Pleading Issue Estoppel Based on Foreign Proceedings

Apotex Inc v AstraZeneca Canada Inc 2012 FCA 68 Stratas JA: Dawson, Trudel JJA aff’g 2011 FC 598 Mosley J, aff’g 95 CPR(4th) 414 Lafrenière Pr.

Can issue estoppel in Canadian patent litigation be based on foreign findings of fact? While we do not yet have a definitive answer to this question, the FCA has once again held that such a pleading will survive a motion to strike.

In early skirmishing in the omeprazole infringement action, AstraZeneca sought to allege that Apotex is estopped from litigating certain findings of fact made in US litigation respecting the equivalent US patent. AstraZeneca was careful in its pleading to exclude “matters regarding claim construction.” Despite opposition from Apotex, Prothonotary Lafrenière permitted these allegations to stand, and that decision was affirmed by Mosley J. The FCA has now affirmed, saying “it is not plain and obvious at this time that the facts alleged are inextricably bound or related to the foreign court’s construction of the claims and that these paragraphs cannot succeed in law” [9].

See here for a related discussion, including citations to earlier decision of the FC and FCA on point.

The State of the Art for the Purposes of Obviousness

This is a plug for my most recent article, “What is the State of the Art for the Purpose of an Obviousness Attack?” which has just appeared in 27(2) CIPR 385. Traditionally the body of prior art which may be set up against a patent in an obviousness attack includes only that prior art which is common general knowledge or reasonably discoverable by a person skilled in the art. However, the codification of the obviousness requirement in s 28.3 refers to information disclosed “in such a manner that the information became available to the public in Canada or elsewhere,” which is almost exactly the same wording as used in respect of anticipation, in s 28.2. On its face this implies that the entire body of public information is available in respect of an obviousness attack, as it is for an argument of anticipation: see AD Morrow, “Patent Update” (2003), 20 CIPR 237 at 248 suggesting that in consequence of the codification, the prior law has been “swept away, and everything available to the public is now to be considered.” Less dramatically, as Hughes J noted in Merck & Co Inc v Pharmascience Inc 2010 FC 510 [37], there is a “quaere” as to whether the codification of the non-obviousness requirement in section 28.3 of the new Act has changed the law, so that all publically available prior art may be used in an obviousness attack, regardless of whether it would have been discovered by a reasonably diligent search. My article reviews the debate, including the English case law, which addressed exactly the same question, inconclusively, under the Patents Act, 1949. In considering the purpose of the provision, I argue that the English Court of Appeal in Windsurfing v Tabur Marine [1985] RPC 59 – the source of the Windsurfing / Pozzoli test approach to obviousness – was wrong in principle when it held that the prior public, but isolated, use of a sailboard by Peter Chilvers, a 12 year old boy, was part of the state of the art for purposes of an obviousness attack. I conclude that the best view is that the codification has not changed the law, but the textual argument is strong enough that a judicial decision will be required to settle the question definitively.

Bifurcation Restored

Dywidag Systems International, Canada, Ltd v Garford Pty Ltd 2012 FCA 50 Layden-Stevenson JA: Gauthier, Stratas JJA

As noted in yesterday’s post, Garford commenced an action against Dywidag based on alleged infringement of Garford’s patents, as well for alleged breaches of the Competition Act. Prothonotary Milczynski ordered bifurcation of the action, which was reversed by Zinn J 2010 FC 581 on the basis that the financial information necessary at the remedy phase would be relevant to the proof of the claim for lessening of competition under the Competition Act [FC 16]. Now that the Competition Act claim has been dismissed as being out of time, that basis for setting aside the bifurcation no longer exists [5], and the FCA accordingly restored the bifurcation order.

It is not always reasonable to pursue all reasonable points

Today’s EWCA costs judgment in MMI Research Ltd v Cellxion Ltd & Ors [2012] EWCA Civ 139 raises an interesting point of principle, as the Court of Appeal declined to award costs to the defendants, which had ultimately prevailed on a question of obviousness, because they had raised so many issues on which they lost. Notwithstanding that the points raised may have been individually reasonable, the sheer number was not:

We think the defendants were indeed profligate in the number of points they took. A defendant cannot take as many "reasonable" points as it likes and not have to pay for any of them if they are unsuccessful. If he has a large number of potential such points he should make a judgment as to which are the better ones. A good test to apply is not merely "is this point a reasonable runner?" but also "which of my reasonable runners are the best few?" If only a few such points are run and all but one fails, the court may deprive the party of its costs of the unsuccessful points. But there comes a point when more sanction is called for. This is particularly important in a patent action where very often a host of possible defences could be run. A reasonably strict costs regime should make a defendant concentrate on his best – which may indeed also give him a better chance of winning.

The English and Canadian rules are different, and I am not an expert on either, but so far as I can tell, the Federal Courts Rules would permit a similar result, at least in principle. Has this question been raised in the Canadian Federal Courts?

Limitations Period Ends Garford's Competition Act Claim

Garford Pty Ltd. v. Dywidag Systems International, Canada, Ltd. 2012 FCA 48 Layden-Stevenson JA: Gauthier, Stratas JJA

The latest chapter in the saga of procedural wrangling between Garford and Dywidag tells us that this book will not, after all, be about the relationship between patent law and competition law. Garford commenced an action against Dywidag based on alleged infringement of Garford’s patents, as well for alleged breaches of the Competition Act. In 2010 FC 996 Russell J granted Dywidag’s motion for summary judgment and dismissed Garford’s claim under the Competition Act on the basis that it was out of time. The Court of Appeal has now affirmed, essentially for the reasons given by Russell J.

Garford’s claim was based on s 36 of the Competition Act, and the applicable limitation period is established in s 36(4)(a)(i) as being two years from a “day on which the conduct was engaged in … .” Gardford itself had specified the conduct as being Dywidag entering into certain purchase agreements [FC 16]. Two years from the latest agreement was March 2008, and the action was commenced in August 2008. Garford had argued that the period running of the limitation period did not run from the date of the last agreement because of the reasonable discoverability rule. Russell J held that the rule did not apply to subsection 36(4) of the Competition Act [FC 32], and even if it did, it was not relevant on the facts of the case as, inter alia, Garford was fully aware of all the relevant facts by April of 2006. The Court of Appeal affirmed on the latter basis, without any indication as to its view on the legal question of whether the discoverability rule applied to subsection 36(4).

Garford also argued that the cause of action was continuing, essentially on the grounds that even though the purchase agreements were entered into on a specified date, these agreements had ongoing consequences. Russell J held that the offence (if any) was complete at the date the agreements were entered into, even if the agreements had continuing consequences [FC 42]. The Court of Appeal affirmed [19].

One More Time: No Reach-back under Section 8 of the NOC Regulations

Apotex Inc. v. Warner-Lambert Company LLC / quinapril 2012 FC 202 Lemieux J

The patentee was successful in NOC proceedings relating to two patents. Apotex then brought an impeachment action in respect of the same patents. One of the patents has now expired, and the patentee sought to have the action dismissed in respect of that patent on the ground of mootness. Apotex argued that the action was not moot, and even if it was, the court should exercise its discretion to hear the action because it would affect Apotex’s right to damages under s 8 of the NOC Regulations, and a possible future action under the Ontario Monopolies Act.

Applying very well established FCA jurisprudence, Lemieux J held that the action was moot, and the court should not exercise its discretion to hear it. Entitlement to s 8 damages requires success in the s 8 action itself. Success in a subsequent infringement or impeachment action is irrelevant: “The jurisprudence established by the FCA is clear that in the circumstances of this case there is no reach-back under section 8 of the NOC Regulations” [50].

Lemieux J’s analysis did not address the argument that the action should be heard because it would impact on a possible future action under the Ontario Monopolies Act. Presumably he accepted the patentee’s submission that this basis was too speculative to justify hearing an otherwise moot appeal, as there have been no reported cases under that Act [10].

Apotex also argued that the action should be heard in respect of the expired patent, as the action would proceed in respect of the related unexpired patent. Lemieux J pointed out that new evidence would have to be heard, as the invalidity of the expired patent had not been considered in the NOC proceedings (only non-infringement had been argued), and in any event there was no point to adding any complexity to the trial in respect of an issue which would have no practical effect on the parties rights [52].

A Purposive Interpretation of “Innovative Drug”

Celgene Inc. v. Canada (Health) / THALOMID 2012 FC 154 de Montigny J

In his decision in THALOMID de Montigny J has held that thalidomide is an “innovative drug” under the Data Protection Regulations, and so Celgene is entitled to have it listed on the Register of Innovative Drugs. While thalidomide has a very unusual history, and de Montigny J himself stated that “the present decision will have a limited impact in the foreseeable future” [47], the reasoning underpinning de Montigny J’s interpretation marks an important and welcome development in the interpretation of the Regulations.

SCC Decision on Access to NDS Information

Merck Frosst Canada Ltd v Canada (Health), 2012 SCC 3 var’g 2009 FCA 166 var’g 2006 FC 1201, 2006 FC 1200.

The litigation in this case concerned a request made under the Access to Information Act by a competitor of Merck’s [FCA 4], for access to information submitted by Merck as part of the regulatory approval process for Singulair®. While the Supreme Court dismissed Merck’s appeal in 6 - 3 split, the decision as a whole is not hostile to the interests of innovator pharmaceutical companies. It should remain possible for an innovator to protect all significant information in an NDS, though it will be more burdensome to do so than if the dissenting view had prevailed. In some important respects the Supreme Court decision is clearly more favourable to innovator pharmaceutical companies than was the decision of the FCA.

An Accounting Really Is Difficult in Some Cases

Eurocopter v Bell Helicopter Textron Canada Limitée 2012 FC 113 Martineau J

In Eurocopter Martineau J held that the successful patentee was not entitled to an accounting of the defendant’s profits. Martineau J began his discussion of this point with what is becoming a standard assertion of the complexity of an accounting as a reason that courts “have been very reluctant to grant such remedy. Perhaps such complexity does not prevent the Court from exercising its discretion, but there must exist good reasons to do so” [411], citing the decision of Snider J in Merck & Co Inc v Apotex Inc / lovastatin 2010 FC 1265, [615]-[616]. It may be that an accounting is a difficult calculation, but the real question is whether it is more difficult than the damages calculation. As I commented in my post on the lovastatin decision, the courts have often remarked on the difficulty of an accurate calculation of damages (see cases cited in that post), and I fail to see why an accounting of profits is generally more difficult that a calculation of lost profits damages. The former compares the profits the defendant actually earned with the hypothetical profits that would have been earned using the best non-infringing alternative, while the latter compares the profits the plaintiff actually earned with the hypothetical profits the plaintiff would have earned had the defendant not infringed. Both require discovery of similar kinds of information, and both require construction of a hypothetical “but for” scenario.

Moreover, an accounting has at least two advantages. As between an accounting and lost profits damages, if the remedial order is going to require one competitor to open its books to the other, surely it is more equitable to order the wrongdoer to open its books to the successful patentee, rather than the other way around. And as between an accounting and reasonably royalty damages, an accounting provides a better deterrent, as the reasonable royalty amounts to a compulsory licence. As Zinn J has pointed out in Monsanto Canada Inc. v. Rivett 2009 FC 317 at [23], “[a]t the level of principle, there is no deterrent from infringing the patent if what the infringer is required to hand over is the sum he would otherwise have paid to Monsanto to buy the seed and the licence. In fact, this would almost be counter to the purpose of deterrence. It is much like saying, as the plaintiffs put it in their oral submission, ‘Catch me if you can’. If caught, the defendant would be required to pay the sum he would have paid to use the patent in any event. When not caught, he is left with a windfall.”

This does not mean that an accounting is always preferable; it does mean that question of whether an accounting is justifiable as compared with the damages remedy will turn on the facts of the particular case, not on broad generalizations.

In this particular case, Martineau J pointed out that an accounting would be complex because “landing gear, although essential for the proper functioning and security of a helicopter, represents just a small part of the total cost of a helicopter” [412]. While it is often possible to prove sales (whether by the infringer, in an accounting calculatin, or by the patentee, in a lost profits calculation), attributable to some patented feature, that is an easier inquiry when the patented feature is an important selling point. Further, in this case, Bell did not actually sell any helicopters at all that were equipped with the infringing landing gear; the argument for an accounting of profits would be that it had secured extra sales of models equipped with non-infringing gear on the basis of marketing of prototype models equipped with infringing gear. This is an particularly speculative inquiry. It is true that Eurocopter’s lost profit damages would be just as speculative – it would be require exactly the same inquiry – but the consequence would very probably be that Eurocopter would be confined to reasonable royalty damages, which would likely be a significantly easier calculation.

In this case I am entirely persuaded that on the facts Martineau J’s decision to refuse an accounting was correct for the reasons he gave, but I hope that dubious generalizations about the relative complexity of an accounting do not become entrenched through repetition.

When Should Entitlement to Punitive Damages be Determined?

Eurocopter v Bell Helicopter Textron Canada Limitée 2012 FC 113 Martineau J
 
Yesterday’s post addressed the question of whether it appropriate to hold that Eurocopter was entitled to punitive damages. A preliminary question is whether it appropriate to make this determination prior to the actual assessment of damages. In Apotex v Merck / Vasotec 2003 FCA 291, [34], Sharlow J stated(emphasis added):

The purpose of punitive damages is to punish, to deter the wrongdoer and others, and to denounce wrongful behaviour. Punitive damages are awarded only where compensatory damages and other normal civil remedies are insufficient to accomplish those objectives, and in an amount that is no greater than necessary to accomplish that objective: Whiten, supra; Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130. It is axiomatic that until all the ordinary civil remedies are finally determined (which in this case would include a determination as to whether the remedy is an award of damages or an accounting of profits, and the quantum), it is impossible to determine whether punitive damages are required to meet the objectives of punishment, deterrence and denunciation.

Martineau J distinguished Vasotec on the basis that in that case there had been a de facto bifurcation of liability and remedies generally, not just quantum. That is true, but it is not clear that this distinction addresses the FCA’s point, which is that the court cannot tell whether compensatory damages are sufficient for deterrence until the court knows the quantum of those compensatory damages. Martineau J responded by stating that in his view of the evidence, ordinary damages were likely to be minimal and “will simply not be enough to achieve the goal of punishment and deterrence” [455]. In other words, even without a full determination of damages, he was nonetheless in a position to make the determination that ordinary damages would be insufficient for deterrence. I have argued in yesterday’s post that this is not persuasive.

Martineau J also justified his decision on the much more persuasive ground that entitlement to punitive damages was dependent in large measure on the conduct of the infringer. This was a matter that had been thoroughly canvassed at trial, and delay would make determination of this issue all the more difficult [454], and therefore he was best placed to make the determination. This is a compelling point which is complementary to, rather than inconsistent with, the FCA’s point in Vasotec: whether punitive damages are appropriate depends on both the quantum of compensatory damages and the conduct of the parties, so in principle a determination as to entitlement should not be made until both have been addressed. The problem remains, as Martineau J pointed out, that because of the bifurcation, both factors cannot be determined in the same proceedings. In principle, perhaps the best course would have been for Martineau J to have made findings as to whether the conduct is of the type that would warrant punitive damages, and then leave it for damages phase to determine whether punitive damages are warranted, in light of those findings and the quantum awarded as compensatory damages. In practice, given that Martineau J did not actually specify the quantum, which will only be determined at the damages stage, his holding that Eurocopter is entitled to punitive damages is not so different from merely making findings as to the relevant facts.

For an overview of this decision, see here.

Problematic Entitlement to Punitive Damages

Eurocopter v Bell Helicopter Textron Canada Limitée 2012 FC 113 Martineau J

In Eurocopter v Bell, Martineau J, having held one claim of Eurocopter’s patent to be valid and infringed, went on to hold that Eurocopter is entitled to punitive damages, though the quantum was left for determination pursuant to the order bifurcating damages assessment. This holding is the most legally novel aspect of Martineau J’s decision, and in my view it is also the most problematic.

The factors that Martineau J pointed to in holding that punitive damages were warranted were that Bell intentionally copied “the unique and new patented technology developed by Eurocopter” [430], without any attempt to avoid infringing the patent [431], with knowledge of the patent [432]. From this Martineau J concluded that:

[ 433] On a balance of probability, the Court finds that there is clear evidence of bad faith and egregious conduct on the part of Bell. This is not a case where the infringement is small, trivial or isolated, or where the defendant is unsophisticated or ignorant. This is a case of wilful blindness or intentional and planned misappropriation of the claimed invention. Eurocopter has proven that the infringement of the '787 Patent by the making and use of the Legacy gear was not innocent or accidental.

In short, intentional copying of a product that the defendant knows to be patented is conduct warranting punishment. This is an entirely novel concept in Canadian patent law, and it is very worrying as a matter of policy.

Eurocopter v Bell Overview

Eurocopter v Bell Helicopter Textron Canada Limitée 2012 FC 113 Martineau J

Eurocopter v Bell is a familiar case name from numerous visits to the Federal Court on discovery matters, but now the infringement decision itself is available. It has not yet now been posted to the Federal Court website, but Alan Macek has made it available through his IPPractice site. Eurocopter’s patent in question, 2207787, relates to sled-type helicopter landing gear which was known as “Moustache” gear. Matineau J held that one claim was valid and infringed by Bell’s prototype “Legacy” landing gear, but no valid claims were infringed by Bell’s current “Production” gear. The most interesting legal aspect of the decision is that Martineau J held that Eurocopter as the successful patentee was entitled to punitive damages, which is extremely unusual in Canadian patent law. I will deal with that issue in a separate post. This post will provide a synopsis of the remainder of the decision.

Week of 22 January 2012

No new substantive patent decisions were posted on the Federal Courts' websites for the week of 22 January 2012. A long (236 paragraphs) assessment of costs in Janssen Inc. v. Teva Canada Ltd 2012 FC 48 was released, which may be of interest for its detail, and because of the amount involved: the Bill of Costs presented at $852,423.52 was assessed and allowed for a total amount of $619,158.30 plus post judgment interest from the date of judgment. The assessment of costs in Simpson Strong-Tie Company, Inc. v. Peak Innovation Inc. at trial 2012 FC 63 and in respect of the appeal 2012 FCA 15 was also released.

Appealing a Finding of Invalidity after Settling

The recent decision of the English Court of Appeal in Apimed Medical Honey Ltd v Brightwake Ltd [2012] EWCA Civ 5 is substantively uninteresting (see my IPKat post), but it raises an interesting point of English procedure. The defendant had won at trial on both infringement and invalidity. The parties settled (the decision was very strong on infringement), but the patentee wished to appeal the finding of invalidity. Because of the settlement, the defendant had no interest in appearing, so following guidance provided in Halliburton Energy Services Inc v Smith International (North Sea) Ltd [2006] EWCA Civ 185, the Comptroller-General of the Patent Office appeared to argue the case for upholding the decision below that the patent was invalid.

US Federal Circuit Split on Patentable Subject Matter

See my IPKat post for a discussion of last Friday's decision of the US Court of Appeals for the Federal Circuit in Dealertrack v Huber, 2009-1566, -1588 (Fed Cir 2012), which I argue demonstrates that a post-Bilski split has emerged in the Federal Circuit as to the correct approach to patentable subject matter.

Amazon.com Patent Granted

Alan Macek's IPPractice blog reports that the Amazon.com's patent was granted yesterday as CA 2246933. My views on the FCA decision are here. The next development will be the new Practice Guidance, which I assume must be forthcoming at some point to tell us what the Patent Office thinks the FCA meant in Amazon.com.

Plavix Patent Invalidated by the Distinction Between Demonstrated Utility and Sound Prediction

Apotex Inc v Sanofi-Aventis / clopidogrel 2011 FC 1486 Boivin J
            1,336,777 PLAVIX

Two unique features of Canadian law, the false promise doctrine, and the more recent rule that the basis for a sound prediction must be disclosed in the patent itself, mean that lack of utility is one of the most common reasons for invalidating pharmaceutical patents. This was the case in this clopidogrel decision, in which both these doctrines came together to result in a holding of invalidity based on lack of utility.

By way of context, clopidogrel is the enantiomer of the racemic compound referred to as PCR 4099, which is a member of the class of compounds called thienopyridines. An early member of this class, ticlopidine, was synthesized by Sanofi in the early 1970s [411]. Ticlopidine has been approved for use in humans (in 1978 in France [442]); Apotex, for example, holds an NOC for the sale of ticlopidine for humans. Unfortunately, ticlopidine has significant side-effects, so there was a motivation to find a better tolerated but equally or more active member of the class. Sanofi identified PCR 4099 as a lead compound, and carried out extensive studies on it in the 1980s, including roughly a dozen different studies on humans [444]. Based on these studies, “it was found that (i) PCR 4099 was the most potent thienopyridine compound synthesized to that point of time, and, (ii) it was significantly more effective and better tolerated than ticlopidine [446]. However, a long term animal study suggested that PCR 4066 could lead to convulsions. (It is not entirely clear from the discussion of the facts whether this was a side effect of ticlopidine, but it appears not.) A wide range of animal studies demonstrated that clopidogrel was at least as active as PCR 4099, but not toxic [467].

In summary, PCR 4099 was more efficacious than ticlopidine and clopidogrel was at least equally active. PCR 4099 was better tolerated than ticlopidine, except for convulsions, while clopidogrel was less toxic that PCR 4099. This means that at the relevant date it seemed that clopidogrel was clearly better than ticlopidine, and ticlopidine was actually approved for human use. Nonetheless, Boivin J held that Sanofi had neither established demonstrated utility or a sound prediction of utility. What explains this?

Plavix: Obvious or Not?

Apotex Inc v Sanofi-Aventis / clopidogrel 2011 FC 1486 Boivin J
            1,336,777 PLAVIX

Clopidogrel, the claimed compound at issue in this case, is the dextro-rotatory enantiomer of a racemic compound referred to as PCR 4099. Clopidogrel has superior pharmacological properties as compared with the racemate, in particular greater activity and lower toxicity. Patent 1,194,875, which was conceded to be part of the common general knowledge [608], claimed a genus encompassing PCR 4099, which was also specifically disclosed as the lead compound in Example 1 of the ‘875 patent [611]. The obviousness question was therefore simply whether the enantiomer was obvious over the racemate. In the NOC proceedings, which culminated in Apotex Inc v Sanofi-Synthelabo Canada Inc, 2008 SCC 61, the SCC held that it was not. In these infringement proceedings, Boivin J held to the contrary. What accounts for the differing conclusions?

Double Recovery in Transnational Patent Litigation

Apotex Inc v Sanofi-Aventis / clopidogrel 2011 FC 1486 Boivin J
            1,336,777 PLAVIX

The recent decision of the Federal Court of Canada invalidating Sanofi’s Canadian Plavix patent raises some interesting points relating transnational patent litigation. Sanofi holds US and Canadian patents for Plavix (clopidogrel). Apotex imported bulk clopidogrel from a third jurisdiction into Canada and then exported it into the US for sale there, so the same pills that were infringing the US patent by sale in the US, were also infringing the Canadian patent by importation into Canada [251]-[253]. The parties entered into a settlement agreement respecting the US litigation. The settlement was subject to regulatory approval, and provided for alternate terms in the event of regulatory denial; in particular, if Sanofi prevailed in subsequent litigation, damages were specified to be 50% of Apotex’s net sales. Regulatory approval was denied, Sanofi prevailed in the subsequent US litigation (492 F Supp 2d 353 (SDNY 2007), aff'd, 550 F 3d 1075 (Fed Cir 2008)), and, in an October 2010 decision (748 F.Supp.2d 293 (SDNY)), Sanofi was awarded damages of 50% of Apotex’s net sales, as provided for in the settlement agreement. In November, 2010 Apotex paid into court US$556,000,000 in respect of the judgment. The Canadian litigation went to trial in April of 2011, after US proceedings were concluded. Apotex argued that Sanofi should not be able to “com[e] to Canada to sue Apotex and recover a second time for the same Apo-clopidogrel in respect of which they have already secured judgment and payment in the U.S.” [276]. Apotex raised three legal arguments to give effect to this general point of principle.

Joinder and Limitations

Janssen Inc v Teva Canada Ltd / levofloxacin 2011 FC 1480 Hughes J

In 2006 Daiichi Pharmaceutical Co, Ltd (the patentee) and Janssen-Ortho Inc (its licencee, now Janssen Inc) prevailed against Teva (then Novopharm) in an infringement action relating to levoflaxin: 2006 FC 1234 aff'd 2007 FCA 217. In this motion the plaintiffs sought to add three related companies, namely Janssen Inc’s parent company Johnson & Johnson, and two other companies owed by Johnson & Johnson, all of which were asserted to have been part of the levoflaxin production and distribution system, and to have suffered loss consequent on Teva’s infringement. Hughes J dismissed the motion. Without deciding whether those companies were entitled to damages as “person[s] claiming under the patentee” as required by s 55(1), Hughes J held that the determination of that issue was a question that might require “discovery, further evidence, expert evidence if needed, and full argument and submissions respecting the evidence and the jurisprudence” [22]. Consequently it was not appropriate to add the companies to this action, in which the determination that the two original plaintiffs were entitled to damages had already been made. Hughes J distinguished McIntosh v Society of Composers, Authors and Music Publishers of Canada, 2004FCA 57 as being a case in which “there had not yet been a trial and the proceedings were still in the early stages such that further discovery could comfortably be included” [27].

While it is open to the companies in question to bring an infringement action [23], this ruling did not have purely procedural consequences. The applicable limitations period is 6 years, and Hughes J held that this should be calculated from the date of the filing of the motion for joinder, namely 30 August 2011. Consequently, “the claim for damages would be limited to any claim arising after August 30, 2005" [34], while the period of infringement ran from November 2004 to November 2006 [31].

Plavix Patent Invalid

Apotex Inc v Sanofi-Aventis / clopidogrel bisulfate 2011 FC 1486 Boivin J

In a decision dated 6 December 2011, and released on the FC website today, Boivin J has held the Plavix patent (1,336,777) to be invalid for lack of demonstrated utility and lack of sound prediction, and as being obvious to try. This is the same patent that was held to be not invalid in NOC proceedings that culminated in the SCC decision in Apotex v Sanofi 2008 SCC 61. I will have more to say once I have read and digested this massive (790 paragraphs, 248 pages) decision.

Amazon.com Patent Allowed

Alan Macek reports that the Amazon.com patent application has been allowed. I must admit that I am very surprised, as I had predicted that the Patent Office would refuse the patent in light of the FCA decision. I still agree with Barry Sookman that the consequence is that the SCC will not hear an appeal, and the law of patentable subject matter therefore remains very uncertain. It will be interesting to see how (and whether) CIPO revises its practice guidance relating to patentable subject matter.

Can a Product Monograph Induce Infringement?

Apotex Inc v Nycomed Canada Inc / pantropazole 2011 FC 1441 Simpson J

In this decision Simpson J upheld a decision of Prothonotary Milczynski refusing to allow Nycomed to amend its counterclaim against two generics to allege contributory infringement “distinct from the ‘but for’ allegation of inducement” [2]. The patent at issue is for a combination of pantoprazole with a heliobacter inhibiting anti-microbial agent. The generics wish to sell generic pantoprazole. Nycomed wanted to allege that the generics contributed to infringing activities of third parties (such as physicians prescribing the combination) “through its product monograph, website and its marketing strategies to physicians and pharmacists” [2]. Nycomed acknowledged that the generics’ actions were not the “sole cause” of the infringing use [2]. This is presumably because the combination of an antibiotic with a proton pump inhibitor (PPI), such as pantoprazole, is now the “gold standard” for the treatment of ulcers caused by H pylori (see 2006 FC 1411 at [30]), so it is very likely that substantial infringement would occur regardless of the generics’ marketing. Simpson J refused to allow Nycomed to amend, on the basis that “contributory inducement is not a reasonable cause of action” [21]. 

I suggest that the facts alleged do disclose a reasonable cause of action, as the general factual allegations are not materially different from those in Abbott Laboratories Ltd. v. Novopharm / lansoprazole (NOC) 2006 FC 1411, [40]-[42] aff’d 2007 FCA 251, [26], similarly involving a PPI, in which the FCA specifically affirmed von Finckenstein J’s holding that Novopharm’s product monograph constituted “an encouragement to infringe” that was sufficient to establish inducement. Whether Nycomed would ultimately succeed would of course depend on the specific facts, and certainly von Finckenstein J’s finding was at the limit of what has been found to constitute inducement in Canada. Indeed, the question of what constitutes the exact bounds of inducing infringement is a difficult question as a matter of policy, and it may be that it would be desirable to have a strict rule that the claim at issue cannot succeed. However, in light of the lansoprazole decision, it is difficult to see how it can be said that Nycomed has no prospect of success on the facts alleged. 

I suggest that two points account for Simpson J's decision in this motion. First, no reference was made to the lansoprazole decision, from which I would infer that it was not argued. Secondly, Nycomed explicitly acknowledged that it could not establish "but for" inducement, and argued instead that contributory infringement should be recognized as a cause of action. The alternative arguement, which was successful in the lansoprazole decision, was to argue that the "encouragement" offered by the generics amounted to inducement. 

The framing of the cause of action reflects an underlying substantive difficulty, which is that the standard test for inducement, set out most recently in Corlac v Weatherford 2011 FCA 228 at [162], states what is on its face a “but for” test for causation as its second prong. However, “but for” causation is rarely a bright line in reality, and the courts have not been entirely consistent in cases that are close to the line: the lansoprazole decision in one instance in which the FCA has been willing to stretch the concept of “but for” causation, and MacLennan v Gilbert Tech Inc. 2008 FCA 35 rev’g 2006 FC 1038, is another. I suggest that the “but for” test is itself problematic, and the concept of contributory infringement is in need of conceptual clarification – but that is a topic for another day.

No Disgorgement of Profits in Federal Court in an Action Based on Section 8

Apotex Inc v Eli Lilly Canada Inc 2011 FCA 358 Noël JA: Dawson, Trudel JJA aff’g Heneghan J (unreported) aff’g 2009 FC 693, Pr. Tabib & Milczynski Pr (unreported)

A generic that is successful in NOC proceedings is entitled to damages under section 8 of the NOC Regulations as compensation for its losses from having been kept out of the market as a consequence of the statutory stay. The question in this motion to strike paragraphs of the statement of claim is whether the generic can also obtain a disgorgement of the excess profits earned by the patentee during that period, in an action where the sole “wrongful” act alleged is invocation by the patentee of the NOC Regulations. The FCA has held unequivocally that “the answer to this question is no” [18]. Consequently, Apotex’s claim “cannot possibly succeed” [23].

CGPA Lack of Standing Affirmed

Canadian Generic Pharmaceutical Association v. Canada (Health) 2011 FCA 357 Dawson JA: Noël, Trudel JJA aff'g 2011 FC 465 de Montigny J affm'g 2010 FC 1211 Lafrenière Pr

The FCA has affirmed that the Canadian Generic Pharmaceutical Association does not have standing to challenge the listing of a particular drug on the Register of Innovative Drugs, saying, from the Bench, that there was no error in the decisions below. The decision of de Montigny J is blogged here.

Holidays

I'm off for a week. I will be back blogging at the end of next week.

Enantiomers Are Per Se Ineligible for Data Protection

Takeda Canada Inc. v Canada (Health) / DEXILANT 2011 FC 1444 Near J  

I believe this is only the second judicial decision interpreting “innovative drug” in the Data Protection Regulations, and the first to interpret what constitutes a “variant” that is excluded from protection. In the DEXILANT decision, Near J held that the listed examples of variants in the definition of “innovative drug”, namely salts, esters, enantiomers, solvates and polymorphs, are excluded per se, regardless of whether extensive and costly trials were required to obtain an NOC.

Trial Date Backlog

Teva Canada Limited v Wyeth LLC 2011 FC 1442 Hughes J

While probably not a surprise to those of you in litigation, this statement, from Hughes J’s decision declining to set a trial date pending appeal, caught my eye: “A second reason respecting the trial date is that consideration must be given to the pressures on this Court to find trial dates for other litigants in other cases. Even now, some litigants are not expecting trial dates until 2015" [4]. I noted a few weeks ago that we have recently seen substantive patent decisions from three judges who are new to the patent roster: Rennie J, Scott J and Crampton J (who has just been appointed Chief Justice). I wonder if this represents an attempt by the FC to deal with the backlog of patent cases?

Sask CA Disagrees with FCA on Irreparable Harm in Interlocutory Injunctions

Mosaic Potash Esterhazy Limited Partnership v Potash Corporation of Saskatchewan Inc, 2011 SKCA 120

It is very difficult to obtain an interlocutory injunction in a patent case in the Federal Court, as the FCA jurisprudence uses irreparable harm as a strict threshold, in the sense that the balance of convenience stage will not be reached if the applicant cannot established that it will suffer irreparable harm, and the standard for establishing such harm is high: the applicant must show it “will actually” suffer irreparable harm on the basis of evidence that is “clear and not speculative.” For a critical review of the FCA jurisprudence, see my article Interlocutory Injunctions and Irreparable Harm in the Federal Courts, (2009) 88(3) Can Bar Rev 515. While not a patent case, or even an intellectual property case, Mosaic v PCS is an important appellate decision which fully considers the principles applicable to the grant of an interlocutory injunction, including a review of the leading authorities, and establishes an approach which is directly contrary to that used by the FCA. While the FCA is of course not bound by the SaskCA, this thorough and fully reasoned decision from an appellate court may give the FCA cause to reconsider its position when the occasion arises.

FCA Clarifies PM(NOC) Transitional Provisions

Merck Frosst Canada & Co v Apotex Inc / norflaxin (NOC) 2011 FCA 329 Stratas JA: Layden-Stevenson, Sexton JJA aff’g 2010 FC 287 O'Reilly J

Section 8 of the PM(NOC) Regulations, provides for compensation to a generic that has been denied entry as a result of a statutory stay. It was notoriously obscure as enacted in 1993 [59], and was amended in 1998. The transitional provision says that the 1998 version applies to an application that is “pending” when the 1998 Regulations came into force (March 11, 1998). The FCA has now clarified that an application is pending, and so the 1998 Regulations apply, when a final decision of the applications judge is under appeal: “the correct test for determining whether an application is “pending” is whether the application remains alive either at first instance, or on appeal” [17]. This effectively overrules the decision of Snider J in 2010 FC 1264 (blogged here), but I won’t go into the merits of the decision on this point. There were respectable arguments to be made on both sides as to the interpretation of “pending,” and what is important is that the FCA has given a clear and definitive answer.

The FCA also strongly implied that the whole debate was pointless, as the effect of the 1998 Regulations was to clarify rather than to change the law as intended under the 1993 Regulations. Merck had argued that if the 1998 Regulations applied, they were invalid as not being authorized by the enabling statutory provision, as they would retroactive deprive Merck of its vested rights. The FCA rejected this argument for a variety of reasons, of which two are of particular interest. First, section 8 of the 1998 Regulations is “a largely clarifying provision or a provision that largely attempts to declare what the law has been, [and so] is not retroactive or retrospective, nor does it interfere with earlier vested rights” [49]. Secondly, the original provision in the 1993 Regulations was so impenetrably obscure that Merck could not possibly have acted in reliance on the rights defined by that provision, as it was inevitable that substantial clarification would be required, either by case law, or, as it happened, through legislative amendment [64]-[67].

The Significance of Motive in an Obviousness Analysis

Allergan Inc v Sandoz Canada Inc / combigan (NOC) 2011 FC 1316 Crampton J

As noted in yesterday’s day post, combigan is Allergan’s brand name for a composition of two active ingredients, brimonidine and timolol, for the treatment of glaucoma, which was claimed as such in patent 2,440,764. In a curious twist in the combigan case, the Allergan, the patentee, argued that there was no motivation to develop combigan because the FDA was generally reluctant to approve fixed combination drugs for the treatment of glaucoma because of the fear of a mid-afternoon “trough” in efficacy: [115], [62]. This is curious because this type of argument is more usually raised by the defendant, as a rebuttal to the question “If it was so obvious, why was it not done before?” The answer in this case, would be, “why do what was obvious when everyone knew the FDA would not approve it?”

The "Inventive Concept" and the Problem-and-Solution Approach to Obviousness

Allergan Inc v Sandoz Canada Inc / combigan (NOC) 2011 FC 1316 Crampton J

The Federal Court seems to be expanding the roster of judges assigned to patent cases, as we have had three decisions recently that appear to be the first patent decision for the judge in question: Rennie J’s anastrozole (NOC) decision, Scott J’s decision in Hollick Solar and now this decision from Crampton J. The fresh eyes have brought a new perspective on some old problems: Rennie J set out a structured framework for determining the promise of a patent; Scott J resurrected the Improver questions for determining whether an element is essential to a claim; and in this case Crampton J has addressed whether the claims or the inventive concept are the focus of the obviousness inquiry. While Crampton J resolved the question correctly, in my view, I suggest that the difficulty which arose in this case reflects a problem with the Windsurfing / Pozzoli test itself. This problem could be avoided, and the analysis simplified, by invoking the problem-and-solution approach that is standard in the European Patent Office.

Patentability of Business Methods Unresolved by FCA Decision in Amazon.com

Amazon.com, Inc. v. Canada (Attorney General) 2011 FCA 328 Sharlow JA; Trudel, Stratas JJA var’g 2010 FC 1011 Phelan J rev’g Re Amazon.com, Inc. Patent Application No. 2,246,933 (2009) C.D. 1290, 75 CPR(4th) 85 (PAB & Com’r Pat)

In a thinly reasoned decision, the FCA has decided the Amazon.com appeal without deciding whether business methods are patentable subject matter in Canada. The central question, “Can a business method ever be patentable subject matter?” was dealt with in five paragraphs, in which the FCA applied its own prior decision on computer implemented inventions, Schlumberger Canada Ltd v Comm’r of Patents, [1982] 1 FC 845, 56 CPR (2d) 204 (CA), and held that the result turns on whether “the only inventive aspect of the claimed invention is the algorithm,” in which case it would be unpatentable, or whether the one-click shopping method at issue is “one of a number of essential elements in a novel combination” [63]. The FCA held that this was a matter of claims construction, and remanded the patent to the Commissioner for reexamination in accordance with the FCA’s reasons.

While the FCA disapproved certain aspects of the test applied by the Patent Office, the decision is a victory for the Commissioner, at least in the short term. Schlumberger was also thinly reasoned – it was two pages long and cited no case law whatever – and the practical result was to allow the Patent Office to deal with software patents as it saw fit. While the claims at issue in Schlumberger were refused, the Patent Office soon changed its mind, and ultimately interpreted Schlumberger so as to grant patents for inventions which were functionally indistinguishable: see eg Mobil Oil’s Application (1985), 24 CPR (3d) 571. The FCA’s reasons in Amazon.com are similarly ambiguous. Consequently, while the Patent Office will have to revise the complex test which it applied in Amazon.com’s Application, it will be able to follow its own policy with respect to business method patents. At present the Patent Office is firmly set against such patents, and it is a foregone conclusion that this particular patent will be refused on reexamination, but since claim construction is a matter of law to be reviewed without deference, Amazon.com will have a real possibility of having the Commissioner’s decision overturned, if it is prepared for more litigation. In the short term, then, business method patents will not be granted in Canada; in the longer term, unless the FCA decision is appealed to the SCC, we can expect a protracted period of uncertainty as the Federal Court judges struggle with the interpretation of the FCA decision in Amazon.com.

FCA Releases Amazon.com Decision

The decision of the FCA in Amazon.com 2011 FCA 328 has been released. It has not yet been posted on the FCA website, but Alan Macek has made the decision available at IPPractice.ca. I will have a post on this decision later today soon.

Test for a Stay Depends on Whether the Court is Enjoining Another Body, or Delaying Its Own Proceedings

Mylan Pharmaceuticals ULC v. AstraZeneca Canada, Inc. 2011 FCA 312, Stratas JA

In 2011 FC 1023 (blogged here and here), Rennie J granted an order of prohibition in respect of Mylan’s application for an NOC for anastrozole. Mylan is appealing this decision. In this motion, AstraZeneca sought to have the hearing of the appeal stayed until the decision of the SCC in Teva v Pfizer / sildenafil (SCC 33951). The legal issue raised was whether the applicable legal test was the tripartite test set out in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 SCR 311 (the same test as for an interlocutory injunction). Stratas JA held that the RJR-MacDonald test applies only when the Court is enjoining another body from exercising its jurisdiction [5]. In the case where the Court is deciding whether to delay exercising its own jurisdiction, “the demanding tests prescribed in RJR-MacDonald do not apply,” [5] and the question is “whether, in all the circumstances, the interests of justice support the appeal being delayed” [14].

No Vested Right to an NOC

Apotex Inc v Canada (Health)/ Apo-Omeprazole 2011 FC 1308, Barnes J

In March 2003 the Therapeutic Products Directorate advised Apotex that the examination of Apo-Omeprazole had been completed but Apotex’s application for a NOC was on patent hold. In the fall of 2009 the TPD revoked the approval status on the basis that the bioequivalence study filed by Apotex with its ANDS had not been appropriately conducted. The TPD refused to reconsider this decision (for a review of the facts see 2010 FC 1310, [3], a motion to strike on this application). Apotex challenged the TPD’s decisions by way of this application, which was dismissed as untimely under the Federal Courts Act s 18.1(2). On the only substantive point that was discussed, Barnes J held that there can be no vested right to an NOC:

[33] There is no legal significance attaching to an application for a NOC that has been placed on patent hold. The Minister is fully entitled to revisit scientific issues at any point in the process up to the actual issuance of a NOC. It is only at that point that the Minister’s examination is completed in accordance with C.08.004 of the Food and Drug Regulations, RSC 1985, c F-27. Indeed, given the lengthy delays that can arise, the Minister would be remiss if such applications were approved at the expiry of the patent hold period without further scrutiny.

This conclusion strikes me as neither surprising nor controversial.

Proving the Promise of a Selection Patent

Eli Lilly Canada Inc. v. Novopharm Ltd / olanzapine (No 2) 2011 FC 1288 O'Reilly J

2,041,113 – olanzapine – ZYPREXA

To repeat the introduction from yesterday’s post, in Eli Lilly Canada Inc. v. Novopharm Ltd. / olanzapine (No 1) 2009 FC 1018 O’Reilly J held Lilly’s olanzapine patent, 2,041,113, to be an invalid selection patent over the genus patent 1,075,687. On the appeal, the FCA held that invalid selection is not an independent basis upon which to attack the validity of a patent (2010 FCA 197, [27], [33], [90]), and that O’Reilly J’s finding of invalidity was fatally tainted by this error. The FCA held that the patent was neither anticipated nor obvious, nor was it invalid for double patenting, but it remitted the case to O’Reilly J on the issues of utility and sufficiency. O’Reilly J at [124], following the lead of the FCA at [99], construed the patent as promising superiority to (1) prior known antipsychotics; and (2) other '687 compounds, in particular flumezapine. O’Reilly J held that patent invalid for failure to fulfil these promises. Yesterday’s post discussed the first promise. This post discusses the second promise.

Olanzapine Patent Invalid on Remand: The Ad Hoc Nature of the Utility Determination

Eli Lilly Canada Inc. v. Novopharm Ltd / olanzapine (No 2) 2011 FC 1288 O'Reilly J

2,041,113 – olanzapine – ZYPREXA

In Eli Lilly Canada Inc. v. Novopharm Ltd. / olanzapine (No 1) 2009 FC 1018 O’Reilly J held Lilly’s olanzapine patent, 2,041,113, to be an invalid selection patent over the genus patent 1,075,687. On the appeal, the FCA held that invalid selection is not an independent basis upon which to attack the validity of a patent (2010 FCA 197, [27], [33], [90]), and that O’Reilly J’s finding of invalidity was fatally tainted by this error. The FCA held that the patent was neither anticipated and nor obvious, nor was it invalid for double patenting, but it remitted the case to O’Reilly J on the issues of utility and sufficiency.

On remand, O’Reilly J has held there was sufficient disclosure, but the 113 patent is invalid for lack of utility. As always in Canadian cases dealing with utility, the first question is construing the promise of the patent. Layden-Stevenson J giving the decision of the FCA in olanzapine (No 1) stated that she would be inclined to construe the patent as promising “that olanzapine, in the treatment of schizophrenia, shows marked superiority to flumezapine and other '687 compounds, has a better side effects profile than prior known antipsychotic drugs and has a highly advantageous activity level” [99]. She did not conclude the point as she did not have the benefit of the expert evidence, but she remitted this issue to O’Reilly J as part of the utility question. O’Reilly J has taken the hint and in effect construed the patent in exactly in this manner: [124]. Note that there are two distinct promises: olanzapine must be superior to (1) prior known antipsychotics; and (2) other '687 compounds, in particular flumezapine. These are distinct points because no '687 compound had been used as an antipsychotic. While O’Reilly J’s decision runs these two points together, as both are encompassed in the promise of the patent, it is convenient to treat them separately. I will deal with the second promise in a subsequent post.

“[T]he soundness of a prediction is a question of fact”

Sanofi-Aventis Canada Inc. v. Apotex Inc. / ramipril, 2011 FCA 300 Layden-Stevenson JA: Noël, Pelletier JJA aff’g 2009 FC 676 Snider J

In this brief decision, the FCA affirmed Snider J’s finding that Sanofi’s claims to ramipril were invalid on the basis that the inventors could not soundly predict the utility promised by the patent as of the filing date. The FCA stated at [5] that “the soundness of a prediction is a question of fact” which was therefore owed deference unless the trial judge had applied the wrong legal test. The FCA held that Snider J has applied the correct test, and her findings of fact were amply supported by her detailed review of the evidence.

While this conclusion is no doubt reasonable on the facts (which I have not reviewed in detail), I am concerned by the apparently blanket statement that “the soundness of a prediction is a question of fact.” If taken to an extreme, so that every case turns on its own facts, it will not be possible to develop guidelines that provide the legal predictability and certainty that is so important to an industry such as biotechnology, which requires massive investments in reliance on patent protection. This statement is also doubtful as a matter of principle. There is no sharp dividing line between questions of law and questions of fact. Legal principles may be stated at different levels of generality, and as principles become more detailed, they shade more closely into questions of fact.

Both of these points are illustrated by the recent decision of the UKSC in HGS v Eli Lilly [2011] UKSC 51 rev’g [2010] EWCA Civ 33 (blogged here, here and here), in which the EWCA distinguished a number of decisions from the EPO Technical Boards of Appeal dealing with very similar facts, essentially on the basis that each case turned on its own facts. That would have made is makes it difficult for patentees to determine whether their patent is valid, and more importantly, to determine how soon they can apply for a patent with confidence that its validity will be upheld. As explained by Lord Neuberger in HGS v Eli Lilly at [98], this predictability is very important in the pharmaceutical industry, which relies on patent protection to fund research. The patentee is caught in a squeeze between wanting to patent early, to protect its innovation in a competitive industry, and not patenting too early in order to ensure validity. Whether the line is drawn early or late is arguably less important than that it is drawn clearly, so that inventors can know, rather than guess, what point they have to reach in order to obtain a valid patent. The UKSC, which strongly emphasized the need for legal certainty, felt able to draw principles from the TBA decisions which the EWCA had viewed as turning on their own facts. Notably, the UKSC stated the governing principles at three different levels of generality: general principles; principles applicable to new proteins and their encoding genes; and principles applicable where the protein is said to be a family or superfamily member [107]. It was the willingness to set out principles applicable to a narrow class of cases, rather than simply saying that the cases turn on their own facts, that mark the difference between the EWCA and the UKSC, and which allowed the UKSC to state guidelines that enhance predictability.

I am not arguing that the FCA was wrong in holding that the question on appeal in the ramipril case was one of fact. It is not possible to state principles that will provide clear answers in all cases; to some degree each case must turn on its own facts. My concern is that a blanket statement that the soundness of a prediction is a matter of fact reflects an approach similar to that taken by the EWCA in HGS v Eli Lilly, and may consequently impede the development of detailed principles that would improve predictability.

FCA Takes a Hard Line on Payment of Fees by the Wrong Agent

Excelsior Medical Corporation v. Canada (Attorney General) 2011 FCA 303 Pelletier JA: Noël, Layden-Stevenson JJA, aff’g 2011 FC 407 Hughes J

Patent Rule 6(1) states that the Commissioner shall only have regard to communications from the authorized correspondent. This means that if the patentee changes its agent, but does not notify the Patent Office of the change, the original agent remains the agent of record. In these circumstances the Patent Office will refuse payments made by the new agent. The result is that the patent may be deemed to be abandoned for non-payment of fees, even though payment has been tendered, albeit by the wrong agent. This point has recently been affirmed by the FCA in Unicrop.

In the decision under appeal in this case Hughes J had created a glimmer of hope for a patentee in this situation. He held that if the Patent Office accepts the fees from the wrong agent and sends a notice to the agent of record stating that the application had been reinstated, the application is thereby reinstated and the Commissioner cannot “undo” the reinstatement. In my post on that decision, I suggested that while this result seems fair, it is difficult to reconcile with the mandatory language of Rule 6(1), which states that the Commissioner “shall only have regard to communications from[] the authorized correspondent.” On appeal, the FCA extinguished that glimmer of hope, faint though it was:

The acceptance of maintenance fees, whether within or outside the reinstatement period, from someone other than the applicant’s authorized correspondent does not reinstate a patent application. Contrary to the application judge’s view, the Patent office’s acceptance of those fees did not create rights and its return of those fees did not extinguish rights. To hold otherwise would be to create a situation in which the Patent office’s administrative errors created or extinguished rights independently of the statutory scheme. [5]

Nor did the FCA show any sympathy for the patentee in this situation: “there is no basis for invoking the Federal Court’s equitable jurisdiction on the facts of this case. This is simply another in a line of case where the most elemental precautions were not taken when accepting a patent prosecution mandate” [8]. It is therefore clear that there is no prospect of judicial relief in cases in which fees have been paid by the wrong agent.

(Note that on the facts Hughes J refused to order the patent reinstated, as the new agent had subsequently requested and accepted a refund, and the application then became incurably dead. Thus the FCA dismissed the appeal.)

The Improver Questions Resurrected

Hollick Solar Systems Ltd v Matrix Energy Inc 2011 FC 1213, Scott J

In his first patent decision, Scott J has walked right into the morass of the essential elements doctrine. Moreover, he applied the three question test approved in Free World Trust 2000 SCC 66 at [55]-[56]. These questions are normally known as the Improver questions, after the case in which Hoffmann J first set out these questions, but they might now be known as the Improver “mangle,” the term used by Lord Hoffmann when, in Kirin-Amgen Inc. v Hoechst Marion Roussel Ltd [2004] UKHL 46 at [52], he repudiated his own test. The Improver questions were applied in a few cases soon after Free World Trust, but have been almost entirely ignored by the Federal Courts in recent years. (The last case I know to apply them was Halford Seed Hawk 2004 FC 88 at [140]ff, aff’d 2006 FCA 275, though with some criticism at [14]-[15].)

The invention at issue in Hollick v Matrix was a system for solar preheating of building ventilation air. It is the last in the series of three patents granted to the same inventor. As I read the patents, in the first, 1,196,825, the inventive concept was to pre-heat incoming ventilation air by passing that air through a solar panel on the sunny wall of the building, thereby capturing both solar heat and waste heat escaping through the wall of the building. The second, US Patent 4,774,932, is for an improved collector panel with vertical corrugations. This patent at issue in this case, 1,326,619, is for a further improvement to the invention disclosed in the US patent. It divides the vertical corrugations into a series of offset panels in order to improve efficiency by preserving laminar air flow. All of these patents specify that the heated air is removed into the building through a plenum at “the top” of the panels. The defendant’s device in this case placed this air intake at the bottom of the panel. The question therefore was whether the location of the air intake at the top of the panel was an essential element.

Post-Published Evidence in Europe

Human Genome Sciences Inc v Eli Lilly & Co [2011] UKSC 51 rev’g [2010] EWCA Civ 33 aff’g [2008] EWHC 1903 (Pat)

In HGS v Eli Lilly the UKSC, relying on case law of the EPO Technical Board of Appeal, held that post-filing evidence may be used to confirm the utility of a claimed invention, though such evidence cannot be the sole basis for establishing utility: [107(ix)]. The point is made most clearly in the TBA decision in T 0898/05 Hematopoietic receptor/ZymoGenetics:

Admittedly, no experimental evidence for the suggested role of the receptor and/or its ligands is made available in the application. Later evidence, however, confirmed this sort of "educated guess", which the examining division considered to be - in its own words - "reasonably credible".

(Note that the UKSC and the TBA in T 0898/05 refer to this as “later evidence,” but the TBA normally uses the term “post-published” evidence, as did Jacob LJ in the EWCA.)

The TBA case law is quite consistent on this point. Of the cases reviewed by the UKSC and EWCA in HGS v Lilly, T 0898/05 ZymoGenetics, T 1165/06 IL-17 related polypeptide/Schering, and T 0018/09 Neutrokine/Human Genome Sciences all rely on post-published evidence to establish that the claimed invention did indeed have the utility asserted in the patent. In some cases that evidence was published years after the filing date. Two more cases, T 0870/04 and T 1452/06 consider post-published evidence, though conclude it was not helpful on the facts. The case most hostile to post-published evidence was T 1329/04 Factor- 9/John Hopkins [sic] but even there the TBA did not dismiss such evidence outright, but said only at [12] that “even if supplementary post-published evidence may in the proper circumstances also be taken into consideration, it may not serve as the sole basis to establish that the application solves indeed the problem it purports to solve.”

Functional Limitations Need Not Be Express in the Claim

Delp v Fresh Headies Internet Sales Ltd 2011 FC 1228 Barnes J

This decision is a reasonably straightforward application of Burton Parsons [1976] 1 SCR 555 in the context of a motion for summary judgment. The claimed invention is for a method of extracting resins from plant materials without the use of chemicals, by chilling the plant material in cold water, which causes the resin to become brittle, and then agitating, which causes the brittle resin to break off the plant surface, after which it can be removed by filtration.

The problem faced by the patentee was a familiar one. The process can be made to work over a range of temperatures, though the efficacy drops off gradually at increasing temperatures. If the temperature is too high it will not work, though there is no strict cutoff point. Further, it will work for a variety of resinous plants, and the temperature at which the process becomes inoperative depends on the plant. A low temperature cutoff in the claim would risk excluding practically operable embodiments of the invention that could be used by competitors, but a cutoff that is too high risks encompassing inoperable embodiments.

What Does HGS V Eli Lilly Mean for Canadian Law?

Human Genome Sciences Inc v Eli Lilly & Co [2011] UKSC 51 rev’g [2010] EWCA Civ 33 aff’g [2008] EWHC 1903 (Pat)  

Wednesday’s decision of the UKSC in Human Genome Sciences Inc v Eli Lilly is very interesting in its own right, but what impact will it have on Canadian law? In broad terms it demonstrates that there is a clear functional parallel between the European requirement of “industrial application” and the Canadian utility requirement; both deal primarily with the question of how far upstream in the innovation process a patent may be granted. We can no longer say that Europe has done away with the utility requirement; to a large extent they have just renamed it. This means that in principle Canadian courts and the Patent Office can look to UK and European law on industrial applicability for guidance in respect of questions of utility. The SCC, of course, has in recent years relied heavily on UK law in a number of important decisions. CIPO is also in the habit of looking to foreign law, particularly European law, for guidance in contexts where there is little Canadian case law. HGS v Lilly means that this course remains open in respect of utility.

With that said, at the intermediate level of the specifics of doctrine, there are very significant differences between European and Canadian law that mean the specific holdings of UK courts of the EPO Boards of Appeal may not be directly transferable to the Canadian context. In particular, Canadian law on how far upstream a patent may be granted has developed through the doctrine of sound prediction. European law has no such doctrine. While it came to us from the UK, it was abandoned there with the Patents Act, 1977 which implemented the European Patent Convention. Paradoxically, this arguably makes HGS more relevant than it might initially appear. In stating the principles applicable where a patent discloses a new protein and its encoding gene, the UKSC held that “[a] ‘plausible’ or ‘reasonably credible’ claimed use, or an ‘educated guess’, can suffice” to establish industrial applicability [107(viii)]. This may appear to set a different, perhaps lower, standard than the requirement of “sound” prediction that is established in Canadian law. However, the UKSC principles are not directed to a predicted use at all, as sound prediction is not a basis for demonstrating industrial applicability. The UKSC held that a “plausible” use is sufficient to establish what would in Canada be called a demonstrated use, not merely a sound prediction.

How Far Upstream May a Patent Be Granted?

Human Genome Sciences Inc v Eli Lilly & Co [2011] UKSC 51 rev’g [2010] EWCA Civ 33, aff’g [2008] EWHC 1903 (Pat)

Today the UKSC released an important decision on industrial applicability which raises in pure form the difficult question of how far upstream in the innovation process a patent should be granted.

The facts are quite simple. The patent disclosed and claimed the DNA sequence for Neutrokine-α, which was described, correctly, as being a member of the TNF family of cytokines. It was common general knowledge that all known members of the TNF family had in common certain biological activity related to immune and inflammation responses, so a skilled person would expect Neutrokine-α to have the same activity. Little else was disclosed or known about Neutrokine-α at the time of the application. The question is therefore whether the known activity of the TNF family was sufficient to satisfy the requirement of industrial applicability.