Must the Factual Basis for Sound Prediction Be Disclosed in the Patent?

Eli Lilly Canada Inc. v. Apotex Inc. / raloxifene (NOC), 2008 FC 142, 63 CPR (4th) 406, aff'd 2009 FCA 97, 78 CPR(4th) 388.

In Eli Lilly / raloxifene (NOC), 2008 FC 142 Hughes J held that the data supporting a sound prediction of utility must be disclosed in the patent itself [163-64]. This was the primary basis for holding the allegation of invalidity to be justified [183]. The holding that the disclosure must be in the patent was crucial, as Hughes J held that a good factual basis for the sound prediction did exist, and if it had been disclosed in the patent, that ground of attack would have failed [156 - 58]. Hughes J’s holding on this point was specifically affirmed by the Court of Appeal in 2009 FCA 97 [15] Noël JA: Desjardins, Trudel JJA. In this post I will argue that despite this clear holding, the doctrine that the factual basis for sound prediction must be disclosed in the patent itself is conceptually unsound and inconsistent with the leading cases, including those of the Supreme Court of Canada. Recent jurisprudence from the FCA has provided a clarification that will allow the application of the doctrine to be avoided in many, perhaps most cases, but we nonetheless are left with an unjustifiable and technical doctrine that is uniquely Canadian, and so may serve as a trap for unwary patent drafters.

Taking the conceptual difficulty first, it is well established that the data supporting utility need not be disclosed in the patent itself. Indeed, the patentee need not even explain how the invention is useful: Consolboard v. MacMillam Bloedel, [1981] 1 SCR 504 at 526; Pfizer / atorvastatin calcium (NOC), 2008 FCA 108 [57]-[62]; Pfizer / sildenafil (NOC) 2010 FCA 242 [82]. Consequently, the raloxifene rule implies a sharp distinction between a patent where utility has been established at the relevant date, and one where utility is based on sound prediction. In the former case the patent need not disclose any data supporting utility, but in the latter it must: see 2010 FC 1065 [92]. The difficulty with this distinction is that it is not consistent with a purposive interpretation of the Patent Act. On the text of the Act, there is only one utility requirement, namely that which defines an “invention” to be “new and useful.” There is therefore no textual basis for treating demonstrated utility and sound prediction differently. The purpose of that utility requirement is to ensure that a patent is not granted for “mere speculation”: Wellcome / AZT 2002 SCC 77 [69]. A line must be therefore drawn somewhere in the development of an innovation from conception to commercialization. That line is drawn at the point of sound prediction. Thus there is no purposive basis for the distinction between demonstration of actual utility and sound prediction. An innovation that has demonstrated utility is closer to practical application than one where there is only a sound prediction of utility, and an innovation that has actually been delivered to consumers is closer again; but none are based on mere speculation, and therefore all are equally “useful” under the Act. Note that the Supreme Court in Wellcome / AZT consistently treated demonstrated utility and sound prediction on the same terms: [46], [52], [56].