Column IV Costs for Summary Trial

Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC 2023 FC 780 St-Louis J

2,226,784 / tadalafil / CIALIS / NOC

There are a couple of points worth noting in this costs decision following from the summary trial in Lilly v Teva 2022 FC 1398*, in which the defendants, Apotex, Mylan, Teva and Pharmascience, prevailed: see FC “Or” And FC Overbreadth. Only Mylan and Lilly filed written submissions in regards to costs [1].

The first point is that while Rule 407 provides that costs are normally assessed on column III, the jurisprudence has established that the upper end of column IV is often appropriate in patent trials due to their greater than average complexity. Lilly argued that notwithstanding this caselaw, column III should apply in respect of summary trials. St-Louis J rejected this submission: “Accepting Lilly’s argument of some sort of a norm being fixed at column III for summary trials in intellectual property would entail, in addition to encroaching on the Court’s discretion, assuming that summary trials in intellectual property are, by default, of average complexity. While summary trials may mitigate the considerations highlighted by the Chief Justice in Allergan [2021 FC 186], I have not been convinced that they necessarily or always completely diminish the complexity of a pharmaceutical patent litigation to the point that these 400(3) factors cannot be considered and found to be present” [37].

Secondly, St-Louis J confirmed that an offer to settle that does not meet the conditions of Rule 420 may nonetheless be considered as one factor in awarding costs under Rule 400. This point is by now well-established [32]. (In this case, Mylan’s offer did not meet the timing conditions in subsection 420(3)—ie presumably it was made less than two weeks prior to trial.)

(I will have a post on the FCA decision in Benjamin Moore 2023 FCA 168, addressing the difficult issue of patentable subjet-matter, but the post may be delayed as I am teaching a new course in the fall and I have an article deadline coming up.)

*For some reason, the trial decision is still not available on the FC website, so I’ve linked to a copy made available by Smart & Biggar.

Are Successive NOAs Permitted in Respect of the Same Patent?

Janssen Inc v Apotex Inc 2023 FC 912 Manson J

2,655,335 / paliperidone regimens / INVEGA SUSTENNA / NOC

This summary judgment motion raises a tricky question on the application of res judicata / abuse of process. Apotex sought to launch a generic form of paliperidone and had to address Janssen’s 335 patent. In its initial NOA, Apotex alleged it would not infringe; it did not allege invalidity [12]. That led to a summary trial in which Apotex alleged non-infringement without challenging the validity of the 335 patent. Apotex lost, but an appeal is ongoing: see Janssen v Apotex 2022 FC 107 (see here) [14]–[16]. Apotex then amended its NOA to allege invalidity, without alleging non-infringement [17]. Janssen brought this motion for summary judgment, on the basis that Apotex was precluded from raising the defence of invalidity, on the basis of res judicata or abuse of process.

Manson J held that the issue was suitable for summary judgment as it turned solely on the application of the law to settled facts [38]. However, Manson J dismissed the motion. His key holding was that

[69] The Regulations, when viewed contextually and purposively, do not preclude successive dual NOAs in respect of the same patent, one alleging non-infringement and another alleging invalidity.

There are two branches to res judicata, namely cause of action estoppel and issue estoppel. Manson J held that neither of these was engaged.

Both branches require that the prior decision is final [42], [52]. Manson J noted that there is conflicting caselaw on whether a decision is final when there is a pending appeal, but he held that the weight of authority is to the effect that a decision is not final if an appeal is pending [48]–[51]. It was not disputed that the appeal in Janssen v Apotex 2022 FC 107 is pending, and consequently Manson J held that the matter is not res judicata [51], [53].

I must say that I don’t find the authorities relied on by Manson J to be strong support for his conclusion that a decision is not final if an appeal is pending. He quoted the statement in CUPE 2003 SCC 63 [46] that “[a] decision is final and binding on the parties only when all available reviews have been exhausted or abandoned.” But the thrust of that paragraph as a whole is that a party who is dissatisfied with a decision can attack it through an appeal or judicial review, but it is an abuse of process to attempt to impeach a decision in a different forum. This could just as well support the view that the only mechanism for attacking a decision is by way of appeal or judicial review. Manson J also relied on Lilly v Teva 2018 FCA 53 [83]. That case held that a decision was final even though there was no opportunity for appeal because the issue was moot. This is entirely consistent with saying that the only mechanism for attack is by way of appeal. In both these cases, the prior decision was held to be final. Finally, Manson J relied on Canada v MacDonald 2021 FCA 6 [15], in which Stratas JA remarked that “If an appeal is brought, the appeal court can interfere with the order or judgment. Thus, an order or judgment under appeal is not final for the purposes of the doctrine of res judicata.” Again, this is consistent with saying that the only mechanism for attack is by way of appeal. As I read it, Stratas JA was saying that taking an appeal is not precluded by res judicata, but this does not mean that it is not final for other purposes. Indeed, Stratas JA held that res judicata did apply to bar re-litigation on the facts [24] (albeit in obiter, as the matter was disposed of on other grounds [12]).

I am not saying that Manson J is necessarily wrong in his conclusion that a decision is not final for the purposes of res judicata if it is under appeal, but I would suggest that the point is not settled by the authorities he referred to. In my view, those cases stand primarily for the proposition that any attack on a decision other than by way of appeal or judicial review is an abuse of process.

While Manson J would have dismissed the issue estoppel argument on finality alone, he also found that the issue of infringement is not the same as the issue of validity, so that branch of the test for issue estoppel was not satisfied either [57]–[63]. For issue estoppel, it is not enough that the argument might have been raised; it must actually have been raised and decided (albeit possibly implicitly).

This left abuse of process, which is a supplementary doctrine that “has applied to bar needless litigation that may not meet the technicalities of issue estoppel or cause of action estoppel” [65]. There is no test as such for abuse of process, which turns on the court’s assessment of whether the proceedings are oppressive or vexatious: CUPE 2003 SCC 63 [35]–[43].

Janssen’s main argument was that:

[66] Apotex “testing a non-infringement allegation before alleging invalidity” constitutes an abuse of process. Janssen argues that allowing these actions to continue would lead to the absurd result that generic drug manufacturers could deliver one NOA making just one allegation, fully litigate that issue, only to then deliver another NOA with a fresh allegation in respect of the same patent and drug.

I must say that strikes me as a strong purposive argument. If the PM(NOC) system did not exist and a generic brought a declaratory action alleging non-infringement in order to “clear the way,” I think it would have to be an abuse of process to bring a second declaratory action alleging invalidity if the non-infringement action failed.

Now, this is not a declaratory action, so the text and context of the PM(NOC) Regulations are crucial [68]. Manson J stated that “Nowhere in the text of the Regulations does it state that a [generic] can serve only one NOA in respect of each patent” [70]. That’s true, but nether it say that multiple NOAs are permitted; the Regs simply do not directly address this situation. He continued “On the contrary, the Regulations require that an NOA is served on a patentee each time an allegation is made leading to, in some cases, successive NOAs and successive litigation” [70]. I’m not sure what examples he had in mind. To the extent that a generic serves successive NOAs because it is seeking ANDS for different products, that is clearly not an abuse of process, but in such a case the underlying facts are different, because the products are different, so res judicata or abuse of process is clearly not engaged. That is going on here.

Manson J relied heavily on the fact that allegations of invalidity and non-infringement are contemplated in different subparagraphs of the Regs, namely 5(2.1)(c)(ii) and (iv) [72]–[73]. I have difficulty reading as much into this as did Manson J. It looks to me like this paragraph is simply trying to set out an exhaustive list of allegations in a clear format. Manson J placed considerable emphasis on the fact that invalidity and non-infringement found in separate paragraphs, noting that

[72] There is, however, no such distinction between individual grounds of invalidity. If a generic drug manufacturer were attempting to serve a second NOA in order to pursue different grounds of invalidity it did not pursue in previous litigation that would almost certainly be abusive of the process set out under the Regulations.

This strikes me as being somewhat formalistic. Yes, they are in two separate paragraphs. But what function or purpose is served by allowing separate allegations of non-infringement and invalidity, while prohibiting separate allegations of different grounds of invalidity? Invalidity attacks are not generally more closely linked than validity and infringement; eg an attack based on patentable subject matter will have little evidence or argument related to an obviousness attack.

Janssen also relied on the statement in the 2017 RIAS that “[the amendments eliminate] the need for separate proceedings to address all claims in a single patent” [66]. Manson J dismissed this on the basis that “the new Regulations were implemented to avoid the dual track litigation that occurred under the old Regulations where limited issues of patent validity or infringement were addressed summarily via applications for prohibition orders under the Regulations, and then re-litigated as actions for infringement under the Patent Act” [75]. No doubt that was one specific objective of the new Regs, but the amendments were not limited to curing that problem: the RIAS states that “[a]s a general statement, the amendments seek to facilitate the just and expeditious resolution of patent infringement and validity disputes under the Regulations.” The need for an efficient and expeditious resolution of the disputes is emphasized throughout in a variety of contexts.

Moreover, the 2017 RIAS contemplates that non-infringement and invalidity will normally be litigated in the same proceeding. So, when the patentee brings an infringement action, “[i]n addition to defending such an action, a second person may commence a counterclaim seeking to invalidate the patent.” This is directly reflected in s 6(3)(a), which contemplates that when a patentee brings an action for infringement in respect to the NOA, the generic may respond with a validity attack. The RIAS also remarks that because the proceedings “will focus on underlying questions of patent validity and infringement” mootness is no longer an issue. The RIAS explains that “[n]on-infringement allegations need not be as detailed as invalidity allegations; a second person will be free to choose how detailed a non-infringement allegation may be. However, the second person is required to serve, along with its NOA, any portions of its submission or supplement that could be relevant for determining whether a listed patent would be infringed. The second person must comply with this requirement even if it makes no allegation of non-infringement.”

Overall, I would say that purposive and contextual factors relating to the desirability of promoting efficient and expeditious resolution of the proceedings weigh quite strongly against permitting separate allegations of invalidity and non-infringement. A sufficiently clear text will dominate purposive and contextual considerations, but the only textual point invoked by Manson J was that that invalidity and non-infringement allegations are mentioned in separate subparagraphs of 5(2.1)(c); this strikes me as a fairly weak textual point, which is not sufficiently clear to warrant an interpretation contrary to the purposive and contextual emphasis on streamlining the litigation process.

The issue will be slightly different if an appeal had been decided in the earlier proceeding, or if the time for taking an appeal had passed. If a generic argues non-infringement, and, for example, does not appeal, can it then allege invalidity in a new NOA? According to Manson J, doing so would not be an abuse of process, as nothing in his abuse of process analysis turns on the finality of the prior decision. This strikes me as counter-intuitive. Perhaps the answer is that in such a case cause of action estoppel might apply. In that scenario, the finality requirement would not be an obstacle, so the question would be whether an allegation in an NOA is a “cause of action.” The answer isn’t entirely clear, because strictly the cause of action is for infringement, brought by the patentee in response to the NOA. But given the emphasis in the 2017 amendments on efficient dispute resolution, I find it very difficult to believe that the generic would be permitted to file successive NOAs alleging that the patentee is not in fact the owner or licensee, then after losing in a final decision, and then another alleging invalidity, and another alleging that the patent at issue was not properly listed, and yet another alleging non-infringement. If that is not permitted if the prior decision is final, I find it difficult to see why it should be permitted simply because the prior decision is under appeal.

Misleading the Court as a Basis for Punitive Damages

Fromfroid SA v 1048547 Ontario Inc 2023 FC 925 Grammond J

2,301,753 / rapid cooling cells

This decision is of interest primarily for the award of punitive damages, granted because the infringer had intentionally infringed the patent rather than buying the patented system from the patentee in order to save money and then tried to cover up the infringement by presenting misleading evidence to the court [106]–[107]. As a matter of law, it is interesting that attempting to mislead the court was used as one factor—and for one defendant, the only factor—for awarding punitive damages, rather than sanctioning that conduct through elevated costs. There is precedent for this in the trademark context: see Chanel v Lam Chan Kee Co 2016 FC 987 [76] affd 2017 FCA 38 [11].

Fromfroid’s 753 patent relates to a cooling system for food products. The system consists of “a tunnel lined with tarpaulins that inflate with air blown by a fan. When they inflate, the tarpaulins press against the pallet of products to be refrigerated, which is placed in the centre of the tunnel. In so doing, they force the stream of cold air to pass between the containers of products instead of going around the pallet, which ensures more rapid cooling” [3]. The complete system consists of a number of “cells” each with its own fan.

The defendant 1048547 Ontario Inc dba Skotidakis, operates a dairy products business [6]. Skotidakis was interested in acquiring a cooling system for its dairy products. In 2014, Skotidakis obtained a trial cell from Geosaf, Fromfroid’s agent, for a period of about six weeks. Fromfroid then submitted a bid for a 24-cell system, but Skotidakis did not follow up [6]. In October of 2018, approximately three months after the 753 patent expired, a representative of Geosaf attended Skotidakis’s facilities in order to service unrelated equipment. The Geosaf representative saw and photographed a 24-cell cooling system that bore a strong resemblance to the patented system [7]. The only live issue at trial was whether the system was built before or after the expiry of the patents [10]. (There was a feeble attempt to argue non-infringement on the basis that the tarps did not press against the sides of the pallet, but Grammond J had no difficulty dismissing this on the facts [74]–[93].)

The difficulty for Fromfroid was that it had no direct evidence of when the system was built. Instead, it had to rely on indirect evidence, such as wear marks apparent in the photograph taken by the Geosaf representative and the difficulty of constructing a system in only 3 months [71].

Against this circumstantial evidence was the direct testimony of four persons, all more or less closely associated with Skotidakis, who stated that, “to their personal knowledge, the cells were built [in the three month period after expiry], particularly since this testimony is supported by documentary evidence” [49]. As counsel for the defendants put it, “[a]ccepting Fromfroid’s position would entail that these four witnesses lied to this Court and that the documents they submitted are forgeries” [49].

While Grammond J did not explicitly find that the witnesses lied or that the documents were forgeries, he did reject their evidence as being defensive and unresponsive [52], deliberately evasive [53], “implausible” [57] and imprecise [59]. He found that while the documents Skotidakis tendered in evidence “show no obvious signs of falsification, there is also no basis for excluding the possibility that they are forged, that the date on them could have been altered (e.g., by replacing ‘2016' with ‘2018') or that they refer to a different project” [61].

With little weight given to the defendants’ evidence, Grammond J found that the circumstantial evidence was sufficient to establish “a serious, precise and concordant presumption” (per CCQ Art 2849) that the cells were built before the 753 patent expired [71]. While Grammond J did not expressly find that the Skotidakis witnesseses had lied or that the documents were forged, he did find that “Skotidakis sought to conceal the infringement by presenting various pieces of evidence intended to mislead the Court as to the date the cells were made” [106].

Grammond J awarded lost profit damages on the basis that but for the infringement, Skotidakis would have purchased its system from Fromfroid [97]–[102].

He also awarded punitive damages, on the basis of two factors. First, he found that Skotidakis knew of the existence of the patent and infringed knowingly [105]. This alone would not be sufficient to justify punitive damages [105], but as an additional factor, Grammond J found that in attempting to mislead the Court, Skotidakis had engaged in “highly reprehensible misconduct” [106]. He stated that “the attempt to mislead this Court is serious and should be severely denounced” [109]. Accordingly, he ordered Skotidakis to pay $200,000 in punitive damages, on a top of $150k in compensatory damages [102], [111].

Grammond J also awarded punitive damages against the defendant, Frimasco, a construction company that had built the system on behalf of Skotidakis, even though Frimasco was not aware of the patent at the time it constructed the system [112]. The sole basis for awarding punitive damages against Frimasco was its role in concealing the infringement [112]. While Frimasco did not benefit directly from the infringement, “Skotidakis and Frimasco have a close and longstanding business relationship” [37]. Mr. Robert, the president of Frimasco at the time, gave implausible testimony relating to the purchase of parts for the system [36] and as to the construction speed [47], and as to the nature of the system when testifying regarding infringement [78]. Grammond J found that Frimasco’s “involvement in the cover-up is just as reprehensible as that of Skotidakis” [113]. (Note there are a couple of typos in paras [112], [113], where Grammond J refers to the patentee, Fromfroid, when he evidently intends to refer to the defendant Frimasco.)

It is interesting to see such conduct used as a factor—and in the case of Frimasco, the sole factor—supporting an award of punitive damages. I would have expected to see some kind of costs sanctions instead. But I’m not an expert in sanctions for giving misleading evidence or litigation misconduct generally. Chanel v Lam Chan Kee Co 2016 FC 987 [76] affd 2017 FCA 38 [11], cited by Grammond J at [106], does use attempts to mislead the court as a factor in awarding punitive damages (though in Chanel the attempt to mislead the court was only one of nine factors supporting the award of punitive damages). Further, it is established in Ontario law that litigation misconduct can be an independent actionable wrong that could give rise to punitive damages: McCabe v Roman Catholic Episcopal Corp 2019 ONCA 213 [43]–[48]. At the same time, litigation misconduct can also be sanctioned by costs: Render v ThyssenKrupp 2022 ONCA 310 [87]–[91]. Costs submissions remain to be made in this case [121]. It will be interesting to see if Grammond J takes the misconduct into account in awarding costs, or whether that would be considered double counting. Absent the award of punitive damages, I would be inclined to think that a very substantial costs award would be appropriate, well beyond 40% lump sum which is the higher end of the usual range, and approaching full indemnity. It is apparent from Grammond J’s reasons that Skotidakis did not have any good faith defence and should have settled rather than raising a defence premised on trying to mislead the court.

Does an Order to the Commissioner to Vary the Patent Office Records Engage the Limitations Period?

Secure Energy (Drilling Services) Inc v Canadian Energy Services LP 2023 FC 906 Zinn J

2,624,834 / Water-Based Polymer Drilling Fluid

This case raises a difficult question as to whether the limitations period in s 39(2) of the Federal Courts Act applies to a declaration of inventorship and consequent declaration of ownership. It also raises a subsidiary question as to whether a formal order directing the Commissioner to vary the records of the Patent Office is required when the court issues a declaration of ownership under s 52. For convenience, I will refer to the corporate parties’ predecessors by the name of the current parties, namely Canadian Energy Services (CES) and Secure; some arguments based on chain of title were raised, but these came to nothing: [78]–[83]. (CES’s predecessor was Mud King and Secure’s predecessors are Genesis, New West, Marquis, 1658774 Alta Inc.)

The 834 patent relates to drilling mud with anionic polymers as an anti-accretion additive to prevent the mud from sticking to the drilling components [2]. Ewanek, currently the named inventor on the 834 patent, worked for Secure. He hired Levey to work on anti-accretion additives [10]. In this decision, Zinn J found that it was in fact Levey alone who devised the anionic polymer additive which was the subject of the 834 patent [55]. In 2005, after Levey devised the anionic additive, Ewanek left Secure to work for CES [13]–[14]. CES then filed an application for what became the 834 patent, with Ewanek listed as the sole inventor. The 834 patent issued in 2016, with CES as the owner of record of the 834 patent and Ewanek as the sole inventor, which is the way the record stands as of the date of the decision. (It’s worth noting that Levey also devised a cationic polymer, which led to a separate patent 2,508,339, which issued to Secure; both Ewanek and Levey were named inventors on the 339 patent application, relating to the cationic polymer, but Ewanek’s name was subsequently removed: Secure v CES 2021 FC 1169 Zinn J discussed here.)

So, at heart, this was a case of contested inventorship, in which Zinn J found on the facts that Levey was the true sole inventor, and not Ewanek, who was listed as inventor on the record. This was the easy part. The finding that Levey was the true inventor was not a close call [42]–[54], and there was no real dispute that if Levey was the true inventor, then Secure as his employer was properly the owner, as Levey did not advance any personal claim to ownership [81].

The difficult issue related to the application of the limitations period. This was complicated by the procedural history. In Feb 2018 CES brought an infringement action against Secure in the Federal Court, based on the 834 patent,. Secure sought a stay on the basis that it would be commencing an action in the Alberta Court of Queen’s Bench seeking a declaration of ownership of the 834 patent; this was before SALT v Baker 2020 FCA 127 (see here), so both parties believed that the FC did not have jurisdiction to determine ownership [20]. This evidently alerted CES to the fact that Secure was going to defend on the basis of ownership, so in July 2018, CES commenced an action in the ABQB seeking a declaration that it was the owner of the 834 patent and that Secure had infringed. Secure defended and counterclaimed on the basis that it was the true owner or at least co-owner [18]–[19]. The FC action was stayed on consent until the Alta decision was received: [23].

Stay Pending Re-Examination Denied

Pfizer Canada ULC and Pfizer inc v uniQure BioPharma BV 2023 FC 629 Furlanetto J

2,737,094 / Modified Factor IX Polypeptide / HEMGENIX

Pfizer has a product that has undergone a Phase 3 clinical trial that would arguably infringe uniQure’s 094 patent. Pfizer therefore brought an action last fall challenging the validity of several key claims [5]. Shortly thereafter, uniQure filed a request for re-examination pursuant to s 48.1, allegedly in response to new prior art that was brought to uniQure’s attention during foreign proceedings involving Pfizer [10].

In this motion, uniQure sought a stay of Pfizer's impeachment action pending the outcome of the re-examination. There is no statutory bar to impeaching a patent that is under re-examination [42], so the decision to stay is discretionary, guided by the aim of “securing the just, most expeditious, and least expensive determination of the proceeding on its merits,” without unfairly prejudicing one of the parties [19]. In the result, Furlanetto J refused to stay the impeachment action, essentially because the outcome of the re-examination would not sufficiently simplify the impeachment proceeding to warrant a lengthy stay of up to a year.

The crux of uniQure’s argument was that the claims would likely change as a result of re-examination and it would be pointless to litigate claims that would no longer be in effect [21]. The Re-examination Board might cancel the existing claims or it might accept some or all of the amended claims proposed by uniQure. Moreover, uniQure undertook to not to defend the existing claims if the Board accepted any of its proposed claims [14].

However, uniQure acknowledged that the crux of the invention remained the same under the proposed claims [25]. Consequently, the attacks based on anticipation, obviousness and misrepresentation under section 53 would remain largely unaffected [25], [40]. The amendments certainly would not dispose of the litigation [25].

The arguments based on utility / overbreadth and patentable subject-matter might or might not be affected, depending on whether the Board accepted uniQure’s proposed claims and if so, which ones [25]–[27]. While uniQure argued that documentary discovery would be narrowed without the issues of utility and claim breadth [28], Furlanetto J found that discovery would not be significantly narrowed because the documents are issue were probably relevant to other issues put in play by the pleadings [29]-[32]. (This is aside from the question of whether the Board would adopt the proposed claims.)

Further, Furlanetto J pointed out that

[38] uniQure was and has always been free to choose its own litigation strategy. It was uniQure’s choice to wait to seek re-examination in Canada despite narrowing its claims elsewhere well in advance of the initiation of the Action. It cannot now claim prejudice from circumstances created in part by its own doing. There is also nothing preventing uniQure from making formal admissions in the Action to limit what it perceives as unnecessary areas of inquiry for discovery in view of positions it has taken in the re-examination.

Furlanetto J also found that uniQure would not be unfairly prejudiced if the action went ahead [25]–[37]. The wait for re-examination could be up to a year, and re-examination would have to have an impact that was “not. . . tenuous” to justify a stay of such length [41]. Consequently, Furlanetto J dismissed uniQure’s motion for a stay.

Routine Correction of Inventorship re Patent which is the Subject of Litigation

Regeneron Pharmaceuticals, Inc v Canada (Attorney General) 2023 FC 768 Grammond J

3,007,276

This was a routine correction of inventorship pursuant to s 52, to add an inventor who had been inadvertently omitted. Two points of note: Regeneron did not provide affidavits from the other inventors, but Grammond J noted that this is not a bar to such an application, citing CAE Inc 2021 FC 307 [22]. Second, the main consideration on a change of inventorship is whether third party rights might be affected. Consequently, “[a]n application pursuant to section 52 should include a statement that the patent at issue is not the subject of pending litigation or evidence allowing the Court to find that granting the application would not affect the rights of third parties” [4]. In this case, the 276 patent is currently the subject of litigation. Counsel for Regeneron gave notice of the application to counsel for the other parties in these other proceedings, and as no one has sought to intervene in this application, Grammond J was satisfied that third party rights were not affected [4].

The Role of the Inventive Concept in an Obvious to Try Analysis

Eli Lilly Canada Inc v Apotex Inc 2023 FCA 125 Rivoalen JA: de Montigny, Gleason JJA affg 2020 FC 816 St-Louis J

2,371,684 / tadalafil / CIALIS ADCIRCA / FC Selection / FC Anticipation

This case is ultimately a straightforward example of the asserted claims being invalid on an obvious-to-try analysis, but because of the way it was argued it also sheds some light on the role of the inventive concept in the obviousness analysis.

The asserted claims of the 684 patent are to dosage forms of tadalafil for treating ED, namely doses from 1 to about 20 mg, as well as specific doses within that range, including 2.5, 5, 10 and 20 mg doses [FC 197-213]. The question in this case was whether the 684 patent is valid over the prior art 2,226,784 patent, which claims tadalafil for the treatment of ED, and disclosed a dose range from 0.2 to 400 mg [12]. At trial, St-Louis J held on the facts that starting from the knowledge that doses from .02 to 400 mg were useful, it would be routine for the skilled team to carry out the trials necessary to narrow that down to the range providing the best balance between efficacy, and safety and tolerability, and they would be motivated to do so [FC 325–28]. The claimed invention was therefore obvious to try [FC 323, 330]. The FCA has now affirmed on that basis [65]–[80].

Lilly’s challenge on appeal was to find a question of law to attack in St-Louis J’s essentially factual finding. Lilly argued that St-Louis J had erred in her construction of the inventive concept, a question of law [48] arising at step 3 of the Windsurfing test for obviousness, which was adopted in Sanofi 2008 SCC 61 [67]. Lilly waffled in its argument as to what constituted the specific inventive concept, before settling on the position that the inventive concept is that the claimed dose remains effective in treating ED, with a reduced flushing side-effect as compared to larger doses of tadalafil [20]–[27], [61]. (As an aside, getting an extra four years of exclusivity on a popular drug on the basis of reduced flushing would be grist for the mill for critics of evergreening practices. From a PR perspective, it is probably a good thing for Lilly that this patent was invalidated.)

There has been a debate as to the role of inventive concept in assessing obviousness, which came to the fore in Shire 2021 FCA 52. One central issue is whether the inventive concept is the “end point” of the obviousness inquiry (Shire [65]), or is rather a “distraction” that can be avoided if it is unhelpful Ciba 2017 FCA 225 [76]–[77]: see here. Rivoalen JA held that in this case, it did not matter whether Lilly was right as to the nature of the inventive concept; the claims were invalid for obviousness in any event [49].

As noted, St-Louis J used an obvious-to-try analysis, which was endorsed by Rivoalen JA [65]. (So far as I can tell, Lilly did not dispute that the obvious-to-try test was appropriate.) St-Louis J found that carrying out a drug dosing study is typically done in Phase II clinical trials, and it is normally routine work [FC 325]. Such studies aim to identify the dosage that provides the best balance of efficacy, safety and tolerability [69]. In reviewing the factors relevant to an obvious-to-try analysis, Rivoalen JA pointed out that the reduced flushing that was eventually identified as an advantage of the optimal dose does not change the aim of identifying the dose range that offers the best balance [72]. Further, on the facts that the dosing study in this case was routine; again, this conclusion is not affected by the fact that reduced flushing turned out to be one of the advantages of the optimal dose [73]–[77]. After carrying out this routine dosing study, the skilled person would be motivated to identify and commercialize the optimal dose [79]. Consequently, the claimed dosage range was obvious [80].

To summarize, there was nothing inventive about carrying out the dosing study and identifying the optimal dose—and that conclusion does not depend on the precise properties of the final dose. While minimizing the flushing side effect was one goal of the dosing study, it is possible that the optimal dose would not have reduced flushing significantly; while flushing was a side effect of interest, it is a relatively minor side-effect, certainly compared to other side-effects such as passing out from low blood pressure. So, before carrying out the trials, the skilled person might not have predicted that the optimal dose would have reduced flushing. Nonetheless, there was nothing inventive about the dosing studies, even though not all the specific properties of the optimal dose could not have been predicted ex ante. This is really the whole point of the obvious-to-try analysis: when something is obvious to try (finding the optimal dose) and the trials themselves are routine, the resulting product is obvious, even if not all of its properties could have been predicted in advance.

In other words, apart from the distraction of the inventive concept debate, this was a perfectly ordinary application of the obvious-to-try test, and the patent was invalidated on that basis both at trial and on appeal.

What does this tell us about the role of the inventive concept? Rivoalen JA was very explicit that she was accepting Lilly’s construction of the inventive concept only for the sake of argument, and her conclusion did not turn on whether that was the true inventive concept [49], [61]. On its face, this implies that it is not always necessary to identify the inventive concept in order to assess obviousness.

But there is also a debate as to how to define the inventive concept. In this case, Lilly seemed to be using it to mean new information that was disclosed in the patent and embodied in the claimed subject-matter. But the inventive concept has also been equated to “the solution taught by the patent” (Bristol-Myers 2017 FCA 76 [65]). In a previous post, I argued that the focus on the obviousness inquiry should be on whether the subject-matter defined by the claim is the solution to the objective problem that would have faced the skilled person. This is consistent with Rivoalen JA’s analysis in this case. In a dosage study, the problem is to find the dose that best balances efficacy against side-effects. In this case, the solution to that problem was a dose from 1 to about 20 mg. On the facts, that solution was obvious on an obvious-to-try analysis.

So perhaps the underlying issue is how to define the inventive concept. If we define it as the solution to the objective problem, then perhaps it is the proper focus of the obviousness inquiry; that view is at least consistent with the result and analysis in this case. On that view, the real lesson of this case is that if we are going to use the inventive concept as part of the obviousness analysis, we cannot allow the patentee free rein in defining it.

Finally, St-Louis J had also held that that the 684 patent was anticipated by the prior art 784, and she had an extended discussion of whether the 684 patent was a selection patent, evidently on the view that this had important consequences for validity. I had criticized her analysis of both these points: see here and here. In light of her holding that the patent was invalid for obviousness, Rivoalen JA found it unnecessary to address these issues; she added that “[t]hese reasons, however, should not be viewed as endorsing the Judge’s findings or reasons in respect of these issues” [82].

Summary Judgment Denied

Meridian Manufacturing Inc v Concept Industries Ltd 2023 FC 20 Zinn J

3,036,430 / Hopper Bottom for Storage Bin

In this brief decision Zinn J dismissed a motion for summary judgment, essentially on the basis that there were disputed factual issues related to both infringement and validity which would likely turn on the credibility of various witnesses [49], [54].

We have seen something of a resurgence in the use of summary disposition in patent cases, starting with Manson J’s decision in Canmar 2019 FC 1233 (here) affd 2021 FCA 7 (here), but we have also seen some pushback, notably in Gemak 2022 FCA 141 (see here): [122]–[124]. The trial judge has quite a lot of de facto discretion in deciding whether to grant summary disposition, and of course, even in a more favourable regime some summary disposition motions will be denied, and vice versa. So each case is an exercise in reading the tea leaves to try and tell whether it signals a trend.

It’s hard to get a read on those tea leaves in this case. Zinn J pointed to specific defects in the evidence, eg it was not clear whether a device that was allegedly anticipatory was part of the prior art [54]. That’s a good reason to deny summary disposition even with a more permissive regime, but on the other hand, if he had been so inclined, he might have proceeded nonetheless, relying on the principle that the parties must put their best foot forward.

Also, I must say I found some aspects of the decision a bit hard to understand. One of the issues where Zinn J found a fundamental disagreement was regarding the essential elements of the claims: “Specifically, [the parties] disagree on whether claims 3 and 7 are essential” [46]. What’s strange here is that essentiality has to be decided on a claim by claim basis, and it is claim elements that are essential or otherwise, not the claim itself: Shire 2021 FCA 52 [55]. Further, there was a dispute as to “[w]hether the ‘solid inner wall’ is an essential component,” and this was crucial to the infringement issue [47]. But so far as I can tell, the term “solid inner wall”—which Zinn J placed in quotes—does not appear in the claims, or anywhere at all in the patent. Presumably the phrase was being used as a shorthand for a claim element and the parties would know which element was at issue. But it does make the decision hard to interpret.

So, at the end of the day, we have another decision refusing to grant summary judgment, and I’m not sure how much more we can extract from those tea leaves.

Collaboration of Counsel in Preparing Expert Reports

dTechs EPM Ltd v British Columbia Hydro and Power Authority 2023 FCA 115 Gauthier JA: Mactavish, Leblanc JJA varg 2021 FC 190 Fothergill J

2,549,087 / Electrical Theft Detection System

Gauthier JA’s decision for the FCA in dTechs involves “the application of known principles to a very unusual set of facts” [7]. While it did not set out new law, the unusual facts provided an opportunity for a helpful discussion of the principles and procedure related to the introduction of new evidence on appeal [20]–[30], and the proper role of counsel in preparing expert reports [32]–[37]. There is also a helpful nugget on claim construction.

The patentee, dTechs, lost comprehensively at trial: see here. During the costs assessment, dTechs obtained invoices and working agreements relating to BC Hydro’s expert witness, Mr. Shepherd, which led dTechs to believe that Shepherd did not author his reports. dTechs formed the view that the reports had instead been ghostwritten by a Mr Falany, the President of the corporation which provided Shepherd’s services [41]. There was also some suggestion that first drafts of the reports may have been written by counsel for BC Hydro [45]. dTechs consequently argued that the trial decision was unreliable as it was based on tainted evidence.

A motion to allow these documents to be introduced as new evidence on appeal was granted by a motion judge. Gauthier JA’s extensive discussion on the law and practice relating to the role of the motion judge on such a question [20–[30] will be essential reading for anyone pursuing a similar motion in the future.

Gauthier JA then went on to address the role of counsel in the preparation of expert reports. She noted that “In patent cases, it is not unusual for expert reports to be prepared in close collaboration with counsel in an effort to present the substantive opinion of the expert in a manner and format that is helpful to the Court in light of the complexity of the issues raised” [32], and “[a]s a practical matter, it is known that extensive notes are taken during meetings with experts to help prepare the draft reports, and that counsel are actively involved in putting these reports together” [33]. However, “[t]his does not inevitably mean that those drafts do not reflect the substantive and objective opinion expressed by the expert during those meetings.” A “high level of instruction by lawyers to expert witnesses” is not necessarily objectionable in patent cases [53]. While there are limits to the involvement of counsel, the important point is not who puts the words to paper: “I know of no cases where an expert report was excluded in a patent case on the sole ground that the first draft of said report was penned by counsel after meetings with the expert to discuss their opinions in detail” [34]. The key point is that “the Court must ultimately be presented with the substantive and objective opinion of the expert” [34].

Gauthier JA also noted that any potential overstepping of the proper limits on the role of counsel will normally be revealed on cross-examination at trial, and that is the appropriate place to raise such objections, so that it may be considered by the trial court in assessing the evidence [34]–[35]. The FCA will not be sympathetic to parties trying to raise this kind of argument on appeal [37].

Further, the degree of involvement of counsel will go to weight rather than admissibility, unless it is established that the expert “is unable or unwilling to comply with the duty to give fair, objective and non-partisan opinion evidence” [49]. Consequently, “[t]he Federal Court could not conclude that there was a reasonable basis for refusing to admit Mr. Shepherd’s expert evidence simply because the first drafts of his reports were penned by counsel after many hours of consultation with him” [55]. However, the fact that Shepherd might not have drafted the reports himself might have affected the weight that the trial court would have given to his evidence [56].

The weight to be given to the evidence is a matter for the trial court, not the FCA [56], but even so, the fact that the new evidence might have affected the weight to be given Shepherd’s reports was not in itself sufficient to require sending the matter back for redetermination [57]. There is a second question, whether the trial conclusions would remain unchanged, taking the view most favourable to dTechs. Gauthier JA therefore considered whether “based on the other evidence adduced at trial, the distinct findings and conclusions of the Federal Court would remain unchanged, such that the outcome of the trial would not be affected” [57], even if no weight were given to Shepherd’s evidence [58].

Gauthier JA therefore turned to the question of whether the result would have been the same without Shepherd’s evidence. This required a detailed look at the construction of the claims. While most of the discussion turned on the facts and evidence, Gauthier JA made some more general points.

The most basic point is that claim construction is ultimately a matter of law [68]. “[T]he role of the expert is not to interpret the patent claims per se, ‘but to put the trial judge in the position of being able to do so in a knowledgeable way’” [69], primarily by providing evidence to the court as to the meaning of technical terms. Conversely, this means that the interpretation of non-technical terms, or a fortiori, legal terms of art, are for the court, not for experts. This point arose in considering the term “further comprising”. After hearing evidence on this point, the trial judge had remarked that “certainly claim construction is a matter for the Court, and I’m not sure that terms like ‘further’ or ‘wherein’ require the input of an expert witness” [78]. Gauthier JA affirmed that “I fully agree with the trial judge that if the words ‘further comprising’ are terms of the art, it is in the art of claim drafting, one that none of the experts were qualified to opine on, and in respect of which the judge did not require expert guidance” [80].

On the facts, Gauthier JA concluded that giving Shepherd’s evidence no weight could not have impacted the holding that the 087 patent was not infringed, but it might have affected the validity of one claim (Claim 4), which had been attacked by way of counterclaim. The appeal on infringement was therefore dismissed, but the appeal on validity was allowed in part, amending the judgment to the extent that Claim 4 is not declared to be invalid [118]–[120]. The defendants are entitled to a retrial on the validity of Claim 4, if they so chose.

Case Management May be Preferrable to Summary Disposition

Noco Company, Inc v Guangzhou Unique Electronics Co, Ltd 2023 FC 208 Pallotta J2,916,782 / Portable Vehicle Battery Jump Start Apparatus

Pallotta J’s decision refusing a motion for summary disposition is an interesting contribution to the developing jurisprudence on this issue. There is no new law as such and the decision ultimately turned on the facts, but Pallotta J’s analysis is noteworthy for emphasizing that in some circumstances case management may serve the goal of just and efficient dispute resolution more effectively than summary adjudication.

As an initial point, there was a dispute as to whether the motion was actually a motion for summary judgment under Rule 215, or instead a motion for summary trial under Rule 216 ”[13]. The mere fact of the confusion illustrates that the distinction is fuzzy. While Pallotta J concluded that it was indeed a Rule 216 motion, she pointed out that there is overlap in the factors to be considered [91] and she noted that “judges faced with a motion for summary disposition based on a paper record may be guided by similar factors to decide whether the matter is suitable for summary adjudication, regardless of whether the motion is made under Rule 215 or Rule 216" [93]. On the facts, her decision to dismiss the motion did not turn on the “true nature” of the motion [95]. Her comparison of the requirements under the two Rules is very helpful in clarifying the similarities and differences in requirements for each [91]–[97].

One of the main reasons Pallotta J dismissed the motion is the standard ground that “the Moving Defendants have not presented a sufficiently narrow and well-defined non-infringement issue that is suitable for summary adjudication” [97]. She noted that:

[99] The Moving Defendants’ . . . have not limited their arguments to the claim terms that must be construed in order to make a finding of non-infringement based on a single essential element of claim 1. Instead, they have advanced what appear to be all possible non-infringement arguments for claim 1.

[105] The Moving Defendants presented multiple non-infringement arguments, and a range of possible non-infringement declarations that this Court could make, with the expectation that the Court could decide the motion on a narrower basis or re-define the relief. The issues raised and the expert and fact evidence that was adduced required NOCO to respond to a full-scope non infringement action extending beyond the allegedly infringing products in NOCO’s pleading, before any oral or documentary discovery had taken place. In my view, such an approach is inconsistent with the values underlying summary adjudication as a means for proportionate, cost effective, and timely dispute resolution that fairly balances expediency with a just resolution of the issues in dispute.

It seems that the strategy of “throw mud at the wall and see what sticks” backfired, by broadening the issues beyond what was suitable for summary disposition.

Pollatta J also referred to the importance of trial in cases where there are serious issues with respect to the credibility of the witnesses, which is another well-established factor, recently re-emphasized by the FCA in Gemak 2022 FCA 141 (see here): [122]–[124].

While these are well-established concerns, Pallotta J also noted that summary disposition is not necessarily more efficient. She emphasized that case management can also promote efficient dispute resolution, and may do so more effectively than summary disposition:

[109] Motions for summary judgment or summary trial are time-intensive, and do not necessarily provide an “express route” to resolving a dispute: ViiV at para 41. Proportionality is inevitably comparative; even slow and expensive procedures can be proportionate when they are the fastest and most efficient alternative: Hryniak at para 33.

[110] Procedural steps leading to trial, including documentary and oral discoveries, may also serve to streamline a case, narrow the issues for trial, and promote settlement. The evidence on this motion demonstrates that there are serious issues with respect to the underlying factual basis for deciding infringement, including whether the [exemplary product] is representative of [the Defendants] Products. In my view, allowing the discovery process to unfold is a more proportionate and efficient way to address these issues, particularly under case management.

[111] Restricting judgment to the [exemplary product] alone, without deciding whether it is representative of other products, is not an efficient way to proceed and amounts to litigating in slices. This approach would not narrow the issues for discovery with respect to other products at issue, including the products of defendants who are not parties to this motion. Furthermore, deciding the issues the Moving Defendants have raised without understanding how the findings would affect other products at issue may result in repetition or even complicate the issues to be determined at trial on a more complete factual record.

In concluding, she again emphasized the problem of “litigating in slices” and held that “Allowing the discovery process to unfold provides a more just and proportionate way to streamline the case and narrow the issues for trial” [131].

The entire decision is well worth reading for anyone dealing with a summary disposition motion.

Commissioner Overlooks an Essential Element

Coca-Cola Company v Canada (Attorney General) 2023 FC 424 Furlanetto J

            2,718,279

Coca-Cola’s 279 application relates to plastic beverage and food containers and methods for making them from PET polymers, where the PET polymer comprises a component derived at least in part from bio-based materials [3]. The application was refused on the basis of obviousness [1]. In this decision Furlanetto J held that the Commissioner had erred in law in its assessment of the inventive concept of certain method claims (Claim 18 being representative), because the Commissioner had failed to consider one of the essential elements of the claims in question, namely recyclability of the container [44], [47]. Furlanetto J therefore sent the application back for reconsideration of the affected claims. The finding of obviousness was otherwise upheld.

While the error was one of law, there doesn’t seem to have been any legal principle at stake. Rather, the error seems to have arisen because of a procedural slip. The claims at issue were introduced very late in prosecution; after the Final Action, after the response to the Final Action, after the application was sent to the PAB for review, and after the PAB provided its preliminary review letter that the claims were obvious [11]–[15]. It was only in its response to the preliminary review that Coca-Cola proposed the method claims at issue, in which recyclability was an essential element [16]. After the hearing the Commissioner released the Decision, which “adopted the recommendations of the PAB” [18] and which relied on the preliminary review letter in describing the inventive concept [19]. Since the preliminary review letter had been written before the new claims had been proposed, it did not consider the inventive concept of those specific claims. So, the Commissioner’s decision seems to have been a bit sloppy in having relied on the preliminary review rather than reassessing the inventive concept of the newly proposed claims in question, though of course I don’t know the extent to which the point was emphasized in the hearing.

No Entitlement to s 8 Damages Unless the Generic Prevails on the Merits in the Underlying s 6 Proceeding

Apotex v Eli Lilly 2023 ONSC 1968 Koehnen J

2,209,735 / atomoxetine / Strattera

Under the patent linkage system set out in the PM(NOC) Regulations, a 24-month statutory stay is triggered when a patentee brings proceedings against a generic seeking to obtain an NOC by relying on a comparison between its product and the patentee’s product. Under s 8 of the Regulations, the generic is entitled to damages for having been kept off the market during that 24-month period if the proceeding is “discontinued or dismissed.” This decision holding that Apotex was not entitled to damages under s 8 of the PM(NOC) Regs is interesting for two points. First, it applies the established rule that a generic is not entitled to s 8 damages if the patent is invalidated in separate proceedings to facts which present a slight twist on the prior cases. Second, it is an interesting example of the independent application of the “would” branch of the “could and would” test for assessing damages.

Apotex had filed an ANDS for generic atomoxetine in Feb 2008. At that time, it indicated on Form V that it would not challenge Lilly’s 735 patent, and would instead wait for its expiry before launching. A few months later, Teva began an action to impeach the 735 patent. Shortly thereafter, Apotex served Lilly with an NOA challenging the validity of the 735 patent, and Lilly responded with an application pursuant to s 6 for a prohibition order (this was under the old Regs), thereby triggering the statutory stay. Both the Teva action and the Lilly application were heard before Barnes J. In the Teva action, released first, Barnes J held that the 735 patent was invalid for lack of utility: Novopharm / atomoxetine 2010 FC 915 affd 2011 FCA 220. In the Apotex proceeding, released six weeks later, he held that the Apotex’s allegations of invalidity failed: Apotex / atomoxetine 2010 FC 1065. Different evidence and a different approach to the issue meant that Apotex failed in its utility argument even though Teva had succeeded: 2010 FC 1065 [96]. But because the 735 patent had already been invalidated in the Teva action, Apotex had already received its NOC by the time the Apotex / atomoxetine decision was released. The proceeding was an application for an order of prohibition under the old Regs, and Barnes J therefore dismissed Lilly’s application “on the ground of mootness” [104]; the judgment was that “this application for an order prohibiting the Minister from issuing a NOC is dismissed.” Apotex then sought s 8 damages. Apotex argued that since the Lilly application had been “dismissed,” which is what is required under [then] s 8(1), it was therefore entitled to s 8 damages even though it had not been successful on the merits.

There is obvious merit to Apotex’s submission on the text of s 8(1). The provision says the generic is entitled to damages if “an application made under subsection 6(1) is . . .dismissed by the court hearing the application,” which indeed it was. But Koehnen J pointed out that a purely textual approach to the interpretation of the provision is not sufficient; context and the purpose of the regulation must also be taken into account [28].

Koehnen J pointed out that it is well-established that a generic cannot claim s 8 damages if the patent is invalidated in a subsequent action. This “no reach back” rule was established in cases such as Apotex / Olanzapine 2010 FC 952 and Ratiopharm 2009 FC 1165 and by the FCA in Syntex / naproxen 2010 FCA 155 affg 2009 FC 494 and re-affirmed in Ratiopharm / amlodipine 2011 FCA 215 (see here). The cases illustrated a few variations on the theme. In Syntex / naproxen, the generic seeking s 8 damages had been unsuccessful in the NOC prohibition application, and the same generic was subsequently successful in having the patent declared invalid in a different proceeding. In Apotex / Olanzapine 2010 FC 952 the generic (Apotex) had been unsuccessful in the NOC prohibition application, but the prohibition order was subsequently lifted when the underlying patent was declared invalid in an action involving a different generic (Teva).

This case presented another variation, because the invalidity holding came before the decision in the s 8 action, rather than after. Koehnen J held this was not a good basis for distinguishing the prior authorities. He noted that if Barnes J had released the Apotex decision before the Teva decision, the no reach back rule would clearly have applied to bar Apotex’s s 8 claim. The fact that Barnes J had released the Teva decision first, rather than second, was not sufficient reason to come to a different conclusion: “Results of cases should turn on matters more substantive than the order in which a judge chose to release reasons in related cases” [48].

Koehnen J also noted that “Apotex wants damages not for anything that occurred as a result of its Notice of Allegations or the prohibition proceeding that followed. It wants damages for something that Teva accomplished in a different action even though Teva is not entitled to damages for what it had accomplished” [33]. This seems to be a kind of fairness argument. While the point is reasonable enough, I don’t find it particularly persuasive, as the Regs are primarily motivated by incentives and balancing interests, rather than fairness.

I find the flip side of this point more compelling:

[47] The importance of the second person’s Notice of Allegations cannot be overstated in this analysis. When a second person decides to issue a Notice of Allegations, it chooses what allegations to make. The nature of those allegations inevitably affects the first person’s decision about whether to commence a prohibition application or whether to let the NOC issue and then pursue the second person for breach of patent. The combination of the allegations Apotex made and the prohibition application Lilly commenced led Barnes J. to conclude that the Minister should be prohibited from granting Apotex a NOC until the 735 Patent expired. Once that issue has been decided, Apotex should not get a second chance to raise new and better arguments that might have led to a different outcome.

The innovator cannot make an informed decision of whether to resist a particular generic’s application unless its exposure to s 8 liability turns on the allegations made in that particular NOA.

Koehnen J therefore concluded that Apotex’s right to s 8 damages had not been triggered [62].

Koehnen J went on to address the damages, in case he was reversed on appeal on the entitlement point. His analysis raised an interesting application of the general principle that events in the real world are good evidence of what would have happened in the but for world (see eg Teva v Sanofi-Aventis 2014 FCA 67 [83]). It is also an interesting example of the independent application of the “would” branch of the “could and would” test. On the could branch of the test, Koehnen J found that Apotex could have manufactured product and entered the market early in the s 8 compensation period [91]. However, he held that it would not have done so. Recall that when Apotex originally filed its Form V in the real world, it stated that it would not challenge the 735 patent, but would instead wait for its expiry. Presumably, this is because Apotex was of the view that the likelihood of prevailing was not great enough to offset the cost of the proceeding. Koehnen J noted that in the hypothetical world in which Apotex was not kept off the market by the statutory stay, it would still have been exposed to an infringement action brought by Lilly, and “Apotex’s risk exposure in a patent infringement action was significantly larger than its exposure in a prohibition proceeding” [96]. This implies that “[i]f Apotex preferred to wait for the 735 Patent to expire before incurring the risk of even a prohibition action, it was even more likely to wait for the 735 Patent to expire before incurring the much larger risk of a patent infringement lawsuit” [97]. Koehnen J therefore found that Apotex would not have launched any earlier in the hypothetical world that it would have in the real world [107]. (This analysis raises some interesting issues about what Teva would have been doing in the but for world, which I won’t pursue since the discussion is all strictly obiter.)

Sufficiency, Overbreadth, or Utility?

Eli Lilly Canada Inc v Teva Canada Limited 2022 FC 1398 St-Louis J

2,226,784 / tadalafil / CIALIS / NOC

I’m back to blogging again after an end of term vacation—still catching up on the backlog from my longer hiatus over the winter. In my last post on this case I discussed the meaning of “or”. This post turns to validity. St-Louis J held the 784 patent to be invalid for overbreadth [120] and insufficiency [149], while declining to address utility. I have argued that overbreadth is almost always functionally duplicative of another established ground of invalidity, and this case illustrates that point once again, as the facts supporting the finding of overbreadth were the same as those supporting insufficiency.

The facts are reasonably straightforward. The 784 patent relates to the use of tadalafil for the treatment of ED. Claim 2, which is representative for present purposes, is to a pharmaceutical composition for the treatment of ED in a male animal, comprising “[tadalafil] or a physiologically acceptable salt or solvate thereof.” All asserted claims include the phrase “or a physiologically acceptable salt.”

St-Louis J found on the facts that it is not possible to make a physiologically acceptable salt of tadalafil [118]. Tadalafil does not have an ionisable functional group and consequently it is very difficult to make a salt form [103]. It may be possible to make one or two salts, but only under extreme conditions that would result in the degradation of the tadalafil such that the resultant salt would not be sufficiently pure and stable to be considered physiologically acceptable [118]. As a result, St-Louis J held the 784 patent to be invalid for overbreadth [120] and insufficiency [149], while declining to address utility.

As discussed in my last post, St-Louis J concluded that a physiologically acceptable salt is an essential element of the claim. While I have my doubts about that conclusion, once we accept that, the claim is effectively to a physiologically acceptable salt of tadalafil, and insufficiency then follows directly from the fact that it is not possible to make even one physiologically acceptable salt. This is the classic “how to make” variety of sufficiency. If you claim “Compound X” you have to tell a skilled person how to make Compound X, or the claim is invalid for insufficiency. The traditional view is that the purpose of the disclosure is to ensure that the public would have benefit of the invention after the term expired: see eg Minerals Separation [1947] ExCR 306, 316. If a skilled person cannot make the claimed compound with the guidance provided by the specification, the patentee could get the benefit of patent protection during the term, while keeping its monopoly through secrecy after the term expired. There is an extremely difficult question as to whether the invention has to be enabled across the full scope of the claim. But that doesn’t concern us here, as the specification did not provide sufficient instruction to allow a skilled person to make any physiologically acceptable salt.

A standard statement of the sufficiency requirement is that the specification must enable the skilled person to practice “the invention” [133]; citing s 27(3) and Teva 2012 SCC 60 [51]. But what is “the invention”? That term is notoriously ambiguous: “The word ‘invention’ has many meanings and nuances,” as Henderson pointed out in Patent Law of Canada (1994) 7–8. It can mean the inventive concept, which is to say the information disclosed in the patent which is the quid pro quo for the grant; it can means the invention as claimed, which is the set of all existing or future embodiments of the claimed invention; or it can mean a particular embodiment: see British United Shoe Machinery Co Ltd v A Fussell & Sons Ltd (1908) 25 RPC 631 (CA) 649–51. This led to a debate in this case in which Lilly argued that insufficiency was not available as an attack because the Defendants had not established the nature of the invention [139]. Lilly’s argument isn’t fleshed out in enough in St-Louis J’s decision for me to fully understand it, but I suspect the point is that the inventive concept was the discovery that tadalafil is an effective treatment for ED, and not the discovery of how to make a salt form of a compound that was already known to be effective. If that is indeed what Lilly was arguing, it is effectively another angle on the “or” argument, and one which, in my view, is better framed in terms of claim construction (as discussed in my last post) rather than sufficiency. So, given St-Louis J’s conclusion on the meaning of “or”, I would say she was right to reject Lilly’s argument on this point [143], to focus on whether the specification instructed how to make the salt [144]–[148]. And since the answer to that on the facts is “no,” I agree with her conclusion that the patent is invalid for insufficiency [149] (given her conclusion on the construction of “or”).

With all that said, the ambiguity as to the meaning of “the invention” made this part of the decision more convoluted that it needed to be. Given the ambiguity of the phrase “the invention,” I suggest it might be desirable for the courts to simply stop using it altogether, in any context in which precision is necessary—which is to say, especially in defining validity doctrine. Instead, the law should specify “the invention as claimed” or “an embodiment of the invention,” or “the inventive concept,” as appropriate to the particular doctrine. That is a clarification that would probably have to be done by the FCA, since many authoritative statements of the law use the ambiguous term “invention.”

On that note, I would also point out that the law of sufficient disclosure has several threads that need to be disentangled, and the meaning of “the invention” isn’t necessarily the same for each aspect of the disclosure requirement. The SCC in Consolboard [1981] 1 SCR 504, 518, noted that the statutory provision, s 27(3) “gives the impression of a mélange of ideas gathered at random rather than an attempt to enunciate, clearly and concisely, a governing principle or principles.” While the Court in Consolboard at 518 suggested that the haphazard nature of the statutory provision might be the product of amendment over a period of many years, I think the truth is that the case law gives a similar impression of a mélange of ideas. This is illustrated by Thorson P’s well-known summary of the disclosure requirement established by the case law in Minerals Separation [1947] ExCR 306, 316–17. I won’t repeat it here, but it is plain on its face that it runs together several concepts that are sometimes only tangentially related.

Moving on, St-Louis J also held the asserted claims to be invalid for overbreadth:

[120] As I conclude that it is more probable than not that physiologically acceptable salts of tadalafil cannot be made I conclude, as the Defendants argue, that such a salt was not invented. The Asserted Claims therefore claim broader than what was invented and are thus invalid for overbreadth.

In my article Overbreadth in Canadian Patent Law: Part I (2020) 33 IPJ 21 and Part II (2021) 33 IPJ 147, I argued that a finding of invalidity for overbreath is almost always redundant with another established ground of invalidity. And so it is here. All the evidence St-Louis J reviewed in the context of overbreadth went to the question of whether went to whether a physiologically acceptable salt could be made [114]–[119]. Exactly the same facts that results in a finding of insufficiency—that the claim compound could not be made—was also the basis for the finding of overbreadth.

The problem with overbreadth is that it remains ill-defined. St-Louis J noted that “There are two (2) ways that a patent claim can fail for overbreadth (or overclaiming): it can be broader than the invention disclosed in the specification, or it can be broader than the invention made by the inventor” [109]. It seems that in this case she was relying on the second prong, as she noted that

Under the claims broader than invention made, it is a question of fact as to what the inventor actually invented [112].

But what does “actually invented” mean? As I argued in my Overbreadth article, if the patentee has sufficiency disclosed and claimed subject-matter that is new, useful and non-obvious, how could it be said that they had not “invented” the claimed subject-matter? Overbreadth has an air of being something distinct only because of the ambiguity in the phrase “the invention.” It sound very reasonable to say that the patentee cannot claim more than it invented, but if we try to define exactly what is meant by “invention,” it is difficult to give this proposition any content that is independent of the standard grounds of invalidity.

In any event, as noted, this is another case in which overbreadth is redundant as turning on the same analysis as another ground of invalidity, in this case insufficiency.

The third issue is as to utility. The utility argument turned entirely on the point that a physiologically acceptable salt could not be made: the Defendants argued that “the failure of the 784 Patent to indicate which of the many possible salts can be made as a physiologically acceptable salt of tadalafil” renders the asserted claims invalid for a lack of utility [154], while Lilly argued that “the Defendants have not met their burden to establish that a physiologically acceptable salt of tadalafil cannot be made” [159]. That is, the argument was that the invention lacked utility because a physiologically acceptable salt could not be made; it really just recapitulated the sufficiency argument. To my mind, this conflates utility and sufficiency. (This is not a criticism of St-Louis J, as this is the way the case was argued.) I have to admit, this conflation is very common. There was really no distinction between the two in early English practice, before the development of claims; if the specification describes a device that is not operable, there is no distinction to be made between a case where the patentee had devised a useful invention but failed to disclose it and a case where the specification disclosed the invention precisely, and the invention itself was useless, unless recourse is had to extrinsic evidence.

But with the advent of claims, we can distinguish between the two. The utility requirement asks whether the claimed invention works (or can be soundly predicted to work). Sufficiency asks whether the claimed invention can be made. These are different. Suppose, for example, that in the early days of genetic engineering, the patentee claims “Pure human insulin.” The claimed subject-matter, pure human insulin, is undoubtedly very useful. If the patentee cannot actually make it, the patent is invalid for insufficiency, but not for lack of utility. On the other hand, it may be easy to make something that lacks utility. If the patent claims “Oregano oil for the treatment of cancer,” the claim is sufficient, because oregano oil can be made and administered with the intent of treating cancer, but invalid for lack of utility because oregano oil does not in fact treat cancer. Applications for impossible inventions, like a perpetual motion machine, are traditionally rejected for both lack of utility and insufficiency; in my view, they should be rejected for insufficiency alone. After all, a device with greater power output than input would be extraordinarily useful—if it is could be built. With all that said, I acknowledge that there is a lot of confusion in the caselaw on this issue, stemming ultimately, in my view, from the fact that the distinction could not be drawn prior to the introduction of claims.

Ultimately, St-Louis J, wisely, in my view, declined to address the utility argument. The Defendants argued that”a claim must fail if, in addition to claiming something that is useful, it also claims something that is useless” [173]. In other words, the question is whether utility has to be established across the full scope of the claim. St-Louis J reviewed the caselaw and noted the uncertainty on the question of whether a claim is invalid if it claims a single inoperable species [175]–[178]. Given that she had already held the asserted claims invalid on two other grounds, she refrained from deciding this point of law, and so she declined to rule on the utility ground [178]. This is a difficult question, which is better left to a case in which it is the focus of the argument.