Obviousness Attack Succeeds: Overbreadth and Wilful Misleading Fail

Valley Blades Ltd v Usinage Pro-24 Inc (Nordik Blades) 2023 FC 1749 St-Louis J

2,856,940 2,965,426 2,992,233 / Segmented Snow Plow Blades

Valley Blades and Nordik Blades are direct competitors in the market for snowplow blades [206]. Valley Blades brought a declaratory action seeking to have Nordik’s 940 patent declared invalid, and Nordik responded with an action claiming that Valley Blades infringed Nordik’s 426 and 233 patents. The patents are all related — the 426 is a divisional of the 940 and the 233 is a divisional of the 426 [46] — and the actions were consolidated Patent [46]. The action was bifurcated and infringement was conceded [7].

St-Louis J found that all the asserted claims were obvious in a very straightforward decision which turned entirely on the facts [88]–[174]. Indeed, that part of the decision was so straightforward that I won’t bother to summarize it. This post will deal with the two other validity attacks, while a subsequent post will address the defendant’s claim under the Trademarks Act s 7(a) for damages for business lost as a result of demand letters sent by Nordik to Valley Blades’ clients.

Overbreath

The first of the other validity attacks was based on overbreadth. In a two part article I have argued that the overbreadth requirement is almost always redundant: Overbreadth in Canadian Patent Law, 33 IPJ 21 and 33 IPJ 147. But the FCA in Seedlings 2021 FCA 154 [50], held that overbreadth is indeed an independent ground of invalidity, and since then parties attacking the patent have been trying to find a way to use overbreadth to launch novel attacks on the patent, so far without success.

In this case, St-Louis J summarized the law of overbreadth as follows:

[175] The law of overbreadth is rooted in the patent bargain; an inventor shall not reap the benefits of an expanded monopoly without a corresponding sufficient disclosure to the public (Seedlings Life Science Ventures, LLC v Pfizer Canada ULC, 2020 FC 1 at para 167).

[178] To identify whether an element goes to the “core of the invention,” the Court ought to consider whether implementing the invention without those elements would require inventive ingenuity (Seedlings FCA at para 63).

This is a fair summary of those decisions, but it is also a fair summary of the sufficiency requirement.

On the facts, Valley Blades argued that the claims at issue were “broader than the invention actually made by [the inventor]. It argues this is because the tapered shape of the Nordik Blades’ blades is not claimed in any of the Disputed Claims” [180]. Valley Blades relied on the inventor’s evidence: “during his examination for discovery in July 2020, [the inventor] was clear that he considered the shape of the Nordik Blades’ blades to be a part of his purported invention” [181]. This passage suggests that Valley Blades was arguing that “the invention” is what the inventor subjectively believed the invention to be. This is an outlandish argument. In the first place, the inventor very often does not know their true invention, because the inventor is not always aware of the complete prior art and so is not necessarily aware of their true contribution. Second, even if the inventor did have a more advanced invention in their head, how can that invalidate the patent they actually were granted? If Sargon invented the wheel, but the idea of a spoked wheel passed through his mind, a patent on the wheel would still be valid. That would be true whether he thought of the spoked wheel either before or after he filed his application for the wheel. It would also be true if he had said to a friend, “My invention is the spoked wheel” after filing his patent; and the same would be true if he had said that before filing the patent.

In response Nordik argued that “nothing demonstrates that the tapered shape is an essential element for the invention to work as claimed in the Nordik Patents” [186]. This seems to be saying that the patent was not overbroad because the claimed invention had utility even without the tapered shape. On this view, overbreadth seems to be a lack of utility argument in a different guise, which, as I explain in my article, is often the case. St-Louis J accepted Nordik’s position, saying “when I factor in all the evidence, I am not convinced on balance that the blades’ tapered shape was an omitted essential element of the invention and that the claims are invalid for claiming more than the invention that was made” [188].

Section 53 Wilful misleading

Valley Blades argued that the patents were invalid for wilful misleading under s 53(1) because some statements in the specifications exaggerated the benefits of the invention [192]. St-Louis J had no difficulty dismissing this attack. She noted that the threshold for establishing wilful misleading is high, and “even assuming that Nordik Blades somehow exaggerated the blade movement, the system’s efficiency, and the blade’s wear-and-tear, I find nothing amounts to the required threshold for statements violating section 53" [197].

In making this argument, Valley Blades relied on Ratiopharm v Pfizer 2009 FC 711, which St-Louis J distinguished on the basis that “the misstatements referred to in Ratiopharm appear considerably more serious—particularly as they relate to pharmaceutical products—than what has been raised against Nordik Blades” [197]. I’d also point out that the FC decision in Ratiopharm is not good authority in any event. While the decision was affirmed on appeal, the s 53 analysis was not. In Ratiopharm 2010 FCA 204 noted that:

[34] Pfizer expressed concern that the trial judge’s determination pursuant to subsection 53(1) of the Act was based on an overly broad interpretation of that subsection. I am of the view that the determination is confined to the unique and particular circumstances of this matter. It has limited, if any, value as a precedent.

Improper Priority Claim is Not a Material Misrepresentation

Uponor AB v Heatlink Group Inc 2016 FC 320 Manson J

2,232,376

I believe this is Manson J’s first patent decision since being appointed to the Federal Court. While the case spanned many grounds of validity and infringement, in the end it turned on its facts. The most interesting legal point relates to s 53 of the Act, but I also have a few miscellaneous comments on other aspects of the decision.

PEX is cross-linked polyethylene. It is used primarily for pipe and tubing (such as the new PEX water-pipes that I had just had installed in place of copper in my on-going kitchen renovation). The polyethylene used in making PEX is cross-linked by heating in the presence of an additive (such as peroxide) [77]. The ‘376 patent relates to a method of heating polyethylene (for the purpose of cross-linking, though that is not specified in the broadest claims), by heating it with infrared (IR) lamps “wherein wave lengths corresponding to the absorption peaks for the [polyethylene] material in respect of infrared radiation, have been eliminated in the infrared radiation irradiating the polymer material” [22, Claim 1]. Polyethylene has two absorption peaks, at 3.2 to 3.6 μm and 6.6 to 6.8 μm [20]. If it is heated by IR which includes those wavelengths, the surface layer of the polyethylene will absorb most of the radiation resulting in uneven heating and therefore uneven cross-linking. By excluding those wavelengths, the radiation will permeate though the entire thickness, giving more uniform cross-linking [21].

The main difficulty for the patentee is that the prior art, in particular the widely consulted “IR Handbook” [207-13] and US patent 4,234,624 [222-23] disclosed the idea of using short-wavelength IR (1.2 μm and 0.76 to 4 μm, respectively), to heat polyethylene for cross-linking. The ‘376 taught two methods of eliminating the undesired wavelengths, namely by filtering them out with a filter that blocks those wavelengths [38], or by using an IR source with a wavelength at 1.2 μm [39]. Thus it is clear that the term “eliminated” encompassed using a low wavelength source. Consequently, most of the broad claims were held to be anticipated or obvious [298]. Some of the claims specified that the undesired wavelengths were to be filtered out, but the patent did not disclose any suitable filter, so many more claims were invalidated. However, a few claims covering what the patent described as a preferred embodiment were held to be valid [251] and infringed [297]. These claims added the element of feeding the extrusion vertically through the IR lamps; this produces a more uniform pipe as it reduces distortions in the hot plastic due to gravity.

Failure to Disclosure Status as Public Servant Not Material for Purposes of s 53

Brown v Canada 2016 FCA 37 Boivin JA: Webb, de Montigny JJA rev’g 2014 FC 831 Kane J

2,285,748

Mr Brown was a member of the Canadian Forces Supplementary Reserve when he filed his application for the 748 patent. The patent related to technology used for decontamination and containment of biological and chemical hazards, which has military applications [9]-[10]. After the firm started by Mr Brown failed to win a contract with Public Works to supply related technology, Mr Brown launched infringement proceedings against the Crown and the winning bidder. The Crown defended by bringing a motion for summary judgement on the basis that (a) Mr Brown was a “public servant” as defined by s 2 of the Public Servants Inventions Act, and as such he was required by s 4(1)(c) of that Act to disclose that he is a public servant in his patent application; and (b) Mr Brown’s failure to make such a disclosure was an untrue material allegation which invalidated the 748 patent pursuant to s 53 of the Patent Act. In the Federal Court, Kane J held that Mr Brown was a public servant, and that the failure to make that disclosure was an untrue material allegation, but whether it was wilfully made for the purpose of misleading was a matter for trial. On appeal, the FCA held that Mr Brown was indeed a public servant, but the failure to disclose was not material to the Patent Act.

On the first issue, the FCA held that “for the purpose of the PSIA, all members of the Canadian Forces are ‘public servants’ whether they are in the Regular Force or the Reserve Force” [27]. While the English version of s 2 is somewhat ambiguous, saying that a public servant means an employee “and includes” a member of the Canadian Forces, the French version of s 2 is perfectly clear that public servant means an employee and a member of the Forces [25].

On the second issue, the FCA held that there was an “apparent conflict and lack of consistency” between the forms and regulations under the PSIA and the Patent Act, in that the former require disclosure of the public servant status and the latter do not. The FCA concluded that the Patent Act prevails and hence there was no requirement on the Patent Act for the applicant to disclose their status a public servant [45]. Moreover, even apart from this inconsistency, a reading of the two Acts together supports the conclusion that Parliament did not intend that a patent could be void for a failure to disclose public servant status [46], as penalties for failure to make that disclosure are provided by s 4(1) of the PSIA [48]. This second point strikes me as entirely compelling. Indeed, the contrary conclusion would be perverse. The purpose of the PSIA is to vest in the Crown inventions that are made by public servants: s 3. If the position advanced by the Crown was correct, then any public servant inventor could unilaterally deprive the Crown of a valid patent to which the Crown was entitled by law, simply by failing to disclose their status as a public servant. Yes, the sanction of invalidity would provide an incentive to disclose, but not a very strong one, since the inventor would not be entitled to the invention either way: if the inventor didn’t disclose, the inventor would run the risk that the patent would be held invalid, and if the inventor did disclose, the inventor would run the risk that the patent would be vested in the Crown. And in any event, the sanction of invalidity puts the victim and the wrongdoer together in front of the firing squad. The offences of s 11 of the PSIA, which are target the public servant, are a far more sensible sanction. I can’t help but think that there was a failure of communication between the Crown’s litigation team and those responsible for longer term policy.

Inequitable Conduct by Patentee: Defence v Reduction of Damages

Alcon Canada Inc v Actavis Pharma Co 2015 FC 1323 Locke J
            2,447,924 / olopatadine solution / PATADAY

As a partial defence to Alcon’s infringement action, Actavis alleged that Alcon engaged in inequitable conduct. This pleading has survived a motion to strike, and Locke J’s decision is interesting both on the substantive issue and for his thorough analysis of the case law relating to the standard of review of the Prothonotary’s decision.

The ‘924 patent covers a formulation of 0.2% olopatadine, as found in Alcon’s PATADAY. Actavis alleged that Alcon conspired, in breach of the Competition Act, to ensure that Actavis could not sell its non-infringing 0.1% olopatadine product, and this inequitable conduct by Alcon should partially offset any damages resulting from Actavis’s (alleged) infringement [5]. (The exact nature of the conduct was not specified – perhaps product hopping?) It was this pleading that was the subject of the motion to strike.

This is an intriguing argument, which I discuss in more detail below, but Locke J first had to deal with the almost equally complex question of the standard of review to be applied to the Prothonotary’s decision.

Under Aqua-Gem [1993] 2 FC 425 discretionary orders of prothonotaries ought not to be disturbed on appeal to a judge unless [8]:

a. they are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts, or

b. they raise questions vital to the final issue of the case.

If the prothonotary refuses to strike a pleading, can this ever be vital to the final issue? After all, if the pleading stands, the result of the motion will never be determinative of the outcome; but on the other hand, a motion on a central issue might reasonably be said to be “vital”. As Locke J put it, “If one focuses on what was sought in Alcon’s motion, it is final. However, if one focuses on the result of the motion, it is interlocutory” [12, original emphasis].

Locke J reviewed the case law on this issue, noting an apparent split within the Federal Court [18], and concluded that the proper question is whether what was sought was vital [19]. This means that even a refusal to strike might in principle be “vital” to a final issue.

What, then, is meant by “vital”? Again Locke J thoroughly reviewed the case law. He concluded that the question is whether “the paragraphs that Alcon seeks to have struck in the present case are more in the nature of ‘isolated allegations’ or rather ‘important or central allegations’” [24]. On the particular pleadings at issue, Locke J held that the paragraphs Alcon sought to have struck were isolated allegations not vital to the case [26]. Consequently, a deferential standard of review should be applied; the order of the prothonotary should not be disturbed unless it is “clearly wrong” [27].

Locke J then turned to the second branch of the conjunctive Aqua-Gem test: was the refusal to strike “clearly wrong”? On the substantive point, Alcon relied on Sanofi FCA 2008 FCA 175 [16], [18], where the FCA said that “a party claiming equitable relief will not be disentitled to that relief by virtue of inappropriate conduct on its part unless that conduct relates directly to the subject matter of that party's claim and the equitable relief sought,” and in a patent case this means that the alleged conduction must “cast a shadow” over the patent rights themselves, or the question of whether infringement occurred [29]. It was not disputed that the conduct alleged in this case did not do either of these things [30], and so Alcon argued that the pleading must be struck.

Locke J rejected this, saying that the Sanofi test was only applicable to equitable relief, and the allegations in this case concerned damages [32]. On its face, this makes sense. Equitable relief is discretionary, and inequitable conduct or “unclean hands” is one factor that a court may take into account in exercising its discretion. Damages are as of right, and without any discretion to be exercised, so unclean hands are not relevant. Ex turpi causa might still be relevant, as a rule of law, but the bar is probably substantially higher than unclean hands, at least according to the UKSC in Servier v Apotex [2014] UKSC 55, though see here suggesting that simple illegality is enough. Ex tupri causa was not raised in this case, as Actavis alleged only “inequitable conduct.”

But a holding based on the distinction between law and equity tends to seem formalistic, particularly when parallel doctrines such as unclean hands and ex turpi causa are available. Actavis clearly raised an allegation of contravention of the Competition Act, and it would be unsatisfactory if the whether pleading stood turned on whether it used the words “unclean hands” or “ex turpi causa.” Similarly, Locke J’s holding on this point implies that if Alcon had sought an accounting of profits, Actavis’ defence would have been struck. It is not evident why unclean hands should bar one monetary remedy but not another, and to say one remedy is legal while the other is equitable is a formalistic answer.

Locke J gave another reason for allowing the pleading to stand which I find more satisfactory. He noted that [37, my emphasis]:

Actavis has indicated that its allegations in issue are not intended to deny Alcon damages for infringement simply because Alcon engaged in the alleged inequitable conduct. Rather, Actavis’ allegations seek to reduce (or eliminate) those damages to reflect the effect of any improperly increased sales of Alcon’s patented product.

There is an important distinction between reducing damages and raising a complete defence. As the UKSC said in Servier, [13] “The doctrine [of ex turpi causa] necessarily operates harshly in some cases, for it is relevant only to bar claims which would otherwise have succeeded. For this reason it is in the nature of things bound to confer capricious benefits on defendants some of whom have little to be said for them in the way of merits, legal or otherwise.” Denying a claim entirely may be disproportionate to the wrong, unless the wrong is very serious, which is largely why the USKSC set a high bar for what constitutes “turpitude.” The same logic applies equally in the case of equitable remedies – in a way, even more so, since it is hardly equitable to deny a patentee’s claim entirely as a punishment for a relatively minor fault. That reasoning is consistent with the caselaw holding that inequitable conduct will only be allowed to stand as a defence if it casts a shadow on the title to the patent. That is a high bar, and it would be wrong to allow any recovery if the patentee would not have a patent at all but for its wrongful conduct.

But if the patentee has indeed committed some wrong that is related to its claim, neither is it appropriate to ignore that wrong entirely. The answer lies in the damages calculation. As I said in my post on Servier, “Instead of using the blunt hammer of ex turpi causa, the tension should be resolved with the finer sword of damages.”

In this case, Actavis’ argument can be cast in terms of “but for” causation. Actavis in effect alleged that Alcon had wrongly increased its sales of its PATADAY product at the expense of Actavis’ non-infringing product, and to the extent that Actavis’ infringing sales captured some part of the PATADAY sales that Alcon would not have obtained but for its wrongful conduct (because the sales would have been captured by Actavis’ non-infringing product), Alcon should not be able to recover damages in respect of those sales [6]. In constructing the “but for” world for the purpose of assessing damages caused by the infringement, the infringer is assumed to have acted properly, either by avoiding infringement or taking a licence. The question is whether, in constructing the but for world, we should also assume that the patentee acted properly, by not breaching the Competition Act, or avoiding whatever other wrong is alleged. When the wrong is independently actionable, as was the case in Servier (infringement in Canada, raised as defence to an undertaking in damages in respect of UK sales), or under s 45 of the Competition Act, as alleged in this case, there is a judicial economy argument for saying that all parties should be assumed to have acted properly, so as to avoid the need for a separate action. This is particularly so when the evidence relevant to the remedy in both cases is related. On the other hand, when the wrong is not independently actionable, as with the allegations in this case based on ss 75, 76 and 78 of the Competition Act, the question is more difficult, as taking into account the patentee’s wrong would effectively give the infringer a private remedy that it would not otherwise have had, but refusing to take it into account would allow the patentee to compound the harm done by its wrongful conduct.

This analysis is largely consistent with the prior cases. In Procter & Gamble (1990), 29 CPR(3d) 545 (FCA) the allegation was predatory pricing which harmed the defendant, and so might have been relevant to quantum of damages; but it was pleaded as a complete defence, and the pleading was struck. In Visx (1994), 58 CPR(3d) 51 (FCTD) the allegation was that the patentee had made unjustified allegations of infringement against third parties, so it would not even have been relevant to quantum, and it was pleaded as a complete defence. The pleading was struck. Volkswagen [2001] 3 FC 311 (FCA) is a bit different. It was a grey marketing case in which VW pursued the grey marketer for copyright infringement. The allegation was that VW’s actions in seeking to prevent grey marketing were a restraint of trade in breach of the Competition Act, and the pleading was allowed to stand as a complete defence. The FCA distinguished Visx and Procter & Gamble on the view that “it is at least arguable that in this case there is a sufficient relationship between the copyright and the unclean hands defence that the equitable remedy might not be granted.” In my view there is a more direct distinction. If the copyright owner’s rights are exhausted by the authorized foreign sale, which was the essence of the defendant’s pleading, then this would indeed serve as a complete defence, so there is nothing wrong with allowing it to stand as such.

Inventorship Not Material for Purposes of S 53

Gilead Sciences, Inc v Idenix Pharmaceuticals, Inc 2015 FC 1156 Annis J
            2,490,191 2,527,657 / sofosbuvir / SOVALDI

Previous posts have discussed Gildead’s utility and sufficiency attacks on Idenix’ 191 patent. This post deals primarily with Idenix’ s 53 attack on Gilead’s 657 patent. Section 53 provides that a patent is void if “any material allegation” in the application is untrue and wilfully misleading. Annis J’s decision adds to the growing body of case law holding that an error in inventorship is not a “material” allegation giving rise to invalidity under s 53. While we are still not at the point of a per se rule that errors in inventorship can never be material, we are getting close.

Idenix argued that the ‘657 Patent was invalid under s 53 for knowingly omitting naming Dr Lieven Stuyver as inventor [877]. The first question was whether he was an inventor at all. The argument failed on the facts on this point, as Annis J held that it had not been established that Dr Stuyver contributed to the inventive concept [904], [916]. 

Annis J nonetheless went on to consider whether the omission would have been material if Dr Stuyver had been an inventor. He noted that “a fair reading of Corlac [blogged here] indicates that the Court very much minimized the impact of improperly omitting a co-inventor on the determination of materiality in section 53(1)” [919] He also pointed out that the FCA in both Corlac and in Wellcome /AZT [2001] 1 FC 495, had noted that it would illogical to hold a patent invalid for failure to name an inventor, because that would deprive that inventor of any effective remedy [921], [922]. Annis J summarized the FC and FCA decisions in Corlac as being to the effect that failure to name an inventor will only be material for the purposes of s 53 if that failure affects “the term, substance or ownership of the ‘657 Patent, or the public’s ability to use the invention” [923] (and there was no such detriment in this case). That is, there must be some detriment to the public to warrant invalidating the patent. That strikes me as a sound view of this provision.

Restrictive Interpretation of Materiality Requirement under S 53 Wilful Misleading

SNF Inc v Ciba Specialty Water Treatments Ltd, 2015 FC 997 Phelan J
            2,515,581

Phelan J's decision holding Ciba’s patent invalid for obviousness turns entirely on its facts [195-96]. The main point of interest in the decision is his obiter discussion of the argument that the 581 patent was invalid under s 53 for wilfully misleading statements.

The 581 patent concerns a method of treating mine tailings. Tailings are commonly disposed of by pumping aqueous slurry to an open lagoon and allowing it to dewater. To limits the area occupied by the tailings, it is desirable to deposit them in multiple layers. This requires that the lower layers are sufficiently solid to support the material deposited on top. One way of speeding up the process of solidification or “rigidification” is to add a polymer to the slurry which helps bind the waste particles together. Such polymers were well known in the art.

Ciba’s 581 patent claimed a process of rigidifying the tailings by adding an aqueous solution of polymer to the fluid slurry during transfer [24]. A key piece of prior art was the Gallagher patent, WO-A-0192167, which was also owned by Ciba. The Gallagher patent claimed a process of rigidifying the tailings by adding a polymer to the fluid slurry during transfer. The Gallagher patent did not anticipate the 581 patent because its disclosure focused on adding the polymer in powdered form rather than in aqueous form [169]. Nonetheless, the Gallagher patent evidently presented a validity problem for Ciba’s 581 patent, if not on anticipation, then on obviousness, as the 581 patent merely substituted an aqueous solution for powder [222] and both forms were well known in the prior art. (In the end, the 581 patent was held invalid over the common general knowledge alone, as it was not established that the Gallagher patent was part of the cgk.) Ciba, as the owner of the Gallagher patent, was well aware of this problem when the 581 application was filed.

The 581 patent directly addressed the Gallagher patent, stating (581 p6, [223]) that:

the importance of using particles of water soluble polymer is emphasised and it is stated [in the Gallagher patent] that the use of aqueous solutions of the dissolved polymer would be ineffective.

The s 53 attack was based primarily on this statement.

As summarized by Phelan J, a patent is invalid under s 53 if the impugned statement is [216]:

a) untrue;

b) material;

c) made in the drafting of the Patent with wilful intent to mislead; and,

d) the statement would be likely to mislead the Skilled Person.

In this case the statement were untrue – there was no statement to that effect in the Gallagher patent [224-25]. The statements were known by Ciba to be untrue [222] and the statement was made in order to make it seem as though the 581 invention was not obvious over Gallagher when Ciba knew it was an obvious modification to the Gallagher patent [225].

Nonetheless, the s 53 attack failed on the materiality requirement:

[229] Ciba is saved only by the issue of materiality. A statement is material if it affects how the public makes use of the invention taught by the 581 Patent (see Procter & Gamble Co v Bristol-Myers Ltd, [1978] FCJ No 812 (QL) at para 37, 39 CPR (2d) 145; Weatherford Canada Ltd v Corlac Inc, 2011 FCA 228, 95 CPR (4th) 101). 

    (my emphasis)

This is a very narrow definition of materiality which seems to make materiality almost co-extensive with sufficiency. The sources cited by Phelan J do not support such a narrow definition. The relevant statement from Procter & Gamble is that “it is really immaterial to the public whether the applicant is the inventor or one of two joint inventors as this does not got to the term or to the substance of the invention nor even to the entitlement.” To my mind this supports a much broader definition of materiality, to the effect that a statement is material if it would likely have affected the examiner’s decision to allow the patent, or at least to whom the patent should be granted. In Corlac v Weatherford 2011 FCA 228, (blogged here) in holding that the misstatement at issue was not material, the FCA did state that “Finally, the appellants have not demonstrated that inventorship is somehow relevant to the public's use of the invention in this case” [129], but this was a concluding remark in a long discussion citing a variety of factors all pointing to the same conclusion. Consequently, Phalen J’s definition is unlikely to become widely accepted as definitive, particularly given that the discussion of s 53 was expressly obiter [202].

Allegation of S 53 Invalidity Allowed to Stand

NOV Downhole Eurasia Limited v TLL Oil Field Consulting 2015 FCA 106 Nadon JA: Dawson, Boivin JJA aff’g 2014 FC 889 Mosley J
            2,255,065

In a brief decision from the bench the FCA has affirmed Mosley J’s refusal to strike a statement of defence asserting that the '065 patent was void pursuant to s 53(1) as a result of statements regarding claim scope made during prosecution. As discussed here, this case raises important issues regarding the relationship between s 53 and prosecution history estoppel, though of course these issues are not resolved by a motion to strike.

Prosecution History Estoppel Meets Section 53

NOV Downhole Eurasia Limited v TLL Oil Field Consulting 2014 FC 889 Mosley J

            2,255,065

The pigeons are coming home to roost from the SCC’s ill-advised holding in Free World 2000 SCC 66, [66], that prosecution history is not to be used in claim construction (for my critique of the SCC decision, see here).

The invention at issue in NOV Eurasia v TLL Consulting is a downhole oilwell tool which comprises a valve. The defendant alleged that during patent prosecution the applicant had amended the application to restrict the claims to embodiments which included a transverse valve, and they now sought to assert the patent against the defendants even though the allegedly infringing tool does not have a transverse valve [9].

If we had a doctrine of prosecution history estoppel, this would be a straightforward matter. If indeed the applicant had given up the scope in question during prosecution, then the patentee would be estopped from reclaiming that scope in litigation, and the patent would be construed accordingly. The claim, and the patent, would remain valid, but the defendant’s tool (assuming it did not in fact contain a transverse valve), would not infringe. This is an eminently fair and sensible result.

But because the SCC in Free World held that prosecution history cannot be considered as a matter of claim construction, the defendant in this case pleaded that the applicant’s statements were made “with the intention of misleading the Patent Office,” and so the entire patent is void pursuant to s 53(1) [9], which provides that:

A patent is void if any material allegation in the petition of the applicant in respect of the patent is untrue, or if the specification and drawings contain more or less than is necessary for obtaining the end for which they purport to be made, and the omission or addition is wilfully made for the purpose of misleading.

The patentee in this case brought a motion to have the paragraphs pleading s 53 struck. Prothonotary Milczynski granted the motion, but Mosley J reversed, holding, after a review of the case law, that “[i]t remains a live issue whether section 53 of the Patent Act may void an entire patent due to steps taken in the application process” [32]. I think Mosley J is right on this point, but given the low threshold for allowing the pleading to stand I will not review the case law in detail.

The broader point is that the SCC’s Free World holding has created an unpalatable dilemma for the lower courts. If s 53 cannot be used in this manner, then a patentee may be able to narrow the scope of its claim during prosecution to obtain the patent and then try to reclaim that scope in subsequent litigation. On the other hand, if s 53 can be used, then what would have been a battle over claim construction turns into an atomic bomb of patent invalidity. This will increase uncertainty, as opposed to the option of admitting prosecution history in claim construction, because the intent element of s 53 is inherently uncertain. Moreover, to the extent that there is any justification for excluding prosecution history, it is to simplify the claim construction exercise; but to introduce exactly the same evidence under s 53 means that while claim construction is simpler, the litigation as a whole is at least as complex. Indeed, it will be more complex, because the stakes have been raised from scope to validity, ensuring that all the more money will be put into this uncertain issue.

It is not unlikely that in this case the s 53 issue will ultimately become moot, even if it does go to trial. The claims themselves refer to “the valve member being transversely movable,” and the court may well construe the claims to exclude tools without a transverse valve even without the aid of the prosecution history. That will be all the more unfortunate, as parties in future litigation will have to engage the s 53 issue, instead of what could have been a much simpler matter of claim construction. The SCC in Free World feared opening the “Pandora’s box” [66] of file wrapper estoppel. By refusing to do so, it opened the far more dangerous box of s 53.

SCC Denies Leave in Corlac v Weatherford

The SCC today denied leave to appeal in Corlac Inc v Weatherford Canada Ltd 2011 FCA 228 (blogged here and here).

Fraud on the Patent Office: Lessons Learned from the US Experience

Corlac Inc v Weatherford Canada Ltd 2011 FCA 228 Layden-Stevenson JA: Nadon, Evans JJA substantially affirming 2010 FC 602 Phelan J

As noted in yesterday’s post, in Corlac v Weatherford the Court of Appeal held that paragraph 73(1)(a) of the Act cannot be relied upon to attack the validity of a granted patent. Corlac is also an important decision on the doctrine of fraud on the patent office under subsection 53(1). The decision has a thorough treatment of materiality of false attribution of inventorship under this provision, and it will now be the leading case on this point. More broadly the decision of the FCA also signals a generally cautious approach to subsection 53(1).

Deemed Abandonment under Section 73 Cannot Be Used to Attack a Granted Patent

Corlac Inc v Weatherford Canada Ltd 2011 FCA 228 Layden-Stevenson JA: Nadon, Evans JJA substantially affirming 2010 FC 602 Phelan J 

In Corlac v Weatherford the Court of Appeal has clarified a controversial point of law regarding misrepresentations to the Patent Office. Two provisions of the Act bear on misrepresentations to the Patent Office: subsection 53(1), which provides that “[a] patent is void” if there are material misrepresentations in the application, and paragraph 73(1)(a) which provides that “[a]n application for a patent in Canada shall be deemed to be abandoned if the applicant does not reply in good faith to any requisition made by an examiner.” Relying primarily on the distinction between a patent and an application apparent in these two sections, the Federal Court of Appeal held that paragraph 73(1)(a) cannot be relied upon to attack the validity of a granted patent [150]:

To be clear, the concept of abandonment in paragraph 73(1)(a) operates during the prosecution of the application for a patent. Its operation is extinguished once the patent issues. Post-issuance, the provisions of subsection 53(1) must be utilized with respect to allegations of misrepresentation.

Two earlier decisions of the Federal Court, Lundbeck Canada Inc. v. Ratiopharm Inc., 2009 FC 1102 Mactavish J at [298]-[352], and G.D. Searle & Co. v. Novopharm Ltd., 2007 FC 81 at [62]-[78] rev’d 2007 FCA 173 had held that abandonment under section 73 could be invoked post-grant. These cases were specifically overruled on this point: [151]. (Note that the FCA decision in G.D. Searle reversed Hughes J without comment on this point, and the FCA noted at [5] that its decision had been released subject to time constraints and had to be read accordingly.)

Caution Regarding Inequitable Conduct

Valence Technology, Inc. v Phostech Lithium Inc. 2011 FC 174, Gauthier J

Inequitable conduct in patent prosecution poses a thorny problem. On one hand, the practice of willfully misleading the patent office during prosecution in order to obtain a patent that would not have been granted must be discouraged. On the other hand, introducing an intent element into the determination of patent validity introduces uncertainty and expense to the litigation, and the sanction of invalidity is a severe punishment for bad faith in cases where the misinformation is substantively inconsequential. The US has been wrestling with this problem for years, and an en banc decision from the Federal Circuit in Therasense, Inc v Becton, Dickinson and Co is in the offing.

In contrast, Canadian courts have historically been reluctant to invalidate patents on this basis. Recently, however, Hughes J has been seeking to give life to this ground of attack, on the basis of both the older section 53(1) and the new section 73(1)(a). In GD Searle & Co v Novopharm Ltd / celecoxib (NOC) 2007 FC 81, Hughes J held a patent to be invalid on the basis of section 73. While he was reversed, without comment on this point, 2007 FCA 173, Malone JA: Noël, Sexton JJA, his decision was picked up in Mactavish J’s controversial decision in Lundbeck Canada Inc v Ratiopharm Inc / memantine (NOC), 2009 FC 1102. In Ratiopharm Inc. v Pfizer Ltd. / amlodipine besylate, 2009 FC 711, [195]-[204], Hughes J held a patent to be invalid on the basis of section 53(1). This was affirmed on other grounds 2010 FCA 204.

In Valence Technology, Inc v Phostech Lithium Inc 2011 FC 174, Gauthier J indirectly cast doubt on Hughes J’s decision in Ratiopharm v Pfizer respecting section 53. She stated [184] that “[i]t is important to mention that the comments of Justice Roger Hughes in Ratiopharm Inc. v Pfizer Ltd., 2009 FC 711, in respect of subsection 27(3) (as well as those relating to ss. 53(1)) were described by the Federal Court of Appeal as simple ‘obiter’ (2010 FCA 204 at para 2).” She then went on to distinguish Hughes J’s decision on the facts, saying she was satisfied that the case before her was substantially different, “regardless of the intrinsic value of the comments made by Justice Hughes on the law” [200].

It is certainly true that the two decisions can be easily distinguished on the facts. Phostech’s misconduct argument was curious and unique. It argued that Valence’s misconduct lay in copying the wording of Phostech’s subsequent patent application in the divisional to Valence’s prior application. Gauthier J explained that there is simply nothing wrong with this: “there is no copyright on claim language” [211]. That the cases are so readily distinguishable on the facts gives added significance to Gauthier J’s subtle remarks regarding Hughes J’s analysis.

It may be reading too much into a couple of phrases, and we certainly cannot draw any firm conclusions as to Gauthier J’s own views regarding inequitable conduct, but Valence Technology suggests that Gauthier J, for one, will be cautious before following the path that Hughes J seeks to blaze.