Canadian Duty of Candor in Response to a Requisition is Not the Same as the US Duty to Disclose Material Prior Art

Varco Canada Ltd v Pason Systems Corp 2013 FC 750 Phelan J
            2,094,313

The main invalidity argument made by the defendants in Varco v Pason was that the patent had been abandoned pursuant to s 73(1)(a) of the Act by reason failure to reply in good faith to the Examiner’s requisition [341]. The requisition asked for “an identification of any prior art cited in respect of the corresponding United States and European patent applications.” This reply to requisition duly provided the references cited to the USPTO [342]. The defendant argued that the disclosure to the USPTO did not comply with the US disclosure requirements, because it failed to disclose material prior art, and this failure to comply with the US disclosure requirements implied lack of good faith in responding to the Canadian requisition, even though even though the response did respond strictly to the requisition, in that all references cited to the USPTO had been identified [345].

The first difficulty with this argument is that in Corlac v Weatherford 2011 FCA 228 [150] the FCA held that s 73 cannot be used to attack the validity of a granted patent. Curiously, Phelan J did not rely on this holding, even though he had made the same point at trial in Weatherford 2010 FC 602, [344].

Instead, Phelan J emphasized that the US disclosure requirements are different from the Canadian disclosure requirements [348-49]:

Section 73 of the Canadian Patent Act requires a good faith response to a requisition from one examiner, rather than the free standing duty as described in US law.

It is not accurate to say or suggest that Canada does not have a duty of candor – it is just not of the same nature as the US principle. The question is “good faith in respect of what?” In Canada the good faith and duty of candor is in response to a question or inquiry. The response has to be fair and responsive, but it need not respond beyond that which is requested.

Whether or not the US disclosure requirement had been complied with, the relevant question was whether the Canadian requirement had been complied with [352]. In this case, it had been: “the term 'prior art cited', as used in the examiner’s requisition, meant the prior art reviewed by an examiner and applied against a foreign application. It does not mean any prior art listed in a search report; nor does it mean all the prior art of which an applicant is aware,” [357] and “There is no requirement to go beyond answering that which is asked or requested” [360].

Phelan J made it clear that he did not regret the narrower scope of the Canadian requirement:

[364] Despite the not so veiled invitation of the Defendants to have this Court go down the US route of “inequitable conduct”, I will not do so. The Canadian legislation is clear, the obligation is to respond directly and honestly. The US principle is highly unsatisfactory, not supported by Canadian principles or practice, and has been described by US witnesses as a “mess”.

This embraces the message of the FCA in Weatherford: the US experience with the inequitable conduct doctrine shows that an expansive duty of good faith disclosure is a cure worse than the disease, and it will not be judicially read into the Canadian Act.