certain types of prostate cancer and AA was a known adrenal androgen inhibitor, albeit a relatively new one. Most adrenal androgen inhibitors also suppressed other adrenal hormones, such as glucocorticoids; this caused side effects which were treated by co-administration of a glucocorticoid, such as prednisone. AA had an unusual mechanism of action, and at the filing date it was thought that AA would not require co-administration of a glucocorticoid to reduce side-effects; instead, the inventors though that prednisone would have a synergistic effect with AA in treating the cancer itself. As it turns out, that theory was mostly wrong, but not entirely wrong: AA does cause side effects, and prednisone is co-administered for that reason, not for its synergistic effects in cancer treatment, but Phelan J did find that there is also a small synergistic effect.

Utility requirement for a combination

As discussed here, for a combination invention there is a question as to whether the utility requirement is satisfied if the combination has a scintilla of usefulness in treating the disease, or if there has to be a scintilla of a synergistic effect, such that the combination is at least marginally better than the sum of the individual effects. The combination at issue clearly had utility on the simple usefulness test ([218]–[219], but Phelan J proceeded on the view that a scintilla of synergy was required: see eg [219]-[221]. Phelan J found that there was a scintilla of utility even with a synergy requirement, though it was a much closer call.

Locke JA’s decision on appeal proceeded on the same assumption as Phelan J, ie that synergy was required, but without specifically affirming that this was the correct approach as a matter of law: see [43], [45]. My impression is that the point wasn’t argued at either the FC or FCA level; for example, the reference to the synergy requirement at [43] was literally parenthetical. I hope this means that the point shouldn’t be considered settled; but I recall how the promise doctrine started with a few statements that weren’t really challenged in complex litigation where there was a lot else going on, until by the time it was directly addressed, it was considered settled.

Enhanced Disclosure Requirement for Sound Prediction

The evidence relied on to establish utility was two trials, referred to as “Study 001" (AA and a different glucocosticoid, namely dexamethasone, in human subjects) and “Study 004” (AA and prednisone, also in human subjects), collectively the “Cougar trials.” The hypothesis that the combination of AA and a glucocosticoid such as prednisone would have a synergistic anti-cancer effect was referred to as “de Bono’s hypothesis” after one of the inventors [40]; this was the line of reasoning that would connect the trial data to the utility.

At first instance Phelan J held that Janssen could not rely on these trials or the de Bono hypothesis to establish a sound prediction of utility because “no part of de Bono’s hypothesis or the Cougar studies were disclosed in the 422 Patent and therefore Janssen cannot rely on sound prediction” [223]; and see [212]. Without the enhanced disclosure requirement, a sound prediction of utility would “likely” have been made out [223]. Thus this was a case in which the enhanced disclosure requirement played a real role. I had somehow missed this when blogging on Phelan J’s decision, so I’ll make a few comments on Phelan J’s decision at the end of this post. For now I’ll say that while there is certainly FCA caselaw directly endorsing the enhanced disclosure requirement, as Phelan J noted [223], in Sanofi-Aventis v Apotex / clopidogrel 2013 FCA 186 [132] Gauthier JA raised serious concerns about the doctrine. In this case, there was no challenge on appeal to Phelan J’s holding on sound prediction [38], but towards the end of the decision Locke JA quoted from my article “Must the Factual Basis for Sound Prediction be Disclosed in the Patent?” (2012) 28 CIPR 38, and remarked “For the purposes of the present appeal, it is not necessary to address the question posed in the title of Prof. Siebrasse’s article” [50]. Maybe it’s wishful thinking, but I’ll take this as a hint that there may be room to revisit this issue at the FCA level; the only other FCA decision to touch on the point after Gauthier JA’s comments in Clopidogrel, namely Eurocopter 2013 FCA 219 [153], waffled a bit by saying that disclosure in the specification “may” be required to support a sound prediction of utility.

Demonstrated Utility

While Janssen could not rely on the Cougar trials and the de Bono hypothesis to establish sound prediction, Phelan J held that the same data, in conjunction with previous studies on the anti-cancer effects of prednisone, was sufficient to demonstrate utility [FC 221].

The FCA affirmed. Locke JA’s reasons rested on three points of law or principle, combined with a deferential standard of review.

An initial point of law is that neither study was sufficient on its own to demonstrate utility, but Phelan J held that the combination did. Locke JA affirmed that “testing should be considered cumulatively when assessing demonstrated utility” [41], citing with approval Teva v Novartis / imatinib 2013 FC 141 [215]–[216].

Secondly, while the 004 Study tested AA in combination with prednisone [FC 43], the endpoint was not survival rate, but rather prostate specific antigen (PSA) response, which is “a surrogate measurement for the effectiveness of prostate cancer treatments” [FC 19]. The claims were to the combination “for the treatment of a prostate cancer in a human” [FC 38], and Apotex argued that a study using a surrogate could not demonstrate the claimed utility, but would merely provide the factual basis for a prediction of utility [47].

In response, Locke JA first noted that “the Federal Court found, as a fact, that PSA indicated the response to prostate cancer in 2007: Reasons, para. 19. This suggests that a reduced PSA level can be a demonstration of utility in fighting cancer” [48, original emphasis]. The general point, as I understand it, is that even when we consider a fact to be demonstrated, we don’t necessarily directly observe it directly. The Higgs boson is said to have been observed, but what was directly perceived is a peak in the output of a particular detector, which, combined with a suitable statistical analysis, allowed the CERN scientists to say, with a very high degree of confidence, that the existence of the Higgs boson has been established. If we say it has been shown that an antibody binds to an antigen, what is directly observed will likely be a colour change, which, combined with a theory about the conditions under which the colour will be observed, allows us to infer the binding. Even in an RCT in humans, the strongest way of demonstrating utility of a drug, we don’t directly observe the drug curing the disease; what is observed is the disease symptoms in the control and treatment groups, and this, combined with suitable statistical analysis, may allow us to infer that the drug treats the disease. There is no magic in “statistical significance” with a p-value of 0.05, as the replication crisis in social psychology shows; physicists require 5-sigma significance for important discoveries.

Thus Apotex’s objection is correct in a way; the use of the PSA really only allows us to predict—or more accurately, infer—that the combination is effective in treating prostate cancer. But the same would be true even if survival had been used as an endpoint; any conclusion that the combination worked to treat prostate cancer would be an inference based on a statistical analysis of the observed outcomes, which would allow for the role of chance, placebo effect and so on. Depending on the strength of the correlation between PSA levels and prostate cancer, it might well be that a high-powered study using PSA levels would give a greater degree of certainty than a low-powered study measuring survival rate. While the established doctrinal test for sound prediction requires a factual basis and a sound line of reasoning, the same is true for demonstrated utility, even though that point is not expressed as a formal test. There is no sharp difference in kind between a sound prediction of utility and a demonstration thereof; the difference is only the confidence with which we are prepared to draw the inference of causation. So, the fact that the 004 Study used PSA as a criterion rather than studying the survival rate itself does not mean that it cannot demonstrate utility, in the same way that the fact that CERN used statistical analysis of detector energy spectrum rather than direct visual perception does not mean that the Higgs boson has not been observed. The question as to whether utility has been demonstrated rather than soundly predicted does not turn on the nature of the tests that were carried out.

So, it makes sense in principle that the claimed utility need not be directly measured in order to be demonstrated. The question then is to decide how strong the inference must be in order to demonstrate utility, as opposed to merely predicting it. Locke JA held that utility need not be established with certainty in order to be demonstrated [49]:

It is sufficient that the test results are strongly suggestive of utility, and that there is no other logical explanation for the test results is likely.

Finally, Locke JA stated that “More broadly. . . it must be acknowledged that it is difficult to draw a clear line between a demonstration of utility and a prediction of utility” [50]. He went on to quote a passage from my article “Must the Factual Basis for Sound Prediction be Disclosed in the Patent?” (2012) 28:1 CIPR 38, in which I argued that there is no basis for distinguishing between the two. He then concluded that he would not intervene with Phelan J’s decision, “[b]earing in mind the vagueness of the line between prediction and demonstration,” combined with the evidence relied on by Phelan J, and in light of the applicable (deferential) standard of review [51].

Locke JA did not explain exactly why the vagueness of the distinction between demonstration and sound prediction was relevant in upholding Phelan J’s finding that utility had been demonstrated. I made the point in my article to argue that because there is no sharp distinction in reality, there should be no sharp distinction in doctrine; either disclosure of the factual basis should be required for both demonstrated utility and sound prediction, or for neither. That is evidently not how Locke JA is invoking the argument, given that his decision proceeded on the assumption that there is an enhanced disclosure requirement for sound prediction and not for demonstrated utility. I think that what Locke JA was saying is that given that current doctrine establishes a line that is vague, as Locke JA put it—or not grounded in reality, as I might prefer to say—the law should not be too alert to enforce that boundary strictly, so as to avoid arbitrary results. Put another way, the threshold for demonstrated utility should be applied flexibly, given the drastic legal consequences of a vague and arguably arbitrary distinction. This is consistent with GSK/rosiglitazone 2011 FC 239 [98], for example, in which the utility of a claim to the compound rosiglitazone was held to be demonstrated on the basis of potential use for treatment of hypoglycaemia.

While this all makes sense, it does illustrate that the law faces a struggle in adapting to the enhanced disclosure requirement. Ultimately, the FCA will have to deal with the issue head-on. When that time comes, this decision will be an important part of the context.

Phelan J’s discussion of the enhanced disclosure requirement

As noted above, Phelan J proceeded on the view that there is an enhanced disclosure requirement, applicable to sound prediction but not demonstrated utility, such that the factual basis and line of reasoning to support a sound prediction must be disclosed, or at least referenced, in the patent itself. There is certainly FCA caselaw expressly so holding: see Lilly v Apotex / raloxifene 2009 FCA 97 [15]; Lilly v Teva / atomoxetine 2011 FCA 220 [46]–[47]. Subsequently, however, in Sanofi-Aventis v Apotex / clopidogrel 2013 FCA 186 [132] Gauthier JA raised serious concerns on this point in her concurring reasons, though that of course does not in itself overrule the prior FCA holdings; at most, it suggests that there might be some appetite to reconsider the issue in the future. So Phelan J was on firm ground in taking this position. With that said, I have a couple of concerns about his analysis. He didn’t refer specifically to either the Raloxifene or Atomoxetine decisions, but they were evidently the premise of his analysis. His discussion of the relevant case law was as follows:

[222] The Supreme Court of Canada stated in Apotex Inc v Wellcome Foundation Ltd, 2002 SCC 77 at para 70, [2002] 4 SCR 153, that sound prediction requires a factual basis, line of reasoning, and disclosure of the prediction in the patent.

In my view, it is not correct to say that the SCC in Wellcome / AZT held that disclosure of the factual basis is required in the patent. The passage was cryptic and was expressly obiter. That doctrine is really the product of the FC / FCA interpretation of that passage, particularly in Raloxifene. I also have to point out that while the SCC said in Wellcome / AZT that “both the underlying facts (the test data) and the line of reasoning (the chain terminator effect) were in fact disclosed,” that statement is incorrect.

Phelan J went on to say:

Although some commentary has suggested the Supreme Court of Canada may have overturned this statement, the Federal Court of Appeal in Bell Helicopter Textron Canada Limitée v Eurocopter, société par actions simplifiée, 2013 FCA 219 at paras 152-155, 120 CPR (4th) 394, confirmed that where the factual basis and line of reasoning are based on data that is not part of the common general knowledge, then disclosure is likely required to support sound prediction.

I believe the first sentence refers to some commentary suggesting the SCC in AstraZeneca 2017 SCC 36 overturned the enhanced disclosure requirement. I recall seeing that commentary, but I can’t find it or a case referring to it (if any reader can point me to it in a comment, I’d appreciate it.) In any event, I agree with Phelan J that the AstraZeneca decision does not affect the issue one way or the other.

My own view isn’t that the SCC overruled itself in AstraZeneca, it’s that Wellcome / AZT never established an enhanced disclosure requirement in the first place. The SCC’s statements in Teva 2012 SCC 60 are more to the point. The SCC stated at [37] that

The lack of certainty that comes from predicting rather than demonstrating an invention’s utility has led some courts to conclude that there is a “heightened” or “enhanced” disclosure requirement in cases in which a claim of utility is based on sound prediction: see, e.g., Eli Lilly Canada Inc. v. Apotex Inc., 2009 FCA 97, 78 C.P.R. (4th) 388, at paras. 14-15.

Notably, the SCC did not cite its own decision in Wellcome / AZT as suggesting an enhanced disclosure requirement. The SCC in Teva concluded its discussion of this point by saying “Since sound prediction is not an issue, the question whether there is an ‘enhanced’ or ‘heightened’ disclosure requirement with respect to sound predictions does not arise in this case and need not be addressed” [43]. The SCC did not say “We need not consider whether we should overrule our holding in Wellcome / AZT.” In my view, it is clear that the SCC does not consider that it established an enhanced disclosure requirement in Wellcome / AZT; I am quite certain that if the matter ever did go to the SCC, the Court would not consider that the question was whether it should overrule its own precedent, but rather whether it should overturn a rule established by the Federal Courts.