The "Inventive Concept" and the Problem-and-Solution Approach to Obviousness

Allergan Inc v Sandoz Canada Inc / combigan (NOC) 2011 FC 1316 Crampton J

The Federal Court seems to be expanding the roster of judges assigned to patent cases, as we have had three decisions recently that appear to be the first patent decision for the judge in question: Rennie J’s anastrozole (NOC) decision, Scott J’s decision in Hollick Solar and now this decision from Crampton J. The fresh eyes have brought a new perspective on some old problems: Rennie J set out a structured framework for determining the promise of a patent; Scott J resurrected the Improver questions for determining whether an element is essential to a claim; and in this case Crampton J has addressed whether the claims or the inventive concept are the focus of the obviousness inquiry. While Crampton J resolved the question correctly, in my view, I suggest that the difficulty which arose in this case reflects a problem with the Windsurfing / Pozzoli test itself. This problem could be avoided, and the analysis simplified, by invoking the problem-and-solution approach that is standard in the European Patent Office.

Patentability of Business Methods Unresolved by FCA Decision in Amazon.com

Amazon.com, Inc. v. Canada (Attorney General) 2011 FCA 328 Sharlow JA; Trudel, Stratas JJA var’g 2010 FC 1011 Phelan J rev’g Re Amazon.com, Inc. Patent Application No. 2,246,933 (2009) C.D. 1290, 75 CPR(4th) 85 (PAB & Com’r Pat)

In a thinly reasoned decision, the FCA has decided the Amazon.com appeal without deciding whether business methods are patentable subject matter in Canada. The central question, “Can a business method ever be patentable subject matter?” was dealt with in five paragraphs, in which the FCA applied its own prior decision on computer implemented inventions, Schlumberger Canada Ltd v Comm’r of Patents, [1982] 1 FC 845, 56 CPR (2d) 204 (CA), and held that the result turns on whether “the only inventive aspect of the claimed invention is the algorithm,” in which case it would be unpatentable, or whether the one-click shopping method at issue is “one of a number of essential elements in a novel combination” [63]. The FCA held that this was a matter of claims construction, and remanded the patent to the Commissioner for reexamination in accordance with the FCA’s reasons.

While the FCA disapproved certain aspects of the test applied by the Patent Office, the decision is a victory for the Commissioner, at least in the short term. Schlumberger was also thinly reasoned – it was two pages long and cited no case law whatever – and the practical result was to allow the Patent Office to deal with software patents as it saw fit. While the claims at issue in Schlumberger were refused, the Patent Office soon changed its mind, and ultimately interpreted Schlumberger so as to grant patents for inventions which were functionally indistinguishable: see eg Mobil Oil’s Application (1985), 24 CPR (3d) 571. The FCA’s reasons in Amazon.com are similarly ambiguous. Consequently, while the Patent Office will have to revise the complex test which it applied in Amazon.com’s Application, it will be able to follow its own policy with respect to business method patents. At present the Patent Office is firmly set against such patents, and it is a foregone conclusion that this particular patent will be refused on reexamination, but since claim construction is a matter of law to be reviewed without deference, Amazon.com will have a real possibility of having the Commissioner’s decision overturned, if it is prepared for more litigation. In the short term, then, business method patents will not be granted in Canada; in the longer term, unless the FCA decision is appealed to the SCC, we can expect a protracted period of uncertainty as the Federal Court judges struggle with the interpretation of the FCA decision in Amazon.com.

FCA Releases Amazon.com Decision

The decision of the FCA in Amazon.com 2011 FCA 328 has been released. It has not yet been posted on the FCA website, but Alan Macek has made the decision available at IPPractice.ca. I will have a post on this decision later today soon.

Test for a Stay Depends on Whether the Court is Enjoining Another Body, or Delaying Its Own Proceedings

Mylan Pharmaceuticals ULC v. AstraZeneca Canada, Inc. 2011 FCA 312, Stratas JA

In 2011 FC 1023 (blogged here and here), Rennie J granted an order of prohibition in respect of Mylan’s application for an NOC for anastrozole. Mylan is appealing this decision. In this motion, AstraZeneca sought to have the hearing of the appeal stayed until the decision of the SCC in Teva v Pfizer / sildenafil (SCC 33951). The legal issue raised was whether the applicable legal test was the tripartite test set out in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 SCR 311 (the same test as for an interlocutory injunction). Stratas JA held that the RJR-MacDonald test applies only when the Court is enjoining another body from exercising its jurisdiction [5]. In the case where the Court is deciding whether to delay exercising its own jurisdiction, “the demanding tests prescribed in RJR-MacDonald do not apply,” [5] and the question is “whether, in all the circumstances, the interests of justice support the appeal being delayed” [14].

No Vested Right to an NOC

Apotex Inc v Canada (Health)/ Apo-Omeprazole 2011 FC 1308, Barnes J

In March 2003 the Therapeutic Products Directorate advised Apotex that the examination of Apo-Omeprazole had been completed but Apotex’s application for a NOC was on patent hold. In the fall of 2009 the TPD revoked the approval status on the basis that the bioequivalence study filed by Apotex with its ANDS had not been appropriately conducted. The TPD refused to reconsider this decision (for a review of the facts see 2010 FC 1310, [3], a motion to strike on this application). Apotex challenged the TPD’s decisions by way of this application, which was dismissed as untimely under the Federal Courts Act s 18.1(2). On the only substantive point that was discussed, Barnes J held that there can be no vested right to an NOC:

[33] There is no legal significance attaching to an application for a NOC that has been placed on patent hold. The Minister is fully entitled to revisit scientific issues at any point in the process up to the actual issuance of a NOC. It is only at that point that the Minister’s examination is completed in accordance with C.08.004 of the Food and Drug Regulations, RSC 1985, c F-27. Indeed, given the lengthy delays that can arise, the Minister would be remiss if such applications were approved at the expiry of the patent hold period without further scrutiny.

This conclusion strikes me as neither surprising nor controversial.

Proving the Promise of a Selection Patent

Eli Lilly Canada Inc. v. Novopharm Ltd / olanzapine (No 2) 2011 FC 1288 O'Reilly J

2,041,113 – olanzapine – ZYPREXA

To repeat the introduction from yesterday’s post, in Eli Lilly Canada Inc. v. Novopharm Ltd. / olanzapine (No 1) 2009 FC 1018 O’Reilly J held Lilly’s olanzapine patent, 2,041,113, to be an invalid selection patent over the genus patent 1,075,687. On the appeal, the FCA held that invalid selection is not an independent basis upon which to attack the validity of a patent (2010 FCA 197, [27], [33], [90]), and that O’Reilly J’s finding of invalidity was fatally tainted by this error. The FCA held that the patent was neither anticipated nor obvious, nor was it invalid for double patenting, but it remitted the case to O’Reilly J on the issues of utility and sufficiency. O’Reilly J at [124], following the lead of the FCA at [99], construed the patent as promising superiority to (1) prior known antipsychotics; and (2) other '687 compounds, in particular flumezapine. O’Reilly J held that patent invalid for failure to fulfil these promises. Yesterday’s post discussed the first promise. This post discusses the second promise.

Olanzapine Patent Invalid on Remand: The Ad Hoc Nature of the Utility Determination

Eli Lilly Canada Inc. v. Novopharm Ltd / olanzapine (No 2) 2011 FC 1288 O'Reilly J

2,041,113 – olanzapine – ZYPREXA

In Eli Lilly Canada Inc. v. Novopharm Ltd. / olanzapine (No 1) 2009 FC 1018 O’Reilly J held Lilly’s olanzapine patent, 2,041,113, to be an invalid selection patent over the genus patent 1,075,687. On the appeal, the FCA held that invalid selection is not an independent basis upon which to attack the validity of a patent (2010 FCA 197, [27], [33], [90]), and that O’Reilly J’s finding of invalidity was fatally tainted by this error. The FCA held that the patent was neither anticipated and nor obvious, nor was it invalid for double patenting, but it remitted the case to O’Reilly J on the issues of utility and sufficiency.

On remand, O’Reilly J has held there was sufficient disclosure, but the 113 patent is invalid for lack of utility. As always in Canadian cases dealing with utility, the first question is construing the promise of the patent. Layden-Stevenson J giving the decision of the FCA in olanzapine (No 1) stated that she would be inclined to construe the patent as promising “that olanzapine, in the treatment of schizophrenia, shows marked superiority to flumezapine and other '687 compounds, has a better side effects profile than prior known antipsychotic drugs and has a highly advantageous activity level” [99]. She did not conclude the point as she did not have the benefit of the expert evidence, but she remitted this issue to O’Reilly J as part of the utility question. O’Reilly J has taken the hint and in effect construed the patent in exactly in this manner: [124]. Note that there are two distinct promises: olanzapine must be superior to (1) prior known antipsychotics; and (2) other '687 compounds, in particular flumezapine. These are distinct points because no '687 compound had been used as an antipsychotic. While O’Reilly J’s decision runs these two points together, as both are encompassed in the promise of the patent, it is convenient to treat them separately. I will deal with the second promise in a subsequent post.

“[T]he soundness of a prediction is a question of fact”

Sanofi-Aventis Canada Inc. v. Apotex Inc. / ramipril, 2011 FCA 300 Layden-Stevenson JA: Noël, Pelletier JJA aff’g 2009 FC 676 Snider J

In this brief decision, the FCA affirmed Snider J’s finding that Sanofi’s claims to ramipril were invalid on the basis that the inventors could not soundly predict the utility promised by the patent as of the filing date. The FCA stated at [5] that “the soundness of a prediction is a question of fact” which was therefore owed deference unless the trial judge had applied the wrong legal test. The FCA held that Snider J has applied the correct test, and her findings of fact were amply supported by her detailed review of the evidence.

While this conclusion is no doubt reasonable on the facts (which I have not reviewed in detail), I am concerned by the apparently blanket statement that “the soundness of a prediction is a question of fact.” If taken to an extreme, so that every case turns on its own facts, it will not be possible to develop guidelines that provide the legal predictability and certainty that is so important to an industry such as biotechnology, which requires massive investments in reliance on patent protection. This statement is also doubtful as a matter of principle. There is no sharp dividing line between questions of law and questions of fact. Legal principles may be stated at different levels of generality, and as principles become more detailed, they shade more closely into questions of fact.

Both of these points are illustrated by the recent decision of the UKSC in HGS v Eli Lilly [2011] UKSC 51 rev’g [2010] EWCA Civ 33 (blogged here, here and here), in which the EWCA distinguished a number of decisions from the EPO Technical Boards of Appeal dealing with very similar facts, essentially on the basis that each case turned on its own facts. That would have made is makes it difficult for patentees to determine whether their patent is valid, and more importantly, to determine how soon they can apply for a patent with confidence that its validity will be upheld. As explained by Lord Neuberger in HGS v Eli Lilly at [98], this predictability is very important in the pharmaceutical industry, which relies on patent protection to fund research. The patentee is caught in a squeeze between wanting to patent early, to protect its innovation in a competitive industry, and not patenting too early in order to ensure validity. Whether the line is drawn early or late is arguably less important than that it is drawn clearly, so that inventors can know, rather than guess, what point they have to reach in order to obtain a valid patent. The UKSC, which strongly emphasized the need for legal certainty, felt able to draw principles from the TBA decisions which the EWCA had viewed as turning on their own facts. Notably, the UKSC stated the governing principles at three different levels of generality: general principles; principles applicable to new proteins and their encoding genes; and principles applicable where the protein is said to be a family or superfamily member [107]. It was the willingness to set out principles applicable to a narrow class of cases, rather than simply saying that the cases turn on their own facts, that mark the difference between the EWCA and the UKSC, and which allowed the UKSC to state guidelines that enhance predictability.

I am not arguing that the FCA was wrong in holding that the question on appeal in the ramipril case was one of fact. It is not possible to state principles that will provide clear answers in all cases; to some degree each case must turn on its own facts. My concern is that a blanket statement that the soundness of a prediction is a matter of fact reflects an approach similar to that taken by the EWCA in HGS v Eli Lilly, and may consequently impede the development of detailed principles that would improve predictability.

FCA Takes a Hard Line on Payment of Fees by the Wrong Agent

Excelsior Medical Corporation v. Canada (Attorney General) 2011 FCA 303 Pelletier JA: Noël, Layden-Stevenson JJA, aff’g 2011 FC 407 Hughes J

Patent Rule 6(1) states that the Commissioner shall only have regard to communications from the authorized correspondent. This means that if the patentee changes its agent, but does not notify the Patent Office of the change, the original agent remains the agent of record. In these circumstances the Patent Office will refuse payments made by the new agent. The result is that the patent may be deemed to be abandoned for non-payment of fees, even though payment has been tendered, albeit by the wrong agent. This point has recently been affirmed by the FCA in Unicrop.

In the decision under appeal in this case Hughes J had created a glimmer of hope for a patentee in this situation. He held that if the Patent Office accepts the fees from the wrong agent and sends a notice to the agent of record stating that the application had been reinstated, the application is thereby reinstated and the Commissioner cannot “undo” the reinstatement. In my post on that decision, I suggested that while this result seems fair, it is difficult to reconcile with the mandatory language of Rule 6(1), which states that the Commissioner “shall only have regard to communications from[] the authorized correspondent.” On appeal, the FCA extinguished that glimmer of hope, faint though it was:

The acceptance of maintenance fees, whether within or outside the reinstatement period, from someone other than the applicant’s authorized correspondent does not reinstate a patent application. Contrary to the application judge’s view, the Patent office’s acceptance of those fees did not create rights and its return of those fees did not extinguish rights. To hold otherwise would be to create a situation in which the Patent office’s administrative errors created or extinguished rights independently of the statutory scheme. [5]

Nor did the FCA show any sympathy for the patentee in this situation: “there is no basis for invoking the Federal Court’s equitable jurisdiction on the facts of this case. This is simply another in a line of case where the most elemental precautions were not taken when accepting a patent prosecution mandate” [8]. It is therefore clear that there is no prospect of judicial relief in cases in which fees have been paid by the wrong agent.

(Note that on the facts Hughes J refused to order the patent reinstated, as the new agent had subsequently requested and accepted a refund, and the application then became incurably dead. Thus the FCA dismissed the appeal.)

The Improver Questions Resurrected

Hollick Solar Systems Ltd v Matrix Energy Inc 2011 FC 1213, Scott J

In his first patent decision, Scott J has walked right into the morass of the essential elements doctrine. Moreover, he applied the three question test approved in Free World Trust 2000 SCC 66 at [55]-[56]. These questions are normally known as the Improver questions, after the case in which Hoffmann J first set out these questions, but they might now be known as the Improver “mangle,” the term used by Lord Hoffmann when, in Kirin-Amgen Inc. v Hoechst Marion Roussel Ltd [2004] UKHL 46 at [52], he repudiated his own test. The Improver questions were applied in a few cases soon after Free World Trust, but have been almost entirely ignored by the Federal Courts in recent years. (The last case I know to apply them was Halford Seed Hawk 2004 FC 88 at [140]ff, aff’d 2006 FCA 275, though with some criticism at [14]-[15].)

The invention at issue in Hollick v Matrix was a system for solar preheating of building ventilation air. It is the last in the series of three patents granted to the same inventor. As I read the patents, in the first, 1,196,825, the inventive concept was to pre-heat incoming ventilation air by passing that air through a solar panel on the sunny wall of the building, thereby capturing both solar heat and waste heat escaping through the wall of the building. The second, US Patent 4,774,932, is for an improved collector panel with vertical corrugations. This patent at issue in this case, 1,326,619, is for a further improvement to the invention disclosed in the US patent. It divides the vertical corrugations into a series of offset panels in order to improve efficiency by preserving laminar air flow. All of these patents specify that the heated air is removed into the building through a plenum at “the top” of the panels. The defendant’s device in this case placed this air intake at the bottom of the panel. The question therefore was whether the location of the air intake at the top of the panel was an essential element.

Post-Published Evidence in Europe

Human Genome Sciences Inc v Eli Lilly & Co [2011] UKSC 51 rev’g [2010] EWCA Civ 33 aff’g [2008] EWHC 1903 (Pat)

In HGS v Eli Lilly the UKSC, relying on case law of the EPO Technical Board of Appeal, held that post-filing evidence may be used to confirm the utility of a claimed invention, though such evidence cannot be the sole basis for establishing utility: [107(ix)]. The point is made most clearly in the TBA decision in T 0898/05 Hematopoietic receptor/ZymoGenetics:

Admittedly, no experimental evidence for the suggested role of the receptor and/or its ligands is made available in the application. Later evidence, however, confirmed this sort of "educated guess", which the examining division considered to be - in its own words - "reasonably credible".

(Note that the UKSC and the TBA in T 0898/05 refer to this as “later evidence,” but the TBA normally uses the term “post-published” evidence, as did Jacob LJ in the EWCA.)

The TBA case law is quite consistent on this point. Of the cases reviewed by the UKSC and EWCA in HGS v Lilly, T 0898/05 ZymoGenetics, T 1165/06 IL-17 related polypeptide/Schering, and T 0018/09 Neutrokine/Human Genome Sciences all rely on post-published evidence to establish that the claimed invention did indeed have the utility asserted in the patent. In some cases that evidence was published years after the filing date. Two more cases, T 0870/04 and T 1452/06 consider post-published evidence, though conclude it was not helpful on the facts. The case most hostile to post-published evidence was T 1329/04 Factor- 9/John Hopkins [sic] but even there the TBA did not dismiss such evidence outright, but said only at [12] that “even if supplementary post-published evidence may in the proper circumstances also be taken into consideration, it may not serve as the sole basis to establish that the application solves indeed the problem it purports to solve.”

Functional Limitations Need Not Be Express in the Claim

Delp v Fresh Headies Internet Sales Ltd 2011 FC 1228 Barnes J

This decision is a reasonably straightforward application of Burton Parsons [1976] 1 SCR 555 in the context of a motion for summary judgment. The claimed invention is for a method of extracting resins from plant materials without the use of chemicals, by chilling the plant material in cold water, which causes the resin to become brittle, and then agitating, which causes the brittle resin to break off the plant surface, after which it can be removed by filtration.

The problem faced by the patentee was a familiar one. The process can be made to work over a range of temperatures, though the efficacy drops off gradually at increasing temperatures. If the temperature is too high it will not work, though there is no strict cutoff point. Further, it will work for a variety of resinous plants, and the temperature at which the process becomes inoperative depends on the plant. A low temperature cutoff in the claim would risk excluding practically operable embodiments of the invention that could be used by competitors, but a cutoff that is too high risks encompassing inoperable embodiments.

What Does HGS V Eli Lilly Mean for Canadian Law?

Human Genome Sciences Inc v Eli Lilly & Co [2011] UKSC 51 rev’g [2010] EWCA Civ 33 aff’g [2008] EWHC 1903 (Pat)  

Wednesday’s decision of the UKSC in Human Genome Sciences Inc v Eli Lilly is very interesting in its own right, but what impact will it have on Canadian law? In broad terms it demonstrates that there is a clear functional parallel between the European requirement of “industrial application” and the Canadian utility requirement; both deal primarily with the question of how far upstream in the innovation process a patent may be granted. We can no longer say that Europe has done away with the utility requirement; to a large extent they have just renamed it. This means that in principle Canadian courts and the Patent Office can look to UK and European law on industrial applicability for guidance in respect of questions of utility. The SCC, of course, has in recent years relied heavily on UK law in a number of important decisions. CIPO is also in the habit of looking to foreign law, particularly European law, for guidance in contexts where there is little Canadian case law. HGS v Lilly means that this course remains open in respect of utility.

With that said, at the intermediate level of the specifics of doctrine, there are very significant differences between European and Canadian law that mean the specific holdings of UK courts of the EPO Boards of Appeal may not be directly transferable to the Canadian context. In particular, Canadian law on how far upstream a patent may be granted has developed through the doctrine of sound prediction. European law has no such doctrine. While it came to us from the UK, it was abandoned there with the Patents Act, 1977 which implemented the European Patent Convention. Paradoxically, this arguably makes HGS more relevant than it might initially appear. In stating the principles applicable where a patent discloses a new protein and its encoding gene, the UKSC held that “[a] ‘plausible’ or ‘reasonably credible’ claimed use, or an ‘educated guess’, can suffice” to establish industrial applicability [107(viii)]. This may appear to set a different, perhaps lower, standard than the requirement of “sound” prediction that is established in Canadian law. However, the UKSC principles are not directed to a predicted use at all, as sound prediction is not a basis for demonstrating industrial applicability. The UKSC held that a “plausible” use is sufficient to establish what would in Canada be called a demonstrated use, not merely a sound prediction.

How Far Upstream May a Patent Be Granted?

Human Genome Sciences Inc v Eli Lilly & Co [2011] UKSC 51 rev’g [2010] EWCA Civ 33, aff’g [2008] EWHC 1903 (Pat)

Today the UKSC released an important decision on industrial applicability which raises in pure form the difficult question of how far upstream in the innovation process a patent should be granted.

The facts are quite simple. The patent disclosed and claimed the DNA sequence for Neutrokine-α, which was described, correctly, as being a member of the TNF family of cytokines. It was common general knowledge that all known members of the TNF family had in common certain biological activity related to immune and inflammation responses, so a skilled person would expect Neutrokine-α to have the same activity. Little else was disclosed or known about Neutrokine-α at the time of the application. The question is therefore whether the known activity of the TNF family was sufficient to satisfy the requirement of industrial applicability. 

Repeating the Claims is Not an Adequate Pleading of Material Facts

Bertelsen v. Automated Tank Manufacturing 2011 FC 1219, O’Keefe J
 
The issue in this motion is the particularity required of the pleadings. The allegation of material fact in the pleadings specified the city in which the infringement was alleged to have taken place and a rough date range, but otherwise simply repeated the claim verbatim as constituting the specific acts of infringement. O’Keefe J, reviewing a decision of the prothonotary de novo as being vital to the final issue in the case, refused to allow the amendment to the statement of claim (which would have been the third amendment) and consequently dismissed the action on the basis that the pleadings did not disclose a cause of action. This appears to be a reasonably straightforward application of Dow Chemical Co v Kayson Plastics & Chemicals Ltd (1996), 47 CPR 1 (Ex Ct) and Precision Metalsmiths Inc v Cercast Inc (1966), 49 CPR 234 (Ex Ct). While the claims themselves describe elements which are factual in nature, e.g. “providing a vertical shaft extending below ground,” what is required is “a description of the particular process that the defendants are alleged to have made or used” (Precision Metalsmiths at 247). It is true that if the defendant did infringe, then the specific acts carried out by the defendant will be described by the claims, so in that sense repeating the claims would describe the defendant’s acts. However, the broader principle appears to be the same as is applied in discovery, namely that litigation cannot be used as a fishing expedition: see eg 2008 FCA 287. The facts pleaded must therefore relate to specifically identifiable acts by the defendant.