Puzzles of Disclosure and Support

Paid Search Engine Tools, LLC v Google Canada Corporation 2021 FC 1435 McDonald J

2,415,167 / Paid Search Engine Bid Management

In my earlier post on this decision, I noted that McDonald J held that in light of the parallelism between 28.1(1), the claim date provision, and 28.2(1), the novelty provision, priority can only be claimed if the priority application discloses the same invention; it is not enough that the claimed subject matter is reasonably inferable from priority document [221]. Specifically, 28.1(1) says priority may only be claimed to a prior application “disclosing the subject-matter defined by the claim.” But as a comment on that post noted, 38.2 prohibits amendments that “add matter that cannot reasonably be inferred from the specification. . . on its filing date”; that means, conversely, that an amendment is permitted if the added matter can be reasonably inferred from the original application. Since the specification is part of the claim, it seems that 38.2 means a new claim is permitted so long as the subject-matter can be reasonably inferred from the original specification. On its face, there seems to be a gap between “reasonably inferred” and “disclosed” with the latter being more stringent than the former: see Western Oilfield 2021 FCA 24 on the difference between the Canadian and UK standards for added matter, discussed here. How can these differing standards be reconciled?

There is a straightforward answer, which is that 38.2 goes to amendments, and 28.1 goes to priority. So it is consistent to have a claim which is permitted (under the less stringent 38.2 standard), but which is not entitled to priority (under the more stringent 28.1 standard).

But problems lie not far below the surface. Consider a scenario in which the description in the application as filed is identical to that in the priority document. A claim is amended during prosecution in response to an objection by the examiner. The amended claim is reasonably inferable from the application as filed, so is permitted by 38.2, but it is not disclosed by the application as filed. The claim date for that claim must be either the filing date or the priority date: there are no other options. In particular, it is not an option under the Act or Rules for the claim date for that claim to be the date on which it was amended. (Compare the old Rule 53 under the old Act.) Section 28.1 provides that the claim date is the filing date unless priority is claimed. If the applicant does not claim priority, then the claim date is the filing date. The claim must also be supported by the description, per Rule 60. It must be implicit that if the amended claim can reasonably be inferred from the description, it is also supported by the description. Otherwise, the “reasonably inferred” standard for permitted amendment would be pointless, as any amended claim that was only reasonably inferred from the description would be invalid for lack of support. This is supported by Hughes J’s passing statement in Bartley 2011 FC 873 [15] equating “supported” with “reasonably inferred.” Because the description is the same in the two documents, this means that the priority document also supports the amended claim.

Now suppose the applicant does claim priority. If the amended claim is not disclosed by the application as filed, it is not disclosed by the priority document, given that in our scenario the descriptions are same in the two documents; but because the descriptions are the same, it also follows that the claim is supported by the priority document. It seems very counter-intuitive that a claim should be properly supported by the application as filed, and yet not entitled to claim priority to a priority document with exactly the same disclosure.

Now change the scenario slightly, and suppose that the claim in question was present in the application as filed. The added matter provision (38.2) is now irrelevant; but by hypothesis, the claim is not disclosed in the priority document even though it is supported by the Canadian application with exactly the same description, which means that priority cannot be claimed.

Refusing a claim to priority on that basis is pointless formalism. The quid pro quo for which the patent exclusivity is granted is the new and non-obvious information disclosed in the description: see Pope Appliance (1929) 46 RPC 23 (JCPC) 55; Halocarbon [1979] 2 SCR 929, 944-45; Pfizer v Ratiopharm 2006 FCA 214 ¶ 23; American Cyanamid Co (Dann's) Patent [1971] 88 RPC 425 (HL) 452; Consolboard [1981] 1 SCR 504, 517; Amazon.com 2011 FCA 328 ¶ 36. The new information disclosed in the specification—the “mental result” or “new idea” or “novel mental concept”—cannot be patented as such: “A disembodied idea is not per se patentable. But it will be patentable if it has a method of practical application”: Shell Oil [1982] 2 SCR 536, 554. The claims define practical embodiments of that information: as the SCC said long ago: “A patentable invention is a mental result. . . . The machine, process or product is but its material reflex and embodiment”: Ball v Crompton Corset Co (1887) 13 SCR 469, 477 quoting with approval Smith v Nicholls, 88 US (21 Wall) 112 (1874) 118. The requirement that the claims are supported by the description ensures that the claimed subject matter reflects the new information: an inventor cannot disclose a new way of peeling potatoes, and claim a cure for cancer. But if the original disclosure was sufficient to support the claim, the patentee has met its part of the bargain, and that is just as true whether the disclosure was made in a foreign filing or in a Canadian application in exactly the same terms. In this scenario, the information content of the two documents is exactly the same; the only difference is that the exact words of the claim do not appear in the priority document. This is an absurd basis for refusing priority—and I mean that in the statutory interpretation sense, that it cannot possibly be right. A claim that is fully supported by the Canadian application should be able to claim priority to a priority document with exactly the same disclosure.

However, this absurdity flows from a fairly straightforward reading of the text of the Act. Of course, while the text is dominant in statutory interpretation, the text must be read in light of context and purpose to arrive at a harmonious result. So, I looked more deeply into the context, including the modern and historical case law, the history of the rule changes, the concept of support, the law in other jurisdictions and so on. That context provided some insights, but added some complexity, and while I have some leads, I have found no easy answer, at least at this point. Unfortunately, I am not in a position to chase this down right now. Instead, I’m just adding this update to say that the position I stated in the post above follows from the text of the Act, but it leads to enough problems down the road that I no longer have the same confidence in it that I did when I wrote the post.

Now consider another implication of the above hypothetical, in which the priority document and the Canadian application have exactly the same description, and the Canadian application has a claim that is supported by the description but is not disclosed by the description. As discussed, that means that the claim is valid but priority cannot be claimed. But at the same time, it is almost certain that a description sufficient to support the claim would also be sufficient to anticipate the claim, with the counter-intuitive result that the priority document would anticipate the claim (but for the grace period), even though priority cannot be claimed. This result is very difficult to reconcile with the view that “disclose” has the same meaning in 28.1 as in 28.2. That is not to say that disclose has different meanings in those two provisions, as the analysis also turns on the meaning of “priority”. The point is only that this is another absurd result flowing from a straightforward reading of the text.

I should emphasize that in the foregoing, I do not mean to endorse any particular test or definition for “disclose” and “support” and “reasonably infer.” So, in agreeing with McDonald J that “disclose” has the same meaning in 28.1 as in 28.2, this was not to endorse the practice of any particular patent office as to the interpretation of that term. I am given to understand that some patent offices interpret “disclose” to require a verbatim or almost verbatim reproduction of the claim in the description. I doubt that is right; I am inclined to prefer the approach taken by Jacob LJ in Unilin Beheer [2004] EWCA Civ 1021 [48].“Disclose” of course is subject to extensive caselaw in the context of anticipation, but even if it has the same meaning in the priority context, it is not obvious how it should actually be applied. For example, a claim to “PDEV inhibitors for the treatment of erectile dysfunction” would be anticipated by the prior use in traditional medicine of epimedium to treat ED; but that does not mean that the disclosure in the priority document of the use of epimedium to treat ED would disclose the use of PDEV inhibitors to treat ED. More broadly, there is very little caselaw on the meaning of any of these terms: see the very interesting discussion of the meaning of “support” in CA/PL 27/99, part of the Travaux préparatoires for the EPC 2000. I expect a proper resolution of this problem will show that some aspects of current practice, or implicit understandings of the key terms, are wrong.

Finally, I note that the result in this case does not seem to have turned on the point. PSETs experts argued that certain claims were “reasonably inferable” from the 976 patent [216]–[217]. McDonald J rejected this argument in terms which seem to me to reject the argument of reasonable inference [218]–[219]. McDonald J did go on to say that the priority document must “disclose” the invention [220]–[221] as discussed above, but, so far as I can tell, this was not necessary to the result. (I want to emphasize that I am not saying that I am of the view that reasonably inferable is the test for claiming priority—simply that the point was not determinative in this case.)

“Disclose” Has the Same Meaning in Claim Date and Novelty Provisions

Paid Search Engine Tools, LLC v Google Canada Corporation 2021 FC 1435 McDonald J

2,415,167 / Paid Search Engine Bid Management

In this decision, McDonald J held all the asserted claims of PSET’s 167 patent were invalid for insufficiency, anticipation, or obviousness [5] in a decision that turned largely on the facts. (If I’m counting right, PSET asserted 64 claims from 6 independent claims.)

The patent relates to a system for search engine bid management. In the early 2000s advertisers were reaching internet users by paying search engines to have their information or advertisements displayed in response to user searches for sites for specified keywords. Advertisers could bid on search keywords, so that a higher bid would get the advertiser a higher place in the search results for that keyword [11]. Advertisers wanted to manage their bids to get the best placement for the least money. This could be cumbersome for an advertiser managing a large number of keywords. The inventors of the 167 patent developed what they called a Keyword Bid Optimizer tool (KBO). The KBO collected information from the search engine on their customers’ keywords and the bids on those keywords, and produced a report showing: the keyword(s), the number of times it was searched (views), the top 20 bids for the keyword, and where the advertiser’s bid (in red) ranked relative to others, as shown in this figure from the patent [17]:

With the report in hand (or on-screen), the advertiser could then easily scan the table and see, for example, that they could reduce their bid on “earth friendly product” from 5¢ to 4¢ while still maintaining their first place ranking. The claimed invention seems to have been an automated version of the KBO tool, which incorporated automatic bid reduction as an essential element [236].

McDonald J held on the facts that two of the key independent claims (1 and 17) were undoubtedly obvious:

[260] This is not a case where the application of the obviousness analysis strains credulity. The evidence is clear that even on a rigid application of the obviousness considerations there were multiple other commercial products that performed the same essential features, and in some cases more, as those described in claims 1 and 17 of the 167 Patent.

This is a classic obviousness scenario, where the development of a new product or technology drives a demand for complementary technologies. There were no doubt many new and useful products that were nonetheless obvious, as companies rushed to pluck the low hanging fruit from the new opportunities opened up by search engine advertising, which was relatively new at the time [62].

A number of the claims were also anticipated. The 167 patent claimed priority from a US provisional patent application, which was referred to as the 976 patent. McDonald J held that a number of the claims were not entitled to claim priority from the 976 patent as the claimed invention was not sufficiently disclosed [222]. PSET argued that the claim to priority is met “if an ‘inference’ can be drawn that the 976 Patent discloses the 167 Patent” [220]. McDonald J rejected this, pointing out that “The word “disclose” appears in various sections of the Patent Act. I do not accept that a different meaning should apply to disclosure as it is used in subsection 28.1(1) such that disclosure is achieved merely if an inference can be drawn” [221]. This holding strikes me as clearly correct. Section 28.1(1), the claim date provision, refers to “a patent disclosing the subject-matter defined by the claim”; s 28.2(1), the novelty provision, states “The subject-matter defined by a claim . . . must not have been disclosed.” It is not just the word “disclosed” that is the same; the two provisions have parallel construction, both dealing with the relationship between disclosure and the claimed subject matter, and of course the claim date defined in s 28.1(1) is incorporated into s 28.2(2). Surely the same meaning was intended. PSET conceded that many of the asserted claims were anticipated if they could not rely on the priority claim [231]. Other claims were anticipated by the prior art [245].

McDonald J also held that a number of the claims were not sufficiently disclosed, particularly those based on automatic reduction of a bid based on the demographic information of searchers, as the patent did not provide sufficient description of how to actually use that information: see eg [199], [204]. In effect, patent says “Check out these cool stats and then optimize.” We don’t see successful insufficiency attacks very often, but this strikes me as a pretty clear case, at least judging from McDonald J’s relatively brief discussion.

Finally, I’ll note that the patentee appears to be a variety of patent assertion entity. PSET did actually implement and sell the KBO tool, but it was not commercially successful, and they stopped selling it in 2003 [20]–[22]. As noted, the invention claimed by the 167 patent is an improved version of that tool, with automated bid adjustment, and it doesn’t seem that PSET ever implemented an embodiment of the invention. So far as I can tell, PSET was one of many firms that jumped into an exploding new market, but they didn’t survive the shake out. This litigation was an (unsuccessful) attempt to monetize the patent.

 UPDATE: See further discussion of the priority point here.

Third Party Prior User Rights

Kobold Corporation v NCS Multistage Inc 2021 FC 1437 Zinn J

            2,919,561 / Bottomhole assembly

As outlined in last week’s post, this motion for summary judgment addresses the new prior user defence set out in s 56. The main operative provision, 56(1) provides that if a person, before the claim date, “committed an act that would otherwise constitute an infringement. . . it is not an infringement. . . if the person commits the same act on or after that claim date.” The key question is what it means for the post-claim date act to be “the same” as the pre-claim date act. Zinn J granted summary judgment on the interpretation of this provision. I’ve discussed aspects of the decision relating to 56(1) in previous posts.

Zinn J also briefly addressed 56(6) and 56(9), which protect third parties. Subsection 56(6) provides that “the use of an article is not an infringement. . . if the article was acquired. . . from a person who, before the claim date . . . in good faith, made or sold. . . an article that is substantially the same as the one used, for that use.” Subsection 56(9) similarly protects a person who uses a service provided by a third party who had provided substantially the same service before the claim date. Note that there is no requirement in these provisions that the third party itself bought the product or service before the claim date; the third party can buy the product after the claim date from a party who sold a substantially similar product before the claim date.

NCS argued that it was protected by this provision because it bought the Blue Bullet element from a third party. The Blue Bullet was part of the packer assembly [27], and presumably an important part; in any event, its exact nature is not important to the decision. Zinn J rejected the s 56(9) argument purely on the facts. There was no evidence that NCS purchased the service from others; on the contrary, NCS was providing the service: [146]. Consequently, on its face s 56(9) does not apply. Zinn J also rejected the 56(6) argument on facts, on the basis that there was no evidence that NCS actually acquired the Blue Bullet from a third party, as is required by the provision: [146].

That turns simply on the facts, but one interesting point concerning the language “substantially” the same, found in 56(6),(9), which is evidently broader than “the same,” which is used in 56(1). Kobold submitted that this was intended to protect a third party “from having to prove what it is using is the same as what was previously available, provided it is still substantially the same and used for the same use” [144]. Presumably this is on the view that the third party may have bought the product after the claim date, and may not have easy access to evidence of what was being sold before the claim date, in contrast to the manufacturer, who should be able to provide evidence of what they themselves were doing before the claim date. That’s at least a plausible suggestion, though I’m not sure that a different substantive test is the best way to deal with that problem. After all, the third party still has to prove that the product is substantially the same as the pre-claim date product, so it still has to have some kind of access to that earlier product, so the evidentiary problem largely remains. If the problem is one of evidence, it might have been better addressed directly, by an evidentiary presumption of some kind. Further, these provisions do not provide a great deal of additional protection to the third party. If the new product purchased by the third party is not “the same” but it is “substantially the same,” then the third party will generally not be able to purchase it anyway; even if the purchaser can take advantage of 56(6) to use the product, it will probably not be able to purchase the product after the claim date, because the vendor who cannot take advantage of 56(1) will likely be enjoined from selling.

In any event, the current Act does have two different standards, “the same” and “substantially the same,” which are evidently different. This case has told us what “the same” means; it will take another case to find out what “substantially the same” means. Kobold’s suggestion is plausible, but not beyond doubt. No doubt we’ll see further speculation as to the purpose of the “substantially the same” requirement, given that it is relevant to a purposive interpretation of the provision.

Zinn J also gave a second reason for rejecting the 56(6) argument:

[149] I also agree with Kobold’s further submission that subsection 56(6) does not apply because the use of the Blue Bullet element is not the potentially infringing act. Claims 1, 9, and 12 of the ‘561 Patent are for the use of tools that incorporate elements that are not present in the Blue Bullet element. Claim 15 is for a pressure equalization tool having elements not present on the Blue Bullet element. It is only the use of the Blue Bullet element in conjunction with the other elements of NCS’s packer assemblies that infringes the claims.

I’m just going to leave this here. Because Zinn J ordered a trial, the facts are not particularly well developed, and I don’t understand why the use of the Blue Bullet element is not the potentially infringing act. It does seems to have been the element that incorporates all of the key elements of the inventive concept. This isn’t to say I disagree; I just don’t understand the point well enough to comment. I am flagging it nonetheless, as it does appear to be some kind of substantive restriction on the availability of 56(6).

Prior User Rights and English Law

Kobold Corporation v NCS Multistage Inc 2021 FC 1437 Zinn J

            2,919,561 / Bottomhole assembly

As outlined in last week’s post, this motion for summary judgment addresses the new prior user defence set out in s 56. The main operative provision, 56(1) provides that if a person, before the claim date, “committed an act that would otherwise constitute an infringement. . . it is not an infringement. . . if the person commits the same act on or after that claim date.” The key question is what it means for the post-claim date act to be “the same” as the pre-claim date act. Zinn J granted summary judgment on the interpretation of this provision.

My last post discussed the central holding, that the subsequent act will be the same so long as any changes do not relate to the inventive concept. In addressing that question I did not address Zinn J’s initial discussion of the meaning of the term “the same,” and whether it should be interpreted to mean “substantially the same act”, as NCS argued [82], or rather “near identicality,” as Kobold argued [88]. Zinn J agreed with Kobold that the more stringent interpretation was correct, even saying that the two acts must be “identical” [92] “in the sense that one can only perform those acts set out in section 42 of the Patent Act which were actually performed pre-patent” [97].

This might seem like a very important point to have omitted; but it is less important than it might seem. Knowing that the test is “identical” rather than “substantially the same” is not particularly helpful unless we know what those terms mean. As I discussed in my last post, it is perfectly clear from Zinn J’s subsequent discussion that when he said “the same” should be interpreted to mean “identical” [92], he did not mean that it must be exactly identical in every respect. He expressly stated that a variety of changes, from paint, to location method, to fracking fluid, would all be permitted. Indeed, after concluding that “the same” meant “identical,” began the next part by saying “[t]his interpretation then leads one to ask if the same act is the manufacture of a device, must it be an identical device that is manufactured to obtain the protection of subsection 56(1)” [99]; he clearly did not consider this question to have been settled by the holding that “the same” means “identical,” and he went on to outline many differences that would be permitted, such as a different paint colour, or the use of a more efficient fracking fluid in the claimed method. So, even though Zinn J did hold that “the same” means “identical” [92], [97], it would a misleading to take that out of context as a summary of his holding.

With that said, I’ll comment briefly on that part of Zinn J’s decision.

His reasons for holding that “the same” means “identical,” were first, “identical” is the dictionary meaning of the word the “same” [93]. Second, “substantially the same” is used in 56(6),(9) and “the same” must mean something different, and presumably more restrictive [94]. Third, the phrase “the act” in the corresponding provision of the UK Act, s 64, had been interpreted as meaning “substantially the same” and to the extent the Canadian drafters were looking to the UK Act, the decision to use “the same act” instead of simply “the act” implies they were looking for a more restrictive meaning than under the UK Act [95], [79]. Fourth, even if an identical act is required, this is still more expansive protection than under the previous provision, which restricted protection to the same specific article [98].

The most significant point is the third, as it implies that the test for similarity in Canadian law is more stringent than in UK law, which in turn means that UK caselaw will be of limited assistance at most. I am not persuaded by this point. Now, I should say that this doesn’t make much difference, as we’re not going to find much guidance in the UK cases anyway. So far there are very few UK cases discussing s 64, and none of them go into what it means to be the same acts, and they mostly turn on whether effective preparations were made. But the point perhaps worth exploring nonetheless, in case future UK decisions are more helpful.

The UK Act says a person who does “an act” before the claim date has the right “to continue to do the act.” “The” is a definite article, which, at least according to Wikipedia “denot[es] . . . things already mentioned, under discussion, implied or otherwise presumed familiar to. . . readers.” So “the act” refers to an act already mentioned, namely the prior act referred to in the first part of the provision. So I would say that as a matter of grammar “the act” in the UK provision means the same act as was previously mentioned in the sentence, which is to say the prior act. So I have a hard time giving much significance to the inclusion of the word “same” in the Canadian provision, as it seems to me to have been grammatically implicit in the UK Act.

More importantly, “the same” was interpreted as meaning “substantially the same by Jacob J in Lubrizol v Esso [1997] 114 RPC 195 (Pat)*, in a passage quoted by Zinn J at [81] (original italics, underling added by Zinn J):

In deciding whether the activity is substantially the same all the circumstances must be considered. Both technical and commercial matters must be taken into account. That is important in a case such as the present where there are inherent minor variations in starting materials or the like. If the protected act has to be exactly the same (whatever that may mean) as the prior act then the protection given by the section would be illusory. The section is intended to give a practical protection to enable a man to continue doing what in substance he was doing before.

I don’t see any real between what Jacob J was saying in this passage and Zinn J’s holding in the remainder of the decision. As noted, Zinn J explicitly held that changes in paint colour, location method, and fracking fluid, would all be permitted, even though the latter two are actually elements of the claim. This goes well beyond the example of “inherent minor variations in starting materials” given by Jacob J. So when Jacob J held that the act had to be “substantially” similar, this was by way of rejecting a requirement that the acts by strictly identical—a requirement which Zinn J also rejected, notwithstanding that he did say that “the same” means “identical” at [92]. I also note that at [97] Zinn J explained “identical” as meaning “in the sense that one can only perform those acts set out in section 42 of the Patent Act which were actually performed pre-patent” [97] and that “[o]n this interpretation [ie identical] if the person claiming the protection of subsection 56(1) had, for example, previously only manufactured and used its device, then they can continue to manufacture and use it, but they cannot now sell the device to others to use” [98]. This suggests that “identical act” means the type of infringement—whether it be the make, sell, or use—that must be identical.

On the whole, I don’t find this discussion of whether “the same” means “identical” or “substantially” the same to be helpful. The label doesn’t matter. The real question the nature and extent of the differences that are permitted. Zinn J’s lengthy discussion of that central question, discussed in Monday’s post, surely supersedes his statement that “the same” means “identical.”

*Zinn J cited the passage as “[1997] RPC 195 (Eng CA) at 216,” which is a pinpoint to the decision of Jacob J in the Patents Court. Aldous LJ in the EWCA did quote and affirm the last two sentences of that passage, [1998] 115 RPC 727 (CA) 700, but did not quote the part related to “substantially the same”.

 

When Are Two Acts “The Same” for the Purpose of 56(1)?

Kobold Corporation v NCS Multistage Inc 2021 FC 1437 Zinn J

            2,919,561 / Bottomhole assembly

As outlined in my last post, this motion for summary judgment addresses the new prior user defence set out in s 56. The main operative provision, 56(1), provides that if a person, before the claim date, “committed an act that would otherwise constitute an infringement. . . it is not an infringement. . . if the person commits the same act on or after that claim date.” The key question is what it means for the post-claim date act to be “the same” as the pre-claim date act. This turns out to be a very difficult question. I’ll suggest that there is some internal tension in Zinn J’s approach; but I don’t see any flaws in his reasoning, and I don’t have anything better to suggest. The facts are outlined in my previous post. I won’t repeat them here, but some of the examples in the following discussion assume familiarity with the invention.

As discussed in the last post, it is clear that the prior user right is not confined to the same specific article that had been used prior to the claim date. On the other hand, the fact that the person did an ‘infringing’ act before the claim date does not give them carte blanche to carry out any infringing act after the claim date. Some halfway house is needed: the subsequent act must be the same as the prior act in a way that goes beyond the mere fact that both are infringing. (If the prior act is not infringing, 56(1) does not apply; and if the subsequent act is not infringing, there is no need to appeal to 56(1): [114].)

The question then, is as to the nature and degree of changes permitted before the subsequent act is no longer considered to be “the same” as the prior act and the protection of s 56 is lost.

First Decision on Prior User Rights: Overview

Kobold Corporation v NCS Multistage Inc 2021 FC 1437 Zinn J

            2,919,561 / Bottomhole assembly

This motion for summary judgment is the first decision to consider the new prior user defence set out in s 56 of the Act, which came into in effect in December 2018 [53]. The previous s 56 also provided for a form of prior user defence, but the new provisions are so completely revamped that the cases interpreting the old s 56 are of no assistance (except, in some cases, in the negative sense of constituting the problem that the legislature intended to correct). Zinn J’s decision in Kobold v NCS has given us a very careful analysis of the key operative provision, 56(1), as well as some discussion of 56(6),(9), which provides for third party prior user rights. This post will give an overview and discuss some of Zinn J’s general observations.

Prior user rights are assessed on a claim by claim basis, and the key date for establishing such rights is the claim date. Subsection 56(1) provides that if a person, before the claim date,

committed an act that would otherwise constitute an infringement. . . it is not an infringement. . . if the person commits the same act on or after that claim date.

The key question is what it means for the subsequent act to be “the same act” as the prior act. This question didn’t arise under the old provision, which gave protection only in respect of “the specific article” that had been used or acquired before the claim date. It is clear that the new provision is intended to expand the prior user rights, so that a person who used an infringing device—more precisely, a device that would be infringing if used after the claim date—before the claim date can not only use that very device, but can also use new devices, so long as the new device is “the same” as the old device. What if the old device was painted green and the new device is painted red, but is otherwise identical—is it the same? The answer is clearly yes. Where, then, do we draw the line? At the risk of oversimplifying, Zinn J’s view is that considerable variation is permitted, so long as the new device does not incorporate changes related to the inventive concept. I’ll discuss this key point at more length in my next post.

Then the question is what it means for changes to relate to the inventive concept. This decision provides some guidance in this respect, although it is limited. Zinn J granted summary judgment on the interpretation of 56(1), but not on its application to the facts, which he held required a trial; but he did address a couple of points on the facts. Zinn J also granted summary judgment on claim construction, which did of course turn on the facts, but the analysis did not implicate the s 56 issue. Finally, he also granted summary judgment in respect of the 56(6), (9), but this did not turn on the question of whether the prior acts were the same as the subsequent acts.

The facts nonetheless provide context for the rest of the discussion. The 561 patent relates the bottomhole assembly [BHA] used in fracking. Fracking involves pumping large volumes of fluid at high pressure into the well to fracture the formation. Kobold’s 561 patent particularly relates to one element of the BHA, namely the packer, which seals the well so the pressurized fluid cannot escape. The packers at issue in this litigation use an elastomeric material to seal the well. The BHA is pushed into the desired position, and then the packer is anchored to the wall of the well. A mandrel connected to the packer is then pushed further, compressing the elastomer, and causing it to expand and seal the well. This much was all part of the prior art [7–13]. The trick is to get the BHA out again. After fracking, there is a large pressure differential above and below the packer that has to be equalized before the BHA can be moved. The most common ways to do this in the prior art were the use of an equalization valve on the sealing element, or by having a passageway through the centre of the tool. The inventive concept of the ‘561 patent is a new method of equalizing pressure by using the mandrel to pull on the sealing element, decompressing the elastomer, which contracts, creating an annular passageway on the outside of the packer which the fluid flows through, equalizing the pressure [13–18]. The inventive concept “is the connecting of the sealing element to the mandrel so that when the mandrel is pulled the sealing element is also pulled, thus forming an annular passageway that equalizes pressure” [153]. (Note that most of the claims, including Claim 1, the representative claim, were method claims, to the method of using such a BHA, not the BHA itself, though some claims were to the tool itself: nothing turns on this.)

NCS builds and operates four BHAs at issue in this litigation [26]. One, known as the Mongoose, was in use since 2012, predating the claim date of the 561 patent [30]. I assume that NCS did not argue that the 561 patent was invalid as being anticipated by the Mongoose because the BHA would not have been available to the public, since it was used at the bottom of a high pressure oil well and, so far as I can tell, was actually operated by NCS, rather than being leased out so that it might have been available for inspection. Kobold conceded that NCS could continue to use the Mongoose, presumably because it was protected by s 56 [31]. The question for s 56 was whether the other three models can be considered “the same” as the Mongoose.

Expanded protection

Zinn J began his analysis with a comparison of the old and new provisions. He noted that it is express in the amending legislation that the new s 56 is intended to grant more expansive rights than the previous version: [67]–[68], referring to Budget Implementation Act, 2018, No 2, SC 2018, c 27, Summary of Subdivision A of Division 7 of Part 4.

He observed that the current version of subsection 56(1) differs in three key ways from the former [70]:

● The former provision was limited to physical inventions and did not cover patented methods. The current provision, referring to “an act” that would otherwise be infringing, encompasses any act kind of potentially infringing act: [71]. (For convenience, in what follows I will generally refer to a physical device, like a BHA, but keep in mind that the protection is broader; the actual claims at issue in this case were method claims.)

● The former provision protected the “specific article”; the current provision instead protects “the same act”: [72].

● The former version only protected persons who had committed an infringing act prior to the claim date; the current provision also protects persons who made “serious and effective preparations” to do so [73]. Zinn J pointed out that this change was likely intended to legislatively overturn Merck v Apotex 2006 FCA 323, in which the FCA held that Apotex was not protected by the former s 56 because it had not actually acquired title to the infringing product by the claim date, even it had ordered the product and production had actually started [74]–[75]. Merck v Apotex can no longer be considered good law.

Further, Zinn J noted that s 56(6) and 56(9), which deal with third party use of a purchased article or service have no corresponding provisions in the previous provision.

The same type of infringement

The current provision protects “the same act.” What does it mean for the acts to be the “same”?

Part of the answer is that the acts must be the same in the sense that the type of infringement—make, sell or use—must be the same. So, if a person manufactured and used an infringing device prior to the claim date, “they can continue to manufacture and use it, but they cannot now sell the device to others to use, as selling is not an act done prior to the issuance of the patent” [98], and see [97], [91]. Section 56 seems to be broadly modeled on the corresponding provision of the UK Patents Act 1977, s 64, and this holding is consistent with the UK caselaw: see Lubrizol Corp v Esso Petroleum Co Ltd [1998] 115 RPC 727 (CA) 769–70 (Aldous LJ); Forticrete [2005] EWHC 3024 [15] (Kitchin J). This point does not appear to have been disputed.

In some cases, this limitation seems straightforward. If NCS was making and operating infringing BHAs before the claim date, but was not selling them to third parties, then it can continue to make and operate the same BHA after the claim date, but it does not have the right to start selling them. A more difficult question arises if a person has in good faith imported an infringing product prior to the claim date, with the intention of selling it, but did not actually make any sales prior to the claim date. In such a case, it appears that the protection would allow the person to continue to import the product, but not to sell it—”unless the importation amounted to an effective and serious preparation to sell it”: see Forticrete [2005] EWHC 3024 [15]. Zinn J did not discuss this point, which did not arise on the facts of this case.

It is necessary that the type of infringement is the same, but that is not sufficient to invoke s 56: a person who makes one infringing device prior to the claim date does not have carte blanche to make any infringing device after the claim date: [100], [90]. A comparison must be made between the prior act and the subsequent act to determine if those acts are the same. This point does not seem to have been contested. (Zinn J accepted Kobold’s submission on that point [90], and that submission does not appear to have been opposed by NCS.) This holding is also consistent with the UK jurisprudence: Lubrizol v Esso (No. 1) (1992) 109 RPC 281 (Pat) 295 (Laddie QC); Lubrizol Corp v Esso Petroleum Co Ltd [1998] 115 RPC 727 (CA) 770 (Aldous LJ); Forticrete [2005] EWHC 3024 [25] (Kitchin J).

So, it is clear that on the one hand, the prior user right is not confined to the same specific article that had been used prior to the claim date; but the fact that the person did an ‘infringing’ act before the claim date does not give them carte blanche to carry out any infringing act after the claim date. The answer lies somewhere between these two extremes. This will be the subject of my next post.

OxFirst Webinar on the Non-Infringing Alternatives in Canadian Patent Law

On Thursday, January 27, I’ll be presenting a free webinar, hosted by OxFirst, titled The Non-Infringing Alternative in Monetary Remedies in Canadian Patent Law. The webinar will run from 15:00-16:00 GMT (10:00-11:00 Eastern):

This webinar addresses the role of the “non-infringing alternative” in assessing damages and an accounting of profits in Canadian patent cases. This doctrine permits an infringer to argue that it would have been able to compete with the patentee as well, or almost as well, by using an non-infringing alternative, so that damages (or the profit to be disgorged) may be reduced, in some cases to zero. The webinar will show how the the doctrine is based in traditional principles of “but for” causation; illustrate its application in some of the leading case; discuss some of the main objections; and discuss some of the fine points that have been emerged from the Canadian caselaw.

You can join the webinar here.

Squeezing Through the Utility / Obviousness Gap

Pharmascience Inc v Teva Canada Innovation 2022 FCA 2 Locke JA: Stratas, Monaghan JJA affg 2020 FC 1158 Kane J

2,702,437 / 2,760,802 / glatiramer acetate / Copaxone / Glatect / NOC / FC Anticipation

In this decision, Locke JA, writing for the FCA, affirmed Kane J’s holding that the 802 patent was valid and that it would be infringed by Pharmascience’s generic product. The 802 patent at issue in this case relates to the use of glatiramer acetate for the treatment of multiple sclerosis, and in particular a dosing regime of 40mg three times a week [11]. Pharmascience argued that the 802 patent was invalid either for lack of sound prediction of utility or obviousness. (Kane J’s holding that the 447 patent was novel, but invalid for obviousness, was not appealed.)

Locke JA’s decision of sound prediction began by mentioning the putative enhanced disclosure requirement for utility based on sound prediction, which would require the factual basis for the sound prediction to be disclosed in the patent itself.* However, it was not necessary for Locke JA to engage with this issue because he found that Kane J had not in any event relied on a factual basis that was not disclosed; her holding that a sound prediction of utility was established was based on the common general knowledge and the logic disclosed in the specification [21]–[22].

This gave rise to a squeeze: “Pharmascience argues that, if the common general knowledge was sufficient to support a sound prediction of utility of the invention of the 802 Patent, then the same common general knowledge would make the invention obvious to try, and therefore invalid for obviousness” [6]. Locke JA rejected the squeeze on the basis that there is a gap between the two requirements:

[38] There is no necessary inconsistency between the finding, on the one hand, that an idea is sufficiently described in the patent disclosure and the common general knowledge to support a sound prediction that it will be useful. . . and, on the other, that the idea is not sufficiently known in the prior art (including but not limited to the common general knowledge) to lead the PSA directly and without difficulty to the solution taught in the patent.

In effect, an expert might say “I would never have thought of trying that, but now that you mention it, yes, I would say that it would probably work.” This makes sense to me, particularly in a case where the inventive concept lies in the insight that a particular approach is worth trying.

*Locke JA prefaced his comments by noting that “the parties do not disagree on the question of whether there is indeed a heightened disclosure requirement applicable to inventions based on sound prediction. Accordingly, it is not necessary to comment on that question here” [16]. I take this to be saying that he is not commenting on whether the law actually requires a heightened disclosure requirement. But in the next paragraph he went on to say that “In my view, the Trial Judge did not misunderstand the disclosure requirement under the sound prediction doctrine” [17]; this evidently says she was correct, not just that it was not necessary to address whether she was correct, given that the parties were in agreement. Locke JA contined by saying “at paragraph 874, she discussed the disclosure requirement specific to the context of the doctrine of sound prediction,” quoting from Eurocopter 2013 FCA 219 [153], which is ambiguous, at least as I read it. I find all this a bit opaque, but it at least seems clear that this decision does not change anything one way or the other in respect of the putative heightened disclosure requirement.

Routine Correction of Inventorship in the Face of Pending Litigation

H Lundbeck A/S v Canada (Commissioner of Patents) 2021 FC 1394 Pentney J

2,705,163

This is a routine correction of inventorship under s 52, with a twist in that the application for correction was brought in the face of what was arguably pending litigation.

Pentney J ordered the records of the Patent Office varied to remove three of the original four named inventors from Lundbeck’s 163 patent, and also removing one of the original two named co-owners. The error arose because the claims had been substantially narrowed during prosecution, such that the new claims were addressed exclusively to the contribution of only one of the four original named inventors [7]–[8]. The ownership point arose because the four original named inventors were employees of two different companies, which thereby became co-owners. With inventorship changed to one of the inventors, their employer was accordingly the sole owner. By inadvertence, inventorship and ownership were not amended accordingly.

Pentney J noted that “[i]n previous cases involving the addition or deletion of an inventor’s (or co-inventor’s) name, the Court has considered the test set out in subsections 31(3) and (4) of the Act, which relate to the addition or removal of applicants to a pending patent application” [15]. The use of the word “considered,” is significant, as Pentney J is not suggesting that the test in s 31(3), (4) is the same as the test under s 52. On its face the powers granted to the Court by s 52 are broader than the Commissioner’s powers of correction under s 31(3), and it is now clear in practice that the Court is not restricted by the criteria set out s 31(3), (4): see eg Inguran 2020 FC 338, (discussed here) removing an inventor without the affidavits from the remaining applicants required by s 31(3); SALT v Baker 2020 FCA 127 (here) adding an owner in a contested case in which the omission was not by inadvertence. The effect is that the criteria in s 31(3), (4) are sufficient but not necessary for removal or addition in a granted patent; the Court will consider those criteria, and if they are satisfied, the addition or removal will be ordered routinely, but the power of correction under s 52 is not limited to those routine cases.

There was one “wrinkle,” namely that “subsequent to filing its Motion Record in this matter, Lundbeck received a Notice of Allegation (NOA) in relation to the 163 Patent” [20], and “[t]he question is whether this constitutes “pending litigation” and as a consequence any other party should have been given notice of this proceeding” [20] While accepting that this arguably constituted pending litigation, Pentney J ordered the correction nonetheless, noting that there was no indication that the parties to the NOA would be prejudiced [22], given that the NOA did not allege improper inventorship or ownership [20]. The key principle is that “It is immaterial to the public whether there is one inventor or two joint inventors as this does not go to the term or to the substance of the invention nor even to entitlement” Micromass v Comm’r of Patents 2006 FC 117 [16], quoted at [22]. As Pentney J noted, this principle has been regularly affirmed and applied [21]. This is perhaps not to say that a change in inventorship can never be material, but rather that it must be shown to be material before an amendment will be refused on this basis. As Martineau J commented in Everlight 2017 FC 1108 (here) [5], quoted by Pentney J at [21], “[t]he proposed variation will cause no prejudice to third parties, as no outsider is claiming an interest in the Patent, there is no ongoing infringement case, and the rest of the Assignment is immaterial to the public.”

First Decision on Patent Agent Privilege

Janssen Inc v Sandoz Canada Inc 2021 FC 1265 Horne CMJ

This is the first decision I’m aware of dealing with the newly introduced s 16.1 which provides for patent agent privilege. Prior to the introduction of this provision, communications between patent agents and their clients were not privileged in Canada [7]. Consequently, the scope of the patent agent privilege is limited by the language of the Patent Act, and in particular the three part test set out in s 16.1 [16], which requires that the communication must be (a) between a patent agent and their client; (b) intended to be confidential; and (c) relating to the protection of an invention.

A few points emerge from the decision. First, patent agent privilege does not extend to all communications between the agent and the client. Section 16.1(1)(c) provides that privilege arises in respect of advice relating to “the protection of an invention.” This means that the privilege does not extend to a non-infringement opinion ie an analysis as to whether a product infringes third party patent rights [18]. However, “whether patent agent privilege applies to an infringement opinion of one’s own patent, that is not before the Court on this motion, and is therefore not a point to be decided here” [18].

Second, when that privilege does arise under the statutory provisions, the legal principles governing the privilege and the exceptions are likely the same as those governing legal privilege [12].

Third, the privilege belongs to the client, not the individual with whom the patent agent initially communicated: see s 16.1(1)(a), 16.1(2), [22]. When the client is a company, as in this case, the privilege is not lost when it is communicated within the firm, without the involvement of third parties [22].

The party asserting privilege had the burden of establishing the privilege, which is to say the burden of establishing the three requirements of s 16.1(1) [4]. Section 16.1(2) provides that the privilege does not apply if it is expressly or implicitly waived by the client. The party asserting privilege does not bear the onus of establishing the absence of waiver: “Once the party asserting the privilege has met the test set out in section 16.1 on a balance of probabilities, the privilege attaches and is assumed to endure. The onus then shifts to the opposite party to establish waiver” [33].

Thanks to Alan Macek's IPPractice for making this decision available.

 

Strict PM(NOC) Time Limits are Still Strict

Merck Canada Inc v Canada (Health) 2021 FCA 224 Gauthier JA: Locke, Leblanc JJA affg Merck Canada Inc v Canada (Health) 2021 FC 345 Fothergill J

             2,830,806 / pembrolizumab / KEYTRUDA

Subsection 4(6) of the PM(NOC) Regulations permits a person to submit a patent for listing on the patent register within 30 days after issuance. Merck submitted the 806 patent for listing a day or two late [14]. Merck argued that the Minister had the discretion to extend the time limit, and, as a secondary argument, that the Covid-19 Time Limits Act applied to extend the deadline. The Minister rejected both these arguments and refused to list the 806 patent. Merck sought judicial review, arguing that the Minister’s decision was based on an unreasonable interpretation of the relevant provisions. Fothergill J at first instance found that the Minister’s determination on both these points was reasonable, as noted here. On appeal, Gauthier JA for FCA affirmed that Minister’s decision was reasonable.

The main substantive point emerging from the FCA decision is that the time limits under the PM(NOC) Regulations have always been strict, and nothing in the 2017 amendments changed this: [35]–[38]. The time limits are still strict, and the Federal Court is not going to be sympathetic to attempts to get around those limits, either now or in the future: see eg [25], [35]. It seems clear that this Minister’s decision would have been upheld even on a correctness standard.

Merck also argued that the Court has a general power to grant equitable relief which should be exercised in this case. Gauthier JA rejected this argument on the basis that it had been raised for the first time on appeal, and it was not appropriate in the circumstances for the FCA to consider it [63]–[66]. While Gauthier JA therefore did not expressly consider the merits of the argument, my sense is that she was distinctly unsympathetic (see [60]–[61]), and I would not hold out much hope for this argument even if it is properly raised in a subsequent case.

On an administrative law point, Gauthier JA noted that it is not unreasonable for the Minister to fail to consider cases that were not cited to it by Merck: “the decision maker is not required to embark on an analysis that would cover any possible line of reasoning (Vavilov at paras. 120 and 127). Regard must be given to the submissions made to the Minister” [22] and similarly [42].

Reasonableness Review Not Possible Without Reasons

Catalyst Pharmaceuticals, Inc. v. Canada (Attorney General) 2021 FC 505 St-Louis J

amifampridine / RUZURGI / FIRDAPSE

In this case Catalyst sought judicial review of the Minister of Health’s decision to issue an NOC to Médunik’s with respect to Médunik’s NDS for RUZURGI, on the basis that the NDS relied on a comparison with Catalyst’s innovative drug FIRDAPSE, contrary to the Data Protection Regulations, C.08.004.1 of the Food and Drug Regulations. Médunik’s NDS for RUZURGI and Catalyst’s NDS for FIRDAPSE proceeded in parallel, so that both products were being considered at the same time. This gave rise to a timing problem; the underlying issue in this case is exactly when a data protection for a drug product is triggered under C.08.004.1. St-Louis J quashed the Minister’s decision, but not because the Minister’s interpretation of the data protection regulations was unreasonable; rather, the problem was that the Minister did not provide any reasons at all for its decision which could have enabled meaningful review [193]. In the circumstances, St-Louis J declined to give any prospective guidance as to the proper interpretation of the provisions [194]–[196].

Catalyst’s FIRDAPSE NDS was filed on 6 Nov 2019, seeking an NOC and also data protection [13]. On November 19, 2019, the Minister informed Catalyst that FIRDAPSE appeared to be an “innovative drug,” eligible for data protection [13]. The NOC was issued on 31 July 2020 [17].

Médunik’s RUZURGI NDS was submitted in December 2019 [15]. The Product Monograph originally submitted made reference to FIRDAPSE [16] (though the exact nature of the reference is not clear). The RUZURGI PM as approved on 5 Aug 2021, did not refer to FIRDAPSE. The NOC was issued on 10 Aug 2020.

So, the RUZURGI NDS made reference to FIRDAPSE at a time when FIRDAPSE application was in process, and FIRDAPSE was considered by the Minister to be an innovative drug, but by the time the RUZURGI NOC was issued, the application no longer referred to FIRDAPSE. The substantive question was whether the data protection regulations are triggered in those circumstances.

The NOC issued to Médunik in respect of RUZURGI contained no reasons. It merely confirmed that the NDS complied with the relevant provisions of the Regulations [21].

In the absence of reasons, the AG tried to justify the Minister’s decision by introducing evidence of the internal process used by Health Canada, including eg the kind of internal checks of the Register of Innovative Drugs, when those checks were carried out etc — in effect, the court was provided with a flowchart of the approval process [65]–[119]. The AG essentially argued that the process disclosed by the evidence was consistent with a reasonable interpretation of the Regulations. As I understand it, Health Canada argued that the Minister interpreted the regulations to mean that a product can only be subject to data protection once the product is listed on the Register of Innovative Drugs that is currently marketed in Canada, which does not happen until the NOC is granted: [85]–[86], [115]. Put another way, the AG argued that a comparison that is made prior to “the designation of an innovative drug” is not captured by the Regulation: [180t].

But the specifics of the AG’s view of the Regulation ultimately did not matter. In the absence of reasons, St-Louis J did not have any evidence of the Minister’s actual interpretation of the provisions at the time the decision was made [135], [195]. In effect, she was being asked to review the AG’s post hoc speculation as to the Minister’s interpretation, rather than the Minister’s interpretation itself. This is not a proper basis for judicial review; in the absence of evidence of the Minister’s rationale, the Court cannot perform its role on judicial review [178]. Moreover, St-Louis J was not persuaded that the process outlined in the evidence was in fact followed in approving the RUZURGI NOC [180].

St-Louis J remarked that she was not persuaded that the procedure outlined in evidence was consistent with the Regulations even on a reasonableness review [179], but neither did she hold that it was not. In the circumstances, she held that it would be inappropriate for her to provide prospective guidance as to the interpretation of the Regulations [194]–[196].

Routine Correction of Inventorship

Secure Energy (Drilling Services) Inc v Canadian Energy Services LP 2021 FC 1169 Zinn J

            2,508,339 / Drilling Fluid and Methods of Use Thereof

This was a routine correction of inventorship under s 52, with Zinn J ordering the records of the Patent Office varied to remove one of the two named inventors from Secure Energy’s 339 patent. The error arose because the patent agent who prepared the application had simply asked one of the named inventors, Levey, for the names and addresses of all the inventors, without informing him of the test for inventorship [24]. Levey and the other named inventor, Ewanek, discussed the matter between themselves and decided that both should be listed, without either having the benefit of advice as to who would legally be considered an inventor [25]. In light of Levey’s uncontested evidence of the course of invention, based on his lab notebooks, Zinn J had no difficulty in finding that Levey was the sole inventor [34]–[41].

There was a minor complication because Ewanek, the named inventor who was removed from the 339 patent, was also the sole named inventor in a different patent for a related invention (the 2,624,834 patent), that was being asserted against Secure Energy by Canadian Energy Services. Secure asserted that it was the true owner of the 834 patent [6]. Because of this relationship, CES was a party to this proceeding. While CES did not contest the change in inventorship of the 339 patent, it wished to ensure that no findings would be made on the evidence relevant to both patents that might prejudice its position with respect to ownership of the 834 patent. Fortunately, Zinn J was able to decide the issue of the ownership of the 339 patent without recourse to any of the contested material [17], [34].

Blogging break

Next week is our fall reading week, and I'll be taking a vacation and a blogging break, resuming blogging around the 22nd.

NOC s 8 Regime is Still a Complete Code

Apotex Inc v Pfizer Ireland Pharmaceuticals 2021 ONSC 6345 Diamond J

            2,163,446 / sildenafil / VIAGRA

This decision is one more short chapter in the saga of Apotex’s attempts to avoid the limitation on recovery of damages under s 8 of the NOC regulations. Bigger news will be coming in the new year, with the appeal of Schabas J’s decision in Apotex v Eli Lilly 2021 ONSC 1588 (here) scheduled for February [22]. In the meantime, Diamond J’s decision in this motion for summary judgment followed Schabas J in dismissing Apotex’s claims, on the basis that the NOC regime provides a complete code governing recovery in respect of the statutory stay provisions of the NOC regime.

Under the patent linkage system established by the PM(NOC) Regulations, a patent that is ultimately held to be invalid can keep competitors off the market for two years by operation of the statutory stay pursuant to s 7(1)(d). If the generic prevails, s 8 provides a remedy in the form of damages for the losses suffered from having been kept off the market by the statutory stay. But if the generic is unsuccessful in the NOC proceeding, it cannot claim s 8 damages, even if the patent is subsequently held invalid in an infringement action: 2013 FCA 282 (here). In an attempt to get around this and other limitations on s 8 recovery, a number of actions have been brought in provincial superior courts (mostly by Apotex), pleading a variety of causes of action other than s 8. So far these attempts have been largely unsuccessful, with the courts generally expressing the view that s 8 provides a “complete code” in respect of recovery pursuant to the statutory stay: see Low v Pfizer 2015 BCCA 506 [46]–[72], and see here, here and here. The most recent decision is that of Schabas J in Apotex v Eli Lilly / Zyprexa 2021 ONSC 1588, relating to olanzapine / ZYPREXA (see here), with an appeal to the ONCA scheduled for February 2022 [22].

The principle that the legislature intended s 8 to be a complete code governing the relationship between generic and innovators implies that the generic cannot recover under any cause of action other than s 8, even if the generic otherwise had a good claim under the alternative cause of action. This is apparent both in Schabas J’s decision, in which he held that the claims were not tenable even before considering the specific causes of action [122], as well as in Low v Pfizer, in which the BCCA [67] addressed the specific causes of action in the alternative, assuming that s 8 was not a complete code. Thus, while some causes of action have survived a motion to strike, they are doomed to fail if the complete code argument is accepted by the ONCA.

In this decision Diamond J came to the same conclusion as Schabas J, in a case related to sildenafil / VIAGRA. (The scheduled trial had been adjourned in light of Schabas J’s decision to allow the matter to be decided by a motion for summary judgment: see 2021 ONSC 1860.)

Diamond J relied on principles of comity, which indicate he should follow the decision of Schabas J unless it was clearly wrong: [15]–[26]. But comity did not play a pivotal role: Diamond J concluded that Schabas J’s decision was not clearly wrong, and “on the contrary, I agree with it” [28]. While Diamond J agreed generally with Schabas J’s analysis, he seemed to place particular emphasis on the point that all of Pfizer’s acts were legally permissible pursuit of the interest under the Patent Act and related legislation: eg “It is the provisions of the Patent Regime itself that precluded Apotex from competing with Pfizer through the development and sale of generic drugs, and not by reason of any alleged wrongful act or omission on the part of Pfizer” [30], and “There is no evidence in the record before me that Pfizer took any steps other than employing the regular legal process set out in the Patent Regime to its conclusion” [36].

Diamond J expressly noted that his conclusion that the patent regime is a complete code was sufficient to dispose of the matter even without the need to consider the merits of the specific causes of action that had been pleaded by Apotex [41]. He nonetheless briefly addressed the two additional common law causes of action advanced by Apotex which had not been raised in Schabas J’s Zyprexa decision, namely unjust enrichment and nuisance.

With respect to unjust enrichment, Diamond J noted that “[t]here is no causal connection between Pfizer’s alleged enrichment and Apotex’s alleged deprivation, as there was no ‘transfer of wealth’ from Apotex to Pfizer,” and more importantly, the patent regime provides a juristic reason for the enrichment [43]. With respect to nuisance, Diamond J stated that “There is nothing alleged to have been done on the part of Pfizer that substantially interferes with Apotex’s use and enjoyment of its property. The right to manufacture generic drugs is not a land right” [45].

Interpretation of CSP Provisions Must Take Into Account Their Purpose

Merck Canada Inc v Canada (Health) 2021 FC 1015 McHaffie J

            2,670,892 / suvorexant / BELSOMRA

A Certificate of Supplementary Protection (CSP) grants patent-like rights which effectively extends the term of the patent as it relates to the medicinal ingredient covered by the patent. The CSP “is intended to partly compensate for time spent in research and obtaining marketing authorization”: CSP RIAS (Background); CSP RIAS pdf p3294; [11]; and see 2020 FCA 135 [4]. An application for a CSP is permitted only if, inter alia, two requirements are satisfied: the patent pertains to a drug “for which an [NOC] was issued” —the “authorization for sale requirement”—and, if marketing authorization was sought first in a foreign country, “the application for the [NOC] sale was filed [within 12 months of the foreign application]”—the “timely submission requirement”: s 106(1)(c),(f); CSP Regs s 4, 6(1), [13]. The underlying issue in this case relates to the interaction of these two requirements.

The drug at issue is suvorexant, an insomnia medicine sold by Merck as BELSOMRA. Merck’s American affiliate filed an application for approval of BELSOMRA in the US in August 2012 (and the application was approved in 2014) [20]. This was before any Canadian application, so it set the clock running on the timely submission requirement. Merck then filed an NDS for Canadian approval in November 2012—well within the 12 month window [12]. So far, so good. However, in response to the NDS, Health Canada asked for more information that would require additional clinical trial data which Merck could not supply. Merck therefore withdrew that NDS in 2014 [22]. Two years later, after Health Canada indicated that other post-market data could satisfy the need for additional safety evidence, Merck filed a second NDS. It contained largely the same data and information that was in the first NDS, together with further safety evidence [23]. Health Canada ultimately issued an NOC for BELSOMRA based on the second NOC in 2018 [23].

Merck then applied for a CSP for the ’892 Patent in relation to BELSOMRA. The Minister initially refused, essentially on the view that “the [NOC]” in the timely submission requirement must be the same as “an [NOC]” in the authorization for sale requirement [27]. In response, Merck submitted to the Minister that the two NOC’s need not be the same, so long as an NOC was applied for in a timely manner, and an NOC was ultimately granted. Merck made submissions based on the text of the relevant provisions [30], but crucially for the purpose of this appeal, Merck also made purposive arguments supporting this interpretation. According to the CSP RIAS, the purpose of the timely submission requirement is “[t]o incentivize the early introduction of innovative drugs into the Canadian market,” and Merck noted that it had pursued the Canadian NOC diligently [29], even though the initial application had not been successful. More importantly, Merck noted that the purpose of the CSP requirements is to compensate for regulatory delay, and in this case, it was denied the CSP because of regulatory delay. Given the Minister’s refusal to grant an NOC based on the first application, it would be impossible for Merck to obtain a CSP for BELSOMRA, because the NDS that led to the NOC being granted was applied for outside the 12 month window [27]. The result, as Merck put is, is that “The [Minister]’s interpretation of the CSP regime results in a denial of CSP rights on the basis of the exact harm a CSP is intended to address” [29].

The Minister nonetheless issued a final decision refusing the CSP, again on the basis that both requirements must be satisfied by the same NOC [32]. Crucially, the Minister did not address Merck’s arguments related to the purpose of the provisions, either in the initial letter or in the final decision letter [41].

Merck appealed, and McHaffie J allowed the appeal on the basis that the Minister had failed to address Merck’s arguments related to the purpose of the provisions [41].

McHaffie J noted that according to Vavilov 2019 SCC 65 [127] “[t]he principles of justification and transparency require that an administrative decision maker’s reasons meaningfully account for the central issues and concerns raised by the parties”: [43]. If a decision maker “fails entirely to consider a pertinent aspect of [the provision’s] text, context or purpose” and this failure “may well” have affected the result, this can render a decision unreasonable: [42], quoting Vavilov [122]. McHaffie J held that Merck’s arguments regarding the object and purpose of the legislation were sufficiently material that a reasonable interpretation of subsection 106(1) had to take them into account [45].

While the Minister’s decision was unreasonable, this does not necessarily mean that the Minister’s interpretation was unreasonable. To hold that the Minister’s decision was unreasonable, it was enough for McHaffie J to conclude that purposive considerations “may well” have changed the result; he did not need to conclude that they would necessarily have done so. McHaffie J noted that “it may sometimes become clear in the course of reviewing a decision that the interplay of text, context and purpose leaves room for a single reasonable interpretation of the statutory provision”: [48], quoting Vavilov [124], but in this case, McHaffie J was “not satisfied the question is so clear that I should reach the conclusion that there is room for only a single reasonable interpretation” [50]. He therefore remitted the matter to the Minister for redetermination [51]. He deliberately refrained from making any comments on the reasonableness or correctness of either party’s interpretative arguments [51]–[52].

Consequently, while Merck won this battle, that doesn’t mean it has won the war. As McHaffie J noted, “Merck and the Minister each suggest that there is only one reasonable interpretation, namely their own” [49]. We’ll see if the Minister changes their mind on reconsideration.