Speculative Prejudice to Third Parties in Reinstating a Patent

Repligen Corporation v. Canada (Attorney General) 2012 FC 931 Near J

Repligen’s former patent agent transposed two digits of Repligen’s patent 1,341,486, to 1,314,486, when it engaged Computer Patent Annuities to pay maintenance fees on the patent. Consequently, the fees were paid against the “14" patent, which was held by Rolls-Royce. Sometimes the fees would be paid first on behalf of Rolls-Royce, sometimes on behalf of Repligen. The second payor would to be told that fees had already been paid and would request a refund. While duplicate fees were paid on the "14" patent, no fees were paid on Repligen’s “41" patent and CIPO sent a Maintenance Fee Notice to Repligen’s former agent advising that the patent would lapse unless payment was made within twelve months. Repligen’s former agent did not respond [5], and the “41" patent lapsed.

Repligen then switched agents. Its new agent attempted to have the patent reinstated, arguing that the Commission should exercise her discretion to correct the clerical error under s 8 of the Act and reinstate the patent. The Commissioner refused, primarily on the basis of the lengthy delay and the potential for prejudice to third parties who might have relied on the register showing the patent as lapsed [#1 59].

In Repligen #1 2010 FC 1288 Lemieux J held that the Commissioner had not properly exercised her discretion. A crucial point was that the Commissioner’s concern regarding prejudice to third parties was speculative as she had no evidence of third party prejudice. Lemieux J contrasted this with Bristol-Meyers (1998), 82 C.P.R. (3d) 192 (FCA) in which two other companies had filed priority claims for similar drugs [#1 60(f)]. Lemieux J noted the “catastrophic consequences” of the loss of patent rights [#1 59], and insisted that the Commissioner take into account the impact on Repligen in deciding whether the patent should be reinstated [#1 60(a)].

I am inclined to think that the Commissioner was right on this point. There may be many cases in which a third party would have relied on the lapse of the patent in a way that could not come to the attention of the Commissioner. For example a third party might have done patent clearance search before deciding to invest in developing a new product and then proceeded after having determined that its product would infringe the Repligen patent, but that the patent had lapsed. Given the nature of third party rights, it seems likely that it would be only in relatively unusual circumstances, such as those in Bristol-Meyers, that the Commissioner could become aware of the prejudice to third parties. It is true that the consequences to Repligen of the loss of its patent rights can be catastrophic, but it is also true that infringement of those rights could be catastrophic to a third party.

In any event, this was not the view of Lemieux J, who remitted the matter to be reconsidered by a different official in the Patent Office. The Commissioner once again refused to correct the error, and Repligen once again sought judicial review, leading to this decision in Repligen #2. This time the Commissioner focused on potential prejudice to Rolls-Royce. The Commissioner argued that “‘[c]orrecting Repligen's error today could retroactively have the effect of causing the Rolls-Royce patent to have expired in 2008' since the payments originally applied to it would automatically turn over to the Repligen Patent” [# 2 16]. Near J rejected this argument, rightly in my view. Fees were always paid in respect of Rolls-Royce’s patent, which never lapsed and has now expired [# 2 31]. I see this argument by the Commissioner as a way of attempting to point to an actual prejudice rather than a speculative prejudice in order to satisfy the direction by Lemieux J. It is an unsatisfactory attempt, as the Commissioner identified the real issue correctly in the first instance; the real question is whether the Commissioner should consider harm to third parties who may have relied on the lapse, unbeknownst to the Commissioner. Lemieux J, and now Near J, have held that it should not.

The matter had been remitted to the Patent Office once again. Even if the patent is reinstated, I am not sure Repligen’s troubles are over. Loss of patent rights is not “catastrophic” if those rights are never exercised. But if Repligen has the patent reinstated and then brings an infringement action against a competitor who can show that it did in fact rely on the lapsed patent, there is a a very strong argument that that defendant should have some kind of equitable defence. If the defendant can say “I searched for patents before undertaking my business, I found this patent that I would have infringed, I determined that it had lapsed, and I then invested $10 million in reliance on that,” it would be a serious failure of the patent system to allow Repligen to enforce against that defendant.

Bifurcation Refused When Patentee Gave up Right to Damages

Apotex Inc. v. H. Lundbeck A/S / escitalopram 2012 FC 414 Tabib P

I don’t usually comment on procedural issues but this decision, in which Lundbeck successfully opposed Apotex’s motion to bifurcate by giving up its right to damages, provides a clear explanation of the rationale for bifurcation and raises some fundamental questions of principle.

What Is the Difference Between Dosage Form and a Device?

Novartis Pharmaceuticals Canada Inc v Canada (Attorney General) 2012 FC 836 Martineau J

Pat No. 2,304,819; Tobi Podhaler®

My previous post discussed the product specificity aspect of this decision. An interesting point is also raised in respect of para 4(2)(c), which allows listing if the patent contains a claim for the dosage form. According to the RIAS to the 2006 amendments introducing the new listing requirements, a claim for a dosage form

must contain a claim that includes within its scope the approved medicinal ingredient. This latter requirement is meant to ensure that a patent directed solely to a device, such as an intravenous stand or a syringe, does not meet the definition of "dosage form" and remains ineligible for listing.

The ‘819 patent does claim a medicinal ingredient in generic terms such as “bioactive agent” and “antibiotic,” and presumably the product specificity requirement would have been satisfied if it had explicitly listed tobramycin. But even apart from the requirement of product specificity, there is still the question of whether the ‘819 patent claims a dosage form. To my mind, the perforated microparticles of the ‘819 patent are somewhere near the boundary of a dosage form and a device. Martineau J addressed this by saying:

[64] There is no doubt that the approved dosage form of Tobi Podhaler is more complex and more nuanced than an intravenous stand or a syringe. However, the rationale remains the same because the delivery system on the grounds of which the applicant seeks to list the ‘819 patent, including its different components, is one that can be used in association with a broad range of medicinal ingredients and is therefore insufficient to help the ‘819 patent qualify under paragraph 4(2)(c) of the Regulations.

This indicates that a broadly applicable delivery vehicle cannot be listed, even if it specifically refers to medical ingredients. This is a reasonable interpretation of the provision. Presumably the intent of the Regulations is that a patent for a new syringe could not be listed, even if it was claimed “for the purpose of delivering a bioactive agent.” But on the other hand, the RIAS explains that para 4(2)(c) was included because

the Government has come to the view that inventions in this area merit the special protection of the PM(NOC) Regulations. This is particularly true where biologic drugs are concerned, as effective administration of the medicinal ingredient is often dependent on the development of new and innovative delivery mechanisms.

If new and innovative delivery mechanisms are worthy of protection under the Regulations, why is a new and innovative delivery mechanisms excluded from listing simply because it can be used with a wide range of drugs? Arguably a delivery system that can be widely used is even more deserving of protection that one that is tailored to a particular drug. Perhaps the objection is that it would be wrong to allow a patent for a new delivery system to trigger the statutory stay for every new drug, simply because the drug could be delivered by that delivery system. This is a fair point, but it seems to me that it could be accommodated by a requirement that the delivery system would certainly or almost certainly be used (and so infringed) in order to be listed against a particular product. It must also be acknowledged that simply because the NOC Regulations exist, does not mean that they should apply to every type of patent, even if it is one that would necessarily be infringed, as the patent holder can always turn to an infringement action. But these kinds of questions make it difficult to see what general principle underlies the listing requirements.

Product Specificity Requires Explicit Naming of Medicinal Ingredient

Novartis Pharmaceuticals Canada Inc v Canada (Attorney General) 2012 FC 836 Martineau J

Pat No. 2,304,819; Tobi Podhaler®

Martineau J’s decision refusing to allow Novartis’ ‘819 to list its patent against its Tobi Podhaler® product follows and applies the existing case law that interprets the principle of product specificity as requiring that a patent explicitly name the medicinal ingredient in the claims in order to be eligible for listing against a drug product. While this case illustrates once again some of the conceptual peculiarities of this approach to the product specificity requirement, it does not change the law in this respect. The decision does raises some interesting questions as to the boundary between a device such as a syringe which does not qualify as a dosage form at all, and once which might quality if it otherwise meets the product specificity requirements, which will be discussed in a subsequent post.

Promise of the Patent Is to Be Found in the Claims

Fournier Pharma Inc. v. Sandoz Canada Inc. 2012 FC 741 Zinn J
            NOC; fenofibrate; LIPIDIL EZ; 2,372,576

Zinn J’s Fournier / fenofibrate (NOC) decision turned primarily on claim construction and infringement, but hidden in the brief treatment of validity of the ‘576 patent there is a very important passage regarding the promise of the patent which deserves to be quoted in full (Zinn J’s emphasis):

[126] The Federal Court of Appeal in Eli Lilly Canada Inc v Novopharm Limited, 2010 FCA 197, citing Consolboard Inc v MacMillan Bloedel (Sask)Ltd, [1981] 1 SCR 504, stated at para 76 that “where the specification sets out an explicit ‘promise’, utility will be measured against that promise [emphasis added].” The promise of a patent, as that term is used in patent law, is nothing more than the utility the inventor claims for his invention. Where that promise – that claimed utility – is clearly and unequivocally expressed by the inventor in the claims of the patent, then that expression ought to be viewed as the promise of the patent. Any statement found elsewhere should be presumed to be a mere statement of advantage unless the inventor clearly and unequivocally states that it is part of the promised utility. The following from page 1 of the patent in AstraZeneca Canada Incv Apotex Inc, 2010 FC 714, is illustrative of such a statement found in the disclosure:

It is desirable to obtain compounds with improved pharmacokinetic and metabolic properties which will give an improved therapeutic profile such as a lower degree of interindividual variation. The present invention provides such compounds, which are novel salts of single enantiomers of omeprazole [emphasis added].

[127] The interpretation should be focused on the claims because an inventor is not obliged to claim a monopoly on everything new, ingenious, and useful disclosed in the specification. If, as here, the claims are certain and unambiguous in stating the promise, then the disclosure should not be examined microscopically to find additional promises that are outside the scope of the inventor’s claimed monopoly.

Consequently, Zinn J concluded at [128] that “I find, as stated in claim 1, that the promise of the patent is a “fenofibrate composition … having a dissolution of at least 10% in 5 minutes, 20% in 10 minutes, 50%in 20 minutes and 75% in 30 minutes” (my emphasis). As I have emphasized, this promise directly reflects the wording of the claim itself.

While Zinn J’s remarks are very clear and he has provided his own emphasis, almost the entire passage could be highlighted, so I will add some of my own:

Where that promise – that claimed utility – is clearly and unequivocally expressed by the inventor in the claims of the patent, then that expression ought to be viewed as the promise of the patent. Any statement found elsewhere should be presumed to be a mere statement of advantage unless the inventor clearly and unequivocally states that it is part of the promised utility. . . 

If, as here, the claims are certain and unambiguous in stating the promise, then the disclosure should not be examined microscopically to find additional promises that are outside the scope of the inventor’s claimed monopoly.

Zinn J’s focus on the claims is in sharp contrast with the trend of the recent Canadian cases, which is to extract the promise of the patent from a searching, sometimes “microscopic,” analysis of the disclosure. This is usually done in an ad hoc manner, though Rennie J in Astrazeneca / anastrozole (NOC) has recently used a more structured approach; but however it is done, the focus is almost always on finding a statement of the promise in the disclosure. One exception which proves the rule was Pfizer v Apotex / latanoprost (NOC) 2011 FCA 236, blogged here, in which the FCA interpreted the promise in light of the common general knowledge, without reference to the disclosure, much less the claims.

While Zinn J’s approach is a departure from recent Canadian trends, it is consistent with the English cases which developed the false promise doctrine. In Alsop’s Patent (1907) 24 RPC 733 at 753 (Ch), one of the leading cases on the promise of the patent, Parker J noted “the importance of drawing a distinction between what the patentee claims to have effected by the invention for which he claims protection [ie the promise of the patent], and a statement of the additional purposes to which the invention can be applied.” That is, not every statement of advantage in the specification is to be treated as a promise. Put another way, in order for validity to turn on a promise made in the specification, the promise must be “material” in the sense that it can be said that the patent was obtained on the strength of the promise: Alsop’s Patent, ibid, Raleigh Cycle Co Ltd v H Miller & Co Ltd, (1948) 65 RPC 141 at 162 (HL). This point seems to have been largely forgotten in recent Canadian case law, in which the disclosure is examined to extract a promise without regard to whether that promise is material. Zinn J’s approach amounts to a presumption that a promise is material only if it is found in the claims. This presumption is consistent with the general rule that the invention is defined by the claims, not by the specification. Consequently, it helps address one of the most problematic aspects of the false promise doctrine, which is that validity of the patent will often turn on a “microscopic” construction of the disclosure. This is a trap particularly when, as is normally the case, the patent was drafted in light of US and European law, which do not have a false promise doctrine.

Notwithstanding the FCA decision in Pfizer v Apotex / latanoprost (NOC), a few recent cases suggest that the FCA has recognized the need to put some bounds on the false promise doctrine by approving relatively moderate constructions of the promise (see here and here). The difficulty with relying on the trial judge to adopt a moderate approach to construction of the promise is that there may be considerable arbitrariness in the result, depending on how aggressive a particular judge chooses to be in construing the promise. The approach of Rennie J in Astrazeneca / anastrozole (NOC) (blogged here) is one attempt to provide a principled legal structure to the construction of the promise, and Zinn J’s approach is another. I prefer Zinn J’s approach for its focus on the claims, as opposed to Rennie J’s approach, in which the focus remains on the disclosure. In any event, it is gratifying to see the Federal Court grapple directly with the legal structure of this problematic doctrine.

Claim Ambiguity and Recourse to the Specification

Fournier Pharma Inc. v. Sandoz Canada Inc. 2012 FC 740, 2012 FC 741 Zinn J

NOC; fenofibrate; LIPIDIL EZ; 2,487,054 (2012 FC 740); 2,372,576 (2012 FC 741)

The separate decisions in Fournier / fenofibrate (NOC) concern the same drug but two different patents. In both cases Fournier failed to obtain an order of prohibition against Sandoz because it failed to established that Sandoz’ product would infringe. Both patents had a particle size limitation. The particle size of Sandoz’ product could have been determined by a standard method, yet neither party did so [740: 102 / 741: 87]. Zinn J refused to draw any adverse inference from Fournier’s failure to carry out the relevant test, because Sandoz could equally well have carried out the test itself [740: 132 / 741: 87]. But the burden in an NOC proceeding is on the patentee to show that the generic’s allegations are not justified, and the evidence which Fournier did advance was inadequate to establish infringement [740: 129 / 741: 91].

The main legal battleground in the case was claims construction. The claims were well-drafted, so that the specification generally supported a straightforward reading of the text of the claims, but one point of interest arose 2012 FC 741, dealing with the ‘576 patent. A central issue was Sandoz’ submission that the term “micronized” in the phrase “a micronized form having a particle size less than or equal to about 20 μm,” should be interpreted as excluding particles less than 1 μm in size. Sandoz introduced evidence drawing on the common general knowledge in support of that interpretation. Zinn J responded by pointing out that the phrase “in micronized form” was specifically defined in the specification [65], and “where an inventor specifically provides a definition of a phrase used in the patent, that definition must be the prime consideration when interpreting the phrase and not the meaning that may or may not be ascribed any particular word in the phrase so defined” [66]. This is consistent with the principle that the specification may “provide[] the dictionary by which the scope and effect of these terms [of the claim] is to be ascertained” (Western Electric Co. v. Baldwin International Radio, [1934] S.C.R. 570 at 593). It is also consistent with the broader principle that “[t]he claims, of course, must be construed with reference to the entire specifications.” (Metalliflex Ltd. v. Rodi & Wienenberger Aktiengesellschaft, [1961] S.C.R. 117, 122 quoted with approval per Binnie J. Free World Trust 2000 SCC 66 at [52]; see also Electric & Musical Industries v Lissen Ltd (1939) 56 RPC 23 at 39 (HL): “The claims must undoubtedly be read as part of the entire document, and not as a separate document.”)

No New Cases for the Week of 1 July

No new non-procedural patent / NOC / data protection cases were released by the Federal Courts in the week of 1 July. There was one costs decision, refusing to award solicitor-and-client costs, but awarding costs on an elevated scale (Column V of Tariff B). Also, Beeser Ramamoorthy reports that Zinn J has refused to grant an order of prohibition in respect of fenofibrate tablets, but the reasons remain confidential.