Enhanced Disclosure Requirement Only in New Use Cases

AstraZeneca Canada Inc v Apotex Inc 2014 FC 638 Rennie J
            2,139,653 – esomeprazole – NEXIUM

As noted in yesterday’s post, in Apotex / esomeprazole Rennie J held that the effect of the SCC’s obiter remarks in Teva / sildenafil 2012 SCC 60 is to overturn previous FCA decisions holding that the factual basis for utility must be disclosed in the patent itself in all cases of sound prediction [142]. On Rennie J's view, the disclosure requirement is now “limited to the context of ‘new use’ patents, assuming such a utility disclosure requirement exists at all” [141]. This holding was expressly obiter [139], because he held that “none of the studies, disclosed or otherwise, demonstrate or soundly predict” the promised utility [140]. Nonetheless, it was a clear holding arrived at after thorough consideration.

To begin, Rennie J noted that “it is not in dispute that disclosure is not required for the demonstration of utility” [130]. In context, “disclosure” refers to disclosure in the patent of evidence demonstrating utility. The holding that such disclosure is not required is established law (see eg 2010 FCA 197 [74]; 2010 FCA 242 [80]; 2008 FCA 108, [56-64]).

He then noted that Wellcome / AZT 2002 SCC 77 [70] requires “proper disclosure” as the third component of the test for sound prediction [138], and he acknowledged that the FCA has interpreted this as requiring proper disclosure in all cases of sound prediction [142]. Rennie J began his analysis of why this is no longer good law with the Patent Act. He pointed out that utility and disclosure are treated separately, and that “there is no statutory basis for a requirement to disclose either the factual basis or the sound line of reasoning required to support a sound prediction of utility” [144].

Rennie J then provided a very careful analysis of the crucial paragraph [70] of Wellcome / AZT . That paragraph begins by saying “The doctrine of sound prediction has three components,” which is no doubt why the courts have previously understood “proper disclosure,” the third component, to apply to all cases of sound prediction. But Rennie J notes [146] that in discussing proper disclosure, the SCC begins by noting that elevated disclosure is not normally required:

Thirdly, there must be proper disclosure. Normally, it is sufficient if the specification provides a full, clear and exact description of the nature of the invention and the manner in which it can be practised. It is generally not necessary for an inventor to provide a theory of why the invention works. Practical readers merely want to know that it does work and how to work it.

The structure of this paragraph implies that normally, even in cases of sound prediction (the topic of the paragraph as a whole), the requirement of proper disclosure is satisfied by the standard disclosure requirement. Rennie J points out [147, his emphasis] that any elevated disclosure is an exception to this rule:

In this sort of case, however, the sound prediction is to some extent the quid pro quo the applicant offers in exchange for the patent monopoly.

The structure of this sentence implies that “this sort of case” is not all sound prediction cases, but only some sound prediction cases. As Rennie J says

[151] [I]t is clear from Justice Binnie’s reasoning that “this sort of case” is a subset of sound prediction cases and not a reference to all sound prediction cases. As he writes, “[i]n this sort of case, the sound prediction is to some extent the quid pro quo the applicant offers in exchange for the patent monopoly” (at para 70). By implication, there are other “sort[s] of case[s]” where the sound prediction is not the quid pro quo offered by the applicant.

This seems to be to be right, as a matter of logic and grammar. I must admit that I had always read the three sentences of paragraph [70] beginning with “Normally,” as simply describing the normal disclosure requirement that applied in cases other than sound prediction cases. I had therefore taken the key issue to be what constitutes “proper disclosure” in sound prediction cases generally. (Presumably the FCA read the paragraph the same way.) But on reflection I think that Rennie J’s reading of paragraph [70], in which “normally” describes the normal requirement for sound prediction cases, with an exception for “this sort of case,” is a better textual interpretation – though the paragraph is certainly not free of ambiguity. (And of course, on Wellcome / AZT alone, the question of what constitutes proper disclosure even in “this sort of case,” is left open.)

On Rennie J’s reading, the key question is what the SCC meant by “this sort of case.” He held that “this sort of case” means new use cases. AZT was indeed a new use case, which supports that interpretation. Rennie J advanced a purposive analysis in addition to his textual analysis (his emphasis):

[152] Second, and even more critically, limiting “this sort of case” to new use cases, rather than sound prediction cases generally, is consistent with the rationale provided by Justice Binnie. In a new use case (which AZT was), there may be an enhanced disclosure requirement because utility is the only thing being offered in exchange for the patent monopoly since the compound itself was previously disclosed.

Rennie J also appealed to the passage from Teva / sildenafil in which the SCC made some obiter remarks regarding sound prediction, including the following:

[38] As the courts below noted, all that is required to meet the utility requirement in s. 2 is that the invention described in the patent do what the patent says it will do, that is, that the promise of the invention be fulfilled

After quoting a passage from Wellcome / AZT [56] in which demonstrated utility and sound prediction are discussed together, the SCC went on to say:

[40] Nothing in this passage suggests that utility is a disclosure requirement; all it says is that "the utility required for patentability (s. 2) must, as of the priority date, either be demonstrated or be a sound prediction". Utility can be demonstrated by, for example, conducting tests, but this does not mean that there is a separate requirement for the disclosure of utility.

Rennie J interpreted this as saying that there is no heightened utility requirement for sound prediction generally, so overruling FCA decisions to the contrary. While that is a reasonable interpretation of the quoted passages, I’m not sure it was so broadly intended. The SCC began this discussion by saying “ I am of the view that this is not a case about sound prediction and that Teva's argument [that Claim 7 is invalid for insufficient disclosure of sound prediction] on this point must fail” [36]. What follows can be taken as an explanation of why Teva’s claim must fail, given that it is not a sound prediction case, in which case the remarks are directed at demonstrated utility, not sound prediction generally. This is consistent with the SCC’s concluding statement that “Since sound prediction is not an issue, the question whether there is an "enhanced" or "heightened" disclosure requirement with respect to sound predictions does not arise in this case and need not be addressed” [43]. However, as with para [70] from Wellcome / AZT this passage is ambiguous, and Rennie J may well be right.

Whether or not Teva / sildenafil overruled prior FCA authority, Rennie J has made a strong argument based on Wellcome / AZT that any enhanced disclosure requirement should apply only in new use cases, not all cases of sound prediction. (And of course, the SCC did not hold that there was any enhanced requirement in any kind of case, only that there was the possibility of some kind of enhanced disclosure in “this sort of case”.) But the question remains as to what that enhanced disclosure might be. Rennie J stated that disclosure of evidence of utility should be required in new use cases because

[152] Theoretically, without such an enhanced disclosure requirement in new use cases, a new use patent could consist of a single sentence alleging a new use and a reference to a prior patent disclosing the compound to which the use attaches. None of the research or studies supporting that new use would have to be disclosed. While new uses can be of tremendous importance (see AZT), such seemingly sparse patents would fairly raise concerns for the court when evaluating the bargain between innovators and the public.

I don’t see this as a particular cause for concern. The evidence supporting the new use would not have to be disclosed in the patent, but it will have to exist. It is clear on existing law that a claim to an entirely new compound could confine itself to a statement of its use, without supporting evidence of that use in the patent itself, though such evidence would have to exist, and I don’t see a principled distinction between those situations. Indeed, I am not sure that Rennie J himself was entirely persuaded by his own argument on this point, as he did not elaborate on the “concerns” that might be raised. It may be that he simply felt bound by prior FCA decisions to hold that there must be an elevated disclosure requirement in “this sort of case”. That suspicion is reinforced by his opening statement that the disclosure requirement is limited to the context of new use patents, “assuming such a utility disclosure requirement exists at all” [141].

With that said, Rennie J’s focus on new use patents is persuasive and thought-provoking. If we accept that enhanced disclosure arises in new use cases, and not sound prediction case generally, perhaps the requirement is simply to disclose the use, but not the supporting evidence. After all, from Consolboard, as affirmed in Teva / sildenafil, it is not generally necessary to make any disclosure of utility at all, so a requirement to disclose the use is enhanced relative to that standard.

In any event, Rennie J’s very careful analysis of the law related to proper disclosure is a welcome re-assessment of this difficult area, which he clearly sees as being problematic. I am very gratified that he quoted at [158] a concluding passage from my article, “Must the Factual Basis for Sound Prediction be Disclosed in the Patent?” (2012) 28CIPR 39, and he stated that “I generally agree with [Professor Siebrasse's] observations.” It will be interesting to see what, if anything, the FCA chooses to do with this issue on appeal. Rennie J has certainly given them a great deal to think about:

[160] In conclusion, I am of the view that there is no enhanced disclosure requirement in all sound prediction cases. Utility and disclosure are treated separately under the Patent Act, and consequently, should be treated separately in the jurisprudence as well.