Allergan v Apotex / Risedronate Dosage Form — Overview

Allergan Inc v Apotex Inc 2022 FC 260 Kane J

2,602,188 / risedronate / ACTONEL DR

This very long decision—262 pages and 946 paragraphs—turns largely on its facts. The length of the decision is a consequence of Kane J’s very thorough recitation of the arguments and evidence. The main point of interest arises from the somewhat unusual claim.

Allergan’s 188 patent relates to a dosage form of a bisphosphonate for use in treating osteoporosis. Bisphosphonates were well known for use in treating osteoporosis. Bisphosphonates were known to have poor bioavailability. One specific known problem was significantly lower absorption when taken with food—the “food effect”. The food effect was thought to be due to bisphosphonates forming complexes with ions, such as calcium and magnesium, from the food in the stomach. (Bisphosphonates were known to be absorbed in the small intestine.) The standard way of addressing the food effect in the prior art was to prescribe the bisphosphonate to be taken while fasting. This gave rise to compliance problems [273].

Allergan came up with a solution to the food effect, namely a dosage form comprising a combination of bisphosphonate with EDTA in an enteric coating. The enteric coating allows everything to pass into the small intestine, where the EDTA—a known chelating agent—binds to the cations and prevents them from binding to the bisphosphonate. This means that the dosage would be equally effective whether given with food or after fasting. Accordingly, Claim 1 of the 188 patent was to “An oral dosage form of a bisphosphonate for use with or without food or beverage intake, comprising...” All the claims incorporated the “for use with or without food” limitation. The “with or without” food structure of the claim is a bit odd, as “or” is normally used to signal alternatives, so that it might have been separated into two claims, one claiming use with food and one without. But given that the purpose of the invention was to overcome the food effect, the experts agreed, and Kane J held, that the claim should be construed to mean that the oral dosage can used “either with food or without food or beverage at the preference of the patient” [228]. That seems right to me.

But there’s a catch. Giving EDTA without food can cause irritation of the esophageal lining. Even though this was apparently an uncommon and fairly minor problem, and did not affect efficacy in treating osteoporosis, the product monograph for Allergan’s product, ACTONEL DR, consequently specified that it should be taken with food. The Apotex PM was essentially identical [905]. Consequently, Kane J held that Apotex’s product did not infringe, either directly or by inducement, because it was not for use with or without food, but only with food [921].

Kane J’s construction seems right, given the phrase “for use with or without food” in the claim. But I am puzzled as to why the patentee included those words in the first place. Kane J said this:

[225] For the ‘188 Patent, the ability to use the oral dosage form either with food or without food is set out in the claim because its purpose is to overcome the food effect (which is the problem of the extremely low absorption of the bisphosphonate when taken with food as opposed to when taken fasted). The oral dosage can be taken either with food or without food at the choice of the patient and the treatment effect will be similar (i.e., pharmaceutically effective absorption). The invention of the ‘188 Patent signalled a significant change in the administration of oral bisphosphonates, hence the emphasis on this feature.

It’s true that the advance was to allow a formulation that can be taken without food as well as with it, and it may be that is what motivated the applicant to include this phrase. But that does not mean that this feature has to be included in the claim itself. (I should note that this explanation was not central to Kane J’s reasoning, as it was not disputed that “with or without food” was an essential element.) So long as the compound itself is new, the purpose need not be specified: if an inventor comes up with a new drug that is useful for curing cancer, they are entitled to claim the compound per se, without restricting it to the use in curing cancer. In this case, the claimed composition* was new: it was essentially a selection over the closest prior art, a prior Brazilian patent application referred to as BR 601: see eg [366], [372]. So I’m at a bit of a loss to explain why it was included.** If the phrase was indeed unnecessary, that suggests the possibility that “for use without or without food” is not an essential element, but this argument was not run by Allergan [188]. So I presume there was some reason for including the phrase that is not apparent from the decision. I wonder if the phrase might have been added to placate an obstinate examiner? I note that even if it was added in response to an objection, it is not clear that this precludes a finding of non-essentiality: see Actavis [2017] UKSC 48 UKSC.

Allegan also argued that “for use with or without food” should be construed as meaning only ‘suitable for’, not intended for. Kane J rejected this argument, which I’ll discuss at more length in my next post.

In light of this construction, infringement turned on the factual issue as to whether the PM instructed use with food, or whether taking with food was optional. Allergan’s argument was to the effect that a skilled person would recognize that it would be effective if taken without food, since the side effects were minor. Nonetheless, as Kane J found [905]–[922], the PM clearly and repeated instructed that the product should be taken with food: eg ““Do not take ACTONEL DR before food or on an empty stomach. . .” That this instruction was to avoid abdominal pain rather than to enable effective absorption does not change the fact that the product was for use with food. Apotex’s PM was the same, and so Apotex did not infringe directly or by inducement.

There are a couple of other points to note. One of the expert witnesses had been ‘blinded’, but Kane J was not impressed: “I note that the jurisprudence is mixed on the treatment of blinded evidence. I favour the approach noted in Janssen Inc v Apotex Inc, 2019 FC 1355 at paras 58-59 . . . that blinded opinions are not necessarily given greater weight just because they are blinded.”

Another point is that the most relevant prior art, a prior Brazilian patent application referred to as BR 601, was obscure prior art; that is, it was available to the public, but it would not have been found by a skilled person in a reasonably diligent search [634]. This raised on the facts the holding in Hospira 2020 FCA 30 that the state of the art for the purposes of an obviousness attack includes all prior art. In my post on Hospira, I suggested that this holding leaves open the question of whether obscure prior art can be mosaiced in an obviousness attack.

Kane J noted that

[635] In accordance with Hospira at para 86, it would be an error for the Court to exclude BR 601 from the mosaic of prior art because it would not be found by the skilled person in a reasonably diligent search.

[636] As guided by Hospira, the likelihood that BR 601 would not turn up (and, based on the evidence, it would not turn up) is relevant to the obvious to try test; i.e., would the skilled person have thought to combine BR 601 with the other prior art to bridge the differences between the state of the art and the invention?

She then noted that

[637] This is a tricky distinction when applied to the facts. If BR 601 is part of the prior art, then the differences between the state of the art and the invention would need to account for whatever can be distilled from BR 601 as part of the “state of the art”. However, if the skilled person would not have found BR 601, how can the skilled person consider it in the context of combining it with other prior art at the obvious to try stage of the analysis of obviousness? This is only possible in circumstances where the unknown prior art is handed to the skilled person. To avoid this dilemma and running afoul of Hospira, I have considered BR 601 as if it were prior art, but as noted, the “teaching” of BR 601 requires careful scrutiny.

Ultimately, Kane J did not have to wrestle too directly with this “tricky distinction”, because, as I read it, BR 601 simply would not make the 188 patent obvious, no matter how it was used. BR 601 was at best a broad genus than encompassed the claimed invention, but did not point to it with any specificity, and did not give any hint of the special advantages of the 188 dosage form.

*The original version of the post said the "compound" was new: that is not correct. It is the claimed composition that was new. 

**Since the composition was new, it seems to me that it could have been claimed as such, without that phrase, in the same way a new compound can be claimed without specifying the use. 

Reduced Costs

Janssen Inc v Teva Canada Ltd 2022 FC 269 Manson J

             2,655,335 / paliperidone palmitate / INVEGA SUSTENNA

This is the costs decision stemming from Janssen v Teva / paliperidone 2020 FC 593 (blogged here and here), in which Manson J awarded costs to the plaintiffs, Janssen. I don’t always blog on costs decisions, but this one is notable for a significant reduction of both fees and disbursements, which is something I haven’t seen much in reported costs decisions. The parties had agreed prior to the issuance of the judgment that costs were to be set at 35% of the successful party’s actual fees. Manson J found the plaintiffs’ reasonable legal fees were 70% of actual fees claimed [22], and that the reasonable disbursements were 80% of the claimed amount [24]. Costs were awarded as 35% of the reduced amount.

Burden in Summary Trial Clarified

Janssen Inc v Pharmascience Inc 2022 FC 62 Manson J

Janssen Inc v Apotex Inc 2022 FC 107 Manson J

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

These are effectively companion cases, in which the underlying actions were brought by Janssen under the new NOC regulations against Pharmascience and Apotex, respectively, on the basis that their proposed paliperidone palmitate products would infringe Janssen’s 335 patent. In response, both Pharmascience and Apotex brought motions for summary trial, seeking a declaration that their products would not infringe. The key issues were the same in both cases: was the matter appropriate for summary trial; and was the second prong of the Corlac test for inducement satisfied. The outcome was also the same in both cases: summary trial was appropriate, and infringement was established. The summary judgment point is better developed in the Pharmascience case, but some of the substantive arguments are easier to understand in the Apotex case. Unless otherwise indicated, paragraph numbers refer to the Pharmascience decision, just because I happened to read it first. Heavy redactions in both cases make it difficult to fully understand a number of substantive issues.

On the procedural issue, the main point of note is that Manson J clarified the burden on a summary trial:

[57] [W]hile on a motion for summary trial, the burden is on the moving party to demonstrate that a summary trial is appropriate, once the onus of the merits of the matter, in terms of either infringement or validity, are before the Court for determination, the burden and onus of proof of the underlying action applies.

This seems right to me on the authorities reviewed by Manson J, and as a matter of policy. A summary trial is a procedural means for expeditious resolution of a matter, and if the burden were different from the underlying action, it might instead be used strategically to affect the substantive outcome.

On the substantive point, the 335 Patent relates to a dosing regimen for long-acting injectable paliperidone palmitate formulations for the treatment of schizophrenia and related disorders. It claims a dosage regimen comprising a first loading dose of 150 mg-eq of paliperidone palmitate administered into the deltoid muscle on day 1; a second loading dose of 100 mg-eq on day 8; and subsequent maintenance doses of 75 mg-eq monthly thereafter [19]. There are various types of claims, including product claims to prefilled syringes adapted for administration accordingly, use of the dosage form, Swiss-form claims, and claims to the dosage form adapted for administration accordingly [10].

Janssen conceded that the defendants would not directly infringe, because their product does not contain one of the essential elements of the claimed invention—though we don’t know which element, because of the redactions.

Janssen therefore relied entirely on inducement [89]–[90]. The standard Corlac 2011 FCA 228 test for inducement has three parts: (1) direct infringement by a third party; (2) the inducer influenced the third party to the point that the infringing act would not have occurred without the influence; and (3) the defendant knew that its influence would bring about the infringing act: [93].

On the first part, Janssen argued that the direct infringement will occur by prescribing physicians. The main issue on this point relates to the absence of the essential element from the generic product. I gather that the generic products would be packaged without one of the essential elements, but the missing element would be supplied at the point of administration: [JvA 119]. (This is one of the points that is difficult to understand because of redactions.) The generics apparently argued that the first prong of the Corlac test was not established in such circumstances. Manson J disagreed:

[JvA 116] The first prong of the inducement test requires that the “act of infringement must have been completed by the direct infringer” [Corlac at paragraph 162].

No direct contact is required between the inducer and the direct infringer [citing Hospira 2020 FCA 30 [26].

There is also no requirement that the alleged inducer supply all components or elements of the claimed invention [citing Copeland-Chatterson (1906), 10 Ex CR 224; MacLennan 2008 FCA 35, MacLennan v. Produits Gilbert Inc., 2008 FCA 35 [MacLennan]; Hospira FC 2018 FC 259; Janssen v Apotex / ZYTIGA 2019 FC 1355

This is straightforward—if the defendant supplied the whole invention, it would typically be a direct infringer. The doctrine of inducement was developed precisely to address the situation when the defendant does not supply all the components of the invention; the factual basis of an action for inducement is typically supply of an unpatented product by the indirect party, which is then used by the direct party to infringe the patent at issue. So, in MacLennan the patent claimed “a saw tooth and tooth holder combination” and the defendant supplied only the tooth, and, as Manson J put it, “the Court found liability for inducement despite the inducer supplying only one-half of the claimed invention” [102].

The key issue was the second prong of the Corlac test. In my view there is some uncertainty as to the whether strict “but for” causation is required on the second step. Manson J discussed this issue in Janssen v Teva 2020 FC 593, which dealt with the same patent, concluding that strict “but for” causation is indeed required: see here. Unsurprisingly, in this decision, Manson J reaffirmed that strict “but for” causation is required for inducement [123]–[124]. An appeal of Janssen v Teva is pending [19], so we may learn more in due course.

The only act of inducement alleged was the product monograph, as is typical in these pharma inducement cases. An initial question is whether the defendants’ PM instructed an infringing use of the defendants’ product. Manson J answered in the affirmative on the facts, though the reasoning is impossible to follow due to the redactions.

A second point arose because the experts all agreed that the ultimate dosing decision is based on physician skill and judgment, not the language in the product monograph [JvA 132], and the question was whether this precluded a finding of inducement. A third point is whether the physicians actually pay any attention to the PM—this is a factual point that has been contentious in a number of recent inducement cases. Again, the details of Manson J’s reasoning on these points is difficult to follow due to the redactions, but he did ultimately find on the facts that“[n]otwithstanding the exercise of skill and judgment by prescribing physicians in selecting the dosing regimen for patients, the evidence before the Court in this case establishes that acts of infringement will be influenced by the acts of the alleged inducer, Apotex, to the point that, without the influence, direct infringement will not take place” [JvA 147] and he was satisfied that Janssen had proven that “at least some prescribers” will be sufficiently influenced by PM to establish inducement [JvA 148].

There are a couple of noteworthy developments on the third prong, the knowledge requirement. Manson J noted that knowledge is not restricted to actual knowledge “but also what Apotex [the alleged inducer] ought to know” [JvA 159]. This is consistent with Hospira 2018 FC 259 [334]–[335], but I am not aware of any other caselaw on this point.

Manson J went on to say that in any event “Apotex can now ‘reasonably be expected’ to have the required knowledge given that Janssen’s experts have stated that some physicians will be influenced by the Apotex product monograph to infringe the claims of the 335 Patent” [JvA 159]. This implies that in any case in which the first two prongs are established, including actual influence, and the allegation of inducement fails only on the knowledge prong, the plaintiff will not be entitled to damages for past infringement, but it will nonetheless normally be entitled to injunctive relief to prevent any future infringement.

Thus Manson J has lowered the bar on the knowledge requirement in these respects, or more precisely, has clarified that the bar is low. A low bar on the third prong is broadly consistent with the existing jurisprudence: I am not aware of any case of inducement which has failed solely on the knowledge prong, if the first and second prongs were satisfied.

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.