The Relationship Between Utility and Obviousness

Hoffmann-La Roche Limited v Apotex Inc / MMF (NOC) 2011 FC 875 O'Reilly J

Regular readers of this blog will recall that I have been critical of the “false promise” doctrine, which holds that utility is measured by the promise of the patent. In the MMF case, the patentee, Roche, directly challenged this doctrine, arguing that an invention need only satisfy the minimum general requirement for utility, and not whatever greater utility might have been promised in the description. O'Reilly J rejected Roche’s submissions on this point. Unfortunately, the nature of the invention in this case complicated the argument by implicating difficult questions regarding the treatment of utility in selection patents, and I will argue in this post that O'Reilly J's reasons for affirming the false promise doctrine are closely related to issues raised by selection patents. This means that in order to revise the false promise doctrine, it will first be necessary to clarify the law relating to selection patents.

Fraud on the Patent Office: Lessons Learned from the US Experience

Corlac Inc v Weatherford Canada Ltd 2011 FCA 228 Layden-Stevenson JA: Nadon, Evans JJA substantially affirming 2010 FC 602 Phelan J

As noted in yesterday’s post, in Corlac v Weatherford the Court of Appeal held that paragraph 73(1)(a) of the Act cannot be relied upon to attack the validity of a granted patent. Corlac is also an important decision on the doctrine of fraud on the patent office under subsection 53(1). The decision has a thorough treatment of materiality of false attribution of inventorship under this provision, and it will now be the leading case on this point. More broadly the decision of the FCA also signals a generally cautious approach to subsection 53(1).

Deemed Abandonment under Section 73 Cannot Be Used to Attack a Granted Patent

Corlac Inc v Weatherford Canada Ltd 2011 FCA 228 Layden-Stevenson JA: Nadon, Evans JJA substantially affirming 2010 FC 602 Phelan J 

In Corlac v Weatherford the Court of Appeal has clarified a controversial point of law regarding misrepresentations to the Patent Office. Two provisions of the Act bear on misrepresentations to the Patent Office: subsection 53(1), which provides that “[a] patent is void” if there are material misrepresentations in the application, and paragraph 73(1)(a) which provides that “[a]n application for a patent in Canada shall be deemed to be abandoned if the applicant does not reply in good faith to any requisition made by an examiner.” Relying primarily on the distinction between a patent and an application apparent in these two sections, the Federal Court of Appeal held that paragraph 73(1)(a) cannot be relied upon to attack the validity of a granted patent [150]:

To be clear, the concept of abandonment in paragraph 73(1)(a) operates during the prosecution of the application for a patent. Its operation is extinguished once the patent issues. Post-issuance, the provisions of subsection 53(1) must be utilized with respect to allegations of misrepresentation.

Two earlier decisions of the Federal Court, Lundbeck Canada Inc. v. Ratiopharm Inc., 2009 FC 1102 Mactavish J at [298]-[352], and G.D. Searle & Co. v. Novopharm Ltd., 2007 FC 81 at [62]-[78] rev’d 2007 FCA 173 had held that abandonment under section 73 could be invoked post-grant. These cases were specifically overruled on this point: [151]. (Note that the FCA decision in G.D. Searle reversed Hughes J without comment on this point, and the FCA noted at [5] that its decision had been released subject to time constraints and had to be read accordingly.)

Post-Judgment Interest: Principles and Practice

Astrazeneca Canada Inc v Apotex Inc 2011 FC 663 Hughes J 

Hughes J’s very brief costs decision packs a great deal of significance into a single paragraph awarding compound post-judgment interest.

At common law the courts were reluctant to grant interest at all, much less compound interest, as being punitive. The prohibition on interest was legislatively reversed, but many jurisdictions at the same time expressly prohibited compound interest. So s 36(2) of the Federal Courts Act permits “reasonable” prejudgment interest, but s 36(4)(b) prohibits compound interest. The Federal Courts Act, again in common with many other jurisdictions, distinguishes between pre- and post-judgment interest, in that they are dealt with in separate sections (s 37 deals with post-judgment interest), and there is no express prohibition on compound post-judgment interest. This lack of prohibition did not imply that compound interest would normally be awarded, given the common law prohibition on compound interest. Consequently, compound interest was not traditionally awarded in patent cases.

“Final” means Final

Bartley v. Canada (Commissioner of Patents) 2011 FC 873 Hughes J 

The facts in Bartley are essentially the same as those in Belzberg v Canada (Commissioner of Patents), 2009 FC 657, with only one twist, and in Bartley Hughes J affirmed and applied Simpson J’s holding in Belzberg that a “Final Action” report must be final: all defects must be raised, not just a selection [71]. If the PAB and Commissioner find no merit in the defects raised in a Final Action report, the patentee is entitled to have the patent granted without further objections being raised. In addition, Bartley settles an important point regarding the time for seeking judicial review in the circumstances.

Issue Estoppel and Foreign Proceedings

Astrazeneca Canada Inc v Apotex Inc 2011 FC 862 Hughes J

Inconsistent results in litigation between the same parties over corresponding patents in different jurisdictions is embarrassing and the duplicative litigation is wasteful. While the results of litigation in a foreign jursidiction are not directly binding on Canadian courts, issue estoppel might in principle be invoked to promote comity and reduce wasteful litigation. While I am not aware of any decision actually applying issue estoppel based on foreign litigation to determine a point in a Canadian action, in Apotex Inc. v Wellcome Foundation Ltd. (1996), 68 C.P.R. (3d) 23 (FCTD) and Connaught Laboratories Ltd v. Medeva Pharma Ltd. (1999), 4 C.P.R. (4th) 508 (F.C.T.D.) Sharlow J. aff'd (2000), 4 C.P.R. (4th) 521 (F.C.A.), the Federal Court has refused to strike pleadings that argued issue estoppel based on foreign actions. However, such pleadings will not automatically be accepted. In Astrazeneca Canada Inc v Apotex Inc 2011 FC 862, Apotex pleaded that because the patentee Astrazeneca had elected not to raise certain claims of the US patent in US litigation, it was thereby precluded from asserting the equivalent claims in the corresponding Canadian patent in the Canadian litigation. (It should be noted that this was in response to Astrazeneca’s pleading that Apotex was bound by certain factual determinations in the US litigation: [6:Category 2.1].) Hughes J ordered these paragraphs struck.

The assertion that the patentee was bound not to assert claims that had not been asserted in a foreign proceeding was novel, but Hughes J’s reasoning was based on broader considerations. The principle underlying issue estoppel, which is a branch of res judicata, is to ensure finality by precluding re-litigation of the same issue. Accordingly, issue estoppel requires inter alia, that it must be the same issue that was decided in the other judicial proceedings: Angle v Minister of National Revenue, [1975] 2 S.C.R. 248 (S.C.C.). In patent law, it may be very difficult to determine whether the same issue was decided. This was pointed out in a decision relied on extensively by Hughes J, Johnson & Johnson Inc. v Boston Scientific Ltd., 2008 FC 552 at [260]-[268], in which Layden-Stevenson J refused to apply issue estoppel to settle a point in an infringement action. Even when the patents are based on the same priority document, the claims at issue may differ, and even if the claims are the same, claim construction is a matter of law to which res judicata cannot apply. Expert witnesses on foreign law would be required to establish whether the issue decided was the same. In short, invoking issue estoppel based on foreign actions is likely to be more trouble than it is worth. Hughes J emphasized at [7] that “litigation is costly and that unnecessary irrelevant or distracting matters should not be put in play simply because there is a possibility of relevance.” In the circumstances in which issue estoppel or res judicata is traditionally applied, it would normally reduce litigation cost by avoiding wastefully duplicative litigation of the same issue; in patent litigation it is more likely to increase litigation cost by requiring determination of whether the same issue had been determined in the foreign litigation. In Connaught, Sharlow J was aware of this problem, and responded by saying that “complexity by itself cannot justify striking pleadings that are worthy of the Court's attention.” In this decision, Hughes J has come down in favour of trying to place some limits on the cost of patent litigation, rather than exploring every issue of potential relevance.

Evergreening and Accounting of Profits

Harris v Glaxosmithkline Inc, 2010 ONSC 2326 affm’d 2010 ONCA 872 leave to appeal to SCC dismissed 14-Jul-11

If a brand pharmaceutical company obtains a stay under the NOC proceedings on the basis of a patent that is ultimately found to be not-infringed or invalid in those proceedings, the generic seeking the NOC is entitled to damages for the period that it was kept off the market. However, the generic is not entitled to an accounting of the brand’s profits in the Federal Court: 2009 FCA 187. Apart from the text of the NOC Regulations, a problem with the generic seeking those profits is that the profits were not made at the generic’s expense. As Lewison J said in Wake Forest University Health Sciences v Smith & Nephew [2009] EWHC 45 (Pat), at [19] “it is by no means clear to me that it would be just to transfer a profit made by the claimant [brand] to the enjoined defendant [generic]. If the claimant has made a profit which it would not have made but for the injunction, there may be other people to whom it would be more just that those profits should be returned, either other potential competitors with the defendant or customers who, as things turn out, may have been overcharged.” Harris v Glaxosmithkline Inc establishes that the customers who may have been overcharged cannot get those profits back from the brand pharmaceutical company. (There is still a question as to whether the generic may be able to get an accounting in a court of inherent jurisdiction on the basis of unjust enrichment: see my earlier post, noting that this route will also face the hurdle identified by Lewison J.)

GSK’s base patent for Paxil was for paroxetine hydrochloride in the anhydrate form. This patent expired in 1995 [ONSC 13]. GSK obtained various patents for hemihydrate paroxetine and listed them on the Patent Register against Paxil. Various generics were ultimately successful in obtaining NOC’s for paroxetine hydrochloride on the basis that they would be selling the anhydrate, and allegations based on invalidity or non-infringinement of the hemihydrate were not unjustified. Nonetheless, in consequence of the statutory stay flowing from the NOC proceedings, generic paroxetine was kept of the market for about four years [ONSC 7]. Harris v Glaxosmithkline Inc was a class action of Paxil (paroxetine) users seeking compensation from GSK for higher paroxetine prices during this four-year period. In other words, the plaintiff alleged that this was a classic case of “evergreening” and that GSK should be liable for the higher prices that resulted.

The ONSC dismissed the action on the basis that it was plain and obvious that the action could not succeed. The ONCA agreed, and leave to appeal to the SCC was dismissed last Thursday. The plaintiff had argued for liability based on conspiracy, abuse of process, and waiver of tort. The abuse of process argument was in effect that listing the hemihydrate patents was an abuse of the PM(NOC) Regulations. This argument was dismissed on the basis that the tort of abuse of process is not available to a person who is not party to the litigation in which the abuse is alleged to have occurred [ONCA 33], and, more fundamentally, using the NOC process in a perfectly regular manner cannot be said to be an abuse of the NOC process, even if the listed patents are ultimately not sufficient to prevent the NOC from issuing. The plaintiff’s “lynchpin” [ONSC 105] argument on this point was that the whole process was a “sham” – in effect, that it was obvious that the listing of the hemihydrate patents against Paxil was inappropriate, and that it was done only in order to trigger the statutory stay. Perell J at first instance considered the substance of the NOC litigation and concluded it was not a sham; the ONCA held that it was unnecessary to consider this argument [ONCA 56]. This implies that the intent of a brand in listing a patent on the Register is irrelevant; the safeguards against abuse of the NOC process lie in that process itself. The conspiracy claims were dismissed on the similar ground that an intent to maximize its own profits cannot sustain the tort of conspiracy to injure the plaintiff.

What is a “Scintilla” of Utility?

Eli Lilly & Co v Teva Canada Ltd / atomoxetine 2011 FCA 220 Evans JA: Noël, Dawson JJA aff’g Novopharm Ltd v Eli Lilly & Co 2010 FC 915 Barnes J

2,209,735 – atomoxetine – STRATTERA

The factual background to this decision and the sound prediction argument are discussed in my last post. The main issue, both at trial and on appeal, was whether the patent was invalid for lack of demonstrated utility. The accepted position in Canadian law is that “[w]here the specification does not promise a specific result, no particular level of utility is required; a ‘mere scintilla’ of utility will suffice. However, where the specification sets out an explicit ‘promise’, utility will be measured against that promise” 2010 FCA 197 [76]. In practice, the patent can always be construed as making some kind of promise, and utility therefore is almost invariably measured against that promise. In this case the patent was construed as promising that atomoxetine would be a clinically effective treatment for ADHD [29]. The problem for the patentee was that as of the filing date, the sole study supporting the claimed utility of atomoxetine for treating ADHD, the MGH Study, was small scale and preliminary, with significant methodological shortcomings. Barnes J held that it was not adequate to establish clinical efficacy. On appeal, Lilly argued that only a scintilla of utility is necessary [31], but the FCA affirmed the standard doctrine that the patentee will be held to the promise of the patent. Whether that standard has been met is largely a factual question, and the FCA held that it was open to Barnes J on the facts to conclude that it was not.

There is nothing legally novel in this. What is more interesting, in my view, is to ask what the result would have been had the patentee been held only to the “scintilla” standard. I have argued in a previous post that the false promise doctrine, which holds the patentee to the utility specified in the patent, should be abandoned because it means that the validity of a patent may depend on the particular wording of the disclosure rather than the substantive usefulness of what has been disclosed. This is a trap for the unwary drafter – so long as an invention has the minimum required utility, there is no need to promise more – so a patentee who speaks too glowingly of its invention may thereby invalidate what would otherwise be a good patent. On its face this problem appears to be illustrated by the atomoxetine decision; if only the patent description had avoided words like “effective” in favour of perhaps “useful,” the lower “scintilla” standard would have applied, rather than the higher “effectiveness” standard.

FCA Affirms that Factual Basis for Sound Prediction Must be Disclosed in the Patent

Eli Lilly & Co v Teva Canada Ltd / atomoxetine 2011 FCA 220 Evans JA: Noël, Dawson JJA affm’g Novopharm Ltd v Eli Lilly & Co 2010 FC 915 Barnes J 

2,209,735 – atomoxetine – STRATTERA

In the decision appealed from this in this case, Barnes J declared Eli Lilly’s patent for the use of atomoxetine in the treatment of ADHD to be invalid on the basis of lack of utility. Barnes J held that the results of the sole study conducted prior to the filing date (the “MGH Study”) “were promising but only preliminary” [113] and “interesting but inconclusive” [114], and were therefore inadequate to establish demonstrated utility based on the promise of the patent. He also held that the study could not be relied upon to support a sound prediction of utility because the study had not been referred to in the patent disclosure.

Lilly appealed, arguing that with respect to demonstrated utility, Barnes J had misconstrued the promise of the patent and had required too high a standard of proof of utility, and that with respect to sound prediction, he had erred in holding that the factual foundation of sound prediction must be disclosed in the patent [FCA 3].

On the sound prediction point, I have argued in a previous post that the requirement that the factual basis for sound prediction must be disclosed in the patent is conceptually unsound as there is no distinction in the Act between demonstrated utility and utility based on sound prediction, and that it is inconsistent with the Supreme Court decision in Wellcome / AZT 2002 SCC 77 and the cases on which the Supreme Court relied. With that said, the FCA jurisprudence is clear on this point. The FCA decision in this case affirms its own prior case law [47], and adds nothing of significance in terms of analysis of the prior cases or policy justification for the doctrine. It should be noted that in this case it is not clear whether the sound prediction would have helped the patentee; Barnes J did not consider whether the MGH Study would have supported sound prediction had it been disclosed.

I will discuss the demonstrated utility point in a subsequent post.

Is a Material Misstatement under Section 53 Fraud for the Purposes of Rule 399?

Pfizer Canada Inc. v Ratiopharm / amlodipine besylate (NOC) 2011 FCA 215 Létourneau JA: Dawson, Stratas JJA

Since I started this blog at the beginning of the year, there have been enough cases on the relationship between section 8 damages and patent validity that I have decided to add a new tag for that topic. The automatic stay available to the patentee under section 7(1) of the PM(NOC) Regulations is analogous to an automatic interlocutory injunction, and section 8 damages available to the generic are analogous to damages on the undertaking normally required of an applicant who obtains such an injunction. The difficulty arises because NOC proceedings and impeachment proceedings are entirely separate. Under the “no reach back” rule established in Apotex v Syntex / naproxen (NOC) 2010 FCA 155, the generic is not entitled to section 8 damages if it is unsuccessful in the NOC proceedings, even if the patent is ultimately held to be invalid in a subsequent infringement action. The generic will therefore have been wrongly excluded from the market under an invalid patent, and yet will have no remedy for the harm suffered as a result. In contrast, if the patentee had obtained an interlocutory injunction in an infringement action, damages on the undertaking would be available to the generic if it ultimately established the patent was invalid. (It would also seem to follow that if the patentee loses in the NOC proceedings, but prevails in the infringement action, the patentee will nonetheless be liable to the generic under section 8, though it would not have been liable on the undertaking on an interlocutory injunction. This point has not yet been established in litigation. For posts discussing the problem, click on the Section 8 and Patent Validity tag.)

The amlodipine besylate litigation exemplifies the issue. In 2006, Pfizer was ultimately successful in obtaining a prohibition order in the NOC proceedings – 2006 FCA 214 rev’g 2006 FC 220 – but the patent was declared invalid in subsequent infringement proceedings: 2010 FCA 204 aff'g 2009 FC 711. Ratiopharm would like section 8 damages, but under the “no reach back” rule, it is not entitled to them. In the motion that was the subject of the most recent decision in 2011 FCA 215, Ratiopharm sought to avoid the “no reach back” rule by applying to have the 2006 prohibition order set aside. Normally the NOC matter would be res judicata, notwithstanding the finding of invalidity in the infringement proceeding, so Ratiopharm applied under Rule 399(1)(a) and (b) of the Federal Court Rules to have the order of prohibition set aside on the basis that (a) the holding of invalidity in the infringement action was “a matter that arose or was discovered subsequent to the making of the order,” or (b) the order had been “obtained by fraud.”

Mootness on Appeal

Epicept Corporation v. Canada (Health) 2011 FCA 209 Stratas JA: Sharlow, Trudel JJA, dismissing for mootness 2010 FC 956 Near J

In the decision under appeal Near J had held that Epicept’s drug CEPLENE is not an “innovative drug” under the Data Protection Regulations. Epicept appealed, but while the appeal was pending, Epicept withdrew its new drug submission for the approval of CEPLENE. On a motion by the CGPA, the Court of Appeal dismissed the appeal for mootness.

The appeal was clearly moot, and the real question was whether the Court should exercise its discretion to hear a moot appeal [7].