Vacation

I will be on vacation (in New Zealand) for a few weeks. I expect to start posting again on December 13, starting with the cases I missed while away.

Sound Prediction and False Promise in Pfizer / sildenafil

Teva Canada Ltd v Pfizer Canada Inc, 2012 SCC 60 LeBel J for a unanimous court,* rev’g 2010 FCA 242 Nadon JA: Blais CJ, Trudel JA rev’g 2009 FC 638 Kelen J

            2,163,446 VIAGRA

While the SCC decided Pfizer / sildenafil on the basis that disclosure of the invention was insufficient under s 27(3), the issue of whether the factual basis for sound prediction must be disclosed in the specification was also raised. The SCC declined to decide this question, but what it did say on the point is nonetheless of some interest.

What Is the “Invention”?

Teva Canada Ltd v Pfizer Canada Inc, 2012 SCC 60 LeBel J for a unanimous court,* rev’g 2010 FCA 242 Nadon JA: Blais CJ, Trudel JA rev’g 2009 FC 638 Kelen J

            2,163,446 VIAGRA

As I noted in yesterday’s post, the Pfizer / sildenafil decision was fundamentally about the patentee’s duty to disclose the invention. But what is “the invention”? Sildenafil had not been explicitly identified in the description as compound which had been tested and found to work, but it had been separately claimed in Claim 7. The ultimate question was whether the identify of sildenafil as the tested compound was sufficiently disclosed. The doctrinal argument turned on whether each claim is to be considered a separate invention [53ff]. At trial, Kelen J had felt bound by the prior case law to hold that each claim defines a separate invention [FC 44, 148], and this was affirmed by the FCA [FCA 65].** This conclusion effectively determined the outcome. As the FCA explained at [71]:

The appellant argues that the Judge was not entitled to find that the patent was clear because Claim 7 was clear. However, the Judge was never actually required to find that the '446 Patent itself was clear. Rather, he was required to find that the '446 Patent clearly revealed the invention disclosed by Claim 7.

That is, once we have decided that the invention is sildenafil (more precisely, the use of sildenafil to treat ED), it follows that the invention was sufficiently identified, since the claim itself explicitly identifies sildenafil. The SCC reversed on the basis that in this case, the specification as a whole must be considered [64], and “there is only one invention: the use of the compound or compounds that are effective in treating ED” [68]. That being the case, it does not follow directly that the invention was sufficiently identified, because the question is whether Claim 7 (which is part of the specification), in conjunction with the disclosure, sufficiently identifies the tested compound. This will depend on the particular patent.

Disclosure Is the Quid Pro Quo

Teva Canada Ltd v Pfizer Canada Inc, 2012 SCC 60 LeBel J for a unanimous court,* rev’g 2010 FCA 242 Nadon JA: Blais CJ, Trudel JA rev’g 2009 FC 638 Kelen J

            2,163,446 VIAGRA

I wish I could say that my delay in writing this post has been because I was carefully pondering the implications of the decision, but the truth is that I was away at a conference (in Shanghai – a very interesting and dynamic city), and I have only just gotten to reading the decision. So these are my initial thoughts.

With that caveat, I do not see the SCC Pfizer / sildenafil decision as making a major change in the law. There is a tension in the disclosure requirement between the principle that the patentee must make full and complete disclosure, and the principle that some trials and experiments by the skilled addresses are permissible. The Federal Courts emphasized the latter principle, and the SCC emphasized the former. On the facts, this patent was close to the line, and either emphasis was reasonable. The disclosure was close to the line because the drafter was evidently deliberately pushing the boundaries of the disclosure requirement. Pfizer was apparently trying to high get a patent while trying to hide the effective compound from competitors; as Kelen J put it in “[t]e patent plays ‘hide and seek’ with the reader” [FC 135]. In my view, the SCC decision does not move the line, but rather clarifies where it lies. The decision should not have a broad impact, unless there are many other patents out there that are similarly trying to “‘game’ the system” [80]. In the end, the SCC holding is straightforward: the quid pro quo for a patent is disclosure. The patentee cannot have its cake and eat it too; it cannot keep its secret and its monopoly as well. The patentee tried in this case to minimize its disclosure, presumably to delay competitors from entering the market with patentable improvements. This is simply contrary to the disclosure requirement. Yes, competitors may be able to use the information disclosed, even prior to the end of the patent term. But disseminating information about the invention so others may make use of it, during the term as well as after, is the very purpose of the disclosure requirement.

First Quantum Judgment in Section 8

In what I believe is the first claim by a generic under s 8 of the NOC Regulations to go all the way to quantum, Apotex prevailed against Sanofi-Aventis for having been wrongly kept out of the market for ramipril: see Snider J`s decision in Apotex Inc v Sanofi-Aventis Canada Inc / ramipril (s 8) 2012 FC 553. Snider J`s judgment as to quantum has now been released. It awards Apotex $215 million in damages. As discussed here (and see also here), Apotex’s damages were calculated on the basis of strict “but for” causation, including an allowance for the likelihood of multiple generic entry, except that the generic is not entitled to the equivalent of springboard damages. Thus the damages principles are sound and, if anything, underestimate Apotex`s loss.  

Further, Sanofi is also liable to Teva on the same principles and in respect of the same market: see Teva Canada Ltd v Sanofi-Aventis Canada Inc / ramipril (s 8) 2012 FC 552 (blogged here and here). I now realize that the likelihood of multiple generic entry may provide a principled basis for refusing ``springboard`` damages to the first generic to enter. That is, damages cannot be recovered for permanent loss of market share after the generics enter the market, even if that loss was caused by the statutory stay. This rule has been justified on the basis that the NOC Regulations provide an overall balance between patentees and generics, even though it may be unprincipled if considered in isolation (see here). But if the overall generic share after the expiry of the stay is the same, then a loss of market share suffered by one generic is a gain to another, and it may be sound in principle and simpler in practice to deny all such awards than to try to adjust damages upwards and downwards for each generic.

Whether or not springboard damages are properly denied as a matter of principle, the point remains that Sanofi`s exposure is greater than the $215 million awarded to Apotex. Moreover, as the first comment to my IP Kat post on this award notes, the public also suffers a loss in the form of higher prices from the generics being wrongly excluded from the market, and the patentee is not liable at all for that loss. To the extent that s 8 is intended to provide an incentive for the patentee not to list patent of dubious validity, failure to capture the loss to the public means that the incentive is actually too small. This is the rationale for allowing the generic to claim an accounting of the patentee`s profit, which has so far been refused as a matter of statutory interpretation. An accounting would also raise difficult questions of apportionment between different generics; the patentee cannot be liable for its entire profit to every generic that would have entered.

A great deal has been written in the academic literature on the economic incentive effects of damages generally. With awards of this magnitude under s 8, it seems the time is ripe for a full principled analysis of s 8 damages.

The False Doctrine of False Promise

After having often been critical of the “promise of the patent” doctrine in this blog, I have finally finished an article on the subject, entitled "The False Doctrine of False Promise," which has now been accepted by the CIPR. The article is available through SSRN in essentially the final version (subject to copy-editing). Here is the abstract:

The emergence of the “promise of the patent” doctrine is an important recent development in Canadian patent law, which primarily impacts pharmaceutical patents. The doctrine holds that if the specification sets out an explicit “promise,” the utility requirement will be satisfied only if the claimed invention delivers on that promise. In practice, the promise of the patent, as set out in the disclosure, is now almost invariably the standard for assessing utility of a pharmaceutical patent. The result is that a patent may be held invalid for lack of utility, notwithstanding that the disclosed invention has sufficient utility to support a valid patent. This article shows that the doctrine originated in English law at a time when the grant of the patent was a discretionary exercise of the royal prerogative, so that the Crown might properly refuse to grant a patent even though it would be upheld by the courts if granted. Consequently, the patent was granted on the basis of all representations made by the applicant, and the promise of the patent doctrine reflected an unwillingness of the courts to second-guess the Crown in the exercise of its prerogative. This article argues that the doctrine is inconsistent with the Canadian Patent Act, under which an applicant is entitled to a patent as a matter of right if the invention satisfies the statutory criteria.

Leave to SCC Denied re Damages after Compensable Period

The SCC has denied Teva’s application for leave to appeal in Teva Canada Ltd v Nycomed Canada Inc 2012 FCA 129, in which the FCA reaffirmed that in a claim for damages under section 8 of the NOC Regulations, losses incurred by a generic after the end of the compensable period are not recoverable, even if the losses were caused by the statutory stay (blogged here). The FCA held that the issue “is now settled at the level of this Court,” [7] and “Teva's remedy is to apply again for leave to appeal to the Supreme of Court of Canada” [11]. Denial of leave does not imply that the SCC is of the view that the decision appealed from was correctly decided, as the primary criteria for granting leave is the “public importance” of the issue, but the SCC has now denied leave twice on this issue under the new Regulations, and once under the old Regulations (see the FCA decision). It therefore appears very unlikely that this question will be addressed by the SCC, unless it is raised as a subsidiary issue in a case in which leave is granted on the basis of some other question. As a practical matter, then, this point is now settled, barring amendment to the Regulations.