A Shift in Approach to the Promise of the Patent?

Mylan Pharmaceuticals ULC v. Pfizer Canada Inc. / donepezil (NOC) 2012 FCA 103 Mainville JA: Sharlow, Gauthier JJA aff’g 2011 FC 547 Hughes J (ARICEPT, Pat No 1,338,808)

I wrote Tuesday’s post on this decision in a bit of a hurry, as I heading to Ottawa for the Symposium on Utility Requirements: Converging and Diverging Approaches, and there are a couple of points that deserve more attention than I gave them. (The Syposium was a great success – the papers and presentations are available here.)

As I noted in Tuesday’s post, the FCA distinguished its decision in Pfizer / latanoprost 2011 FCA 236. That decision was very problematic because of its unprincipled approach to the construction of the promise of the patent. This point may deserve more emphasis than I gave it. There are a couple of paragraphs from Pfizer / donepezil worth quoting in full:

[56] The patent in Latanoprost claimed a “therapeutic composition for topical treatment of glaucoma or ocular hypertension, containing a prostaglandin…in an amount sufficient to reduce intraocular pressure without causing substantial ocular irritation…”: Latanoprost at para. 8 [emphasis added]. In this unique circumstance, where the patent appeared to be premised on avoiding the disadvantage associated with side effects, this Court construed the patent considered in Latanoprost as promising the avoidance of side effects. In contrast, claim 18 of the ‘808 Patent simply refers to a “ therapeutical composition for treating senile dementia…” without any further promise relating to side effects or toxicity. There is no relation between the ‘808 Patent and the patent reviewed in Latanoprost . The ‘808 Patent is rather akin to the patent reviewed by the Supreme Court of Canada in Wellcome.

To my mind, this is not a particularly convincing distinction, as it was an express object of the ‘808 patent, at issue in Pfizer / donepezil, to develop a drug “which has a persistent activity and a high safety” (disclosure p2, quoted 2011 FC 547 [232]. This and the “unique circumstance” language, suggests that the FCA in Pfizer / donepezil was not so much distinguishing Pfizer / latanoprost, as indicating it was wrongly decided, without saying so directly. Also, as Tony Creber pointed out to me when we spoke about this decision at yesterday’s symposium, it is interesting that the FCA is focusing on the language of the claim, since construction of the promise has typically focused on the description. While this passage certainly does not say that the description should be ignored in construing the promise, even a heightened role for the claim would mark a major shift in this doctrine. (Indeed, an exclusive focus on the claims might mark the end of the doctrine in many contexts; for example, no promise could be extracted from a claim to a compound per se. But we are still far from that point.)

Both of these points are reinforced by the next paragraph:

[57] Though some references are made in the ‘808 Patent to potential toxicity and efficacy benefits of donepezil, and to its potential advantages over prior art compounds, the application judge, on the basis of the expert evidence before him, rightly concluded that these references are not to be construed as promises. He noted that the use of the specification of a patent in order to construe its promise “is not to serve as an invitation to a zealous lawyer to read a patent specification in such a way as to persuade a Court, one way or the other, as to what the promise is”: Reasons at para. 213. As recently aptly noted by Zinn J. of the Federal Court, “the jurisprudence does not permit an unescorted and unchaperoned romp through the disclosure”: Janssen-Ortho Inc. v. Canada (Health) , 2010 FC 42, 82 C.P.R. (4th) 336 at paras. 119-120. The disclosure in the specification is to be understood from the viewpoint of a skilled person in the art or science to which the invention pertains, without resort to technicalities but rather for the purpose of seeking a construction of the claims which is reasonable and fair for both the patentee and the public: Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd. , [1981] 1 S.C.R. 504 at pp. 520-21.

This paragraph does not expressly change the law, but it is a clear signal that the FCA – or at least this particular panel – is aware of the problems of unpredictability caused by the ad hoc nature of the false promise doctrine. It could also be taken as a message to the Federal Court to be less aggressive in the using the doctrine to impose a heightened utility requirement on patentees.

It is too soon to be sure, but it may be that Pfizer / latanoprost marked the high water mark in the aggressive application of the false promise doctrine, and that Pfizer / donepezil will turn out to be a turning point. I wonder if the extreme nature of the FCA decision in Pfizer / latanoprost may have been a blessing in disguise for pharma patentees, as it may have alerted the FCA as a whole to the problems created by the false promise doctrine.

Pfizer / Latanoprost Distinguished on Interpreting the Promise of the Patent

Mylan Pharmaceuticals ULC v. Pfizer Canada Inc. / donepezil (NOC) 2012 FCA 103 Mainville JA: Sharlow, Gauthier JJA aff’g 2011 FC 547 Hughes J (ARICEPT, Pat No 1,338,808)

The FCA has affirmed the decision of Hughes J finding that Pfizer’s patent for ARICEPT (donepezil) is not invalid for lack of sound prediction. While the FCA decision does not change the law significantly, there are some interesting hints regarding the false promise doctrine. In particular, the FCA distinguished its own very problematic decision in Pfizer / latanoprost 2011 FCA 236.

A central issue in the case was the interpretation of the promise of the patent, which Hughes J had interpreted as promising a new class of compound, including donepezil, which is effective for the treatment of Alzheimer’s [FC 232]. Mylan, before Hughes J and on appeal, had argued that the patent promised that donepezil would have better toxicity and efficacy than prior art compounds [FCA 49]. The question was crucial because of the interplay with the requirement established in Lilly / raloxifene 2009 FCA 97 [15], that when utility is based on sound prediction, as it was in this case [FC 35], the factual basis for that prediction must be found in the patent itself [FC 226]. A more demanding promise would be less likely to be established by the evidence disclosed in the patent.

Hughes J accepted Pfizer’s interpretation of the promise, and held that a sound prediction of the promised utility had been established. Once Hughes J had determined the promise of the patent, the case turned mostly on the facts, and, as I noted in my post on Hughes J’s decision, and the most interesting aspect of Hughes J’s decision was his approach to the construction of the patent. The question is whether the promise of the patent is a question of fact, in the sense of that the promise is to be determined by expert evidence as to what the posita would understand the promise to be, or rather a question of mixed question of fact and law, in which legal arguments and principles are needed to supplement the expert evidence. As I noted in my earlier post, “Hughes J comes down firmly in the latter camp,” and in this decision the FCA has affirmed that Hughes J reached his conclusion as to the promise of the patent “by applying the correct test.” [FCA 52, approving FC 212-18]. Note that the FCA has reaffirmed that “[t]he promise of a patent is a question of law reviewable on appeal on a standard of correctness,” but the court went on to point out that “generally, the construction of the promise is an exercise that requires the assistance of expert evidence, as the promise should be properly defined, within the context of the patent as a whole, through the eyes of a person skilled in the art or science to which the invention” [FCA 48]. I suggest that given this caveat, it is more accurate to describe it as a mixed question of fact and law, though nothing turns on the label.

Perhaps of more interest, the FCA distinguished its decision in Pfizer / latanoprost 2011 FCA 236 as turning on its “unique circumstance” [56]. At one level this says nothing more than that the promise of a patent turns on its own particular facts; and indeed, perhaps nothing more should be read into this. But it could also be an indication that the FCA intends to pull back from the very aggressive interpretation of the promise of the patent that it indulged in Pfizer / latanoprost.

On an entirely distinct point, Mylan had also argued that Hughes J had erred in not considering certain errors in the specification. The FCA affirmed Hughes J, noting that “[t]he minor bona fide data reporting errors do not materially change the results reported in the patent, nor do they affect the inference which a person skilled in the art or science to which the invention pertains would reasonably draw from these reported results” [46].

Post-Final Action Prosecution: Belzberg Distinguished

CD1317 Balloon Catheter / Declath Systems (PAB & Comm'r of Patents)

In Belzberg 2009 FC 657 Simpson J held that “the defects identified in a final action are comprehensive rather than a mere selection” [43], or, as Hughes J put it in Bartley 2011 FC 873 (blogged here) “a ‘Final Action’ must be final” [71]. In both Belzberg and Bartley a Final Action report had been issued, a PAB hearing was convened and concluded that none of the defects identified in the report were substantiated. The Commissioner returned the application to the examiner for further prosecution, though without identifying any problems, after which the examiner issued a new report with new requisitions. In both cases the Federal Court held that this was improper, and the patent should be granted. In CD1317 Balloon Catheter / Declath Systems the applicant invoked Belzberg and Bartley to argue that the patent must be granted when the applicant had responded to all defects identified in the Final Action, even though in so doing new problems had been introduced. The PAB and Commissioner held, rightly in my view, that Belzberg and Bartley were distinguishable, and remanded for further prosecution.

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).

Is Requiring Security for Costs for Foreign Residents Contrary to TRIPS?

Fraser v. Janes Family Foods Ltd. 2012 FCA 99 Noël JA: Blais CJ; Gauthier JA

Prothonotary Aalto ordered that the plaintiff / appellants post security for costs on the basis, inter alia, that they were “ordinarily resident outside Canada,” which is a factor set out in Rule 416(1)(a). On appeal to the FCA, the appellants raised the argument that this Rule is contrary to NAFTA and TRIPS. The FCA held that it is doubtful whether the Rule is contrary to the national treatment provisions of those agreements, as Rule 416(1)(a) turns not on nationality, but on the distinct concept of residency [9]-[11], so that in some circumstances a Canadian national could be required to post security on the basis of this Rule. The appellants argued that even if that was formally true, the effect of the Rule in practice would be to subject foreign nationals to differential treatment [12]. The FCA did not resolve that argument, as it held that even if the Rule was contrary to NAFTA or TRIPS for this reason, those agreements do not directly have the force of law [15], and the Rule is sufficiently clear that it cannot be brought into line with those agreements (assuming there is any conflict), by interpreting it in the manner urged by the appellants [19].

While this resolves the point of law, it leaves open the possibility that this Rule is in conflict with TRIPS and NAFTA, and so might require amendment. My initial impression is that even if some amendment were required, it would not have a significant practical impact. The factors set out in Rule 416(1) all go to the question of whether the payment of costs is likely to be problematic if the plaintiffs are unsuccessful. A general discretionary rule requiring posting of security for costs in circumstances were payment was likely to be problematic, is surely legitimate and would pass muster under NAFTA and TRIPS, and yet it is just as likely to differentially affect foreign nationals. By analogy, one factor in determining whether a Mareva injunction should be granted is whether assets are likely to be removed from the jurisdiction in order to avoid satisfaction of a judgment. This is not a strict rule, as the impact of reciprocal enforcement of judgment legislation must be considered, but it is likely to differentially impact foreign litigants. However, it is substantively neutral. Put another way, to require that the court ignore the fact that judgments and costs orders may be more difficult to collect against foreign litigants would not artificially disadvantage foreign litigants, but artificially privilege them.

Article on Disclosure of Factual Basis of Sound Prediction

In a number of previous posts I have been critical of the doctrine that the factual basis for sound prediction must be disclosed in the patent itself, and I have finally managed to finish a good draft of an article on the topic. The abstract is below; the article is available for download from SSRN. This is still a draft, so feedback is welcome. (And I'll say now that I only picked up Vol 29(7) of the CIPR after finishing this draft, so it doesn't refer to any of the three(!) articles on sound prediction in that issue.)

Abstract
It has been accepted at least since the Supreme Court decision in Consolboard v MacMillam Bloedel that the evidence supporting utility need not be disclosed in the patent itself. However, in its 2009 decision in Lilly / raloxifene, the Federal Court of Appeal held that when utility is based on sound prediction, the supporting evidence must be disclosed in the specification. Since that time, the raloxifene doctrine has been determinative of invalidity in three important pharmaceutical cases, including, most recently, the blockbuster blood-thinner, PLAVIX. This article argues that the raloxifene doctrine is unsound. There is no basis in the text of the Patent Act, in legal principle, or in practice, for a distinction between demonstrated utility and utility based on sound prediction. The raloxifene doctrine is not supported by the case law; there is no leading case affirming the validity of a patent on the basis of sound prediction in which the factual basis for the sound prediction was disclosed in the patent. Neither US nor European law has any such requirement. The raloxifene doctrine is unsound in principle, as neither the disclosure requirement, nor the utility requirement, purposively understood, mandates disclosure of the evidence supporting utility. Introducing such a requirement engenders technical attacks on patents for valuable inventions, without providing any offsetting benefit to the public. In short, the raloxifene doctrine is an ill-advised departure from well-established legal principles which threatens to undermine the crucial incentives to innovation in the pharmaceutical industry that are provided by the international patent system. It should be abandoned at the earliest possible opportunity.

The “No Reach Back” Shoe is on the Other Foot – Sort of

Apotex Inc. v. Merck Frosst Canada Ltd. / lovastatin (NOC) 2011 FCA 364 Evans JA: Gauthier, Stratas JJA rev’g 2010 FC 1264 Snider J

This decision of the FCA is an important development, though not a final answer, in the debate over whether a generic which has succeeded in an NOC proceeding can get section 8 damages even if the patent is subsequently determined to be valid and infringed in an infringement action.

An initial question in this appeal was whether Apotex’s claim for compensation is governed by the 1993 NOC Regulations, or the 1998 Regulations. Under the transitional provisions, this turns on whether Merck’s application for prohibition was “pending” on the transitional date of March 11, 1998. On the transitional date the Federal Court had already dismissed Merck’s application for prohibition, and Merck had filed an appeal from this decision, but the appeal (which was ultimately dismissed for mootness) had not yet been decided. Snider J held that the 1993 Regulations applied. The FCA reversed Snider J on this point, essentially because she did not have the benefit of the FCA decision in Merck / norflaxin 2011 FCA 329 (blogged here). In an interesting point of statutory interpretation, the FCA held that an interpretation favouring the 1998 Regulations was to be preferred, as they were intended to, and did, clarify the 1993 Regulations [28]. In the result, the FCA stipulated a broad understanding of “pending.” The question is not whether the action is moot, but whether FCA still has jurisdiction to hear an appeal. The holding that the 1998 Regulations applies makes the Court’s conclusion on the substantive issue that much more important.

The question as to whether Apotex was entitled to section 8 damages arose because the stay expired without the application for the order of prohibition ever having been heard on the merits. Apotex argued that Merck had not been successful in the NOC proceedings. Merck, on the other hand, argued that it wasn’t unsuccessful, either. Snider J, interpreting the 1993 Regulations (blogged here), held that entitlement was triggered only when the Minister issued the NOC after expiry of the relevant patents; because the patent had not expired, Apotex was not entitled to damages. The FCA, interpreting the new Regulations, held that the only requirements for triggering section 8 are that the patentee’s application for prohibition is dismissed [34], and that the generic has suffered a loss by being kept out of the market as a result of the stay [35]. As both conditions were satisfied, Apotex was entitled to section 8 damages – with a major caveat.

On a broader level, the argument in favour of allowing the generic to claim damages in a case in which the patent was held invalid in the NOC proceedings, but valid in a subsequent infringement action, is the “no reach back” rule enunciated in Syntex / naproxen (NOC) 2010 FCA 155, which has since been affirmed a number of times (eg here and here). This principle says that NOC proceedings and an infringement action are independent. To be entitled to section 8 damages, the generic must succeed in the NOC proceeding itself; if it loses in the NOC proceeding, but subsequently prevails in the infringement action, the generic cannot reach back and apply the declaration of invalidity from the infringement action to gain entitlement to section 8 damages. Conversely, it would seem to follow that if the generic is successful in the NOC proceedings, but subsequently loses the infringement action, the patentee cannot reach back and apply the declaration of validity in the infringement action to deny the generic section 8 damages. While this result seemed to follow, it had not been tested, until now. Consistently with the no reach back rule, the FCA in this case held that Apotex could claim section 8 damages.

The difficulty with this logic, as Merck pointed out [33], is that the generic would be entitled to damages for having been kept out of a market which it had no right to enter. A holding in NOC proceedings that the patentee did not show the allegation of invalidity to be unjustified is not an in rem declaration of invalidity. If the patent is subsequently held to be valid in litigation, then it was always valid, including during the period when the generic entered the market after the NOC proceedings. This means that the generic had no right to enter the market, which we know with hindsight was protected by a valid patent; it is simply that the procedural mechanism of the NOC proceedings did not immediately vindicate the patentee’s right. In this case, Merck characterized this as a matter of ex turpi causa.

This leads to the major caveat on the generic’s entitlement to damages. The FCA reconciled these two conflicting principles by applying the no reach back rule in the liability question, and the ex turpi causa point in the damages phase. Apotex is entitled to section 8 damages, under the no reach back rule, but the quantum of damages might be reduced “or eliminated” [37] at the damages calculation as a result of ex turpi causa:

[38] The Court’s broad discretion under subsection 8(5) allows it, when considering arguments based on ex turpi causa, to have regard to the factual situation in its entirety, including its nuances. In the present case, one such nuance is that not all the tablets sold by Apotex were found in the infringement action to contain lovastatin made by the infringing process. A court is likely to find it easier to apply the ex turpi causa principle through an exercise of judicial discretion than through the definition of liability. Discretion enables the court to assess the appropriate amount of compensation payable (including nil) in a manner that properly takes account of all the relevant facts.

The Court did not decide whether Apotex was actually entitled to substantial damages on the facts, holding that this was a matter to be returned to the trial judge, including the crucial question of “the extent to which the ex turpi causa principle should be applied on these facts, if at all.” While the FCA is no doubt right to say that this is a matter which turns on issues of law and fact which should be determined by a trial judge, it also raises a crucial issue of principle on which the FCA has provided no guidance. The result is that this decision is an important step in the resolution of this question, but it is very far from being the final word.

Mayo v Prometheus

I've posted my initial reaction to the USSC decision in Mayo v Prometheus on IPKat, here.

Lovastatin Decision Affirmed on the Facts

Apotex Inc v Merck & Co Inc / lovastatin 2011 FCA 363, Gauthier JA: Evans, Stratas JJA aff’g 2010 FC 1265 Snider J

In a decision delivered last December, that has yet to be released on the FCA website, Gauthier J, writing for the court in what I believe is her first patent decision since being appointed to the FCA, has affirmed Snider J’s lovastatin decision in an appeal that essentially asked the FCA to reweigh the evidence. Leave to appeal to the SCC has been sought, but I would astonished if it were granted.

Legally, there are only two points of passing interest. First, Gauthier J’s opinion provides a brief but thorough discussion of the law related to the standard of appellate review. While this will not be a leading case in that it does not change the law, it will be a very useful reference decision on this issue.

Secondly, Snider J had interpreted s 55.1 (s 39(2) under the old Act), which provides that “In an action for infringement of a patent granted for a process for obtaining a new product, any product that is the same as the new product shall, in the absence of proof to the contrary, be considered to have been produced by the patented process,” as placing the persuasive burden of proving infringement on the patentee [FC 168- 184]. The FCA refused to endorse this interpretation, on the basis that the burden of proof was not determinative of the appeal, and Snider J did not have the benefit of full argument on the issue [9-10]. In my view, it is a wholly salutary principle that holdings of law are entitled to little weight if they are not essential to the case and are made without the benefit of full argument. Now, if only the SCC would take that principle to heart, and quit its bad habit of making new law in obiter on unargued points.

“Promise of the Patent” Is Unfamiliar to Experts

Wenzel Downhole Tools Ltd v National-Oilwell Canada Ltd 2011 FC 1323 Snider J

Given her conclusion that the patent was invalid for anticipation and obviousness, Snider J did not make any definitive finding with respect to utility. However, she did remark at [211] that

The first problem with the Defendants' arguments on this issue is that they have failed to clearly define the promise of the ‘630 Patent. Not one of the Defendants' experts provided their opinion on the promise until prompted during their oral testimony. Even then, the experts appeared to be unfamiliar with the term and unable to provide a comprehensible response.

In this passage Snider J is apparently somewhat critical of the defendant’s experts for failing to address the promise of the patent. To my mind, this actually highlights the artificiality of the concept. If a patent specification is supposed to be addressed to persons skilled in the art, and such persons have no idea what the “promise of the patent” means, then maybe this is a problem with the doctrine, and not with the experts. As another expert said of the promise of the patent: “It’s a strange word to me.”

“Obvious to Try” in the Mechanical Context

Wenzel Downhole Tools Ltd v National-Oilwell Canada Ltd 2011 FC 1323, 98 CPR(4th) 155, Snider J

While Snider J’s obviousness analysis in Wenzel is generally fairly routine, there are a couple of interesting points. One is that she invokes the “obvious to try” test in the context of a mechanical invention, saying “[a]n ‘obvious to try’ analysis is clearly warranted here” [197]. This is unusual, because the doctrine is usually thought to be relevant primarily "[i]n areas of endeavour where advances are often won by experimentation", such as chiral chemistry: Sanofi 2008 SCC 61, [68]. The obvious to try analysis addresses a situation where an approach is obvious to try, but success cannot be predicted without an actual trial: see here and here. It seems to be generally the case that in the mechanical arts, success prior to a trial is more predictable, and an obvious to try analysis is accordingly rare. And indeed, I’m not sure Wenzel is really an exception to that rule. While Snider J expressly invokes an “obvious to try” analysis, she makes no reference to the unpredictability of success prior to trial, or the difficulty of achieving success. It strikes me that the actual analysis in which Snider J concludes that the invention is obvious [198-204], would have been exactly the same even without invoking the “obvious to try” question. Her reference to “obvious to try” really only asks “was the invention more or less self-evident?” [197], which is much the same as simply asking “was the invention obvious?”

A second (unrelated) point, is relevant to the long-standing debate over whether the focus on the obviousness inquiry should be the inventive concept, or the claims as construed. While Windsurfing [1985] RPC 59 itself referred to identification of “the inventive concept embodied in the patent in suit,” Pozzoli [2007] EWCA Civ 588 [23] modified this step to “Identify the inventive concept of the claim in question or if that cannot readily be done, construe it.” Hughes J has suggested that it is wrong to focus on the inventive concept because “The claim or claims at issue, as construed by the Court is what are at issue. The "invention" as generally expressed in the patent or by the inventors is not the issue, it is the claim as properly construed” (Janssen-Ortho / levofloxacin 2006 FC 1234 [113.1]). Snider J herself has previously said that “it appears to me that the assessment must be focused on the "inventive concept of the claim in question" and not to some larger "invention" that might be described in the specification of the patent” (Sanofi-Aventis / ramipril, 2009 FC 676, [267]). In this case however, Snider J had no difficulty identifying the inventive concept of the patent generally: “The inventive step of the ‘630 Patent, in my view, was Bill Wenzel’s placement of one or more bi-directional thrust bearings into a single containment chamber with shoulders placed within the chamber such that the same bearings could handle both off-bottom and on-bottom loads during a drilling operation" [175]. Nothing in the case turned on the point, but it does illustrate that despite the arguments for focusing on the claim rather than the inventive concept, or at least focusing on the inventive concept of the particualr claim at issue, there are cases where the Windsurfing route of assessing the inventive concept of the patent as a whole, remains easy and convenient.

The Problem-Solution Approach in the Claim Construction Context

Wenzel Downhole Tools Ltd v National-Oilwell Canada Ltd 2011 FC 1323, 98 CPR(4th) 155, Snider J

I am a bit of a fan of the EPO problem-and-solution approach to obviousness, as I feel it is a structured method of defining the inventive concept, and while it is not formally part of Canadian law, there are many cases which invoke similar language in the obviousness context: see here. Snider J’s approach to claim construction in Wenzel is interesting, first because she expressly equates the essential elements of the claim with the inventive elements of the invention, and secondly because she in effect invokes the problem-and-solution approach as part of the claim construction process.

A New Three Part Test for the Disclosure Branch of Anticipation

Wenzel Downhole Tools Ltd v National-Oilwell Canada Ltd 2011 FC 1323, 98 CPR(4th) 155, Snider J

The patent in issue (‘630) in Wenzel Downhole Tools concerned a bearing assembly for use in downhole drilling motors in oil and gas wells. Snider J held that the patent was invalid on the basis of both anticipation and obviousness. Her decision ultimately turned on the facts, but it raises a number of interesting points of law.  

The most striking development concerned the test for anticipation. Snider J began her anticipation analysis by citing the two part analysis set out in Sanofi 2008 SCC 61, which asks (1) was there disclosure to the public; and (2) was that disclosure enabling? [82]. She then summarized the law by stating a new three part test for the disclosure branch:

[94] The first branch of the test is disclosure. The question of disclosure raises three distinct sub-issues:

1. Does the prior art contain the subject matter defined by the ‘630 claims?

2. Was the prior art disclosed before the ‘630 Patent claim date?

3. Was the disclosure of the subject matter of the ‘630 Patent available to the public?

[95] Only if the answer to all of these questions is affirmative, will the Defendants be able to establish the first branch of the test set out in Sanofi-Synthelabo, above.

This does not change the law, but it is helpful in clarifying the distinct issues which must be addressed.

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?”