Ramipril Costs

Sanofi-Aventis / ramipril (Costs) 2012 FCA 265 Sharlow JA: Dawson, Trudel JJA

In this brief decision from the bench, the FCA dismissed nine appeals and four cross-appeals, relating primarily to Snider J’s costs awards in ramipril litigation between Sanofi-Aventis and Apotex and Teva, 2009 FC 1138 (Apotex) and 2009 FC 1139 (Teva / Novopharm). The appeals were dismissed on the basis that the costs awards were “well within the discretion of Justice Snider” [4]. Consequently, the neither the FCA decision nor the decision of Snider J establish a strong precedent on costs matters. Nonetheless, a several points from Snider J’s decisions are worth noting.

Scale of Costs

First, with respect to the scale of costs

In my view, the upper end of Column IV is appropriate, and not simply because this award "splits the difference". A review of recent jurisprudence on the issue of awards in intellectual property trials indicates that this scale recognizes the significance and complexity of the various issues in such a trial. [2009 FC 1138 ¶ 14, 2009 FC 1139 ¶ 13]

This is consistent with costs in Eurocopter v Bell, and higher than the scale used by Zinn J in the fenobibrate costs decision.

Offer to Settle

In the Teva / Novopharm case Snider J took into account an offer to settle that did not satisfy Rule 420 (emphasis added):

[22] Sanofi argues that Novopharm has not provided sufficient evidence to support a Rule 420 finding and, in any event, the settlement offers would not meet the criteria of Rule 420. I agree. However, I am also sympathetic to Novopharm's situation. It appears that, even if these offers were not formal or substantive enough to satisfy Rule 420, there is no doubt that they were made in a good faith effort to end the litigation. Further, while Sanofi now explains why the offers could not have been accepted, I see no evidence that Sanofi ever tried to make responding offers. In November 2008, Novopharm went so far as to draw up draft terms of settlement, to which there appears to have been no response. Even on the little evidence before me, I am satisfied that Novopharm made very serious efforts to settle the litigation both prior to and during the trial. Sanofi's attitude throughout, and its defensive, after-the-fact justification for its failure to properly consider the offers are simply not helpful. In the circumstances, while recognizing that the offers do not satisfy Rule 420, I am convinced that the settlement offers by Novopharm should result in an increase in the overall award of 50%.

In the Apotex case Snider J similarly took into account an offer to settle by Apotex , but increased the overall award by only 20% because the offer to settle was vague [22].

Bifurcation

In both cases over half the trial days related to remedies, which, with hindsight, turned out to be wasted as the patent was held to be invalid. Sanofi had brought a motion to bifurcate which had been resisted by both Apotex and Novopharm. Snider J ordered a 10% reduction in the overall award of costs to reflect Apotex and Novopharm’s responsibility for the unnecessary remedies phase. However, Snider J noted that in both cases resisting bifurcation was not initially unreasonable because there was a good faith belief that the remedies phase would be relatively brief.

As the reality became clear, the Plaintiffs could have brought a further motion or a motion for reconsideration. That did not happen. Further, Sanofi contributed to the length of this phase of the trial by not making an election between damages and profits until the commencement of the presentation of oral arguments.

Thus in different circumstances the discount for resisting bifurcation might have been greater.

Mere Verification and Anticipation

AstraZeneca Canada Inc v Pharmascience Inc / esomeprazole (NOC) 2012 FC 1189 O’Keefe J

            2,290,531 NEXIUM

As noted in my first post on this decision, here, the patent at issue claims an enteric coated pharmaceutical formulation of omeprazole using hydroxypropyl methylcellulose (HPMC) with a specified cloud point (CP) as a separating layer between the enteric coating and the active ingredient. The patent asserts that it has surprisingly been found that there is batch variation in the CP of HPMC which affects the rate of release of omeprazole. Pharmascience argued that the patent in question was not an invention on the basis that it merely ascertained the properties of a known substance [173ff]. O’Keefe J dismissed this argument, I believe correctly. However, I do have one concern.

O’Keefe J described the issue as “Is the ‘531 Patent not an invention as defined in section 2 of the Patent Act because it merely ascertains the properties of a known substance?” [92]. I suggest that this is not the best characterization of this issue. In some sense it is true that an invention that does not meet the requirements of patentability as set out in the Act is not an “invention” as that term is used in the Act, but now it is more usual to associate a particular attack with a particular established doctrine and its corresponding section. That is, we no longer say that an obvious invention “lacks subject-matter,” but rather that it is invalid for obviousness under s 28.3. Section 2 is associated with the attack that the invention is not patentable subject matter, as being, for example, a higher life form. I suggest that the argument that the invention merely ascertains the properties of a known substance is more properly considered an attack based on anticipation: see eg see King Pharmaceuticals, Inc v Eon Labs, Inc, 616 F3d 1267 (Fed Cir 2010), cited with approval on this point in Janssen Inc v Mylan Pharmaceuticals ULC / galantamine (NOC), 2010 FC 1123 at [54], treating this issue as being one of anticipation.

Double Ramp-Up in NOC Section 8 Damages

Apotex Inc v Merck Canada Inc / alendronate (NOC) 2012 FC 1235 Hughes J

Under s 8 of the NOC Regulations, if a patentee is unsuccessful in NOC proceedings, a generic which has been kept out of the market by the statutory stay is entitled to damages. While a number of cases have addressed preliminary questions regarding section 8, this is only the third decision quantifying those damages, after the ramipril companion cases decided by Snider J in Teva v Sanofi-Aventis / ramipril 2012 FC 552 and Apotex Inc v Sanofi-Aventis / ramipril 2012 FC 553 (Blogged here, here and here). Hughes J adopted (at [10]), the same approach used by Snider J in the ramipril cases, which compares the “but for” world which would have been if the generic had not been prohibited from entry by the statutory stay, with the real world, with one important caveat. In Merck Frosst Canada Ltd v Apotex Inc / alendronate (NOC) 2009 FCA 187 var’g 2008 FC 1185 the FCA held that the generic is entitled only to losses incurred during the statutory period. Apotex had argued that it was entitled to compensation for loss of permanent market share - springboard damages - but the FCA held that losses incurred after the statutory period are not compensable even if they were caused by the statutory stay.

In many respects the quantification exercise was remarkably straightforward. Hughes J provided a clear and logical structure of issues to be addressed such as the relevant period, the overall market size, generic share and so on [10]. He also identified four key factual determinations relating to when a generic would have entered the marketplace, such as when the generic would have had manufacturing capacity [44]. The parties agreed on many key factual issues, both at a broad level (for example, they agreed that “the [generics'] share in the ‘but for’ world, is the same as the share occupied by the generics in the subsequent ‘real world’ period” [42]) and at a more detailed level (agreement that the generic price would generally be set at 70% of brand price with only one generic in the market, and 63% with multiple generics [75-77]). There were of course a few factual disputes resolved by Hughes J, but on the whole this decision gives some reason for hope that quantification of s 8 damages may not always be a difficult exercise once the basic legal principles are clarified.

There was one contentious point of legal principle, related to the issue of “double ramp-up” [81-87]. “When an organization introduces a new drug product into the marketplace, there is an initial period during which the product has to be made or acquired, orders received from customers, and the product is to be shipped to customers” [81]. This is the ramp-up. The difference between the profits during the ramp-up period and the profits during the same time in the steady state is the “ramp-up loss.” The experts for the parties agreed that to determine Apotex’s profits in the “but for” world, this ramp-up loss must be taken into account, so that Apotex’s profits would be somewhat lower than if it had been able to sell at full capacity for the entire period [82]. The experts for the parties also agreed that as a matter of accounting practice and causation, Apotex should not suffer a double ramp-up loss [82]. Apotex actually suffered a ramp-up loss in the real world, and if a ramp-up loss is also deducted in constructing the “but for” world, then Apotex will face a double ramp-up loss, even though in either the real world or the "but for" world, the loss would have been suffered only once, albeit at different times. 

However, as noted above, the FCA has held that losses incurred outside the statutory period are not compensable, even if they were caused by the stay. Consequently, in Apotex Inc v Sanofi-Aventis / ramipril 2012 FC 553 [265-270] Snider J refused to allow Apotex to deduct the ramp-up loss that occurred in the real world, holding that this was precluded by the FCA decision. Hughes J disagreed with Snider J on this point:

[86] I am not satisfied, particularly given the common view of the accounting experts that, normally, compensation would be made to prevent a double ramp-up loss, that the Court of Appeal had this situation in mind.

Nonetheless, citing “the interests of comity and in the expectation of an inevitable appeal” he followed Snider J and he refused to allow compensation for the double ramp-up.

I expect that Hughes J is right to say that the FCA did not have this situation in mind, although Snider J’s holding that the principle enunciated by the FCA nonetheless covers the ramp-up issue has considerable force. It would have been instructive, and no doubt helpful for the FCA, to have had Hughes J’s analysis of the issue. I am not sure that the principle of comity required him to follow Snider J. The functional justification for following prior decisions of the same level of court is that once enough cases have consistently addressed a point of law it should be considered settled; legal certainty should not require an appellate decision. But a novel point of law should not be considered settled by a single decision. It would be perverse if the first judge to address a legal point decided one way, and five subsequent judges all disagreed, but nonetheless followed the first judge, simply because he was first.

On the whole, this decision suggests that many of the factual points arising from s 8 litigation may be relatively easy to settle, but the legal points will be settled narrowly and so will require many trips to the FCA.

Direct Evidence of Lack of Utility Is Useful

AstraZeneca Canada Inc v Pharmascience Inc / esomeprazole (NOC) 2012 FC 1189 O’Keefe J

            2,290,531 NEXIUM

This decision turned entirely on the evidence regarding utility, and no new points of law appear to be raised. The patent at issue claims an enteric coated pharmaceutical formulation of omeprazole using hydroxypropyl methylcellulose (HPMC) with a specified cloud point (CP) as a separating layer between the enteric coating and the active ingredient. The patent asserts that it has “surprisingly” been found that the CP of HPMC affects the rate of release of omeprazole. Pharmascience’s evidence was that not only was this surprising, it was incredible and false. The expert evidence for Pharmascience was to the effect that the HPMC was merely a separating layer and “could not function to control the rate of drug release” [40].

The case therefore turned primarily on the evidence on the issue of utility. O’Keefe J held that Pharmascience had met its evidentiary burden and put this allegation into play, and the burden therefore lay with AstraZeneca to show on the balance of probabilities that the patented invention was useful [172]. On the facts, O’Keefe J held that the experiments disclosed in the patent were sufficient to carry this burden [191]. Ultimately, Pharmascience’s case failed because AstraZeneca provided direct evidence that the invention worked as claimed, while Pharmascience did not provide any direct evidence to the contrary. There was considerable evidence from Pharmascience’s experts that it was very unlikely that the CP should affect the rate of drug release, but that only goes to show how surprising it is if the patent’s claim is true. Pharmascience did not provide evidence of direct tests of rate of release of formulations with the different CPs, as disclosed in the patent [193]. In the absence of evidence that the invention actually did not work, as opposed to evidence that it was unlikely to work, the patentee’s evidence that it did work carried the day.

Pharmascience also argued that the patent in question was not an invention on the basis that it merely ascertained the properties of a known substance [173ff]. O’Keefe J dismissed this argument. The patent did not merely measure the CP, but also disclosed how to use that knowledge to manufacture a superior product [176]. (Selecting HPMC with the disclosed CP would reduce product discard [97].)

On the fact O’Keefe J held that disclosure was adequate. This was purely a matter of the skilled person’s understanding of the disclosure, and no novel points of law were raised.

Finally, O’Keefe J dismissed Pharmascience’s argument that the invention was obvious. This follows directly from his holding on the evidence that the CP does affect rate of release, as Pharamscience’s own evidence established how surprising this was.

What Is a “Formulation”?

Gilead Sciences Canada, Inc v Canada (Minister of Health) / COMPLERA 2012 FCA 254 Trudel JA: Sharlow, Mainville JJA, aff’g 2012 FC 2 Mosley J (blogged here)

            2,512,475

A question left aside in last week’s week post on this decision was whether the patent in question claimed a medicinal ingredient, and so would be eligible for listing under NOC Reg s 4(2)(a), or a formulation, eligible under 4(2)(b).

The ‘475 patent at issue includes a claim to two medicinal ingredients, tenofovir and emtricitabine, in combination with a third medicinal ingredient from the class of non-nucleoside reverse transcriptase inhibitors [claim 34; FC 24]. A “claim for the formulation” is defined (emphasis added) under the NOC Regs s 2 as

"claim for the formulation" means a claim for a substance that is a mixture of medicinal and non-medicinal ingredients in a drug and that is administered to a patient in a particular dosage form;

As the FCA emphasized, this definition requires that a formulation contain non-medicinal ingredient [27]. The relevant claims do not. Consequently, the FCA held that the eligibility of this claim turned on para 4(2)(a), not (b)[32].

This is a straightforward conclusion on the text of the provision. Why then did the Minister argue, in a point accepted by Mosley J, that the listing should be considered under 4(2)(b) [FC 37]? I think the key to the argument is captured in a statement by Russel J in Bayer Inc v Canada (Minister of Health), 2009 FC 1171 [80], aff’d 2010 FCA 161, quoted by Mosley J at [FC 41]:

The essence of a compound patent is the medicinal ingredient; the essence of a formulation patent is the mixture of ingredients.

In this case, the inventive concept was the discovery that tenofovir and emtricitabine are chemically stable when combined with a third anti-viral of the claimed class [FC 25]. The essence of the invention was the mixture of ingredients, not the discovery of any new medicine. Thus a purposive perspective suggests that the Minister and Mosley J were correct in their interpretation. But text, context and purpose must all be read together, and “[w]hen the words of a provision are precise and unequivocal, the ordinary meaning of the words play a dominant role in the interpretive process” Canada Trustco 2005 SCC 54 [10]. In this case, my view is that the text was sufficiently unequivocal that it should dominate, so that the FCA was correct in its interpretation. However, this case does illustrate a shortcoming in the drafting of 4(2)(b), in that the text is inconsistent with the apparent purpose. In this case no harm was done, as the FCA held that the claim was eligible under 4(2)(a). This implies that a mixture of medicinal ingredients is eligible under 4(2)(a) even when the mixture is desirable for reasons of formulation, and not because of a new medicinal effect. That conclusion is perhaps problematic from a purposive perspective, but it does solve the problem of this type of claim falling between the cracks of 4(2)(a) and (b).

Remand on Infringement Includes Factual Findings

Corlac Inc v Weatherford Canada Ltd 2012 FCA 261 Dawson JA: Nadon, Stratas JJA remanding 2012 FC 76 Phelan J

This decision is a second attempt by the FCA to have Phelan J clarify his reasoning on one issue in the Corlac v Weatherford litigation. The patent at issue relates to a seal assembly for use in oil well pumps. In Weatherford v Corlac 2010 FC 602, Phelan J held claims to the assembly itself to be infringed by Corlac, which sold seal assemblies. Claim 17 was to a method of detecting and restraining oil leaks using that assembly. While Corlac did not practice the infringing method, Corlac sold the assemblies with instruction manuals which, according to Weatherford’s expert, taught the practice described in claim 17 [175]. Phelan J held claim 17 to be infringed, but his reasoning on this point was brief and not entirely clear: see [199]. On appeal, 2011 FCA 228, a decision known primarily for its treatment of fraud on the patent office, the FCA affirmed Phelan J except in relation to claim 17. The FCA held that “the judge's reasons do not provide for meaningful appellate review” and consequently, “I would return the issue of infringement of claim 17, that is inducement, to the judge to be determined in accordance with the established test” [171, emphasis added].

On remand, in 2012 FC 76, (see here) Phelan J addressed each of the legal elements of the three-part test for inducement. However, Phelan J did not revisit a crucial factual issue, holding that it was rea judicata [6]. On appeal of that decision, in 2012 FCA 261, the FCA held that it had remanded the entire "issue of infringement of claim 17" to Phelan J, and "the issue" includes the factual issue. The FCA also pointed out that in his original reasons, Phelan J had never explicitly accepted the evidence of Weatherford’s expert: “At best, such a finding is implicit in the Judge’s finding of infringement” [36]. The FCA also pointed out that in its original decision it had never accepted this implicit factual finding; it merely pointed out how Phelan J had determined the point [33].

The FCA’s reasoning is logical. With that said, I understand why Phelan J did not address the factual issue in his original decision. While the FCA did explicitly remand “the issue of infringement," the FCA focused primarily on the legal test, and, as the FCA pointed out, the factual finding was implicit in Phelan J’s original decision. And since that factual finding was indeed implicit in his original determination, it would be surprising if his determination were to change now that he will be required to make it explicitly.

What Are Normal Costs in Hard Fought Litigation?

Fournier Pharma Inc v Sandoz Canada Inc / fenofibrate (Costs) 2012 FC 1121 Zinn J

A point of general interest in Zinn J’s costs decision from the fenofibrate litigation (blogged here and here) is his remark at [6] (emphasis added) that

Typically costs are assessed at the mid-point of Column III of the Tariff; however, numerous judgments of this Court have assessed costs in pharmaceutical litigation at higher levels. Given the complexity of this litigation, I find that the costs are to be assessed at the higher end of Column III.

Contrast this will Martineau J’s statement in his costs decision in Eurocopter v Bell at [22] that “an assessment of costs in accordance with the higher unit of column IV seem to be commonly maintained in [] lengthy and hard-fought patent litigations” (emphasis added). Eurocopter was an infringement action while the fenofibrate case was an NOC proceeding, but this does not seem to be a distinguishing factor, as Zinn J referred simply to “pharmaceutical litigation.”

Extreme Application of Product Specificity Requirement Affirmed

Gilead Sciences Canada, Inc v Canada (Minister of Health) / COMPLERA 2012 FCA 254 Trudel JA: Sharlow, Mainville JJA, aff’g 2012 FC 2 Mosley J (blogged here)

In this decision the FCA has affirmed a very strict application of the already strict product specificity requirement for listing a patent against a drug on the Patent Register that it set out in Purdue Pharma / TARGIN 2011 FCA 132 (blogged here). In my view, the requirement as set out by the FCA is overly strict and is not consistent with a purposive interpretation of the relevant provisions of the NOC Regulations.

Is the Test for Inducement “Strict”?

Weatherford Canada Ltd. v. Corlac Inc. 2012 FC 76 Phelan J (on remand from 2011 FCA 228)

The patent at issue relates to a seal assembly for use in oil well pumps. In Weatherford Canada Ltd. v. Corlac Inc. 2010 FC 602 varied 2011 FCA 228, Phelan J held a number of claims to be valid and infringed by Corlac. All of the claims in issue except one, claim 17, were to the assembly itself. Claim 17 was a claim to a method of detecting and restraining oil leaks using that assembly. On appeal, the FCA affirmed Phelan J except in relation to claim 17. The FCA at [162] re-affirmed the accepted three-part test for inducement:

            First, the act of infringement must have been completed by the direct infringer.

Second, the completion of the acts of infringement must be influenced by the acts of the alleged inducer to the point that, without the influence, direct infringement would not take place.

Third, the influence must knowingly be exercised by the inducer, that is, the inducer knows that this influence will result in the completion of the act of infringement

Layden-Stevenson JA, for the court, held that Phelan J had not explicitly applied this test, and “[i]n view of the stringent test for inducement, I cannot determine whether the judge, had he explicitly applied the test, would have arrived at a conclusion that the appellants indirectly infringed claim 17" [168]. The FCA therefore remanded the case to Phelan J for re-determination in accordance with the accepted test [171].

Perhaps the most interesting part of Phelan J’s decision concerns the standard of proof. Part of Corlac's complaint on appeal was that there was no direct evidence of direct infringement by end-users. Though the FCA did not accept that such evidence was necessary, it did hold that “[t]here seem to be significant gaps in the evidentiary basis needed to support what appears to be an implicit finding of third party use” [169]. Thus the standard of proof was a significant issue. Further, as Phelan J noted at [10], the FCA variously described the test as a “difficult one to meet”, “a stringent test”, and a “strict” test. But, as Phelan J pointed out at [11], “[t]he Supreme Court has confirmed that there are only two evidentiary standards – ‘balance of probabilities’ and ‘beyond reasonable doubt’ (see F.H. v McDougall, 2008 SCC 53),” and the civil standard is proof on the balance of probabilities, or “more likely than not.”

Having established that the standard of proof is the balance of probabilities, Phelan J then reviewed the evidence, explicitly applied the three-prong test for inducement and held, on that standard, that it had been satisfied, in effect because Corlac has sold the assembly with instructions directing the end-users to use it in an infringing manner. Phelan J was willing to accept, on the evidence that customers were likely to use the assembly according to the instructions and that Corlac would have intended that they do so. Consequently, Corlac was held liable for inducing the infringement of claim 17 [24].

So what does it mean to say that a particular test is “stringent”? As Phelan J noted, it cannot mean any change in the standard of proof. It strikes me that in saying the test was “stringent” or “strict” the FCA may simply have been saying that all three prongs must be met. In saying the test is a difficult one to meet, the FCA may have meant that because the three separate prongs must all be met, it will be generally be difficult for a patentee to establish inducement, even on the balance of probabilities. That is, these remarks were meant as an observation, rather than a proposition of law. But I am not sure it is right to say that the test is particularly difficult to satisfy in practice: as Mandamin J noted in Glaston v Horizon Glass 2010 FC 1191, in a number of cases “[i]nducement has . . . been found where a seller provides a purchaser with instructions or directions for using an infringing method” [89]. This decision adds to that list.

Infringement if Later ≠ Anticipation if Earlier

Bristol-Myers Squibb Co. v. Mylan / efavirenz (NOC) 2012 FC 1142 Barnes J

            2,101,572 – 2,279,198 – efavirenz – SUSTIVA

The traditional rule is that “what would infringe if later, anticipates if earlier”: Abbott Labs v Ratiopharm / clarithromycin (NOC) 2006 FCA 187 [25]; Lightning Fastener Co. v. Colonial Fastener Co., [1933] SCR 377 at 381. This is no longer true, since Sanofi 2008 SCC 61, following Synthon [2005] UKHL 59, held that anticipation requires enabling disclosure. This adage applies only to the disclosure prong of anticipation: Synthon [24]. If the prior use did not disclose the information necessary to enable the invention, it will not anticipate. It will still infringe if practiced later, since infringement does not require knowledge: Merrell Dow v HN Norton [1995] UKHL 14 [47]; Abbott / clarithromycin (NOC) [24]. The consequences is that if the prior use was not enabling, a later patent could confer a right to stop people from doing what they had done before. This is strikingly counter-intuitive: “Ever since the power of the Crown to grant monopolies was curbed by parliament and the courts at the beginning of the seventeenth century, it has been a fundamental principle of United Kingdom patent law that the Crown could not grant a patent which would enable the patentee to stop another trader from doing what he had done before”: Merrell Dow v HN Norton [17]. Nonetheless, that is the direct implication of the rule that anticipation requires enabling disclosure. So far the leading cases Canadian and UK cases have avoided this result on the facts, as in Merrell Dow, but this is not a satisfactory response. (US law has addressed the problem directly with the doctrine of inherent anticipation: “a prior art reference may anticipate without disclosing a feature of the claimed invention if that missing characteristic is necessarily present, or inherent, in the single anticipating reference”Schering Corp v Geneva Pharmaceuticals 339 F.3d 1373, 1377 (Fed Cir 2003).) The problem will arise one day in a context in which it cannot be avoided, and the courts will face a choice between preventing a person from doing what she has been done before, and adhering strictly to the requirement of enabling disclosure.

Use Claims and Choice in Construction of the Promise

Bristol-Myers Squibb Co v Mylan / efavirenz (NOC) 2012 FC 1142 Barnes J

            2,101,572 – 2,279,198 – efavirenz – SUSTIVA

Efavirenz is an anti-retroviral drug used to treat HIV infection, typically in combination with other anti-retroviral agents. Two patents related to efavirenz were at issue in this case: the ‘572 patent, expiring in July 2013,which claimed efavirenz; and the ‘198 patent, expiring in 2018, which claims a particular crystalline form of efavirenz (Form I) and a process for producing it. BMS was successful in obtaining an order of prohibition in respect of the ‘572 patent, but not in respect of the ‘198 patent. This post will focus on the ‘572 patent. The interesting question of how to construe the promise of the patent in the context of a use claim, where the utility is specified in the patent itself, was raised but avoided. The most interesting statement in the decision hints in dicta at a return to the older view that “. . it is sufficient utility to support a patent that the invention . . . affords the public a useful choice.”

Issues for the SCC in Olanzapine Decision?

Eli Lilly Canada Inc v Novopharm Ltd / olanzapine (No 2) 2012 FCA 232 Nadon JA: Sharlow, Trudel JJA aff’g 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 and that O’Reilly J’s finding of invalidity was fatally tainted by this error: 2010 FCA 197. The FCA held that the patent was neither anticipated nor obvious, nor was it invalid for double patenting, but it remanded the case to O’Reilly J on the issues of utility and sufficiency. On remand in Lilly v Novopharm / olanzapine (No 2) 2011 FC 1288, O'Reilly J held that the disclosure was sufficient, but the patent was invalid for lack of utility. In a brief decision from the bench the FCA has affirmed this decision: “we have not been persuaded that the judgment under appeal is based on any error of law or principle or any palpable and overriding error of fact” [1].

This brevity of this FCA decision is both unfortunate and understandable. It is unfortunate because O’Reilly J’s decision directly raises two important issues of pharmaceutical patent law. It is understandable because the legal issues are relatively settled at the FCA level.

The first issue relates to the promise of the patent doctrine, which holds that “where the specification sets out an explicit ‘promise’, utility will be measured against that promise” Lilly v Novopharm / olanzapine (No 1) 2010 FCA 197 [76]. If the promised utility is greater than that which is necessary to support a patent, utility will be measured against that promise, with the result that a patent for an invention which has sufficient utility to support a patent may nonetheless be invalid for lack of utility. This appears to be exactly the what happened in this case, as explained in this post on O’Reilly J’s decision. Nonetheless, this doctrine is now firmly established in the Federal Court jurisprudence: in Lilly v Novopharm / olanzapine (No 1) the FCA went so far as to say that “[t]he promise of the patent is fundamental to the utility analysis” 2010 FCA 197 [93]. The real battleground now is how exactly to construe the promise of the patent in a given case. In Lilly v Novopharm / olanzapine (No 1) the FCA gave a very strong hint to O’Reilly J as to how it thought that the promise should be construed and on remand he took the hint and construed the patent as suggested by the FCA. It is therefore not surprising that the FCA should be unwilling to review either the doctrine or the construction of the promise in this case.

From this it seems clear that the promise of the patent doctrine is here to stay, at least until it gets taken to the SCC. In my view, the doctrine is fundamentally unsound, and the SCC should grant leave sooner rather than later. After often being critical of the doctrine in this blog, I decided to explore the issue in a full article, which I am just finalizing. In that article I show that the doctrine was originally premised on the fact that the grant of a patent was a discretionary exercise of the Crown prerogative, so the mere fact that an invention had sufficient utility to support a patent did not guarantee that the Crown would actually choose to grant a patent. In measuring utility by the promise of the patent, the courts were refusing to second guess the Crown as to whether the patent should have been granted. Now that the grant of a patent has shifted from a matter of discretion to a statutory right, the basis for the doctrine no longer exists. Indeed the doctrine is inconsistent with the fac that the Commissioner of Patents has “nodiscretion to refuse a patent . . . if the statutory criteria are met” Harvard Mouse 2002 SCC 76 [11] (Binnie J), dissenting), [119] accord (Bastarache J). I will be on a panel “Current Issues in Construction of a Patent,” at the upcoming IPIC AGM which will discuss this doctrine, and I expect to have a draft of my article available before then.

O’Relly J’s decision in Lilly v Novopharm / olanzapine (No 2) also raises a second important issue related to selection patents. The IG Farbenindustrie rules for selection patents which were adopted by the SCC in Sanofi 2008 SCC 61 as being “well accepted” [11] have since been repudiated by the EWCA as being unsound in principle. In Dr Reddy’s Laboratories v Eli Lilly / olanzapine [2009] EWCA Civ 1362, [2010] RPC 9 [39] Jacob LJ noted that

If one thinks about [the IG rules] it is difficult to see how, realistically, they could be complied with unless the patentee carried out an enormous range of experiments. How can you show your class (or compound) has a “substantial advantage” over the prior class without experimenting with at least quite a lot of the class – enough to make a sound prediction at the very least? Or how can you show that the quality which makes your selected class is peculiar to that class? If you put in your thumb and pull out a plum, how are you to say that there are no other plums in the pudding?

As I noted in a previous post on the FC decision, O’Reilly J invalidated the olanzapine patent exactly for failure to conduct enough experiments to show that olanzapine had a substantial advantage over the prior class. That is, his decision turned on precisely an application of the test which caused the EWCA to reject the IG Farbenindustrie rules as unsound. Nonetheless, in light of the four-year old decision inSanofi approving those rules, it is understandable that the FCA would not choose to revisit them. Again, it seems that if the doctrine is to be addressed, it will have to be done by the SCC.

No New Cases for Week of 9 September

No new cases were posted on the Federal Courts' website for the week of 9 September.

No New Cases for Week of 2 September

No new patent / NOC / data protection cases were posted on the Federal Courts' website for the week of 2 September.

No New Cases for Week of 26 August

No new patent / NOC / data protection cases were posted on the Federal Courts' website for the week of 26 August.

No New Cases for Week of 19 August

No new patent / NOC / data protection cases were posted on the Federal Courts' website for the week of 19 August.

Costs in Eurocopter v Bell

The only patent case posted for the week of 12 August was the costs decision in Eurocopter v Bell 2012 FC 842. While I won’t comment in detail, Martineau J’s decision was interesting in several respects. He indicated at [22] that the costs award in a “lengthy and hard-fought” patent case should normally be assessed at the upper end of column IV of Tariff B. His discussion of what constitutes success and how to assess costs in when success is divided was also interesting. Eurocopter was successful in respect of the Legacy landing gear, of which only a small number were made by Bell, but Bell was successful in respect of the Production landing gear, which, as the name reflects, was put into production. Martineau J concluded that overall, Eurocopter was the most successful party, but while he assessed Eurocopter’s costs at the upper end of column IV, he reduced the costs award by 50% to reflect “Bell’s indisputable partial success in defending its Production gear and Eurocopter’s choice to pursue an action against the Production gear in which it was ultimately unsuccessful” [23].

No New Cases for the Week of 5 August

No new patent / NOC / data protection cases were posted on the Federal Courts' website for the week of 5 August.

Speculative Prejudice to Third Parties in Reinstating a Patent

Repligen Corporation v. Canada (Attorney General) 2012 FC 931 Near J

Repligen’s former patent agent transposed two digits of Repligen’s patent 1,341,486, to 1,314,486, when it engaged Computer Patent Annuities to pay maintenance fees on the patent. Consequently, the fees were paid against the “14" patent, which was held by Rolls-Royce. Sometimes the fees would be paid first on behalf of Rolls-Royce, sometimes on behalf of Repligen. The second payor would to be told that fees had already been paid and would request a refund. While duplicate fees were paid on the "14" patent, no fees were paid on Repligen’s “41" patent and CIPO sent a Maintenance Fee Notice to Repligen’s former agent advising that the patent would lapse unless payment was made within twelve months. Repligen’s former agent did not respond [5], and the “41" patent lapsed.

Repligen then switched agents. Its new agent attempted to have the patent reinstated, arguing that the Commission should exercise her discretion to correct the clerical error under s 8 of the Act and reinstate the patent. The Commissioner refused, primarily on the basis of the lengthy delay and the potential for prejudice to third parties who might have relied on the register showing the patent as lapsed [#1 59].

In Repligen #1 2010 FC 1288 Lemieux J held that the Commissioner had not properly exercised her discretion. A crucial point was that the Commissioner’s concern regarding prejudice to third parties was speculative as she had no evidence of third party prejudice. Lemieux J contrasted this with Bristol-Meyers (1998), 82 C.P.R. (3d) 192 (FCA) in which two other companies had filed priority claims for similar drugs [#1 60(f)]. Lemieux J noted the “catastrophic consequences” of the loss of patent rights [#1 59], and insisted that the Commissioner take into account the impact on Repligen in deciding whether the patent should be reinstated [#1 60(a)].

I am inclined to think that the Commissioner was right on this point. There may be many cases in which a third party would have relied on the lapse of the patent in a way that could not come to the attention of the Commissioner. For example a third party might have done patent clearance search before deciding to invest in developing a new product and then proceeded after having determined that its product would infringe the Repligen patent, but that the patent had lapsed. Given the nature of third party rights, it seems likely that it would be only in relatively unusual circumstances, such as those in Bristol-Meyers, that the Commissioner could become aware of the prejudice to third parties. It is true that the consequences to Repligen of the loss of its patent rights can be catastrophic, but it is also true that infringement of those rights could be catastrophic to a third party.

In any event, this was not the view of Lemieux J, who remitted the matter to be reconsidered by a different official in the Patent Office. The Commissioner once again refused to correct the error, and Repligen once again sought judicial review, leading to this decision in Repligen #2. This time the Commissioner focused on potential prejudice to Rolls-Royce. The Commissioner argued that “‘[c]orrecting Repligen's error today could retroactively have the effect of causing the Rolls-Royce patent to have expired in 2008' since the payments originally applied to it would automatically turn over to the Repligen Patent” [# 2 16]. Near J rejected this argument, rightly in my view. Fees were always paid in respect of Rolls-Royce’s patent, which never lapsed and has now expired [# 2 31]. I see this argument by the Commissioner as a way of attempting to point to an actual prejudice rather than a speculative prejudice in order to satisfy the direction by Lemieux J. It is an unsatisfactory attempt, as the Commissioner identified the real issue correctly in the first instance; the real question is whether the Commissioner should consider harm to third parties who may have relied on the lapse, unbeknownst to the Commissioner. Lemieux J, and now Near J, have held that it should not.

The matter had been remitted to the Patent Office once again. Even if the patent is reinstated, I am not sure Repligen’s troubles are over. Loss of patent rights is not “catastrophic” if those rights are never exercised. But if Repligen has the patent reinstated and then brings an infringement action against a competitor who can show that it did in fact rely on the lapsed patent, there is a a very strong argument that that defendant should have some kind of equitable defence. If the defendant can say “I searched for patents before undertaking my business, I found this patent that I would have infringed, I determined that it had lapsed, and I then invested $10 million in reliance on that,” it would be a serious failure of the patent system to allow Repligen to enforce against that defendant.

Bifurcation Refused When Patentee Gave up Right to Damages

Apotex Inc. v. H. Lundbeck A/S / escitalopram 2012 FC 414 Tabib P

I don’t usually comment on procedural issues but this decision, in which Lundbeck successfully opposed Apotex’s motion to bifurcate by giving up its right to damages, provides a clear explanation of the rationale for bifurcation and raises some fundamental questions of principle.

What Is the Difference Between Dosage Form and a Device?

Novartis Pharmaceuticals Canada Inc v Canada (Attorney General) 2012 FC 836 Martineau J

Pat No. 2,304,819; Tobi Podhaler®

My previous post discussed the product specificity aspect of this decision. An interesting point is also raised in respect of para 4(2)(c), which allows listing if the patent contains a claim for the dosage form. According to the RIAS to the 2006 amendments introducing the new listing requirements, a claim for a dosage form

must contain a claim that includes within its scope the approved medicinal ingredient. This latter requirement is meant to ensure that a patent directed solely to a device, such as an intravenous stand or a syringe, does not meet the definition of "dosage form" and remains ineligible for listing.

The ‘819 patent does claim a medicinal ingredient in generic terms such as “bioactive agent” and “antibiotic,” and presumably the product specificity requirement would have been satisfied if it had explicitly listed tobramycin. But even apart from the requirement of product specificity, there is still the question of whether the ‘819 patent claims a dosage form. To my mind, the perforated microparticles of the ‘819 patent are somewhere near the boundary of a dosage form and a device. Martineau J addressed this by saying:

[64] There is no doubt that the approved dosage form of Tobi Podhaler is more complex and more nuanced than an intravenous stand or a syringe. However, the rationale remains the same because the delivery system on the grounds of which the applicant seeks to list the ‘819 patent, including its different components, is one that can be used in association with a broad range of medicinal ingredients and is therefore insufficient to help the ‘819 patent qualify under paragraph 4(2)(c) of the Regulations.

This indicates that a broadly applicable delivery vehicle cannot be listed, even if it specifically refers to medical ingredients. This is a reasonable interpretation of the provision. Presumably the intent of the Regulations is that a patent for a new syringe could not be listed, even if it was claimed “for the purpose of delivering a bioactive agent.” But on the other hand, the RIAS explains that para 4(2)(c) was included because

the Government has come to the view that inventions in this area merit the special protection of the PM(NOC) Regulations. This is particularly true where biologic drugs are concerned, as effective administration of the medicinal ingredient is often dependent on the development of new and innovative delivery mechanisms.

If new and innovative delivery mechanisms are worthy of protection under the Regulations, why is a new and innovative delivery mechanisms excluded from listing simply because it can be used with a wide range of drugs? Arguably a delivery system that can be widely used is even more deserving of protection that one that is tailored to a particular drug. Perhaps the objection is that it would be wrong to allow a patent for a new delivery system to trigger the statutory stay for every new drug, simply because the drug could be delivered by that delivery system. This is a fair point, but it seems to me that it could be accommodated by a requirement that the delivery system would certainly or almost certainly be used (and so infringed) in order to be listed against a particular product. It must also be acknowledged that simply because the NOC Regulations exist, does not mean that they should apply to every type of patent, even if it is one that would necessarily be infringed, as the patent holder can always turn to an infringement action. But these kinds of questions make it difficult to see what general principle underlies the listing requirements.

Product Specificity Requires Explicit Naming of Medicinal Ingredient

Novartis Pharmaceuticals Canada Inc v Canada (Attorney General) 2012 FC 836 Martineau J

Pat No. 2,304,819; Tobi Podhaler®

Martineau J’s decision refusing to allow Novartis’ ‘819 to list its patent against its Tobi Podhaler® product follows and applies the existing case law that interprets the principle of product specificity as requiring that a patent explicitly name the medicinal ingredient in the claims in order to be eligible for listing against a drug product. While this case illustrates once again some of the conceptual peculiarities of this approach to the product specificity requirement, it does not change the law in this respect. The decision does raises some interesting questions as to the boundary between a device such as a syringe which does not qualify as a dosage form at all, and once which might quality if it otherwise meets the product specificity requirements, which will be discussed in a subsequent post.

Promise of the Patent Is to Be Found in the Claims

Fournier Pharma Inc. v. Sandoz Canada Inc. 2012 FC 741 Zinn J
            NOC; fenofibrate; LIPIDIL EZ; 2,372,576

Zinn J’s Fournier / fenofibrate (NOC) decision turned primarily on claim construction and infringement, but hidden in the brief treatment of validity of the ‘576 patent there is a very important passage regarding the promise of the patent which deserves to be quoted in full (Zinn J’s emphasis):

[126] The Federal Court of Appeal in Eli Lilly Canada Inc v Novopharm Limited, 2010 FCA 197, citing Consolboard Inc v MacMillan Bloedel (Sask)Ltd, [1981] 1 SCR 504, stated at para 76 that “where the specification sets out an explicit ‘promise’, utility will be measured against that promise [emphasis added].” The promise of a patent, as that term is used in patent law, is nothing more than the utility the inventor claims for his invention. Where that promise – that claimed utility – is clearly and unequivocally expressed by the inventor in the claims of the patent, then that expression ought to be viewed as the promise of the patent. Any statement found elsewhere should be presumed to be a mere statement of advantage unless the inventor clearly and unequivocally states that it is part of the promised utility. The following from page 1 of the patent in AstraZeneca Canada Incv Apotex Inc, 2010 FC 714, is illustrative of such a statement found in the disclosure:

It is desirable to obtain compounds with improved pharmacokinetic and metabolic properties which will give an improved therapeutic profile such as a lower degree of interindividual variation. The present invention provides such compounds, which are novel salts of single enantiomers of omeprazole [emphasis added].

[127] The interpretation should be focused on the claims because an inventor is not obliged to claim a monopoly on everything new, ingenious, and useful disclosed in the specification. If, as here, the claims are certain and unambiguous in stating the promise, then the disclosure should not be examined microscopically to find additional promises that are outside the scope of the inventor’s claimed monopoly.

Consequently, Zinn J concluded at [128] that “I find, as stated in claim 1, that the promise of the patent is a “fenofibrate composition … having a dissolution of at least 10% in 5 minutes, 20% in 10 minutes, 50%in 20 minutes and 75% in 30 minutes” (my emphasis). As I have emphasized, this promise directly reflects the wording of the claim itself.

While Zinn J’s remarks are very clear and he has provided his own emphasis, almost the entire passage could be highlighted, so I will add some of my own:

Where that promise – that claimed utility – is clearly and unequivocally expressed by the inventor in the claims of the patent, then that expression ought to be viewed as the promise of the patent. Any statement found elsewhere should be presumed to be a mere statement of advantage unless the inventor clearly and unequivocally states that it is part of the promised utility. . . 

If, as here, the claims are certain and unambiguous in stating the promise, then the disclosure should not be examined microscopically to find additional promises that are outside the scope of the inventor’s claimed monopoly.

Zinn J’s focus on the claims is in sharp contrast with the trend of the recent Canadian cases, which is to extract the promise of the patent from a searching, sometimes “microscopic,” analysis of the disclosure. This is usually done in an ad hoc manner, though Rennie J in Astrazeneca / anastrozole (NOC) has recently used a more structured approach; but however it is done, the focus is almost always on finding a statement of the promise in the disclosure. One exception which proves the rule was Pfizer v Apotex / latanoprost (NOC) 2011 FCA 236, blogged here, in which the FCA interpreted the promise in light of the common general knowledge, without reference to the disclosure, much less the claims.

While Zinn J’s approach is a departure from recent Canadian trends, it is consistent with the English cases which developed the false promise doctrine. In Alsop’s Patent (1907) 24 RPC 733 at 753 (Ch), one of the leading cases on the promise of the patent, Parker J noted “the importance of drawing a distinction between what the patentee claims to have effected by the invention for which he claims protection [ie the promise of the patent], and a statement of the additional purposes to which the invention can be applied.” That is, not every statement of advantage in the specification is to be treated as a promise. Put another way, in order for validity to turn on a promise made in the specification, the promise must be “material” in the sense that it can be said that the patent was obtained on the strength of the promise: Alsop’s Patent, ibid, Raleigh Cycle Co Ltd v H Miller & Co Ltd, (1948) 65 RPC 141 at 162 (HL). This point seems to have been largely forgotten in recent Canadian case law, in which the disclosure is examined to extract a promise without regard to whether that promise is material. Zinn J’s approach amounts to a presumption that a promise is material only if it is found in the claims. This presumption is consistent with the general rule that the invention is defined by the claims, not by the specification. Consequently, it helps address one of the most problematic aspects of the false promise doctrine, which is that validity of the patent will often turn on a “microscopic” construction of the disclosure. This is a trap particularly when, as is normally the case, the patent was drafted in light of US and European law, which do not have a false promise doctrine.

Notwithstanding the FCA decision in Pfizer v Apotex / latanoprost (NOC), a few recent cases suggest that the FCA has recognized the need to put some bounds on the false promise doctrine by approving relatively moderate constructions of the promise (see here and here). The difficulty with relying on the trial judge to adopt a moderate approach to construction of the promise is that there may be considerable arbitrariness in the result, depending on how aggressive a particular judge chooses to be in construing the promise. The approach of Rennie J in Astrazeneca / anastrozole (NOC) (blogged here) is one attempt to provide a principled legal structure to the construction of the promise, and Zinn J’s approach is another. I prefer Zinn J’s approach for its focus on the claims, as opposed to Rennie J’s approach, in which the focus remains on the disclosure. In any event, it is gratifying to see the Federal Court grapple directly with the legal structure of this problematic doctrine.

Claim Ambiguity and Recourse to the Specification

Fournier Pharma Inc. v. Sandoz Canada Inc. 2012 FC 740, 2012 FC 741 Zinn J

NOC; fenofibrate; LIPIDIL EZ; 2,487,054 (2012 FC 740); 2,372,576 (2012 FC 741)

The separate decisions in Fournier / fenofibrate (NOC) concern the same drug but two different patents. In both cases Fournier failed to obtain an order of prohibition against Sandoz because it failed to established that Sandoz’ product would infringe. Both patents had a particle size limitation. The particle size of Sandoz’ product could have been determined by a standard method, yet neither party did so [740: 102 / 741: 87]. Zinn J refused to draw any adverse inference from Fournier’s failure to carry out the relevant test, because Sandoz could equally well have carried out the test itself [740: 132 / 741: 87]. But the burden in an NOC proceeding is on the patentee to show that the generic’s allegations are not justified, and the evidence which Fournier did advance was inadequate to establish infringement [740: 129 / 741: 91].

The main legal battleground in the case was claims construction. The claims were well-drafted, so that the specification generally supported a straightforward reading of the text of the claims, but one point of interest arose 2012 FC 741, dealing with the ‘576 patent. A central issue was Sandoz’ submission that the term “micronized” in the phrase “a micronized form having a particle size less than or equal to about 20 μm,” should be interpreted as excluding particles less than 1 μm in size. Sandoz introduced evidence drawing on the common general knowledge in support of that interpretation. Zinn J responded by pointing out that the phrase “in micronized form” was specifically defined in the specification [65], and “where an inventor specifically provides a definition of a phrase used in the patent, that definition must be the prime consideration when interpreting the phrase and not the meaning that may or may not be ascribed any particular word in the phrase so defined” [66]. This is consistent with the principle that the specification may “provide[] the dictionary by which the scope and effect of these terms [of the claim] is to be ascertained” (Western Electric Co. v. Baldwin International Radio, [1934] S.C.R. 570 at 593). It is also consistent with the broader principle that “[t]he claims, of course, must be construed with reference to the entire specifications.” (Metalliflex Ltd. v. Rodi & Wienenberger Aktiengesellschaft, [1961] S.C.R. 117, 122 quoted with approval per Binnie J. Free World Trust 2000 SCC 66 at [52]; see also Electric & Musical Industries v Lissen Ltd (1939) 56 RPC 23 at 39 (HL): “The claims must undoubtedly be read as part of the entire document, and not as a separate document.”)

No New Cases for the Week of 1 July

No new non-procedural patent / NOC / data protection cases were released by the Federal Courts in the week of 1 July. There was one costs decision, refusing to award solicitor-and-client costs, but awarding costs on an elevated scale (Column V of Tariff B). Also, Beeser Ramamoorthy reports that Zinn J has refused to grant an order of prohibition in respect of fenofibrate tablets, but the reasons remain confidential.

No Contributory Infringement Without “But For” Causation

Apotex Inc v Nycomed Canada Inc / pantropazole 2012 FCA 195 Noël JA: Evans, Sharlow JJA aff’g 2011 FC 1441 Simpson J (blogged here).

Nycomed’s ‘748 patent claims a combination of pantoprazole with a heliobacter inhibiting anti-microbial agent. Apotex and Novopharm sell generic pantoprazole. Since the ‘748 patent does not claim pantoprazole itself, Nycomed sought to allege that the generics’ sale of pantoprazole constitutes contributory infringement. The theory is that pharmacists and physicians who dispense or prescribe pantoprazole and an anti-microbial agent are direct infringers, and the generics have “contributed to the infringing activities of these third parties through its product monograph, website and its marketing strategies to physicians and pharmacists” [FC 2].

The factual problem for Nycomed is that 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. Nycomed therefore sought to allege that the generics were liable for contributory infringement “distinct from the ‘but for’ allegation of inducement” [FC 2].

The legal problem with this claim is that contributory infringement is not recognized as such in Canadian law. As the FCA stated in Beloit Canada Ltee/Ltd et al v Valmet Oy (1988) 20 CPR(3d) 1 (FCA) (citations omitted):

Moreover, it is well established that there is no infringement of a patent in selling an article which does not in itself infringe the patent even when the vendor knows that the purchaser buys the article for the purpose of using it in the infringement of the patent. There seems to be only two exceptions to that rule, namely, that there is infringement:

(a) if the vendor, alone or in association with another person, sells all the components of the invention to a purchaser in order that they be assembled by him; and

(b) if the vendor, knowingly and for his own ends and benefit, induces or procures the purchaser to infringe the patent.

The second branch, inducement, is defined by the following three part test, set out most recently in Corlac v Weatherford 2011 FCA 228 at [162]:

First, the act of infringement must have been completed by the direct infringer.

Second, the completion of the acts of infringement must be influenced by the acts of the alleged inducer to the point that, without the influence, direct infringement would not take place.

Third, the influence must knowingly be exercised by the inducer, that is, the inducer knows that this influence will result in the completion of the act of infringement.

The second part amounts to a requirement that the direct infringement would not have taken place “but for” the acts of the alleged inducer.

Consequently, Simpson J held that Nycomed could not amend its claim to allege contributory inducement distinct from the “but for” allegation of inducement. Nycomed argued that the SCC decision in Monsanto v Schmeiser, 2004 SCC 34 had changed the law. Simpson J disagreed, and the FCA affirmed, saying “we adopt the reasoning set out at paragraph 27 of her reasons for holding that the decision of the Supreme Court in Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34, is not indicative of an intention to depart from the existing precedents and to recognize 'contributory infringement' as a cause of action under the Canadian law.” My own view is also that Simpson J’s interpretation of Schmeiser was entirely correct.

There is nonetheless a problem in this kind of situation, at least in principle. Assume that the physicians are directly infringing, as alleged. Suppose that most would have infringed in any event, but in a substantial minority of cases, say 40%, the generics were the “but for” cause of the direct infringement. In that case Nycomed would not be able to establish “but for” causation for physicians as a class, even though the generics marketing efforts were the “but for” cause of a substantial loss.

This is exactly the problem of mass torts, which was addressed at common law by permitting liability based on “material contribution” rather than but for causation: see McGhee v National Coal Board [1972] 3 All ER 1008 (HL). This solution is very unsatisfactory, as it raises the opposite problem, that the defendant might be liable for all the loss, even though it was only the “but for” cause of a part. Material contribution is consequently disfavoured: see, most recently, Clements v. Clements, 2012 SCC 32. In refusing to relax the causation requirement for contributory infringement to something approaching material contribution, the FCA holding in this case is consistent with this general trend. The problem is solved more satisfactorily by class actions, in which the defendant can be made liable for only the proportion of the harm that it actually caused. I am not suggesting that a class action would be appropriate in this case. Class actions allow a class of plaintiffs to sue a single defendant for what might be called “contributory” causation, rather than allowing a single plaintiff to sue a class of defendants, and in any event, Nycomed wants to sue the generics, not the doctors. The point is simply that there is a real problem in principle which is not satisfactorily addressed by “but for” causation.

At another level, the problem is that the only practical means of enforcing the patent at issue in this case, or a use patent, as was at issue in Abbott / lansoprazole (NOC) 2006 FC 1411 aff’d 2007 FCA 251, is by an action against the generic, and yet the generic is entitled to sell the individual compound. I can’t help but think that there must be a better way of sorting this out than disputing over whether 40% or 60% of doctors would be influenced by the product monograph, but I have to admit that I can’t think of what that better way might be.

Can Comity Rationalize NOC Litigation?

Allergen Inc v Apotex Inc / COMBIGAN (NOC) 2012 FC 767 Hughes J

In Allergen Inc v Apotex Inc / combigan (NOC) Hughes J faced an NOC proceeding involving the same product and the same patent, but a different generic, as was addressed by Crampton J in Allergan Inc v Sandoz Canada Inc / combigan (NOC) 2011 FC 1316 (blogged here and here). Crampton J held that Sandoz’s allegation that Allergan’s 764 patent was invalid for obviousness was not justified. In contrast, Hughes J concluded that Apotex’s allegation that the patent was invalid for obviousness was justified. Hughes J nonetheless granted an order of prohibition, citing the need for comity. He also expressed concern that “that this Court is overwhelmed at times with NOC Regulation proceedings,” [70] and that it is necessary for the FCA to give instruction on the question of “how, in an NOC context, previous decisions of a Court on the same issues respecting the same patent, should be considered” [193]. He concluded that “only practical way to get the matter before the Court of Appeal is for me to grant the Order for prohibition in the likely expectation that Apotex will appeal” [194].

Refusal of Joinder Affirmed

Janssen Inc v Teva Canada Ltd 2012 FCA 137 Pelletier JA: Sharlow, Stratas JJA

In brief reasons from the bench, Pelletier JA affirmed the order of Hughes J in 2011 FC 1480, blogged here, dismissing a motion for the joinder of parties.