ABB Technology AG v Hyundai Heavy Industries Co, Ltd, 2015 FCA 181 Stratas JA: Webb,
Near JJA aff’g 2013 FC 947 and 2013 FC 1050 (costs) Barnes J
2,567,781 – 2,570,772
In my post on Barnes J’s decision in ABB v Hyndai 2013 FC 947, I remarked that it is “a fairly
straightforward case which turned largely on its facts.” It is therefore not surprising that the FCA
has affirmed the holding that both patents at issue are invalid, largely on the basis of a deferential
standard of review.
The most interesting point was one of claim construction, which the FCA reviewed for
correctness. The invention was a viewing window to allow visual inspection of the position of the grounding switch in gas-insulated switchgear. The crucial claim term used to describe the grounding switch
was "a moveable switch-contact element" [32]. The patentee, ABB, acknowledged that the prior
art disclosed the use of viewing windows to observe the position of knife blade switches [33]
and argued that this term should be construed to encompass only sliding contact switches [33].
ABB argued that the principle that a claim should be required to “afford the inventor protection
for that which he has actually in good faith invented” Consolboard ([1981] 1 SCR 504, 521)
implies that an interpretation should be adopted which favours validity [50].
My post on the decision of Barnes J had a long (and now that I re-read it, somewhat convoluted)
discussion of the possible tension between a purposive and textual analysis* of the claim.
Whatever the merits of that discussion, the case at hand does not raise any such tension, because
as Barnes J held and the FCA affirmed, all considerations point in the same direction [46].
The important principle emphasized by the FCA is that “Redrafting [the claims] would
undermine the public notice function of patents, which entitles readers to clear and definite
guidance concerning the extent of the monopoly conferred” [51]. If a construction favouring
validity had to be adopted, then the claims could never be construed without a search to identify
potentially invalidating prior art. It is reasonable to say that the patent should be construed in
light of the common general knowledge which a skilled reader already possesses, but prior art for
the purposes of anticipation, as was at issue in this case, is not necessarily part of the cgk.
More broadly, the statement that a patent should be construed to give protection to that which the
inventor had actually invented was not intended as an overriding rule of law, but rather as a
reminder that patents serve a public good in providing an incentive to invent, and consequently,
“There is no occasion for being too astute or technical in the matter of objections to either title or
specification” (Consolboard 520). But that is not to deny that obscure or poorly drafted patents
can be a disservice to the public, regardless of the merits of the invention. While the inventive
function of patents should not be ignored, neither should the notice function; the construction
must be “reasonable and fair to both patentee and public” (ibid).
Barnes J’s costs award 2013 FC 1050 was also appealed. As described in my blog post, Barnes J
awarded costs with a slight premium above Column IV of the tariff. The FCA affirmed. The
main point of legal interest is that the FCA affirmed that its decision in Imperial Manufacturing
2015 FCA 100 sets out the appropriate standard for a review of a discretionary order, which is
the same as the standard for a ruling of mixed fact and law [88]. On the facts, Barnes J's departure
from the tariff was justified [90].
*It is somewhat confusing that the modern approach to claim construction is referred to as “purposive
construction.” There is a distinction to be made between an overall "approach" to interpretation, and an analysis which may be part of that approach. So, the modern approach to statutory interpretation considers text, context and
purpose, and seeks to arrive at a harmonious interpretation of the legislation in light of all three
analyses. The portion of that analysis which looks to the purpose is referred to as the purposive
analysis, while the approach as a whole is usually referred to simply as the “modern approach.”
The approach to interpretation which would consider purpose of the statute as the overriding
consideration, rather than merely one component, was referred to as a “purposive approach.” The
modern approach to claim construction, like the modern approach to legislative interpretation,
also considers text, context (in the form of the skilled readers cgk) and purpose. It is referred to
as purposive interpretation because Catnic emphasized the need to consider purpose as a reaction
to an excessive reliance on parsing the text. But Catnic never said the text should be ignored, and
indeed the text of the claim itself remains of dominant important, just as the text of the
legislation is the most important consideration in legislative interpretation. Thus “purposive
construction” is not the same as a “purposive approach,” nor is it the same as a purposive
analysis. It would be easier simpler if the current approach to claim construction were simply
referred to as the “modern approach” to claim construction.
Tuesday, August 25, 2015
Wednesday, August 19, 2015
Obviousness and “Blinding” an Expert
E Mishan & Sons, Inc v Supertek Canada Inc 2015 FCA 163 Webb JA: Ryer, Near JJA aff’g 2014
FC 326 Hughes J
2,779,882 here
In Mishan v Supertek the FCA has affirmed Hughes J’s finding that the 882 patent is invalid for obviousness. As discussed here, the trial decision largely turned on the the factual issue of whether a particular piece of prior art would have been found in a reasonably diligent search and it is not surprising that the FCA affirmed, using a deferential standard of review [25]. The case does raise an interesting legal point regarding the role of hindsight in the obviousness analysis.
The invention at issue is a lightweight expandable and contractible garden hose, comprising an elastic inner tube and an inelastic outer sleeve. When the hose is empty, the elasticity of the inner tube causes it to contract. When it fills with water, the inner tube expands; since the diameter is constrained by the outer sleeve, it elongates [3]. The key prior art was the McDonald patent, which disclosed a very similar hose, albeit one that was intended as an oxygen hose for an aviation crew oxygen mask. Hughes J found that the 882 invention was obvious over the McDonald patent.
On appeal, Mishan argued [35] that Hughes J had erred by using his knowledge of the 882 Patent to identify the differences between what is claimed in the 882 patent and the McDonald patent and to determine that the differences were obvious, on the basis that this is contrary to the fourth step of the Windsurfing / Pozzoli test, adopted in Sanofi 2008 SCC 61 [67], which asks whether the invention would have been obvious in light of the state of art “viewed without any knowledge of the alleged invention as claimed.” There is considerable force to Mishan’s argument. As Lewison J explained in Virgin Atlantic 2009 EWHC 26 (Pat) [271-72]:
The FCA nonetheless rejected Mishan’s submission, pointing out that the difficulty is inherent in the Windsurfing / Pozzoli framework:
Thus the statement that the fourth step of the test must be undertaken “without any knowledge of the invention as claimed” cannot be understood literally. It is really just an awkward way of repeating the standard warning against being influenced by hindsight: see eg Wandscheer [1948] SCR 1 at 12.
Though the FCA was bound to reject this objection as a matter of law, what about as a matter of policy? Is there any alternative? Lewison J said in order to avoid the problem of hindsight bias, “[t]he structured Pozzoli approach is a series of steps directed to the court; not to experts” [272]. But this does not solve the hindsight bias, as it is empirically well-established that judges are also subject to the hindsight bias – if anything, to a greater extent than experts in the art.
One alternative approach would be to “blind” the expert to the invention, by asking them to answer the problem addressed by the inventor without knowing the inventor’s solution. In this case, we would simply ask the experts – or rather a skilled person – to design a lightweight expandable and contractible garden hose, and see if they come up with the invention. This would avoid hindsight by asking each expert to fully replicate the inventive process faced by the inventor. But if done faithfully, this would often be unworkable, as the cost of litigation could exceed the cost of invention. With that said, “blinding” the expert to the solution might be workable in some cases, such as where the question is whether the invention is obvious to try; if the expert is blinded and yet readily suggests a route that in fact worked without difficulty, this would be good evidence that the proposed route was indeed obvious to try: see eg Esomeprazole 2014 FC 638 [321].
This relates to the question of whether experts should be blinded in claim construction. As discussed here, in her Rasagiline 2014 FC 1070 decision, Gleason J indicated at [94]-[97] that the blinding of the Apotex experts in that case was reason to prefer their evidence over that of Teva’s experts. But more recently, in Apotex / Tadalafil 2015 FC 875 [166], she explained in effect that both her Rasagiline decision and Rennie J’s Esomeprazole decision turned on the facts. That is, blinding is not always preferred, though in some circumstances it might be preferred. This seems right to me. There is a tradeoff between avoiding the hindsight problem and keeping costs of litigation manageable by focusing on “where the shoe pinches,” and how that balance is best achieved will depend on the facts. Unfortunately, that means there is no easy way to for a litigant to decide whether to blind its experts in a particular case.(Note that Rasagiline concerned claim construction while Esomeprazole and Tadalafil concerned obviousness.)
2,779,882 here
In Mishan v Supertek the FCA has affirmed Hughes J’s finding that the 882 patent is invalid for obviousness. As discussed here, the trial decision largely turned on the the factual issue of whether a particular piece of prior art would have been found in a reasonably diligent search and it is not surprising that the FCA affirmed, using a deferential standard of review [25]. The case does raise an interesting legal point regarding the role of hindsight in the obviousness analysis.
The invention at issue is a lightweight expandable and contractible garden hose, comprising an elastic inner tube and an inelastic outer sleeve. When the hose is empty, the elasticity of the inner tube causes it to contract. When it fills with water, the inner tube expands; since the diameter is constrained by the outer sleeve, it elongates [3]. The key prior art was the McDonald patent, which disclosed a very similar hose, albeit one that was intended as an oxygen hose for an aviation crew oxygen mask. Hughes J found that the 882 invention was obvious over the McDonald patent.
On appeal, Mishan argued [35] that Hughes J had erred by using his knowledge of the 882 Patent to identify the differences between what is claimed in the 882 patent and the McDonald patent and to determine that the differences were obvious, on the basis that this is contrary to the fourth step of the Windsurfing / Pozzoli test, adopted in Sanofi 2008 SCC 61 [67], which asks whether the invention would have been obvious in light of the state of art “viewed without any knowledge of the alleged invention as claimed.” There is considerable force to Mishan’s argument. As Lewison J explained in Virgin Atlantic 2009 EWHC 26 (Pat) [271-72]:
at the third stage of the structured approach it is necessary to focus on the differences
between the prior art and the patent in suit; but at the immediately succeeding fourth stage
it is necessary to erase all knowledge of the alleged invention from the mind. That is not
an easy task. . . . If an expert approaches his own task in the manner set out in Pozzoli, he
will almost inevitably expose himself to a charge of having approached the final question
with the aid of hindsight.
The FCA nonetheless rejected Mishan’s submission, pointing out that the difficulty is inherent in the Windsurfing / Pozzoli framework:
[36] In applying the fourth step of the Sanofi test, in my view, the requirement that this
step be completed “without any knowledge of the alleged invention as claimed” does not
mean that the differences that were identified in step 3 would be forgotten for step 4.
These differences are an essential part of step 4. Without knowing the differences
between the relevant prior art and the inventive concept, step 4 could not be completed.
The differences are based on the inventive concept of the claims in issue and the relevant
prior art and, therefore, are determined based on some knowledge of what is claimed in
the patent in issue. Therefore, some knowledge of the alleged invention will be reflected
in the differences that are analyzed in applying step 4 of the Sanofi test.
Thus the statement that the fourth step of the test must be undertaken “without any knowledge of the invention as claimed” cannot be understood literally. It is really just an awkward way of repeating the standard warning against being influenced by hindsight: see eg Wandscheer [1948] SCR 1 at 12.
Though the FCA was bound to reject this objection as a matter of law, what about as a matter of policy? Is there any alternative? Lewison J said in order to avoid the problem of hindsight bias, “[t]he structured Pozzoli approach is a series of steps directed to the court; not to experts” [272]. But this does not solve the hindsight bias, as it is empirically well-established that judges are also subject to the hindsight bias – if anything, to a greater extent than experts in the art.
One alternative approach would be to “blind” the expert to the invention, by asking them to answer the problem addressed by the inventor without knowing the inventor’s solution. In this case, we would simply ask the experts – or rather a skilled person – to design a lightweight expandable and contractible garden hose, and see if they come up with the invention. This would avoid hindsight by asking each expert to fully replicate the inventive process faced by the inventor. But if done faithfully, this would often be unworkable, as the cost of litigation could exceed the cost of invention. With that said, “blinding” the expert to the solution might be workable in some cases, such as where the question is whether the invention is obvious to try; if the expert is blinded and yet readily suggests a route that in fact worked without difficulty, this would be good evidence that the proposed route was indeed obvious to try: see eg Esomeprazole 2014 FC 638 [321].
This relates to the question of whether experts should be blinded in claim construction. As discussed here, in her Rasagiline 2014 FC 1070 decision, Gleason J indicated at [94]-[97] that the blinding of the Apotex experts in that case was reason to prefer their evidence over that of Teva’s experts. But more recently, in Apotex / Tadalafil 2015 FC 875 [166], she explained in effect that both her Rasagiline decision and Rennie J’s Esomeprazole decision turned on the facts. That is, blinding is not always preferred, though in some circumstances it might be preferred. This seems right to me. There is a tradeoff between avoiding the hindsight problem and keeping costs of litigation manageable by focusing on “where the shoe pinches,” and how that balance is best achieved will depend on the facts. Unfortunately, that means there is no easy way to for a litigant to decide whether to blind its experts in a particular case.(Note that Rasagiline concerned claim construction while Esomeprazole and Tadalafil concerned obviousness.)
Monday, August 17, 2015
No More Perfect Match Requirement for Patent Register Listing
Eli Lilly Canada Inc v Canada (Attorney General) 2015 FCA 166 Nadon JA: Boivin JA;
Dawson JA concurring rev’g 2014 FC 152 Bédard J
2,379,329 / TRIFEXIS
In Gilead / COMPLERA 2012 FCA 254 the FCA apparently held that a perfect literal match between the claims of a patent and the compounds set out in an NOC for a product is required before the patent can be listed on against that product on the Patent Register. In Lilly / TRIFEXISFC Bédard J, following Gilead, refused to allow the 329 patent to be listed against TRIFEXIS. The FCA has now reinterpreted Gilead and consequently set aside Bédard J’s decision. While this FCA decision evidently abolishes the perfect match requirement, it is not entirely clear what the new test is.
The facts in Lilly / TRIFEXIS are fairly simple. TRIFEXIS is authorized as an oral dosage form of a drug that contains two active medicinal ingredients: spinosad and milbemycin oxime. The 329 patent claims an “oral formulation” comprising spinosad [9]. “Oral formulation” was defined in the disclosure to include spinosad in combination with other compounds including “milbemycins” [9]. Consequently Bédard J construed the relevant claims to be directed "not only to a formulation including spinosad as the only active ingredient, but also to formulations that includes other active ingredients such as, but not restricted to, milbemycin oxime" [FC 69]. Thus she in effect held that a generic version of TRIFEXIS would necessarily infringe the 329 patent. She nonetheless refused to allow the patent to be listed against TRIFEXIS because in her view (and in my view as well, as discussed here), the FCA Gilead decision interpreted the product specificity requirement of s 4(2) of the PM(NOC) Regulations as requiring that all the ingredients be listed in the claims themselves.
The FCA has now reversed that decision. Dawson JA’s concurring opinion is straightforward. She was of the view that Gilead is not distinguishable from the case at hand, but that it was wrongly decided and should be reversed [100]. In her view, there is a sufficient nexus between the patent and the subject of the NOC if the patent claims the approved medicinal ingredient, in the sense that the approved product falls within the “boundaries” set out by the claims [107]. In my view Dawson J is entirely correct on all counts.
2,379,329 / TRIFEXIS
In Gilead / COMPLERA 2012 FCA 254 the FCA apparently held that a perfect literal match between the claims of a patent and the compounds set out in an NOC for a product is required before the patent can be listed on against that product on the Patent Register. In Lilly / TRIFEXISFC Bédard J, following Gilead, refused to allow the 329 patent to be listed against TRIFEXIS. The FCA has now reinterpreted Gilead and consequently set aside Bédard J’s decision. While this FCA decision evidently abolishes the perfect match requirement, it is not entirely clear what the new test is.
The facts in Lilly / TRIFEXIS are fairly simple. TRIFEXIS is authorized as an oral dosage form of a drug that contains two active medicinal ingredients: spinosad and milbemycin oxime. The 329 patent claims an “oral formulation” comprising spinosad [9]. “Oral formulation” was defined in the disclosure to include spinosad in combination with other compounds including “milbemycins” [9]. Consequently Bédard J construed the relevant claims to be directed "not only to a formulation including spinosad as the only active ingredient, but also to formulations that includes other active ingredients such as, but not restricted to, milbemycin oxime" [FC 69]. Thus she in effect held that a generic version of TRIFEXIS would necessarily infringe the 329 patent. She nonetheless refused to allow the patent to be listed against TRIFEXIS because in her view (and in my view as well, as discussed here), the FCA Gilead decision interpreted the product specificity requirement of s 4(2) of the PM(NOC) Regulations as requiring that all the ingredients be listed in the claims themselves.
The FCA has now reversed that decision. Dawson JA’s concurring opinion is straightforward. She was of the view that Gilead is not distinguishable from the case at hand, but that it was wrongly decided and should be reversed [100]. In her view, there is a sufficient nexus between the patent and the subject of the NOC if the patent claims the approved medicinal ingredient, in the sense that the approved product falls within the “boundaries” set out by the claims [107]. In my view Dawson J is entirely correct on all counts.
Friday, August 14, 2015
Disagreement on Date for Assessing Obviousness-type Double Patenting
Eli Lilly Canada Inc v Apotex Inc (NOC) 2015 FC 875 Gleason J
2,226,784 / tadalafil /CIALIS
In this decision dealing with Lilly’s CIALIS patent, Gleason J disagreed with de Montigny J’s earlier Mylan / tadalafil decision 2015 FC 17 as to the appropriate date for assessing obviousness-type double patenting. In my blog post on Mylan / tadalafil I had agreed with de Montigny J’s reasoning, but on reviewing Gleason J’s decision, I have realized that there are some holes in that logic. At the end of the day, this point was not determinative and so Gleason J expressly declined to come to any firm conclusion on this legal issue. I have spent considerably longer on the blog post than I usually do, and I haven’t come to any firm conclusion either; all I can say is that the law is unsettled, and that is just as well, as the point is a difficult one.
The judicially created doctrine of obviousness-type double patenting precludes an inventor from obtaining a second patent for an invention which is an obvious modification of an invention for which the same inventor holds a prior patent. While the “obviousness” aspect of this doctrine is the essentially same as the obviousness analysis generally, it is a distinct doctrine because it may be raised in circumstances in which the first patent would not constitute part of the state of the art for the purposes of an obviousness attack on the second patent. In particular, obviousness-type double patenting essentially permits a prior unpublished patent application to used as prior art against a subsequently filed application, even though the unpublished application is not part of the statutorily defined state of the art: [60]; s 28.3. Prior unpublished applications were particularly problematic under the old Act, under which patents were not published until issued: for example, in Whirlpool 2000 SCC 67, decided under the old Act, the second patent (734) was filed 2 ½ years after the first patent (803) application was filed, but two years before it was granted. The problem is reduced under the new Act, but it may still arise because patents are not published until 18 months after the priority date. So, in this case the priority date of the 784 patent was two weeks before the publication date of the earlier 377 patent which was the basis for the double patenting attack.
The date for assessing obviousness-type double patenting is important if the common general knowledge has advanced in the interim. Suppose the inventor invents the wheel and files an application at a time when wood is the only known material. Bronze then becomes a widely known material. The same inventor then develops an improved wheel made of bronze and files a second application, before the first application is published. If the date for assessing obviousness is the filing date of the first application, then the bronze wheel is non-obvious; but if the crucial date is the second filing date, then it is obvious over the wheel claimed in the first application. The basic dilemma is that the inventor has already received a reward for inventing the wheel, in the form of the first patent, and it seems wrong that she should be rewarded with an additional term of protection for a bronze wheel, when she did not invent bronze. But on the other hand, the improved bronze wheel would not be obvious to a skilled person even at the time of the second application; the skilled person would know nothing about the wheel, as the first application was still unpublished. If the inventor had waited to file her application until the later date, she would have been entitled to claim both the wheel and the bronze wheel, because neither would be obvious to a skilled person at that time; it seems perverse to say she should not be permitted to obtain a patent for the bronze wheel for the sole reason that she had previously filed the application for the wheel.
2,226,784 / tadalafil /CIALIS
In this decision dealing with Lilly’s CIALIS patent, Gleason J disagreed with de Montigny J’s earlier Mylan / tadalafil decision 2015 FC 17 as to the appropriate date for assessing obviousness-type double patenting. In my blog post on Mylan / tadalafil I had agreed with de Montigny J’s reasoning, but on reviewing Gleason J’s decision, I have realized that there are some holes in that logic. At the end of the day, this point was not determinative and so Gleason J expressly declined to come to any firm conclusion on this legal issue. I have spent considerably longer on the blog post than I usually do, and I haven’t come to any firm conclusion either; all I can say is that the law is unsettled, and that is just as well, as the point is a difficult one.
The judicially created doctrine of obviousness-type double patenting precludes an inventor from obtaining a second patent for an invention which is an obvious modification of an invention for which the same inventor holds a prior patent. While the “obviousness” aspect of this doctrine is the essentially same as the obviousness analysis generally, it is a distinct doctrine because it may be raised in circumstances in which the first patent would not constitute part of the state of the art for the purposes of an obviousness attack on the second patent. In particular, obviousness-type double patenting essentially permits a prior unpublished patent application to used as prior art against a subsequently filed application, even though the unpublished application is not part of the statutorily defined state of the art: [60]; s 28.3. Prior unpublished applications were particularly problematic under the old Act, under which patents were not published until issued: for example, in Whirlpool 2000 SCC 67, decided under the old Act, the second patent (734) was filed 2 ½ years after the first patent (803) application was filed, but two years before it was granted. The problem is reduced under the new Act, but it may still arise because patents are not published until 18 months after the priority date. So, in this case the priority date of the 784 patent was two weeks before the publication date of the earlier 377 patent which was the basis for the double patenting attack.
The date for assessing obviousness-type double patenting is important if the common general knowledge has advanced in the interim. Suppose the inventor invents the wheel and files an application at a time when wood is the only known material. Bronze then becomes a widely known material. The same inventor then develops an improved wheel made of bronze and files a second application, before the first application is published. If the date for assessing obviousness is the filing date of the first application, then the bronze wheel is non-obvious; but if the crucial date is the second filing date, then it is obvious over the wheel claimed in the first application. The basic dilemma is that the inventor has already received a reward for inventing the wheel, in the form of the first patent, and it seems wrong that she should be rewarded with an additional term of protection for a bronze wheel, when she did not invent bronze. But on the other hand, the improved bronze wheel would not be obvious to a skilled person even at the time of the second application; the skilled person would know nothing about the wheel, as the first application was still unpublished. If the inventor had waited to file her application until the later date, she would have been entitled to claim both the wheel and the bronze wheel, because neither would be obvious to a skilled person at that time; it seems perverse to say she should not be permitted to obtain a patent for the bronze wheel for the sole reason that she had previously filed the application for the wheel.
Friday, July 24, 2015
Blogging Break
I am taking a two week summer vacation. I’ll resume blogging sometime in the week of August
10, starting with the cases that came out this week that I didn’t have time to blog before leaving,
namely: Eli Lilly Canada Inc. v. Canada (Attorney General) - 2015 FCA 166; Eli Lilly Canada
Inc. v. Apotex Inc., 2015 FC 875; and E Mishan & Sons, Inc v Supertek Canada Inc 215 FCA
163.
Monday, July 13, 2015
Non-Infringing Alternative "Defence" Rejected Once Again
ADIR v Apotex 2015 FC 721 Gagné J
1,341,196 / perindopril / COVERSYL
As noted in my last post, this case is the accounting of profits portion of a bifurcated trial. In the liability decision, Laboratoires Servier v Apotex Inc, 2008 FC 825 aff’d 2009 FCA 222, Snider J held that the defendants had infringed the plaintiff’s ‘196 patent and she allowed the plaintiffs to elect an accounting of profits [1]. This post deals with the treatment of non-infringing alternatives in the accounting.
A substantial amount of the infringing material manufactured by Apotex in Canada was destined for export to markets such as the UK and Australia. Apotex argued that it could have manufactured perindopril API and finished dosage in other non-infringing jurisdictions for export to those same markets at exactly the same price, and if it had done so, it would have made exactly the same profits (or even more!) than it made by manufacturing in Canada [79]-[80]. In Schmeiser 2004 SCC 34, the SCC held that the preferred means of calculating an accounting is the differential profit approach, in which “A comparison is to be made between the defendant's profit attributable to the invention and his profit had he used the best non-infringing option” [102]. On this authority, Apotex argued that since it would have made just as much money using the non-infringing offshore manufacturing, the profits attributable to its Canadian infringement were zero. This is referred in the decision to as the “non-infringing alternative” or “NIA” “defence”. (As I have argued, this argument is not a defence, in the sense that it does not normally result in a complete bar to liability.)
Gagné J rejected the NIA argument as a matter of law [106], though she went on to hold that in any event it was not made out on the facts [142]. In my view, Gagné J’s reasons for rejecting the NIA analysis as a matter of law is not persuasive, but her analysis of its application on the facts is.
1,341,196 / perindopril / COVERSYL
As noted in my last post, this case is the accounting of profits portion of a bifurcated trial. In the liability decision, Laboratoires Servier v Apotex Inc, 2008 FC 825 aff’d 2009 FCA 222, Snider J held that the defendants had infringed the plaintiff’s ‘196 patent and she allowed the plaintiffs to elect an accounting of profits [1]. This post deals with the treatment of non-infringing alternatives in the accounting.
A substantial amount of the infringing material manufactured by Apotex in Canada was destined for export to markets such as the UK and Australia. Apotex argued that it could have manufactured perindopril API and finished dosage in other non-infringing jurisdictions for export to those same markets at exactly the same price, and if it had done so, it would have made exactly the same profits (or even more!) than it made by manufacturing in Canada [79]-[80]. In Schmeiser 2004 SCC 34, the SCC held that the preferred means of calculating an accounting is the differential profit approach, in which “A comparison is to be made between the defendant's profit attributable to the invention and his profit had he used the best non-infringing option” [102]. On this authority, Apotex argued that since it would have made just as much money using the non-infringing offshore manufacturing, the profits attributable to its Canadian infringement were zero. This is referred in the decision to as the “non-infringing alternative” or “NIA” “defence”. (As I have argued, this argument is not a defence, in the sense that it does not normally result in a complete bar to liability.)
Gagné J rejected the NIA argument as a matter of law [106], though she went on to hold that in any event it was not made out on the facts [142]. In my view, Gagné J’s reasons for rejecting the NIA analysis as a matter of law is not persuasive, but her analysis of its application on the facts is.
Friday, July 10, 2015
“Insurance” Provision in Transfer Pricing Agreement
ADIR v Apotex 2015 FC 721 Gagné J
1,341,196 / perindopril / COVERSYL
This case is the accounting of profits portion of a bifurcated trial. In the liability decision, Laboratoires Servier v Apotex Inc, 2008 FC 825 aff’d 2009 FCA 222, Snider J held that the defendants had infringed the plaintiff’s ‘196 patent, and she allowed the plaintiffs to elect an accounting of profits [1]. This decision is primarily of interest for two points: the treatment of payments made on account of what was argued to be liability insurance provided by Apotex to its foreign purchaser to protect against infringement of a foreign patent, which is dealt with in this post, and the treatment of non-infringing alternatives, which I will consider in my next post.
1,341,196 / perindopril / COVERSYL
This case is the accounting of profits portion of a bifurcated trial. In the liability decision, Laboratoires Servier v Apotex Inc, 2008 FC 825 aff’d 2009 FCA 222, Snider J held that the defendants had infringed the plaintiff’s ‘196 patent, and she allowed the plaintiffs to elect an accounting of profits [1]. This decision is primarily of interest for two points: the treatment of payments made on account of what was argued to be liability insurance provided by Apotex to its foreign purchaser to protect against infringement of a foreign patent, which is dealt with in this post, and the treatment of non-infringing alternatives, which I will consider in my next post.
Thursday, July 9, 2015
Inventive Concept and the Promise of Utility Are Not Necessarily Coextensive
AstraZeneca Canada Inc v Apotex Inc / esomeprazole 2015 FCA 158 Dawson JA; Ryer, Webb
JJA aff’g 2014 FC 638 Rennie J
2,139,653 / esomeprazole / NEXIUM
The FCA’s brief Esomeprazole decision affirms a couple of important points that were raised in yesterday’s post (which I wrote before having read the FCA decision).
An initial, basic point is that the FCA affirmed Rennie J’s holding that the patent was invalid for failing to satisfy the promise of the patent, which was higher than the mere scintilla necessary to support a patent. As I remarked in my post on Rennie J’s decision, this shows that “the promise doctrine is alive and well post-Plavix FCA 2013 FCA 186.” This is not entirely surprising, as Plavix formally reaffirmed the promise doctrine, holding only that the promise must be explicit, but with the FCA’s affirmance in this case any thought that Plavix was the first step towards abandoning the doctrine entirely must now be laid to rest.
The FCA also stated that “[i]t is also now settled law that some promises can be construed to impose utility requirements across each of a patent’s claims, while other promises may touch only a subset of the claims,” citing Celecoxib 2014 FCA 250 (blogged here). While Rennie J in this case did not construe the promise on a claim-by-claim basis, the FCA held this was not an error in light of the evidence and submissions before him [6]. As noted in yesterday’s post, the distinction between overarching and claim-specific promises was applied by O'Reilly J in his Deferasirox decision.
AstraZeneca also argued that “the Federal Court erred by construing the utility of the claims in issue in a manner inconsistent with their inventive concept. AstraZeneca argues that because it is a fundamental rule of claim construction that a claim receives one interpretation for all purposes, there must be a unitary, harmonious understanding of the essential elements of the claim, inventive concept and utility” [10]. The FCA rejected this proposition as being unsupported by any jurisprudence. In my view, this holding is entirely correct. To elaborate on an example given in yesterday’s post, suppose a racemic compound is known to treat cancer though with side effects, and it is obvious to a skilled person that one of the enantiomers is therapeutically effective while the other is responsible for the side effects, but it is unusually difficult to resolve the enantiomers. If a patentee succeeds in resolving the enantiomers through inventive ingenuity and claims the therapeutically effective enantiomer, the claimed invention is surely patentable. But if the inventive concept and the promise of utility are coextensive, it would be held invalid; the enantiomer is useful, because it treats cancer (without side effects), but that was obvious to anyone. The reason the claim is valid is that the inventive concept, namely the method of separating the enantiomers, is distinct from the utility.
2,139,653 / esomeprazole / NEXIUM
The FCA’s brief Esomeprazole decision affirms a couple of important points that were raised in yesterday’s post (which I wrote before having read the FCA decision).
An initial, basic point is that the FCA affirmed Rennie J’s holding that the patent was invalid for failing to satisfy the promise of the patent, which was higher than the mere scintilla necessary to support a patent. As I remarked in my post on Rennie J’s decision, this shows that “the promise doctrine is alive and well post-Plavix FCA 2013 FCA 186.” This is not entirely surprising, as Plavix formally reaffirmed the promise doctrine, holding only that the promise must be explicit, but with the FCA’s affirmance in this case any thought that Plavix was the first step towards abandoning the doctrine entirely must now be laid to rest.
The FCA also stated that “[i]t is also now settled law that some promises can be construed to impose utility requirements across each of a patent’s claims, while other promises may touch only a subset of the claims,” citing Celecoxib 2014 FCA 250 (blogged here). While Rennie J in this case did not construe the promise on a claim-by-claim basis, the FCA held this was not an error in light of the evidence and submissions before him [6]. As noted in yesterday’s post, the distinction between overarching and claim-specific promises was applied by O'Reilly J in his Deferasirox decision.
AstraZeneca also argued that “the Federal Court erred by construing the utility of the claims in issue in a manner inconsistent with their inventive concept. AstraZeneca argues that because it is a fundamental rule of claim construction that a claim receives one interpretation for all purposes, there must be a unitary, harmonious understanding of the essential elements of the claim, inventive concept and utility” [10]. The FCA rejected this proposition as being unsupported by any jurisprudence. In my view, this holding is entirely correct. To elaborate on an example given in yesterday’s post, suppose a racemic compound is known to treat cancer though with side effects, and it is obvious to a skilled person that one of the enantiomers is therapeutically effective while the other is responsible for the side effects, but it is unusually difficult to resolve the enantiomers. If a patentee succeeds in resolving the enantiomers through inventive ingenuity and claims the therapeutically effective enantiomer, the claimed invention is surely patentable. But if the inventive concept and the promise of utility are coextensive, it would be held invalid; the enantiomer is useful, because it treats cancer (without side effects), but that was obvious to anyone. The reason the claim is valid is that the inventive concept, namely the method of separating the enantiomers, is distinct from the utility.
Wednesday, July 8, 2015
Application of Distinction Between Overarching Promise and Claim-Specific Promise
Novartis Pharmaceuticals Canada Inc v Teva Canada Ltd (NOC) 2015 FC 770 O'Reilly J
2,255,951 / deferasirox / EXJADE
As discussed in Monday’s post, the ‘951 patent relates to iron chelators, which are used to treat disorders caused by excess iron in the body [7]. As usual, the utility attack turned on the promise of the patent. O'Reilly J’s Deferasirox decision illustrates once again that under the promise doctrine the validity of the patent will turn on a meticulous reading of the disclosure. It is also interesting as applying the recently developed distinction between an “overarching” promise, which will affect all claims, and a promise that is directed at one claim only. One point I would quibble with is that there seems to have been an implicit assumption that the stated utility is the same as the inventive concept. Consequently, while O’Reilly J explicitly stated that (for the compound claims) he applied the low standard for utility that applies in the absence of an explicit promise, the standard he actually applied was higher than a mere scintilla.
2,255,951 / deferasirox / EXJADE
As discussed in Monday’s post, the ‘951 patent relates to iron chelators, which are used to treat disorders caused by excess iron in the body [7]. As usual, the utility attack turned on the promise of the patent. O'Reilly J’s Deferasirox decision illustrates once again that under the promise doctrine the validity of the patent will turn on a meticulous reading of the disclosure. It is also interesting as applying the recently developed distinction between an “overarching” promise, which will affect all claims, and a promise that is directed at one claim only. One point I would quibble with is that there seems to have been an implicit assumption that the stated utility is the same as the inventive concept. Consequently, while O’Reilly J explicitly stated that (for the compound claims) he applied the low standard for utility that applies in the absence of an explicit promise, the standard he actually applied was higher than a mere scintilla.
SCC Viagra Decision Does Not Create a Duty to Disclose All Test Results
Novartis Pharmaceuticals Canada Inc v Teva Canada Ltd 2015 FC 770 O'Reilly J
2,255,951 / deferasirox / EXJADE
The background to this decision is given in yesterday’s post. Today’s post deals with Teva’s insufficiency attack. While the SCC’s Viagra 2012 SCC 60 decision was not cited, that decision, and not classic insufficiency, was the basis for the attack. In particular, Teva argued that “the real invention [deferasirox] was buried in claim 32," [56], and that “the patent does not specifically identify the compounds that had been tested in vivo, so a skilled reader would not know which of them would work” [59]. This echos Viagra, in which the SCC held the Pfizer’s Viagra patent invalid for failing to disclose the true invention, essentially on the basis that the patentee had not disclosed that the sildenafil was the only compound which had been tested in humans. The reference to the invention being buried in the claims reflects Viagra because the SCC indicated that if sildenafil had been the only individually claimed compound, that might have constituted sufficient disclosure that it was the true invention.
The facts in Deferasirox were similar to those in Viagra in that the disclosure did not specifically which compounds had been tested in vivo [59] and numerous compounds were individually claimed. O’Reilly J nonetheless dismissed Teva’s arguments, saying “all of the thirty claimed novel compounds had been demonstrated or soundly predicted to have the stated utility set out in the patent. A skilled person would have had no difficulty making and using any one or more of those compounds based on the information in the patent” [60]. In so holding, O’Reilly J joins prior decisions by Harrington J (here) and Snider J (here) to the effect that Viagra does not impose a general obligation to disclose which compounds were tested. This interpretation of Viagra now seems well-established, at least at the FC level. This is a welcome development. The SCC in Viagra sought to do what it saw as justice, but with a shaky grasp of the facts, which led to a decision which was confusing, and, in my view, doctrinally confused: see “The Duty to Disclose ‘The Invention’: The Wrong Tool for the Job, (2013) 25 IPJ 269. The FC has wisely chosen to interpret Viagra conservatively, rather than as creating a new ground of invalidity.
2,255,951 / deferasirox / EXJADE
The background to this decision is given in yesterday’s post. Today’s post deals with Teva’s insufficiency attack. While the SCC’s Viagra 2012 SCC 60 decision was not cited, that decision, and not classic insufficiency, was the basis for the attack. In particular, Teva argued that “the real invention [deferasirox] was buried in claim 32," [56], and that “the patent does not specifically identify the compounds that had been tested in vivo, so a skilled reader would not know which of them would work” [59]. This echos Viagra, in which the SCC held the Pfizer’s Viagra patent invalid for failing to disclose the true invention, essentially on the basis that the patentee had not disclosed that the sildenafil was the only compound which had been tested in humans. The reference to the invention being buried in the claims reflects Viagra because the SCC indicated that if sildenafil had been the only individually claimed compound, that might have constituted sufficient disclosure that it was the true invention.
The facts in Deferasirox were similar to those in Viagra in that the disclosure did not specifically which compounds had been tested in vivo [59] and numerous compounds were individually claimed. O’Reilly J nonetheless dismissed Teva’s arguments, saying “all of the thirty claimed novel compounds had been demonstrated or soundly predicted to have the stated utility set out in the patent. A skilled person would have had no difficulty making and using any one or more of those compounds based on the information in the patent” [60]. In so holding, O’Reilly J joins prior decisions by Harrington J (here) and Snider J (here) to the effect that Viagra does not impose a general obligation to disclose which compounds were tested. This interpretation of Viagra now seems well-established, at least at the FC level. This is a welcome development. The SCC in Viagra sought to do what it saw as justice, but with a shaky grasp of the facts, which led to a decision which was confusing, and, in my view, doctrinally confused: see “The Duty to Disclose ‘The Invention’: The Wrong Tool for the Job, (2013) 25 IPJ 269. The FC has wisely chosen to interpret Viagra conservatively, rather than as creating a new ground of invalidity.
Tuesday, July 7, 2015
State of the Art for an Obviousness Attack Includes Only Art Discoverable in a Reasonably Diligent Search
Novartis Pharmaceuticals Canada Inc v Teva Canada Ltd 2015 FC 770 O'Reilly J
2,255,951 / deferasirox / EXJADE
O’Reilly J’s decision in Novartis v Teva / deferasirox does not break wholly new legal ground, but it does develop several interesting points regarding the state of the art in obviousness, Viagra-style insufficiency, and the promise of the patent. I will deal with these issues in separate posts.
The ‘951 patent relates to iron chelators, which are used to treat disorders caused by excess iron in the body [7]. Iron chelators were known in the prior art, but the most effective could not be administered orally, and others were toxic or insufficiently effective [9]. The problem facing the inventors was therefore to find an effective iron chelator that could be orally administered. Two classes of compounds are disclosed in the patent: Formula I compounds were previously known, and the relevant claims were to their use for treatment of diseases involving excess iron in humans, while Formula II compounds were novel, and they were claimed both as compounds and for the use in treatment of iron excess diseases [14]. Deferasirox, the active ingredient in EXJADE, is a Formula II compound and so is covered by both use and compound claims.
The obviousness attack turned primarily on the facts, but a pure question of law was raised as to what constitutes the prior art for the purposes of an obviousness attack. O’Reilly J held that there was considerable doubt as to whether some of the sources formed part of the relevant prior art for the purposes of an obviousness attack because they would not have been located by a skilled person conducting a reasonably diligent search. But section 28.3 of the Act provides that an invention must not be obvious having regard to information that “became available to the public” in Canada or elsewhere before the relevant date. This is exactly the same language as used in the novelty provision, s 28.2. Citing Barrigar’s, Canadian Patent Act Annotated, at PA-341, Teva argued that this means that the old requirement that only reasonably discoverable information can be used in an obviousness attack is no longer the law, and the prior art for obviousness and novelty purposes should be the same [53].
Teva has a good argument based on the text of the Act, but I have argued that “contextual and purposive considerations imply that s. 28.3 was not intended to change the law, and the state of the art remains limited to information that is reasonably discoverable”: What is the State of the Art for the Purpose of an Obviousness Attack?, (2012) 27 CIPR 385 at 394. I went on to note that “the argument based on the text of the provision is sufficiently strong that case law directly addressing the question will be needed before the point can be considered settled.” In this case, O’Reilly J stated that “there is case law applying the usual ‘reasonably diligent search’ criterion even after the enactment of s 28.3. I see no reason to take a different approach here” [53]. While O’Reilly J is right to say that there was prior case law using the traditional criterion, the question of whether s 28.3 had modified the law was not raised in those decisions. O’Reilly J’s considered holding is therefore a significant development on this point of law. Strictly, however, his holding was obiter, since he held that the invention was not obvious even if Teva’s interpretation was correct [54]. With that said, I believe that O’Reilly J's decision is the first to directly address this point, and it certainly reinforces the view that properly interpreted, s 28.3 did not change the law.
2,255,951 / deferasirox / EXJADE
O’Reilly J’s decision in Novartis v Teva / deferasirox does not break wholly new legal ground, but it does develop several interesting points regarding the state of the art in obviousness, Viagra-style insufficiency, and the promise of the patent. I will deal with these issues in separate posts.
The ‘951 patent relates to iron chelators, which are used to treat disorders caused by excess iron in the body [7]. Iron chelators were known in the prior art, but the most effective could not be administered orally, and others were toxic or insufficiently effective [9]. The problem facing the inventors was therefore to find an effective iron chelator that could be orally administered. Two classes of compounds are disclosed in the patent: Formula I compounds were previously known, and the relevant claims were to their use for treatment of diseases involving excess iron in humans, while Formula II compounds were novel, and they were claimed both as compounds and for the use in treatment of iron excess diseases [14]. Deferasirox, the active ingredient in EXJADE, is a Formula II compound and so is covered by both use and compound claims.
The obviousness attack turned primarily on the facts, but a pure question of law was raised as to what constitutes the prior art for the purposes of an obviousness attack. O’Reilly J held that there was considerable doubt as to whether some of the sources formed part of the relevant prior art for the purposes of an obviousness attack because they would not have been located by a skilled person conducting a reasonably diligent search. But section 28.3 of the Act provides that an invention must not be obvious having regard to information that “became available to the public” in Canada or elsewhere before the relevant date. This is exactly the same language as used in the novelty provision, s 28.2. Citing Barrigar’s, Canadian Patent Act Annotated, at PA-341, Teva argued that this means that the old requirement that only reasonably discoverable information can be used in an obviousness attack is no longer the law, and the prior art for obviousness and novelty purposes should be the same [53].
Teva has a good argument based on the text of the Act, but I have argued that “contextual and purposive considerations imply that s. 28.3 was not intended to change the law, and the state of the art remains limited to information that is reasonably discoverable”: What is the State of the Art for the Purpose of an Obviousness Attack?, (2012) 27 CIPR 385 at 394. I went on to note that “the argument based on the text of the provision is sufficiently strong that case law directly addressing the question will be needed before the point can be considered settled.” In this case, O’Reilly J stated that “there is case law applying the usual ‘reasonably diligent search’ criterion even after the enactment of s 28.3. I see no reason to take a different approach here” [53]. While O’Reilly J is right to say that there was prior case law using the traditional criterion, the question of whether s 28.3 had modified the law was not raised in those decisions. O’Reilly J’s considered holding is therefore a significant development on this point of law. Strictly, however, his holding was obiter, since he held that the invention was not obvious even if Teva’s interpretation was correct [54]. With that said, I believe that O’Reilly J's decision is the first to directly address this point, and it certainly reinforces the view that properly interpreted, s 28.3 did not change the law.
Monday, June 29, 2015
No New Cases for the Week of 22 June
No new patent / NOC / data protection cases were released for the week of 22 June 2015. Keep in mind that I do not normally blog on procedural cases. To keep up with all IP cases, I recommend Alan Macek's IPPractice Daily IP News service.
Tuesday, June 16, 2015
Canada / UK Contrast in the Test for Inducement Liability
Bayer Inc v Pharmaceutical Partners of Canada Inc / moxifloxacin (NOC) 2015 FC 388
Lafrenière J
2,378,424 / moxifloxacin / AVELOX
Warner-Lambert Company, LLC v Actavis Group Ptc & Ors [2015] EWCA Civ 556 (28 May 2015)) rev’g [2015] EWHC 249 (Pat) (indirect infringement)
EP 0 934 061 / pregabalin / LYRICA
Liability for inducing infringement raises the question of how the patentee’s rights should be protected when the defendant sells a product which is capable of non-infringing uses, but is likely to be put to an infringing use. This question often arises in the context of second medical use patents. The ‘424 patent at issue in Bayer v PPC / moxifloxacin is a formulation patent and PPC’s product can be used post-sale to make the formulation, so this case raises essentially the same question as second medical use patents. Lafrenière J struck the portions of Bayer’s application for an order of prohibition alleging that PPC would induce infringement of the ‘424 patent on the basis that Bayer had no reasonable chance of establishing inducement by PPC. The recent decision of the EWCA in Warner-Lambert v Actavis provides a helpful European perspective on the issue, albeit in the context of Swiss form claims. (An excellent summary is provided by the IPKat.) The comments in this post are tentative, as this issue deserves an article rather than a blog post.
The law of inducement seeks to encourage cost-effective enforcement of its rights by the patentee, while at the same time ensuring that the public is not impeded in engaging in non-infringing activity. The “cost-effective” part of the rationale is central. Inducement is not necessary to allow the patentee to enforce its patent rights, as inducement (normally*) requires an act of direct infringement and the patentee could in principle enforce its rights by proceeding against the direct infringer. But that is not always practical. It is often more efficient to pursue a single intermediary which in some way facilitates infringing activity, as Napster illustrates in the copyright context. But once we move away from direct infringement, we must be careful not to impede the defendant who facilitates non-infringing activity as well.
2,378,424 / moxifloxacin / AVELOX
Warner-Lambert Company, LLC v Actavis Group Ptc & Ors [2015] EWCA Civ 556 (28 May 2015)) rev’g [2015] EWHC 249 (Pat) (indirect infringement)
EP 0 934 061 / pregabalin / LYRICA
Liability for inducing infringement raises the question of how the patentee’s rights should be protected when the defendant sells a product which is capable of non-infringing uses, but is likely to be put to an infringing use. This question often arises in the context of second medical use patents. The ‘424 patent at issue in Bayer v PPC / moxifloxacin is a formulation patent and PPC’s product can be used post-sale to make the formulation, so this case raises essentially the same question as second medical use patents. Lafrenière J struck the portions of Bayer’s application for an order of prohibition alleging that PPC would induce infringement of the ‘424 patent on the basis that Bayer had no reasonable chance of establishing inducement by PPC. The recent decision of the EWCA in Warner-Lambert v Actavis provides a helpful European perspective on the issue, albeit in the context of Swiss form claims. (An excellent summary is provided by the IPKat.) The comments in this post are tentative, as this issue deserves an article rather than a blog post.
The law of inducement seeks to encourage cost-effective enforcement of its rights by the patentee, while at the same time ensuring that the public is not impeded in engaging in non-infringing activity. The “cost-effective” part of the rationale is central. Inducement is not necessary to allow the patentee to enforce its patent rights, as inducement (normally*) requires an act of direct infringement and the patentee could in principle enforce its rights by proceeding against the direct infringer. But that is not always practical. It is often more efficient to pursue a single intermediary which in some way facilitates infringing activity, as Napster illustrates in the copyright context. But once we move away from direct infringement, we must be careful not to impede the defendant who facilitates non-infringing activity as well.
Friday, June 12, 2015
Jurisdictional Variation as to Whether Direct Infringement by a Single Actor is Required for Inducing Infringement
Warner-Lambert Company, LLC v Actavis Group Ptc & Ors [2015] EWCA Civ 556 (28 May
2015) aff’g [2015] EWHC 72 (Pat) (interlocutory injunction) rev’g [2015] EWHC 249 (Pat)
(indirect infringement)
EP 0 934 061 / pregabalin / LYRICA
Limelight Networks Inc v Akamai Technologies Inc, (USSC, 2014) rev’g 692 F.3d 1301 (Fed Cir 2012)(en banc)
In Akamai v Limelight the US Federal Circuit held that a party may be liable for inducing infringement of a method claim even if there was no direct infringement by any single actor, so long as all of the steps that constitute the infringement method were practiced. Consequently, an inducer would be liable if it practiced some of the steps and induced another to practice the rest. The USSC reversed, holding that inducement liability can only arise if there is direct infringement, and, on the authority of the Fed Cir Muniauction 532 F. 3d 1318 (2008) decision, direct infringement of a method claim requires that all the steps are performed by a single actor. Consequently, the USSC held that inducement liability only arises if all the steps of a method claim are performed by a single actor.
In contrast, in Warner-Lambert v Actavis the EWCA undertook a thorough review of the European case law, and noted that the courts of two EPC members states (Holland and Germany [106]) have concluded that indirect infringement can arise even in “the absence of a downstream event which, as a whole, can be regarded as putting the invention into effect” [135]-[136]. That is, indirect infringement does not necessarily require direct infringement. The EWCA did not give its own opinion on this matter, as the issue on appeal was only whether a claim for indirect infringement should be struck. But the EWCA did point to this view of the Dutch and German courts as reason for allowing the claim for indirect infringement to go to trial [136], [140].
Both US and European case law have to be treated with case. Both the US and European statutes define infringement (s 60 of the UK Act, s 271 of the US Act), while the Canadian Act has no explicit definition. The split between the US and European approaches is nonetheless instructive because the relevant European provisions derive ultimately (though loosely) from the US statute (see Grimme [2010] EWCA Civ 1110 ¶ 92), so the split is not just due to fundamentally different statutory provisions.
I have no opinion as to how this difficult question is best resolved, but the European developments do indicate that it would be wrong for Canadian courts to simply follow the recent USSC decision in Limelight v Akamai. That is particularly so because the US debate over the proper approach to inducing infringement is closely tied up with the Muniauction test for direct infringement. The USSC relied on Muniauction "[a]ssuming without deciding" that it is correct, and implied that any difficulties its holding might cause were attributable to Muniauction's strict approach to direct infringement. This might have been taken as an invitation to the Fed Cir to revisit that decision, but that invitation was declined in Akamai v. Limelight (Fed. Cir. 2015), on remand, which essentially reaffirmed Muniauction. Moreover, as explained here, it appears that in reversing the Fed Cir, the USSC didn’t fully understand the Fed Cir’s reasoning. It will be interesting to see how the issue of inducing infringement is treated in the UK now that Warner-Lambert v Actavis will proceed to trial on this issue.
EP 0 934 061 / pregabalin / LYRICA
Limelight Networks Inc v Akamai Technologies Inc, (USSC, 2014) rev’g 692 F.3d 1301 (Fed Cir 2012)(en banc)
In Akamai v Limelight the US Federal Circuit held that a party may be liable for inducing infringement of a method claim even if there was no direct infringement by any single actor, so long as all of the steps that constitute the infringement method were practiced. Consequently, an inducer would be liable if it practiced some of the steps and induced another to practice the rest. The USSC reversed, holding that inducement liability can only arise if there is direct infringement, and, on the authority of the Fed Cir Muniauction 532 F. 3d 1318 (2008) decision, direct infringement of a method claim requires that all the steps are performed by a single actor. Consequently, the USSC held that inducement liability only arises if all the steps of a method claim are performed by a single actor.
In contrast, in Warner-Lambert v Actavis the EWCA undertook a thorough review of the European case law, and noted that the courts of two EPC members states (Holland and Germany [106]) have concluded that indirect infringement can arise even in “the absence of a downstream event which, as a whole, can be regarded as putting the invention into effect” [135]-[136]. That is, indirect infringement does not necessarily require direct infringement. The EWCA did not give its own opinion on this matter, as the issue on appeal was only whether a claim for indirect infringement should be struck. But the EWCA did point to this view of the Dutch and German courts as reason for allowing the claim for indirect infringement to go to trial [136], [140].
Both US and European case law have to be treated with case. Both the US and European statutes define infringement (s 60 of the UK Act, s 271 of the US Act), while the Canadian Act has no explicit definition. The split between the US and European approaches is nonetheless instructive because the relevant European provisions derive ultimately (though loosely) from the US statute (see Grimme [2010] EWCA Civ 1110 ¶ 92), so the split is not just due to fundamentally different statutory provisions.
I have no opinion as to how this difficult question is best resolved, but the European developments do indicate that it would be wrong for Canadian courts to simply follow the recent USSC decision in Limelight v Akamai. That is particularly so because the US debate over the proper approach to inducing infringement is closely tied up with the Muniauction test for direct infringement. The USSC relied on Muniauction "[a]ssuming without deciding" that it is correct, and implied that any difficulties its holding might cause were attributable to Muniauction's strict approach to direct infringement. This might have been taken as an invitation to the Fed Cir to revisit that decision, but that invitation was declined in Akamai v. Limelight (Fed. Cir. 2015), on remand, which essentially reaffirmed Muniauction. Moreover, as explained here, it appears that in reversing the Fed Cir, the USSC didn’t fully understand the Fed Cir’s reasoning. It will be interesting to see how the issue of inducing infringement is treated in the UK now that Warner-Lambert v Actavis will proceed to trial on this issue.
Thursday, June 11, 2015
EWCA Criticizes Prohibition on Patenting Methods of Medical Treatment
Warner-Lambert Company, LLC v Actavis Group Ptc & Ors [2015] EWCA Civ 556 (28 May
2015) aff’g [2015] EWHC 72 (Pat) (interlocutory injunction) rev’g [2015] EWHC 249 (Pat)
(indirect infringement)
EP 0 934 061 / pregabalin/ LYRICA
The decision of the EWCA in Warner-Lambert v Actavis / pregabalin is an appeal from two decisions of Arnold J, refusing to grant an interlocutory injunction and striking a claim of indirect infringement. Despite the preliminary nature of the decisions on appeal, the EWCA is a must-read on methods of medical treatment, Swiss form claims, and direct and indirect infringement of second medical use patents. The IPKat has an excellent summary of the key holdings.
In this post I’d like to highlight the court’s remarks on methods of medical treatment. Methods of medical treatment are unpatentable under the EPC, as they are in Canada. The basis for the prohibition in the EPC is statutory (Art 53(c)), while in Canada it is a judge-made exception (see here). European law therefore cannot necessarily be assumed to reflect the same principles, but the basic rule is sufficiently similar that European jurisprudence may at least cast some light on the Canadian rule.
In Warner-Lambert v Actavis the EWCA noted that Swiss forms claims arose from the need to provide protection for second-medical use inventions in the face of the rule that “for reasons connected with protecting medical practitioners from claims for patent infringement, a patent cannot be granted for a method of treatment of humans with a therapy using the compound in question” [51]. We see here that the EWCA is of the view that the main reason for the rule against patenting methods of medical treatment is to ensure that physicians can treat their patients as is medically required, without being inhibited by fear of a patent infringement action.
The EWCA then pointed out that Swiss form claims are not necessarily effective in achieving this goal , because a Swiss form claim is a process claim, so “its direct product, the medicine, is an infringement, and all those who use or dispose of the product will infringe” [54]. Consequently,
Or both, I might add, which is essentially the situation in the US; claims to methods of medical treatment are permitted, while physicians are provided with a defence under 35 USC § 287(c)(1). This makes perfect sense: if the underlying policy is to provide doctors with a defence, surely the best way to implement that policy is to provide doctors with a defence. Attempting the same thing indirectly, through a prohibition on methods of medical treatment, is both over- and under- inclusive; it does not adequately protect physicians, but at the same time makes it difficult to protect valuable second-medical use inventions.
I would add that another rationale is sometimes advanced for refusing to allow patents for methods of method treatment, and the exercise of professional skill more generally, in those cases where the inventive contribution cannot be precisely defined or reliably replicated. As I said in a previous post:
This rationale is compelling, but it does not require that methods of medical treatment or the exercise of professional skill be unpatentable, because such claims would be invalid for ambiguity in any event. If this problem of replicability is the real issue, excluding claims to the exercise of professional skill is both under-inclusive, because it only catches a subset of claims in which replicability is a problem, and over-inclusive, because replicability is not a problem in all exercises of professional skill.
EP 0 934 061 / pregabalin/ LYRICA
The decision of the EWCA in Warner-Lambert v Actavis / pregabalin is an appeal from two decisions of Arnold J, refusing to grant an interlocutory injunction and striking a claim of indirect infringement. Despite the preliminary nature of the decisions on appeal, the EWCA is a must-read on methods of medical treatment, Swiss form claims, and direct and indirect infringement of second medical use patents. The IPKat has an excellent summary of the key holdings.
In this post I’d like to highlight the court’s remarks on methods of medical treatment. Methods of medical treatment are unpatentable under the EPC, as they are in Canada. The basis for the prohibition in the EPC is statutory (Art 53(c)), while in Canada it is a judge-made exception (see here). European law therefore cannot necessarily be assumed to reflect the same principles, but the basic rule is sufficiently similar that European jurisprudence may at least cast some light on the Canadian rule.
In Warner-Lambert v Actavis the EWCA noted that Swiss forms claims arose from the need to provide protection for second-medical use inventions in the face of the rule that “for reasons connected with protecting medical practitioners from claims for patent infringement, a patent cannot be granted for a method of treatment of humans with a therapy using the compound in question” [51]. We see here that the EWCA is of the view that the main reason for the rule against patenting methods of medical treatment is to ensure that physicians can treat their patients as is medically required, without being inhibited by fear of a patent infringement action.
The EWCA then pointed out that Swiss form claims are not necessarily effective in achieving this goal , because a Swiss form claim is a process claim, so “its direct product, the medicine, is an infringement, and all those who use or dispose of the product will infringe” [54]. Consequently,
[55] It would have been better if doctors had been provided with a defence, or the
restriction on methods of treatment repealed altogether.
Or both, I might add, which is essentially the situation in the US; claims to methods of medical treatment are permitted, while physicians are provided with a defence under 35 USC § 287(c)(1). This makes perfect sense: if the underlying policy is to provide doctors with a defence, surely the best way to implement that policy is to provide doctors with a defence. Attempting the same thing indirectly, through a prohibition on methods of medical treatment, is both over- and under- inclusive; it does not adequately protect physicians, but at the same time makes it difficult to protect valuable second-medical use inventions.
I would add that another rationale is sometimes advanced for refusing to allow patents for methods of method treatment, and the exercise of professional skill more generally, in those cases where the inventive contribution cannot be precisely defined or reliably replicated. As I said in a previous post:
Professional skill often reflects a multitude of subtle practices that have accumulated over
years of experience. These skills can be capable of general definition, yet precisely
because the general strategy is instantiated by a variety of specific practices, it may be
difficult to define how to practice the skill. For example, a lawyer who is skilled in
cross-examination may say "I like to establish a rapport with the witness" or "I like to
intimidate the witness," but how exactly this is done is difficult to define. A few tricks
might be described, but the skill must ultimately be learned by experience and practice -
which is why it is referred to as a skill rather than a rule. It seems evident that such skills
should not be patentable, and I suggest that this may underpin the intuition that
professional skills are unpatentable. But this rationale only applies to certain types of
professional skill, namely those which cannot be precisely defined. Any claim to such a
skill would be unpatentable in any event, as being vague or insufficiently disclosed. This
objection does not apply to skills that can be sufficiently precisely defined to be
susceptible of effective use on the disclosure in a patent.
This rationale is compelling, but it does not require that methods of medical treatment or the exercise of professional skill be unpatentable, because such claims would be invalid for ambiguity in any event. If this problem of replicability is the real issue, excluding claims to the exercise of professional skill is both under-inclusive, because it only catches a subset of claims in which replicability is a problem, and over-inclusive, because replicability is not a problem in all exercises of professional skill.
Tuesday, June 9, 2015
FCA Affirms Validity of LUMIGAN RC Patent on the Facts
Apotex Inc v Allergan Inc 2015 FCA 137 Dawson JA: Webb, Boivin JA aff’g 2014 FC 567
O'Reilly J
2,585,691 / bimatoprost / LUMIGAN RC
O’Reilly J’s holding that the ‘691 patent turned largely on the facts, and, unsurprisingly, the FCA has affirmed on the basis that O’Reilly J made no legal error and there was no palpable and overriding error in his factual findings.
O’Reilly J held, on the authority of Sanofi, 2008 SCC 61, [77], that it is sometimes necessary to look to the disclosure to determine the inventive concept of the claims. In my post on that aspect of his decision, I remarked that “O’Reilly J is clearly right on this point,” and the FCA has now affirmed that principle, on the same authority [7.1]
On appeal Apotex also argued that the utility of the invention was not soundly predicted “because the line of reasoning from which the desired result can be inferred was not explicitly disclosed in the patent” [8]. The FCA held that “[t]hose elements of the doctrine of sound prediction that would be self-evident to the skilled person need not be explicitly disclosed in the patent” [9]. This strikes me as no more than an explicit statement of what is implicit in the principle that the patent is addressed to a skilled person, and it does not represent any change in the practice in this respect. (See here for my discussion of the FC holding on this point.)
The FCA also affirmed at [10] that a genus patent does not anticipate a selection if the special advantages of the selection are not disclosed in the genus. As the FCA pointed out, this point was established in Sanofi [32].
2,585,691 / bimatoprost / LUMIGAN RC
O’Reilly J’s holding that the ‘691 patent turned largely on the facts, and, unsurprisingly, the FCA has affirmed on the basis that O’Reilly J made no legal error and there was no palpable and overriding error in his factual findings.
O’Reilly J held, on the authority of Sanofi, 2008 SCC 61, [77], that it is sometimes necessary to look to the disclosure to determine the inventive concept of the claims. In my post on that aspect of his decision, I remarked that “O’Reilly J is clearly right on this point,” and the FCA has now affirmed that principle, on the same authority [7.1]
On appeal Apotex also argued that the utility of the invention was not soundly predicted “because the line of reasoning from which the desired result can be inferred was not explicitly disclosed in the patent” [8]. The FCA held that “[t]hose elements of the doctrine of sound prediction that would be self-evident to the skilled person need not be explicitly disclosed in the patent” [9]. This strikes me as no more than an explicit statement of what is implicit in the principle that the patent is addressed to a skilled person, and it does not represent any change in the practice in this respect. (See here for my discussion of the FC holding on this point.)
The FCA also affirmed at [10] that a genus patent does not anticipate a selection if the special advantages of the selection are not disclosed in the genus. As the FCA pointed out, this point was established in Sanofi [32].
Thursday, May 21, 2015
Disgorgement of Patentee’s Profits Fails Second Branch of Unjust Enrichment Test
Apotex Inc v Eli Lilly & Co, 2015 ONCA 305 Feldman JA: Doherty, Blair JJA aff’g 2013 ONSC
5937 Grace J: Law, Sachs JJ
When a patentee brings an application for an order of prohibition pursuant to the NOC Regulations a statutory stay is automatically triggered keeping the generic off the market for 24 months or until the application is resolved in the generic's favour. If the generic prevails, it is entitled, under s 8, to damages equal to the profits it lost from having been kept off the market by the statutory stay. Since the patentee's price is normally higher than the generic's, the profits made by the patentee from sales that would have been made by the generic but for the stay are normally greater than the generic’s damages. Apotex has now failed, once again, to obtain not just its damages, but a disgorgement of the profits made by the patentee.
In its decision on this motion to strike Apotex' claim for unjust enrichment, the ONCA has provided a helpful review of the prior attempts by Apotex, both in the Federal Courts and Ontario courts, to obtain a disgorgement [22]-[31]. Apotex was previously unsuccessful on the basis that s 8 is a complete code which contemplates damages as the sole remedy [35] (and see here, discussing the previous ONCA decision, and here discussing the leading FCA decision).
In this case Apotex argued that these precedents do not govern when the patent holder obtains and lists its patent through misrepresentation: that is, it argued that even if mere invocation of the NOC Regulations cannot trigger disgorgement, knowingly triggering the Regulations by misrepretation may trigger such a remedy. This invited a debate as to the limits of the "complete code" argument, which was the basis on which Apotex' claim was struck by the Divisional Court. But the ONCA, of its own initiative [40], took a different tack. Instead of holding that the unjust enrichment claim was barred because allowing it would be inconsistent with the statutory regime, the ONCA held that Apotex' claim could not stand purely as a matter of the law of unjust enrichment [39], [41] (my emphasis):
It is true that the patentee, Lilly in this case, benefitted at Apotex’ expense to some degree – the profits lost by Apotex were gained by Lilly – but Apotex is already entitled to recover that loss under s 8. In the unjust enrichment claim Apotex is seeking Lilly’s excess profits above the damages which are already payable to Apotex, and “the portion of the windfall that is not compensable under s. 8 of the PMNOC regulations, the monopolistic profit, was not in any way transferred from Apotex or lost by Apotex” [53].
This brings us to Apotex’ policy argument, which is that [16]:
There are two answers to this. One is the “complete code” argument. The appropriate incentive is a complex matter which has been addressed by the legislature in the NOC Regulations as a whole. There are a number of difficult policy decisions related to the incentives to use the regulations. For example, under the US Hatch-Waxman Act, the first generic to successfully challenge the patent gets a 180 day exclusivity over other generics as an added incentive to file applications. This incentive feature is missing from Canadian law. Whether this is right or wrong, it is a decision that has been made by the legislature, and so should be changed, if necessary, by the same body.
The other response is made by the ONCA in this case:
That is, even if it is desirable to require the patentee to disgorge its profits to avoid abuse of the patent-linkage system, it does not follow that the profits should be disgorged to the generic. There is a prima facie argument that the parties actually harmed by the excessive prices, namely the consumers, should be those entitled to the disgorgement.
This argument is entirely distinct from the complete code argument. As the ONCA pointed out, in Low v Pfizer Canada Inc, 2014 BCSC 1469, Smith J allowed an allegation of unjust enrichment to stand in a class action claim on behalf of consumers [33]. Smith J’s holding required a rejection of the “complete code” argument [34], but it is consistent with the ONCA’s holding in this case. Even if it sound policy to require a patentee to disgorge is profits, Low v Pfizer illustrates that it is not necessary, either in theory or in practice, to require those profits to be disgorged to the generic that triggered the s 8 challenge.
When a patentee brings an application for an order of prohibition pursuant to the NOC Regulations a statutory stay is automatically triggered keeping the generic off the market for 24 months or until the application is resolved in the generic's favour. If the generic prevails, it is entitled, under s 8, to damages equal to the profits it lost from having been kept off the market by the statutory stay. Since the patentee's price is normally higher than the generic's, the profits made by the patentee from sales that would have been made by the generic but for the stay are normally greater than the generic’s damages. Apotex has now failed, once again, to obtain not just its damages, but a disgorgement of the profits made by the patentee.
In its decision on this motion to strike Apotex' claim for unjust enrichment, the ONCA has provided a helpful review of the prior attempts by Apotex, both in the Federal Courts and Ontario courts, to obtain a disgorgement [22]-[31]. Apotex was previously unsuccessful on the basis that s 8 is a complete code which contemplates damages as the sole remedy [35] (and see here, discussing the previous ONCA decision, and here discussing the leading FCA decision).
In this case Apotex argued that these precedents do not govern when the patent holder obtains and lists its patent through misrepresentation: that is, it argued that even if mere invocation of the NOC Regulations cannot trigger disgorgement, knowingly triggering the Regulations by misrepretation may trigger such a remedy. This invited a debate as to the limits of the "complete code" argument, which was the basis on which Apotex' claim was struck by the Divisional Court. But the ONCA, of its own initiative [40], took a different tack. Instead of holding that the unjust enrichment claim was barred because allowing it would be inconsistent with the statutory regime, the ONCA held that Apotex' claim could not stand purely as a matter of the law of unjust enrichment [39], [41] (my emphasis):
there is a fundamental flaw in Apotex’s claim for unjust enrichment that makes this
doctrine unavailable to Apotex, irrespective of the nature of Lilly’s conduct that may be
proved at a trial. The flaw is in the second requirement for a claim of unjust enrichment: a
corresponding deprivation.
Put simply, Apotex was never deprived of the portion of Lilly’s revenues represented by
its monopolistic profits because Apotex would never have earned those profits.
It is true that the patentee, Lilly in this case, benefitted at Apotex’ expense to some degree – the profits lost by Apotex were gained by Lilly – but Apotex is already entitled to recover that loss under s 8. In the unjust enrichment claim Apotex is seeking Lilly’s excess profits above the damages which are already payable to Apotex, and “the portion of the windfall that is not compensable under s. 8 of the PMNOC regulations, the monopolistic profit, was not in any way transferred from Apotex or lost by Apotex” [53].
This brings us to Apotex’ policy argument, which is that [16]:
In the absence of a disgorgement of [the patentee’s profits], every patentee would have an
incentive to use the PMNOC Regulations in all cases to unjustly delay entry of every
generic product at the expense of the Generic, in the knowledge that the revenues made
by it would exceed the damages for which it will be liable for the delay caused to the
Generic.
There are two answers to this. One is the “complete code” argument. The appropriate incentive is a complex matter which has been addressed by the legislature in the NOC Regulations as a whole. There are a number of difficult policy decisions related to the incentives to use the regulations. For example, under the US Hatch-Waxman Act, the first generic to successfully challenge the patent gets a 180 day exclusivity over other generics as an added incentive to file applications. This incentive feature is missing from Canadian law. Whether this is right or wrong, it is a decision that has been made by the legislature, and so should be changed, if necessary, by the same body.
The other response is made by the ONCA in this case:
Effectively, Apotex is asking the court to designate it as the de facto beneficiary of the
wrongfully-obtained monopolistic profits despite recognizing in its pleadings that it was
the public that suffered actual deprivation as a result of the monopolistic pricing. Unlike
the plaintiffs in the “profiting from wrong” cases discussed above, Apotex is not
positioned as the sole party with a legitimate right to “enforce” or “deter” the underlying
wrong. The pecuniary interests of consumers, and potentially other generic companies,
are also implicated.
That is, even if it is desirable to require the patentee to disgorge its profits to avoid abuse of the patent-linkage system, it does not follow that the profits should be disgorged to the generic. There is a prima facie argument that the parties actually harmed by the excessive prices, namely the consumers, should be those entitled to the disgorgement.
This argument is entirely distinct from the complete code argument. As the ONCA pointed out, in Low v Pfizer Canada Inc, 2014 BCSC 1469, Smith J allowed an allegation of unjust enrichment to stand in a class action claim on behalf of consumers [33]. Smith J’s holding required a rejection of the “complete code” argument [34], but it is consistent with the ONCA’s holding in this case. Even if it sound policy to require a patentee to disgorge is profits, Low v Pfizer illustrates that it is not necessary, either in theory or in practice, to require those profits to be disgorged to the generic that triggered the s 8 challenge.
Wednesday, May 20, 2015
OMNARIS Patents Invalid for Obviousness
Takeda Canada Inc v Apotex Inc 2015 FC 570 O'Reilly J
2,388,322 / 2,388,325 / 2,538,419 / ciclesonide / OMNARIS
Takeda had a compound patent to ciclesonide (2,050,812) which expired in 2011 [3]. The patents at issue in this case were two formulation patents and a second use patent. O’Reilly J held all three patents to be obvious. None of the other grounds were addressed [5]. O’Reilly J’s holding turned entirely on the facts. One point of interest is that he did prefer evidence that was given before the expert knew what was claimed in the patent in dispute, following Rasagiline (blogged here) and Esomeprazole 2014 FC 638 [29], [43], [60]. However, this did not appear to be a determinative reason in his overall weighing of the evidence; for example, another factor that was at least as important was the fact that Takeda’s expert did not fully canvass the prior art [34], [45].
2,388,322 / 2,388,325 / 2,538,419 / ciclesonide / OMNARIS
Takeda had a compound patent to ciclesonide (2,050,812) which expired in 2011 [3]. The patents at issue in this case were two formulation patents and a second use patent. O’Reilly J held all three patents to be obvious. None of the other grounds were addressed [5]. O’Reilly J’s holding turned entirely on the facts. One point of interest is that he did prefer evidence that was given before the expert knew what was claimed in the patent in dispute, following Rasagiline (blogged here) and Esomeprazole 2014 FC 638 [29], [43], [60]. However, this did not appear to be a determinative reason in his overall weighing of the evidence; for example, another factor that was at least as important was the fact that Takeda’s expert did not fully canvass the prior art [34], [45].
Tuesday, May 19, 2015
Should Claim Construction be a Matter of Law?
Cobalt Pharmaceuticals Co v Bayer Inc / drospirenone (NOC) 2015 FCA 116 Stratas JA:
Pelletier, Webb JJA aff’g 2013 FC 1061 Hughes J (blogged here and here)
2,382,426 / drospirenone / YAZ
In Cobalt / Drospirenone the FCA held that “[t]he Federal Court’s construction of the patent is to be reviewed on the basis of correctness” [12]. However, Stratas and Webb JA went on to argue at some length, in obiter comments, that it would make more sense to apply a deferential standard [16]-[24]. (Pelletier JA did not join in this potion of the decision; he did not disagree with the comments, but rather expressed no opinion on the basis that it was not necessary to do so for the disposition of the appeal [105]).
Stratas JA pointed out that “a court nearly always reads a patent through goggles supplied by the experts whom the judge considers to be credible and accurate,” and “[o]ften the experts’ testimony stretches beyond opinion evidence and goes into factual matters within their knowledge that are relevant to the construction exercise” [17], [18]. As is well-recognized, if an inquiry is heavily fact dependent, this militates in favour of a deferential standard of review [18], [20].
These are compelling arguments against reviewing claims construction on a correctness standard. I also agree with Stratas JA’s observation that “doctrine of comity among judges will ensure there is sufficient consistency and certainty in the meaning of patents” [21]. But I don’t think these points, valid though they are, lead to the conclusion that a generally deferential standard of review should apply. In principle at least, the problem of claim construction is a mixed question of fact and law. Ideally, the trial judge would use the testimony of the experts to educate herself as to the meaning of all the technical terms, and then, armed with that knowledge, would construe the claim herself. The first aspect of the inquiry is factual, while the second is legal. It would follow that in principle the mixed standard – deferential review except for extricable legal questions, which are reviewed for correctness – should be applied. This is the standard which applies in obviousness and utility for example, as Stratas JA notes [48], [55]. Stratas JA appealed to Sattva Capital 2014 SCC 53, for the proposition that “even legal documents may be subject to review on a deferential standard” [24]. Indeed, Sattva Capital does illustrate that legal documents are not necessarily reviewed on a correctness standard, but to be precise, the SCC held that a mixed standard of review was applicable to the contract in question [53].
I don’t think I am disagreeing with Stratas JA in suggesting that the appropriate standard is mixed standard. While he repeatedly referred to “a deferential approach” [20] or “a deferential standard” [24], or “according deference” [22], his comments were mainly directed at showing why a pure correctness standard was problematic, and in referring to “a” deferential standard, he appears to have intended to capture any standard more deferential than correctness. This is directly implied by his reference to both Sattva Capital and the USSC decision in Teva v Sandoz as endorsing a deferential standard, as both of those cases endorse a mixed standard.
In any event, even if a mixed standard is applicable in principle, can it really be applied in practice? Stratas JA made this point by asking rhetorically, “How are appellate judges supposed to cleave off those aspects of claim construction that flow from the trial judge’s appreciation of expert evidence from the words of the claim per se?” [20]. It seems to me that the answer is yes, sometimes they can. This is illustrated by Stratas JA’s own decision in Cobalt / Drospirenone. While he argued that a deferential standard would be preferable, he recognized that review for correctness is settled law, and correctness is the standard he actually applied [25].
The claim of the ‘426 patent in question, Claim 31, was to “drospirenone particles” [27] and the question was whether this should be construed as being limited to micronized particles [28]. In making the argument that it should be so limited, Cobalt pointed to references to micronized form in several points in the specification. In rejecting Cobalt’s argument, Stratas J noted that “Patents are not to be construed in a tendentious way. Rather, we must examine the patent as a whole construing the language of the claims with due regard to the inventor’s purpose through the eyes of the skilled reader: Whirlpool, [2000 SCC 67]” [31]. This, it seems to me, is a point of law, as is indicated by the fact that Stratas JA cited the authority of Whirlpool as support. He also noted that while some of the claims did explicitly claim “micronized drospirenone particles,” others, including the claim at issue, were not so limited [37]. Had the inventors intended to limit Claim 31 to micronized particles, they would have done so explicitly, as they did in other claims. This is not a question of what “micronized” means, or anything else which is informed by technical expertise, but is rather a matter of general grammar and interpretative principles, which are more squarely within the expertise of a judge than a technical expert. Similarly, Stratas JA pointed to a passage in the specification stating that “Instead of providing the drospirenone in micronized form, it is possible to [use other techniques to promote rapid dissolution]” [35]. To explicitly give micronized form as but one alternative in the specification supports the view that not all of the claims are restricted to micronized form. One can come to this conclusion without knowing what “micronized” means. Without getting into the niceties of whether these are all strictly extricable questions of law, at least they are questions which are squarely within the expertise of a judge, rather than a technical expert.
This distinction is important because the law / fact question goes not only to the standard of appellate review, but also to the role of the trial judge in the construction of the patent. Indeed, the statement by the SCC that is cited as authority for the correctness standard – “claims construction is a matter of law for the judge” – goes to the latter point (Whirlpool [61], cited at [12]). The full passage is as follows:
In the question of whether Claim 31 was restricted to micronized particles, it would no doubt be possible for a trial judge to decide this matter purely as a question of fact by considering the evidence of expert witnesses. But this would require the expert witness to testify eg that a skilled person would in fact construe the claims by looking to the patent as a whole with due regard to the inventor’s purpose, and that a skilled person would note that some claims did use this language, and would therefore infer that the claims that were not so restricted were broader, and so on. And another expert would no doubt testify to the contrary. The trial judge would likely then decide that the evidence of the expert who advanced grammatically peculiar interpretations was to be discounted. But if the trial judge could and should discount the evidence of an expert who testifies to an ungrammatical reading for the reason that the reading is ungrammatical, it is more straightforward for the trial judge to simply say directly she can consider matters of grammatical reading herself, without evidence from technology experts. That, it seems to me, is the gist of the SCC statement in Whirlpool.
In summary, Stratas JA has given strong reasons not to review claim construction on a pure correctness standard, but there is a stronger argument for a mixed standard than for a wholly deferential standard. Stratas JA’s comments were directly primarily to the problems with the correctness standard, and I do not see his remarks as ruling out the mixed standard.
2,382,426 / drospirenone / YAZ
In Cobalt / Drospirenone the FCA held that “[t]he Federal Court’s construction of the patent is to be reviewed on the basis of correctness” [12]. However, Stratas and Webb JA went on to argue at some length, in obiter comments, that it would make more sense to apply a deferential standard [16]-[24]. (Pelletier JA did not join in this potion of the decision; he did not disagree with the comments, but rather expressed no opinion on the basis that it was not necessary to do so for the disposition of the appeal [105]).
Stratas JA pointed out that “a court nearly always reads a patent through goggles supplied by the experts whom the judge considers to be credible and accurate,” and “[o]ften the experts’ testimony stretches beyond opinion evidence and goes into factual matters within their knowledge that are relevant to the construction exercise” [17], [18]. As is well-recognized, if an inquiry is heavily fact dependent, this militates in favour of a deferential standard of review [18], [20].
These are compelling arguments against reviewing claims construction on a correctness standard. I also agree with Stratas JA’s observation that “doctrine of comity among judges will ensure there is sufficient consistency and certainty in the meaning of patents” [21]. But I don’t think these points, valid though they are, lead to the conclusion that a generally deferential standard of review should apply. In principle at least, the problem of claim construction is a mixed question of fact and law. Ideally, the trial judge would use the testimony of the experts to educate herself as to the meaning of all the technical terms, and then, armed with that knowledge, would construe the claim herself. The first aspect of the inquiry is factual, while the second is legal. It would follow that in principle the mixed standard – deferential review except for extricable legal questions, which are reviewed for correctness – should be applied. This is the standard which applies in obviousness and utility for example, as Stratas JA notes [48], [55]. Stratas JA appealed to Sattva Capital 2014 SCC 53, for the proposition that “even legal documents may be subject to review on a deferential standard” [24]. Indeed, Sattva Capital does illustrate that legal documents are not necessarily reviewed on a correctness standard, but to be precise, the SCC held that a mixed standard of review was applicable to the contract in question [53].
I don’t think I am disagreeing with Stratas JA in suggesting that the appropriate standard is mixed standard. While he repeatedly referred to “a deferential approach” [20] or “a deferential standard” [24], or “according deference” [22], his comments were mainly directed at showing why a pure correctness standard was problematic, and in referring to “a” deferential standard, he appears to have intended to capture any standard more deferential than correctness. This is directly implied by his reference to both Sattva Capital and the USSC decision in Teva v Sandoz as endorsing a deferential standard, as both of those cases endorse a mixed standard.
In any event, even if a mixed standard is applicable in principle, can it really be applied in practice? Stratas JA made this point by asking rhetorically, “How are appellate judges supposed to cleave off those aspects of claim construction that flow from the trial judge’s appreciation of expert evidence from the words of the claim per se?” [20]. It seems to me that the answer is yes, sometimes they can. This is illustrated by Stratas JA’s own decision in Cobalt / Drospirenone. While he argued that a deferential standard would be preferable, he recognized that review for correctness is settled law, and correctness is the standard he actually applied [25].
The claim of the ‘426 patent in question, Claim 31, was to “drospirenone particles” [27] and the question was whether this should be construed as being limited to micronized particles [28]. In making the argument that it should be so limited, Cobalt pointed to references to micronized form in several points in the specification. In rejecting Cobalt’s argument, Stratas J noted that “Patents are not to be construed in a tendentious way. Rather, we must examine the patent as a whole construing the language of the claims with due regard to the inventor’s purpose through the eyes of the skilled reader: Whirlpool, [2000 SCC 67]” [31]. This, it seems to me, is a point of law, as is indicated by the fact that Stratas JA cited the authority of Whirlpool as support. He also noted that while some of the claims did explicitly claim “micronized drospirenone particles,” others, including the claim at issue, were not so limited [37]. Had the inventors intended to limit Claim 31 to micronized particles, they would have done so explicitly, as they did in other claims. This is not a question of what “micronized” means, or anything else which is informed by technical expertise, but is rather a matter of general grammar and interpretative principles, which are more squarely within the expertise of a judge than a technical expert. Similarly, Stratas JA pointed to a passage in the specification stating that “Instead of providing the drospirenone in micronized form, it is possible to [use other techniques to promote rapid dissolution]” [35]. To explicitly give micronized form as but one alternative in the specification supports the view that not all of the claims are restricted to micronized form. One can come to this conclusion without knowing what “micronized” means. Without getting into the niceties of whether these are all strictly extricable questions of law, at least they are questions which are squarely within the expertise of a judge, rather than a technical expert.
This distinction is important because the law / fact question goes not only to the standard of appellate review, but also to the role of the trial judge in the construction of the patent. Indeed, the statement by the SCC that is cited as authority for the correctness standard – “claims construction is a matter of law for the judge” – goes to the latter point (Whirlpool [61], cited at [12]). The full passage is as follows:
The appellants object that the "vane" controversy ought to have been foreclosed by the
Agreed Statement of Facts where the parties agreed that the appellants' flex vane machine
infringed the '803 patent subject to the removable sleeve issue. However, claims
construction is a matter of law for the judge, and he was quite entitled to adopt a
construction of the claims that differed from that put forward by the parties.
In the question of whether Claim 31 was restricted to micronized particles, it would no doubt be possible for a trial judge to decide this matter purely as a question of fact by considering the evidence of expert witnesses. But this would require the expert witness to testify eg that a skilled person would in fact construe the claims by looking to the patent as a whole with due regard to the inventor’s purpose, and that a skilled person would note that some claims did use this language, and would therefore infer that the claims that were not so restricted were broader, and so on. And another expert would no doubt testify to the contrary. The trial judge would likely then decide that the evidence of the expert who advanced grammatically peculiar interpretations was to be discounted. But if the trial judge could and should discount the evidence of an expert who testifies to an ungrammatical reading for the reason that the reading is ungrammatical, it is more straightforward for the trial judge to simply say directly she can consider matters of grammatical reading herself, without evidence from technology experts. That, it seems to me, is the gist of the SCC statement in Whirlpool.
In summary, Stratas JA has given strong reasons not to review claim construction on a pure correctness standard, but there is a stronger argument for a mixed standard than for a wholly deferential standard. Stratas JA’s comments were directly primarily to the problems with the correctness standard, and I do not see his remarks as ruling out the mixed standard.
Friday, May 15, 2015
Time for En Banc Review at the FCA?
Cobalt Pharmaceuticals Co v Bayer Inc / drospirenone (NOC) 2015 FCA 116 Stratas JA:
Pelletier, Webb JJA aff’g 2013 FC 1061 Hughes J (blogged here and here)
2,179,728 / 2,382,426 / drospirenone / YAZ
No new law was applied by the FCA in Cobalt / Drospirenone and the result itself is not surprising, but the decision is nonetheless very interesting. Stratas JA explicitly called for the SCC to provide advice in two different areas, namely the standard of review for claim construction [16] and whether methods of medical treatment should be considered patentable subject matter [101]. Stratas JA also provided an in-depth discussion, albeit in obiter, of whether construction of the claims should be considered a matter of law or fact [16]-[24].
That the FCA called for SCC clarification in two contentious areas of law raises the broader question of what institutional mechanisms should be used to clarify and advance the law. I suggest it is time to seriously consider instituting an en banc mechanism similar to that which is used in both the US appellate system, including the Federal Circuit, and in the EPO with the Enlarged Board of Appeal. In this mechanism, a court which normally sits in panels, will sit with a large number of judges (though not necessarily the full court) to review its own decision in appeals raising important points of law. As the EPO explains, the Enlarged Board of Appeal “clarifies and interprets important points of law . . . and ensures uniform application of the law.” The issues raised in this case illustrate the usefulness of a mechanism for clarification and interpretation of important points of law. An en banc procedure could also usefully address apparent divergences between different panels of the FCA. En banc review would have advantages over the options which are currently institutionally available, namely legislative amendment, review by the SCC, or allowing panels to overrule prior decisions of other panels.
The problem with legislative amendment is obvious: the legislature has a lot on its plate and even very important issues of patent law may not be important enough to warrant legislative action. This is so obvious that in his call for reform Stratas JA addressed himself only to the SCC: he did not bother to say “in the interests of the sound development of the law, I would like to offer certain observations for the legislature to consider.” But much the same can be said about the SCC. The SCC has a limited caseload and it grants leave only in cases which it considers to be “of public importance” (Supreme Court Act s 40; and see here for a general discussion of the factors considered in leave decisions.) As I noted in an earlier post, “The SCC only hears about 60 cases a year, including many as of right criminal appeals, and it has an understandable focus on constitutional and criminal law cases. With what remains it has to deal with every other area of private law. The SCC simply does not have the ability to deal with every confused technical area of law, no matter how important that area might be to some parties.” It is true that the SCC is more accessible than the legislature and it is certainly more likely to act on technical matters of law such as the nature of appellate review, but the fact remains that the SCC cannot deal with every area of patent law that requires clarification or reform.
The problem of accessibility does not arise if we look to individual panels of the FCA, but individual panels simply lack the requisite institutional authority. This is quite apart from any argument that a panel should not be permitted to change or depart from settled law in order to preserve the expectations of the parties. Even if we were to say that it is permissible for an individual panel to depart from settled law, doing so would be more likely to further confuse difficult areas of law. The views of any panel, even the most recent to opine on a particular issue, carry no more weight than the panels that went before it. If one panel purported to change or clarify the law, the next panel to hear the same issue would be perfectly justified in saying that the opinion of the panel that had changed the law deserved no more weight than any of the panels that went before it, and so the supposed change was ineffective. Certainly, a well reasoned opinion of one panel may be so persuasive that subsequent panels will follow it for that reason; and more broadly, mechanisms of comity can cause the law to evolve and become clearer through the decisions of multiple panels. Such a process often does work effectively to resolve difficult new issues of law. But sometimes even new issues prove intractable; and the mechanism of incremental change through the decisions of individual panels is much less effective to address the problem which arises when law which is taken to be settled in principle proves to be problematic in practice.
So, en banc review is more accessible than the legislature or the SCC and it is more authoritative and potentially quicker than the decisions of individual panels. With that said, I can think of a couple of objections to en banc review, though none which strike me as compelling. One is that the law once settled, should not be changed. But that is not an argument against en banc review; it is an argument against changing the law through any mechanism, including SCC review and legislative change. And if the issue is one of clarification or interpretation rather than change, then by definition there are no settled expectations to be disturbed.
The other objection is that en banc review will not be useful when the problematic law is SCC precedent. While it is true that not even an en banc panel of the FCA could overrule the SCC, that only limits the scope of en banc review in some cases. So, one of the areas addressed by the FCA was methods of medical treatment. As Stratas JA noted “The current law in this Court is that methods of medical treatment are not patentable. . . . The provenance of this is Tennessee Eastman Co. et al. v. Commissioner of Patents, [1974] S.C.R. 111, 33 D.L.R. (3d) 459, a decision based on former subsection 41(1) of the Patent Act, now repealed.” As Stratas JA points out, and as the SCC has affirmed, Tennessee Eastman itself was based on s 41. As discussed here, the notion that methods of medical treatment remain unpatentable despite the repeal of s 41 stems from the interpretation of Tennessee Eastman by the FCA itself in ICI (1986) 9 CPR(3d) 289, subsequently affirmed in other FCA decisions. While the law is settled, changing it would not require the FCA to overrule the SCC, but only to overrule its own prior decisions.
The question of the correct standard of appellate review of claim construction is different, because of the authority of the SCC in Whirlpool 2000 SCC 67 [61] holding that “claims construction is a matter of law for the judge.” I will discuss this in more detail in Monday’s post. For now I will just saw that I think the law could be considerably clarified and improved in this area without overruling Whirlpool. And even if I am wrong about that, if en banc review can authoritatively tackle even half the contentious patent issues that come to the FCA, that would be very helpful.
2,179,728 / 2,382,426 / drospirenone / YAZ
No new law was applied by the FCA in Cobalt / Drospirenone and the result itself is not surprising, but the decision is nonetheless very interesting. Stratas JA explicitly called for the SCC to provide advice in two different areas, namely the standard of review for claim construction [16] and whether methods of medical treatment should be considered patentable subject matter [101]. Stratas JA also provided an in-depth discussion, albeit in obiter, of whether construction of the claims should be considered a matter of law or fact [16]-[24].
That the FCA called for SCC clarification in two contentious areas of law raises the broader question of what institutional mechanisms should be used to clarify and advance the law. I suggest it is time to seriously consider instituting an en banc mechanism similar to that which is used in both the US appellate system, including the Federal Circuit, and in the EPO with the Enlarged Board of Appeal. In this mechanism, a court which normally sits in panels, will sit with a large number of judges (though not necessarily the full court) to review its own decision in appeals raising important points of law. As the EPO explains, the Enlarged Board of Appeal “clarifies and interprets important points of law . . . and ensures uniform application of the law.” The issues raised in this case illustrate the usefulness of a mechanism for clarification and interpretation of important points of law. An en banc procedure could also usefully address apparent divergences between different panels of the FCA. En banc review would have advantages over the options which are currently institutionally available, namely legislative amendment, review by the SCC, or allowing panels to overrule prior decisions of other panels.
The problem with legislative amendment is obvious: the legislature has a lot on its plate and even very important issues of patent law may not be important enough to warrant legislative action. This is so obvious that in his call for reform Stratas JA addressed himself only to the SCC: he did not bother to say “in the interests of the sound development of the law, I would like to offer certain observations for the legislature to consider.” But much the same can be said about the SCC. The SCC has a limited caseload and it grants leave only in cases which it considers to be “of public importance” (Supreme Court Act s 40; and see here for a general discussion of the factors considered in leave decisions.) As I noted in an earlier post, “The SCC only hears about 60 cases a year, including many as of right criminal appeals, and it has an understandable focus on constitutional and criminal law cases. With what remains it has to deal with every other area of private law. The SCC simply does not have the ability to deal with every confused technical area of law, no matter how important that area might be to some parties.” It is true that the SCC is more accessible than the legislature and it is certainly more likely to act on technical matters of law such as the nature of appellate review, but the fact remains that the SCC cannot deal with every area of patent law that requires clarification or reform.
The problem of accessibility does not arise if we look to individual panels of the FCA, but individual panels simply lack the requisite institutional authority. This is quite apart from any argument that a panel should not be permitted to change or depart from settled law in order to preserve the expectations of the parties. Even if we were to say that it is permissible for an individual panel to depart from settled law, doing so would be more likely to further confuse difficult areas of law. The views of any panel, even the most recent to opine on a particular issue, carry no more weight than the panels that went before it. If one panel purported to change or clarify the law, the next panel to hear the same issue would be perfectly justified in saying that the opinion of the panel that had changed the law deserved no more weight than any of the panels that went before it, and so the supposed change was ineffective. Certainly, a well reasoned opinion of one panel may be so persuasive that subsequent panels will follow it for that reason; and more broadly, mechanisms of comity can cause the law to evolve and become clearer through the decisions of multiple panels. Such a process often does work effectively to resolve difficult new issues of law. But sometimes even new issues prove intractable; and the mechanism of incremental change through the decisions of individual panels is much less effective to address the problem which arises when law which is taken to be settled in principle proves to be problematic in practice.
So, en banc review is more accessible than the legislature or the SCC and it is more authoritative and potentially quicker than the decisions of individual panels. With that said, I can think of a couple of objections to en banc review, though none which strike me as compelling. One is that the law once settled, should not be changed. But that is not an argument against en banc review; it is an argument against changing the law through any mechanism, including SCC review and legislative change. And if the issue is one of clarification or interpretation rather than change, then by definition there are no settled expectations to be disturbed.
The other objection is that en banc review will not be useful when the problematic law is SCC precedent. While it is true that not even an en banc panel of the FCA could overrule the SCC, that only limits the scope of en banc review in some cases. So, one of the areas addressed by the FCA was methods of medical treatment. As Stratas JA noted “The current law in this Court is that methods of medical treatment are not patentable. . . . The provenance of this is Tennessee Eastman Co. et al. v. Commissioner of Patents, [1974] S.C.R. 111, 33 D.L.R. (3d) 459, a decision based on former subsection 41(1) of the Patent Act, now repealed.” As Stratas JA points out, and as the SCC has affirmed, Tennessee Eastman itself was based on s 41. As discussed here, the notion that methods of medical treatment remain unpatentable despite the repeal of s 41 stems from the interpretation of Tennessee Eastman by the FCA itself in ICI (1986) 9 CPR(3d) 289, subsequently affirmed in other FCA decisions. While the law is settled, changing it would not require the FCA to overrule the SCC, but only to overrule its own prior decisions.
The question of the correct standard of appellate review of claim construction is different, because of the authority of the SCC in Whirlpool 2000 SCC 67 [61] holding that “claims construction is a matter of law for the judge.” I will discuss this in more detail in Monday’s post. For now I will just saw that I think the law could be considerably clarified and improved in this area without overruling Whirlpool. And even if I am wrong about that, if en banc review can authoritatively tackle even half the contentious patent issues that come to the FCA, that would be very helpful.
Thursday, May 7, 2015
Valid Industrial Design May Be Functional
Zero Spill Systems (Int’l) Inc v Heide 2015 FCA 115 Stratas JA: Dawson, Near JJA var’g 2013
FC 616 Barnes J
In its Zero Spill decision the FCA has largely set aside Barnes J’s decision and remitted it for redetermination. The only legal point of interest relates to the ‘793 Industrial Design.
In its Zero Spill decision the FCA has largely set aside Barnes J’s decision and remitted it for redetermination. The only legal point of interest relates to the ‘793 Industrial Design.
Wednesday, May 6, 2015
Allegation of S 53 Invalidity Allowed to Stand
NOV Downhole Eurasia Limited v TLL Oil Field Consulting 2015 FCA 106 Nadon JA: Dawson,
Boivin JJA aff’g 2014 FC 889 Mosley J
2,255,065
In a brief decision from the bench the FCA has affirmed Mosley J’s refusal to strike a statement of defence asserting that the '065 patent was void pursuant to s 53(1) as a result of statements regarding claim scope made during prosecution. As discussed here, this case raises important issues regarding the relationship between s 53 and prosecution history estoppel, though of course these issues are not resolved by a motion to strike.
2,255,065
In a brief decision from the bench the FCA has affirmed Mosley J’s refusal to strike a statement of defence asserting that the '065 patent was void pursuant to s 53(1) as a result of statements regarding claim scope made during prosecution. As discussed here, this case raises important issues regarding the relationship between s 53 and prosecution history estoppel, though of course these issues are not resolved by a motion to strike.
Subscribe to:
Posts (Atom)