Bell Helicopter Textron Canada Limitée v. Eurocopter 2013 FCA 261 Mainville JA: Noël,
Trudel JJA refusing a motion for reconsideration of 2013 FCA 219
In previous litigation in this action, Eurocopter’s claims to helicopter landing gear with a forward
offset front cross-piece had been held to be valid and infringed, but Claim 16, to landing gear
with a backward offset front cross-piece, had been held invalid for lack of utility. In this motion
under Rule 397, which permits reconsideration when “(a) the order does not accord with any
reasons given for it; or (b) a matter that should have been dealt with has been overlooked or
accidentally omitted,” Eurocopter has asked the FCA to modify two paragraphs of its reasons
([157]-[158]), in a way that Eurocopter apparently hoped would have the effect of reversing the
judgment with respect to Claim 16, rendering that claim valid [4]. The FCA rejected this motion
on the basis that (1), Rule 397 cannot be used to re-argue an issue [15]; (2) the paragraphs in
question were not inadvertent and indeed were not incorrect [16]-[17]; and (3) the motion was
pointless as even if the paragraphs in question were “corrected,” Claim 16 would still be invalid.
This last point is of some general interest. As I discussed in a post on the original FCA decision,
the FCA held that the line of reasoning supporting sound prediction must be disclosed in the
patent. If the decision has been amended as sought by Eurocopter, it would have held that the line
of reasoning was indeed disclosed in the patent [4]. But the FCA noted that this would not have saved the claim,
because Bell had brought evidence that the backward offset embodiment lacked utility, and “It
would therefore have still been incumbent on Eurocopter to rebut that evidence through its own
evidence of testing or through calculations supporting a sound line of reasoning for that
embodiment at the time the `787 Patent was applied for. Eurocopter failed to do so. As a result,
its cross-appeal would still fail” [18]. In other words, the FCA has recognized that its holding
that the line of reasoning must be disclosed in the patent was obiter, because the more
fundamental problem is that Eurocopter had not supplied any evidence of utility, whether in the
patent or not. This is significant, as there is some suggestion of a disagreement at the FCA as to
whether the heightened disclosure requirement in respect of sound prediction is sound, and to the
extent that the holding in Eurocopter affirming this doctrine is obiter, it has less weight than if it
were determinative. That is, it would be possible for a subsequent decision of the FCA to
distinguish Eurocopter on this point as being obiter. With that said, there obiter, and there is
obiter; while the Eurocopter panel of the FCA has acknowledged that its holding on this point
was strictly obiter, it was clearly thoroughly considered, and so will not be lightly distinguished
or ignored.
Wednesday, November 27, 2013
Friday, November 22, 2013
Draft Trans-Pacific Partnership Treaty – Data Protection
Unsurprisingly, data protection is being negotiated in the leaked draft TPP treaty. And also
unsurprisingly, the main debate is between the US, which proposes a fairly strong mandatory data
protection regime (Art E.16), a group of seven countries, including Canada, which propose
a weaker regime (“the majority proposal”) (Art E.XX.4), and the rest, who apparently would prefer
no data protection requirement at all. The notes indicate
that both Canada and Japan are considering the US proposal, which is not strictly inconsistent
with the majority proposal, as it sets a higher standard.
The gist of the US proposal is that when data is submitted for pharmaceutical marketing authorization for a new product, a third party cannot piggy back on that data for at least five years: E.16(a). If the chemical entity has previously been approved as part of another product, the period is reduced to three years: E.16(c). The majority proposal simply requires that such data be protected against “unfair commercial use.” No minimum period of data exclusivity is specified. Furthermore, under the majority proposal, the protection may be limited to new chemical entities – that is, no protection at all would be permitted if the chemical entity has been previously approved as part of another product, even if new data is required – and it may also be limited so that data protection is not available for new uses, or dosage forms, again, even if new data is required. There are also some other potential limitations on the data exclusivity. (Both proposals safeguard any measures necessary to implement the Doha Declaration on the TRIPS Agreement and Public Health.)
I am generally inclined to think that data protection is sound as a matter of policy. The argument for data protection is the same as the argument for intellectual property generally; the data is difficult and expensive to create (both proposals are limited to data “the origination of which involves a considerable effort”), and it is easy to copy, and without some form of protection no one will have an incentive to originate the data in the first place. Unlike patent protection, data protection does not have any requirement of an inventive step, but on the other hand, it does not provide a true monopoly either. In my view the inventive step requirement in patent law is designed to ensure that a monopoly is not granted over inventions that would have been independently developed in any event: Graham v John Deere Co, 383 US 1 at 11 (1966). Since data protection does not prevent applications for marketing authorization based on independently created data, this problem does not arise. On this logic, the potential exclusions for new uses of known entities, drugs that have not been approved in other formulations, or new dosages, are difficult to justify. If the data required significant effort to originate, and it is susceptible of piggy-backing, then it should be protected.
Of course, the bigger debate between the two positions is as to whether there should be a minimum period of data protection. If we accept the basic justification for data protection, which the majority proposal apparently does, then a minimum period of protection seems necessary in practice to make that protection effective.
The positions are set out below for convenience:
The gist of the US proposal is that when data is submitted for pharmaceutical marketing authorization for a new product, a third party cannot piggy back on that data for at least five years: E.16(a). If the chemical entity has previously been approved as part of another product, the period is reduced to three years: E.16(c). The majority proposal simply requires that such data be protected against “unfair commercial use.” No minimum period of data exclusivity is specified. Furthermore, under the majority proposal, the protection may be limited to new chemical entities – that is, no protection at all would be permitted if the chemical entity has been previously approved as part of another product, even if new data is required – and it may also be limited so that data protection is not available for new uses, or dosage forms, again, even if new data is required. There are also some other potential limitations on the data exclusivity. (Both proposals safeguard any measures necessary to implement the Doha Declaration on the TRIPS Agreement and Public Health.)
I am generally inclined to think that data protection is sound as a matter of policy. The argument for data protection is the same as the argument for intellectual property generally; the data is difficult and expensive to create (both proposals are limited to data “the origination of which involves a considerable effort”), and it is easy to copy, and without some form of protection no one will have an incentive to originate the data in the first place. Unlike patent protection, data protection does not have any requirement of an inventive step, but on the other hand, it does not provide a true monopoly either. In my view the inventive step requirement in patent law is designed to ensure that a monopoly is not granted over inventions that would have been independently developed in any event: Graham v John Deere Co, 383 US 1 at 11 (1966). Since data protection does not prevent applications for marketing authorization based on independently created data, this problem does not arise. On this logic, the potential exclusions for new uses of known entities, drugs that have not been approved in other formulations, or new dosages, are difficult to justify. If the data required significant effort to originate, and it is susceptible of piggy-backing, then it should be protected.
Of course, the bigger debate between the two positions is as to whether there should be a minimum period of data protection. If we accept the basic justification for data protection, which the majority proposal apparently does, then a minimum period of protection seems necessary in practice to make that protection effective.
The positions are set out below for convenience:
Thursday, November 21, 2013
Draft Trans-Pacific Partnership Treaty – Regulatory Review Exception
The leaked TPP treaty contemplates a regulatory review exception in Art E.13, but there is some
controversy over the scope. There is considerable debate over the precise wording (which makes the
annotated draft difficult to read), but main debate is over whether the exception should be
confined to getting marketing authorization for pharmaceuticals, or whether it should extend to any kind of
regulatory approval. The US proposal is representative of the more restrictive position, and
the Canadian proposal is representative of the broader position. I have parsed out their positions below, with
my underlining to highlight the differences. (No other countries support either of these positions
exactly, but several support each of them with some deviations.)
Draft Trans-Pacific Partnership Treaty – Written Description and Overbreadth
Two very different versions of Article E.9 are proposed in the leaked draft TPP treaty. The proposal of the US and Peru provides for a US-style written description requirement:
US version:
Australia proposes a very substantially different version:
All others except Japan oppose this provision. Japan is considering.
While this provision raises complex issues – this is a familiar refrain by now – in my view the Australian proposal is sound and desirable, while the US proposal verges on the absurd.
US version:
Article QQ.E.9
Each Party shall provide that a claimed invention is sufficiently supported by its
disclosure if the disclosure reasonably conveys to a person skilled in the art that the
applicant was in possession of the claimed invention as of the filing date.
Australia proposes a very substantially different version:
Article QQ.E.9
Each Party shall provide that a claimed invention shall be sufficiently supported by its
disclosure.
All others except Japan oppose this provision. Japan is considering.
While this provision raises complex issues – this is a familiar refrain by now – in my view the Australian proposal is sound and desirable, while the US proposal verges on the absurd.
Wednesday, November 20, 2013
Draft Trans-Pacific Partnership Treaty – Disclosure
Article E.8 of the leaked draft TPP treaty relates to the disclosure requirement. It is proposed by the
US, Australia and two others, and opposed by all others except Japan, which is still considering:
This provision essentially codifies the core disclosure requirement of Canadian law. This precise formulation is not commonly used by the Federal Courts. A more typical statement is that a specification is sufficient if a skilled worker can practice the invention, even if “routine trials and experiments not amounting to invention might be necessary to arrive at the desired result” (see eg 2010 FC 1265, [532]). But it is doubtful that there is any real difference between this and the “undue experimentation” formulation, which is often used by the PAB (see eg CD 1315).
While E.8 captures the core Canadian disclosure requirement, if, as appears on its face, this provision is intended to be an exhaustive definition of the disclosure requirement, then Canadian law would require amendment. For example, s 27(3)(c) has a best mode requirement, applicable at least to machines, and Professor Vaver is of the view that there is a more general best mode requirement in Canadian law: Vaver, Intellectual Property Law (2nd ed) at 343-44. Indeed, it is surprisingly difficult to define the Canadian disclosure requirement precisely. As the SCC noted in Supreme Court noted in Consolboard [1981] 1 SCR 504, 518, “[i]t cannot be said that [the disclosure section] of the Act is happily phrased. It gives the impression of a mélange of ideas gathered at random rather than an attempt to enunciate, clearly and concisely, a governing principle or principles.” This is illustrated by the recent confusing – dare I say confused? – decision of the SCC in Sildenafil 2012 SCC 60, in which the invalidity of the Viagra patent turned on the failure to disclose “the invention”: see my recent article “The Duty to Disclose ‘The Invention’: The Wrong Tool for the Job, (2013) 25 IPJ 269. It may be that Canada opposes E.8 to avoid having to amend and clarify the disclosure provision of our Act. In my view clarification of our disclosure provision is undoubtedly desirable. It might even turn out that paring down the requirement to something like E.8 would be the best solution; but a number of important substantive questions, such as whether a best mode requirement is desirable, would have to be addressed before we could arrive at that conclusion. If indeed E.8 is intended as an exhaustive disclosure requirement, I am not surprised at Canada’s opposition. Again, the problem is not that this particular issue is impossibly difficult to settle. Legislative reform never seems to happen without some kind of external pressure, and a trade negotiation is perhaps as good an occasion as any. The difficulty is that the TPP negotiations are raising a number of difficult issues, and I don’t see how they can all be satisfactorily addressed, especially without a more public consultation process.
According to FN 100 to Art E.8, Mexico and Singapore “are willing to accept the article provided that the sentence ‘without undue experimentation’ is deleted.” The effect of deleting these words depends on how the resultant provision is interpreted. It might be interpreted as implying the very stringent requirement found in some old English cases, that “the terms of a specification should express the invention in the clearest and most explicit manner; so that a man of science may be able to produce the thing intended without the necessity of trying experiments” Turner v Winter (1787) 99 ER 1274, 1277. Experience soon proved that this requirement was much too stringent, and a provision that required such disclosure would be unacceptable. The alternative, and more reasonable interpretation, is that there would still be room for some trials, and it is only the precise “undue experimentation” formulation that Mexico and Singapore find objectionable.
Article QQ.E.8
Each Party shall provide that a disclosure of a claimed invention shall be considered to be
sufficiently clear and complete if it provides information that allows the invention to be
made and used by a person skilled in the art, without undue experimentation, as of the
filing date.
This provision essentially codifies the core disclosure requirement of Canadian law. This precise formulation is not commonly used by the Federal Courts. A more typical statement is that a specification is sufficient if a skilled worker can practice the invention, even if “routine trials and experiments not amounting to invention might be necessary to arrive at the desired result” (see eg 2010 FC 1265, [532]). But it is doubtful that there is any real difference between this and the “undue experimentation” formulation, which is often used by the PAB (see eg CD 1315).
While E.8 captures the core Canadian disclosure requirement, if, as appears on its face, this provision is intended to be an exhaustive definition of the disclosure requirement, then Canadian law would require amendment. For example, s 27(3)(c) has a best mode requirement, applicable at least to machines, and Professor Vaver is of the view that there is a more general best mode requirement in Canadian law: Vaver, Intellectual Property Law (2nd ed) at 343-44. Indeed, it is surprisingly difficult to define the Canadian disclosure requirement precisely. As the SCC noted in Supreme Court noted in Consolboard [1981] 1 SCR 504, 518, “[i]t cannot be said that [the disclosure section] of the Act is happily phrased. It gives the impression of a mélange of ideas gathered at random rather than an attempt to enunciate, clearly and concisely, a governing principle or principles.” This is illustrated by the recent confusing – dare I say confused? – decision of the SCC in Sildenafil 2012 SCC 60, in which the invalidity of the Viagra patent turned on the failure to disclose “the invention”: see my recent article “The Duty to Disclose ‘The Invention’: The Wrong Tool for the Job, (2013) 25 IPJ 269. It may be that Canada opposes E.8 to avoid having to amend and clarify the disclosure provision of our Act. In my view clarification of our disclosure provision is undoubtedly desirable. It might even turn out that paring down the requirement to something like E.8 would be the best solution; but a number of important substantive questions, such as whether a best mode requirement is desirable, would have to be addressed before we could arrive at that conclusion. If indeed E.8 is intended as an exhaustive disclosure requirement, I am not surprised at Canada’s opposition. Again, the problem is not that this particular issue is impossibly difficult to settle. Legislative reform never seems to happen without some kind of external pressure, and a trade negotiation is perhaps as good an occasion as any. The difficulty is that the TPP negotiations are raising a number of difficult issues, and I don’t see how they can all be satisfactorily addressed, especially without a more public consultation process.
According to FN 100 to Art E.8, Mexico and Singapore “are willing to accept the article provided that the sentence ‘without undue experimentation’ is deleted.” The effect of deleting these words depends on how the resultant provision is interpreted. It might be interpreted as implying the very stringent requirement found in some old English cases, that “the terms of a specification should express the invention in the clearest and most explicit manner; so that a man of science may be able to produce the thing intended without the necessity of trying experiments” Turner v Winter (1787) 99 ER 1274, 1277. Experience soon proved that this requirement was much too stringent, and a provision that required such disclosure would be unacceptable. The alternative, and more reasonable interpretation, is that there would still be room for some trials, and it is only the precise “undue experimentation” formulation that Mexico and Singapore find objectionable.
Draft Trans-Pacific Partnership Treaty – Patentability of Methods of Medical Treatment
The leaked draft TPP treaty has a number of provisions concerning medically related claims. My last
posts dealt with second medical use claims, and a prohibition on any requirement of enhanced
efficacy for pharmaceuticals. This post deals with methods of medical treatment, addressed in
Art E.1(3)(b). I find the notation in this provision to be a bit confusing, but as I understand it, the
position of the parties is as follows:
US proposes that:
Others (including Canada, but excluding Japan) propose:
The majority position reflects in TRIPS Art 27(3)(a); and see also EPO Art 53(c). The basic question is whether this potential exclusion of methods of medical treatment should be maintained, or eliminated.
Japan opposes any provision, one way or the other, on this issue.
US proposes that:
3. Each Party shall make patents available for inventions for (b) diagnostic, therapeutic,
and surgical methods for the treatment of humans or animals if they cover a method of
using a machine, manufacture, or composition of matter
Others (including Canada, but excluding Japan) propose:
3. Each Party may exclude from patentability (b) diagnostic, therapeutic, and surgical
methods for the treatment of humans or animals.
The majority position reflects in TRIPS Art 27(3)(a); and see also EPO Art 53(c). The basic question is whether this potential exclusion of methods of medical treatment should be maintained, or eliminated.
Japan opposes any provision, one way or the other, on this issue.
Tuesday, November 19, 2013
Draft Trans-Pacific Partnership Treaty – Prohibition on Requiring Enhanced Efficacy of Pharmaceuticals
The leaked TPP treaty has a number of provisions concerning medically related claims. My last
post dealt with second medical use claims.This post deals with a proposed prohibition on any
requirement of enhanced efficacy for pharmaceuticals, which is addressed in Art E.1(1)(b). The
following provision is proposed by the US and Australia, and opposed by all others, except
Japan, which is still considering:
I don’t have a specific context for this, but on its face this provision is aimed at precluding national legislation which would require enhanced efficiency as an additional condition of patentability for pharmaceuticals, presumably in an attempt to deal with pharmaceutical patent “evergreening.”
Article QQ.E.1: {Patents / Patentable Subject matter}
1. The Parties confirm that:
(b) a Party may not deny a patent solely on the basis that the product did not result
in enhanced efficacy of the known product when the applicant has set forth
distinguishing features establishing that the invention is new, involves an
inventive step, and is capable of industrial application.
I don’t have a specific context for this, but on its face this provision is aimed at precluding national legislation which would require enhanced efficiency as an additional condition of patentability for pharmaceuticals, presumably in an attempt to deal with pharmaceutical patent “evergreening.”
Draft Trans-Pacific Partnership Treaty – Patentability of Second Medical Use Claims
The leaked TPP treaty has a number of provisions concerning medically related claims, in
particular second medical use claims, a prohibition on any requirement of enhanced efficacy for
pharmaceuticals, and claims related to methods of medical treatment. I will deal with these in
separate posts, beginning with second medical use claims, which are addressed in Art E.1(1)(a):
The US and Australia support this, Japan is considering, and all others, including Canada, oppose this provision. This most prominent impact of this provision would be to ensure that second medical use claims are patentable, though it would apply more broadly, to any second use of a known product.
It is not clear to me why Canada opposes this provision, as it would do no more than affirm existing law. That patents are available for new inventive uses of a known product is the central holding of Shell Oil [1982] 2 SCR 536. In Wellcome / AZT [2001] 1 FC 495 (FCA), Rothstein J, [72-75] applied Shell Oil to hold a second medical use claim (to the use of AZT for the treatment of HIV/AIDS) to be valid, and this was affirmed by 2002 SCC 77 [49-50].
With that said, there is a real controversy over second medical use claims in particular. The advantage of Swiss form claims, to the use of a known compound for the manufacture of a pharmaceutical composition for the new therapeutic application, is that it can encompass a new use for a known product, but only the manufacturer could be liable for infringement, and not a physician prescribing or administering the drug. Thus prohibiting patenting of a second medical use, while allowing Swiss form claims, allows physicians to treat their patients according to their best medical judgment, without fear of an infringement actions. An alternative approach to achieve the same end is to allow second medical use claims but provide a defence for physicians; this is the approach used is the US under 35 USC § 287(c)(1).
It is conceivable that this concern is driving the Canadian opposition to E.1(a), but this seems unlikely. Since E.1(a) reflects existing Canadian law, even if E.1(a) is not adopted, Canada would still have to amend the Patent Act if it wants to protect physicians by abolishing second medical use claims. If we are going to amend the Act for this purpose, surely the simpler approach would be to amend it to provide for a US-style defence, which addresses the root problem directly. Further, it is not clear that TPP members would be required to allow Swiss form claims in the absence of E.1(a), since it could be said that functionally, Swiss form claims do provide patents for new uses of a known product, even though there is an important substantive difference between Swiss form claims and second medical use claims as such. And in any event, this argument respecting second medical use claims does not apply to second use claims more generally; for example, the invention at issue in Shell Oil was for a use as a plant growth regulator. This obviously does not raise concerns about physician’s freedom to treat their patients. It may be that Canada’s opposition to this provision is driven by its broader negotiating strategy, rather than opposition to this provision in particular.
Article QQ.E.1: {Patents / Patentable Subject matter}
1. The Parties confirm that:
(a) patents shall be available for any new uses or methods of using a known
product,
The US and Australia support this, Japan is considering, and all others, including Canada, oppose this provision. This most prominent impact of this provision would be to ensure that second medical use claims are patentable, though it would apply more broadly, to any second use of a known product.
It is not clear to me why Canada opposes this provision, as it would do no more than affirm existing law. That patents are available for new inventive uses of a known product is the central holding of Shell Oil [1982] 2 SCR 536. In Wellcome / AZT [2001] 1 FC 495 (FCA), Rothstein J, [72-75] applied Shell Oil to hold a second medical use claim (to the use of AZT for the treatment of HIV/AIDS) to be valid, and this was affirmed by 2002 SCC 77 [49-50].
With that said, there is a real controversy over second medical use claims in particular. The advantage of Swiss form claims, to the use of a known compound for the manufacture of a pharmaceutical composition for the new therapeutic application, is that it can encompass a new use for a known product, but only the manufacturer could be liable for infringement, and not a physician prescribing or administering the drug. Thus prohibiting patenting of a second medical use, while allowing Swiss form claims, allows physicians to treat their patients according to their best medical judgment, without fear of an infringement actions. An alternative approach to achieve the same end is to allow second medical use claims but provide a defence for physicians; this is the approach used is the US under 35 USC § 287(c)(1).
It is conceivable that this concern is driving the Canadian opposition to E.1(a), but this seems unlikely. Since E.1(a) reflects existing Canadian law, even if E.1(a) is not adopted, Canada would still have to amend the Patent Act if it wants to protect physicians by abolishing second medical use claims. If we are going to amend the Act for this purpose, surely the simpler approach would be to amend it to provide for a US-style defence, which addresses the root problem directly. Further, it is not clear that TPP members would be required to allow Swiss form claims in the absence of E.1(a), since it could be said that functionally, Swiss form claims do provide patents for new uses of a known product, even though there is an important substantive difference between Swiss form claims and second medical use claims as such. And in any event, this argument respecting second medical use claims does not apply to second use claims more generally; for example, the invention at issue in Shell Oil was for a use as a plant growth regulator. This obviously does not raise concerns about physician’s freedom to treat their patients. It may be that Canada’s opposition to this provision is driven by its broader negotiating strategy, rather than opposition to this provision in particular.
Monday, November 18, 2013
Draft Trans-Pacific Partnership Treaty – Patentability of Biological Subject Matter
This post deals with Article E.1(3)(a),(c) of the leaked TPP treaty. The issue being negotiated is
whether the potential exclusions from patentability set out in TRIPS Art 27(3)(b) should be
maintained, removed, or altered. The TRIPS article is as follows:
The draft TPP splits this into separate paragraphs dealing with (a) plants and animals, and (c) essentially biological processes for the production of plants and animals.
I find the notation to this provision a bit confusing, but as I understand it, the US proposes that both potential exclusions would be eliminated:
Ten countries, including Canada (Japan’s position is not noted), propose that (the “majority proposal”):
In the alternative, five countries, including Canada, propose that the TRIPS potential exclusions be maintained as is (the “alternative proposal”):
The difference between the majority proposal and the alternative is that the majority proposal would not explicitly require that parties provide an effective alternative to patent protection for plant varieties. However, since all of the TPP countries are WTO members, they would be bound be the TRIPS provision in any event, unless they qualify for the LDC transitional extension. So, it may be that the effect of the alternative would be to require LDCs to provide for an effective system of plant protection under TPP even if not required to do so under TRIPS. However, this may be parsing the draft too finely; the leaked draft simply provides notes, and the negotiators would understand more clearly the implications of the alternatives.
I will discuss in turn the paragraphs relating to higher life forms and essentially biological processes.
27(3). Members may also exclude from patentability: (b) plants and animals other than
micro-organisms, and essentially biological processes for the production of plants or
animals other than non-biological and microbiological processes. However, Members
shall provide for the protection of plant varieties either by patents or by an effective sui
generis system or by any combination thereof.
The draft TPP splits this into separate paragraphs dealing with (a) plants and animals, and (c) essentially biological processes for the production of plants and animals.
I find the notation to this provision a bit confusing, but as I understand it, the US proposes that both potential exclusions would be eliminated:
3. Each Party shall make patents available for inventions for
(a) plants and animals
(c) essentially biological processes for the production of plants or animals, other
than non-biological and microbiological processes for such production
Ten countries, including Canada (Japan’s position is not noted), propose that (the “majority proposal”):
3. Each Party may exclude from patentability
(a) plants and animals, other than microorganisms
(c) essentially biological processes for the production of plants or animals, other
than non-biological and microbiological processes for such production
In the alternative, five countries, including Canada, propose that the TRIPS potential exclusions be maintained as is (the “alternative proposal”):
3. Each Party may also exclude from patentability
(b) plants and animals other than microorganisms, and
essentially biological processes for the production of plants or animals other than
nonbiological and microbiological processes.
However, Parties shall provide for the protection of plant varieties either by patents or by
an effective sui generis system or by any combination thereof.
The difference between the majority proposal and the alternative is that the majority proposal would not explicitly require that parties provide an effective alternative to patent protection for plant varieties. However, since all of the TPP countries are WTO members, they would be bound be the TRIPS provision in any event, unless they qualify for the LDC transitional extension. So, it may be that the effect of the alternative would be to require LDCs to provide for an effective system of plant protection under TPP even if not required to do so under TRIPS. However, this may be parsing the draft too finely; the leaked draft simply provides notes, and the negotiators would understand more clearly the implications of the alternatives.
I will discuss in turn the paragraphs relating to higher life forms and essentially biological processes.
Thursday, November 14, 2013
TPP - Competition Issues
The recently leaked draft shows that Trans-Pacific Partnership treaty has the potential to have a major impact on
patent law, to a significantly greater extent than CETA or ACTA, as a number of issues that are
both fundamental and controversial are being negotiated. In this and subsequent posts I will
highlight some of these proposed provisions, with some suggestions as to their potential
implications. This post will deal with issues related to competition law. I should emphasize that all my comments are tentative, both because I may not be
interpreting the provision properly, and because I have not had time to fully assess the law to the
extent necessary to provide a thorough commentary. Nor are my comments a comprehensive
review of the draft treaty. I will deal with those provisions which strike me as particularly
interesting. There are a number of proposals which may be both controversial and of a significant
practical impact, which I will not discuss. In the extracts below I have edited the draft provisions
for clarity, sometimes omitting substantive material. Consequently, the excerpts and my
discussion may not fully reflect the proposal or the position of the parties. Please refer to the
original leaked draft before drawing your own conclusions.
Wednesday, November 6, 2013
Does Canada Really Follow the “English Rule” for Costs?
ABB Technology AG v Hyundai Heavy Industries Co, Ltd 2013 FC 1050 Barnes J
Cost-shifting has been big news lately in the US as a way of discouraging patent trolls, and in conversation I have heard it suggested that trolls are not a major problem in Canada because we follow the “English rule,” that costs follow the cause. There is a real debate as to whether the English rule actually deters trolls – my intuition is that it might deter trolls who are asserting weak patents for nuisance value settlement, but it is unlikely to deter trolls who are asserting strong and important patents that impact major markets. (And see this IPKat report of the debate being joined in Europe.)
But a more basic question from a Canadian perspective is raised by this costs award in ABB Tech v Hyundai: do we really follow the English rule? In ABB Tech v Hyundai 2013 FC 947 (blogged here), the defendant Hyundai was entirely successful: the plaintiff’s action was dismissed and both patents in issue were declared invalid. The defendant’s actual legal costs exclusive of disbursements, were $2,809,161 [2]. Costs calculated at the middle of Column III would have been $75,337 – less than 3% of actual costs [3]. Costs at the top of Column IV, which seems to be the norm in hard-fought patent cases, would have been $289,495, or just over 10% of actual costs. In the end, Barnes J felt that a premium even above Column IV was warranted [4], and he awarded $350,000 [8] – which is 12.5% of actual costs.
Readers in practice will know whether these numbers are representative of costs awards generally, but they are at least generally consistent with what I have seen in other costs decisions in which actual costs were disclosed. Barnes J confirmed this in his remark that “This case exemplifies the growing disparity between the Federal Court tariff and the actual costs of patent litigation” [4]. Barnes J continued to say, “but that [disparity] alone is not a basis for departing wholly from the tariff in assessing costs. If it were otherwise the tariff would rarely, if ever, be used in cases of this type.” I think this is right. Rule 400(1) does state that “The Court shall have full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid,” and the Court has already exercised that discretion in systematically departing from the prima facie rule of Col III that is set out in Rule 407, in favour of the top end of Column IV. But in order to maintain consistency and predictability, a complete departure from the tariff is a policy matter that should be implemented deliberately, rather than by the exercise of the discretion of individual judges.
Perhaps it is time for a deliberate reconsideration of the costs rules. It seems to me that now we don’t really follow the English rule in a functional sense. We have a hybrid in which costs awards are big enough to fight over (thus increasing costs), but not big enough to make any difference to litigation strategy. That may be the worst of both worlds.
Cost-shifting has been big news lately in the US as a way of discouraging patent trolls, and in conversation I have heard it suggested that trolls are not a major problem in Canada because we follow the “English rule,” that costs follow the cause. There is a real debate as to whether the English rule actually deters trolls – my intuition is that it might deter trolls who are asserting weak patents for nuisance value settlement, but it is unlikely to deter trolls who are asserting strong and important patents that impact major markets. (And see this IPKat report of the debate being joined in Europe.)
But a more basic question from a Canadian perspective is raised by this costs award in ABB Tech v Hyundai: do we really follow the English rule? In ABB Tech v Hyundai 2013 FC 947 (blogged here), the defendant Hyundai was entirely successful: the plaintiff’s action was dismissed and both patents in issue were declared invalid. The defendant’s actual legal costs exclusive of disbursements, were $2,809,161 [2]. Costs calculated at the middle of Column III would have been $75,337 – less than 3% of actual costs [3]. Costs at the top of Column IV, which seems to be the norm in hard-fought patent cases, would have been $289,495, or just over 10% of actual costs. In the end, Barnes J felt that a premium even above Column IV was warranted [4], and he awarded $350,000 [8] – which is 12.5% of actual costs.
Readers in practice will know whether these numbers are representative of costs awards generally, but they are at least generally consistent with what I have seen in other costs decisions in which actual costs were disclosed. Barnes J confirmed this in his remark that “This case exemplifies the growing disparity between the Federal Court tariff and the actual costs of patent litigation” [4]. Barnes J continued to say, “but that [disparity] alone is not a basis for departing wholly from the tariff in assessing costs. If it were otherwise the tariff would rarely, if ever, be used in cases of this type.” I think this is right. Rule 400(1) does state that “The Court shall have full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid,” and the Court has already exercised that discretion in systematically departing from the prima facie rule of Col III that is set out in Rule 407, in favour of the top end of Column IV. But in order to maintain consistency and predictability, a complete departure from the tariff is a policy matter that should be implemented deliberately, rather than by the exercise of the discretion of individual judges.
Perhaps it is time for a deliberate reconsideration of the costs rules. It seems to me that now we don’t really follow the English rule in a functional sense. We have a hybrid in which costs awards are big enough to fight over (thus increasing costs), but not big enough to make any difference to litigation strategy. That may be the worst of both worlds.
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