Claim Construction in EXJADE Affirmed as Correct

Teva Canada Ltd v Novartis Pharmaceuticals Canada Inc 2016 FCA 230 Dawson JA: Gauthier, Near JJA aff’g 2015 FC 770 O'Reilly J
            2,255,951 / deferasirox / EXJADE / NOC

In the decision under appeal O'Reilly J issued an order of prohibition in respect Teva’s generic version of EXJADE on the basis of the ‘951 patent. The only issue on appeal was whether O’Reilly J, having correctly stated the law relating to the promise of the patent, had correctly applied that law in construing the promise of the ‘951 patent [4]. (The promise aspect of O’Reilly J’s decision is blogged here. See here and here for discussion of other aspects of his decision.)

In a brief decision, the FCA held that O’Reilly J’s construction of the promise was “correct” [25]. In light of the recent Nova v Dow , 2016 FCA 216 decision on the standard of review for claim construction (see here), it is interesting that the FCA did not discuss the standard of review at all. (To be clear, the FCA did not hold that the standard of review for construction of the promise was correctness; it simply did not discuss the issue.) Of course, a holding that the decision below is correct is consistent with upholding it on a less stringent standard of review, and it may be that the FCA simply felt no need to address the standard of review.

The FCA also went out of its way to quote Celebrex 2014 FCA 250 [66] (see here) to the effect that “the promise of the patent doctrine will hold an invention to an elevated standard of utility ‘only where a clear and unambiguous promise has been made.’ Where a patent’s validity is ‘challenged on the basis of an alleged unfulfilled promise, the patent will be construed in favour of the patentee where it can reasonably be read by the skilled person as excluding this promise’” [26]. Finally, the FCA re-affirmed that the point made in Celebrex (see here) that the promise doctrine applies on a claim-by-claim basis, so “different claims can have different utilities for the same compound” [23].

Repayment of Damages Paid Pending Appeal

Pfizer Canada Inc v Teva Canada Ltd 2016 FCA 218 Stratas JA:Gleason JA (Ryer JA*) refusing to vary 2016 FCA 161
            1,248,540/ 2,199,778 / venlafaxine / EFFEXOR XR

The circumstances of this motion are “unusual” [25]. In Teva v Pfizer 2014 FC 248 (here), Zinn J awarded Teva almost $125m, including interest, under s 8 of the PM(NOC) Regulations, as compensation for having wrongly been kept off the market for venlafaxine. Pfizer paid the damages award to Teva and launched an appeal [3]. Pfizer was successful, at least to the extent that in 2016 FCA 161 the FCA vacated Zinn J’s award because it was based on inadmissible hearsay evidence. The matter was remitted to Zinn J for redetermination (see here) [2]. Pfizer then asked Teva for the money back. Teva refused. The difficulty for Pfizer is that there was no provision in the FCA judgment requiring Teva to return the money. Pfizer therefore brought this motion, asking the FCA to vary its judgment to add a term requiring Teva to repay the money with interest [5].

The first issue was whether the two remaining members of the original panel has subject-matter jurisdiction, notwithstanding the retirement of the third. The Court concluded that it did have jurisdiction [10].

Nonetheless, and notwithstanding that “[i]n light of the judgment of this Court and on the record before us, Teva has absolutely no right to keep Pfizer’s payment” [4], the FCA refused to vary its judgment to order Teva to return the money. Pfizer’s failure to request the return of the money was fatal: “Without a formal, explicit request for specific relief in the notice of appeal, the request is not before the Court. . . . Now that judgment has been rendered, it is not possible to retroactively expand the scope of the appeal and then vary the judgment” [22].

Pfizer is not without recourse. The matter has been remitted to Zinn J for redetermination. He may again find that Pfizer owes substantial damages to Teva. If he does, in making his award of damages he “will be bound to take into account any payments that Teva might have received to which it is not entitled,” including consideration of interest [23]. That is, the amount already paid will be offset, with interest, against any future award. In the alternative, or if no damages are awarded on remand, Pfizer “can sue Teva for restitutionary recovery of monies wrongly withheld from it” [23].

*Ryer JA was a member of the original panel, but had retired and was functus by the time of this hearing [8].

The Complexities of Comity and Stare Decisis

Bayer Inc v Apotex Inc 2016 FC 1013 Fothergill J
            2,382,426 / micronized drospirenone / YAZ YASMIN

As noted in yesterday’s post Bayer’s ‘426 patent covers an oral contraceptive comprising drospirenone and ethinylestradiol, where the drospirenone is in the form of fast dissolving particles. The claims of the ‘426 had previously been construed by Hughes J and the FCA in the prior NOC proceedings: Bayer v Cobalt 2013 FC 1061 J aff’d 2015 FCA 116 (blogged here). This raised the question of the extent to which Fothergill J was bound to follow the claim construction arrived at by Hughes J (on the basis of comity) and the FCA (on the basis of stare decisis) [45].

Bayer argued that Fothergill J should adhere to the FCA’s construction “unless the evidence demonstrates the prior construction was wrong, or if different evidence compels a different result” [46], relying on Allergan 2012 FCA 308, [44] (here). This position is in some ways surprisingly modest. Allergan did state that test, but in the context of comity, which governs the relationship between courts of the same level. As noted in Pfizer 2014 FCA 250 [59] (here) (also relied on by Bayer), claim construction is a matter of law, and stare decisis implies that a subsequent lower court should be strictly bound by a holding of law by a higher court. On the other hand, Cobalt and Apotex pointed out that because of their summary nature, even holdings of law in an NOC proceedings are arguably not strictly binding at all in a subsequent infringement action: Lilly v Novopharm / nizatidine [1998] 2 SCR 129 [95]-[96]; Lilly v Novopharm /olanzapine 2007 FCA 359 [41].

Broad Experimental Use Exception to Anticipation

Bayer Inc v Apotex Inc 2016 FC 1013 Fothergill J
            2,382,426 / micronized drospirenone / YAZ YASMIN / action

Bayer’s ‘426 patent covers an oral contraceptive comprising drospirenone and ethinylestradiol, where the drospirenone is in the form of fast dissolving particles. In this consolidated infringement action, Fothergill J found claims 31, 48 and 49 to be valid and infringed by Apotex’s Zamine and Mya tablets and Cobalt’s Zarah tablets. The conclusions on validity and infringement turned on almost entirely the facts. With that said, it is significant that that Fothergill J accepted the broad experimental use exception to anticipation set out by Hughes J in his NOC decision concerning the same patent. Fothergill J’s remarks on blinding of expert witnesses, as well as on comity and the binding effect of prior FCA decisions on claim construction, are also of interest. This post deals with experimental use and blinding, while tomorrow’s post will deal with comity.

More than one year before the filing date, Schering, Bayer’s predecessor in title [19], conducted Phase III clinical studies in Europe and the United States involving oral contraceptive tablets containing the claimed amounts of drospirenone and ethinylestradiol [145]. (It is not clear to me whether it was admitted that these tablets also fit the claimed formulation profile, but for the purposes of Fothergill J’s reasoning, we may assume they did.)

Participants were given a large number of the tablets, which were to be self-administered over several months outside of a clinical setting. In all three trials, participants were told what the tablets contained, and knew that the tablets were intended to be used as oral contraceptives. No restriction was imposed on participants regarding the disclosure of information concerning the tablets. The participants did not sign confidentiality agreements. [145-46].

Apotex alleged these trials anticipated the ‘426 patent. Fothergill J held they did not. He pointed out that anticipation requires enabling disclosure, and he held that even if some of the tablets had made their way into the hands of a person skilled in the art, such a person would not have been able to reverse engineer the tablets to discover the particular formulation which constituted the invention without the exercise of inventive ingenuity [154-55]. That finding turned on the facts and the law he applied is not controversial.

More interesting is the “alternative” basis for Fothergill J’s holding that the trial did not anticipate [156]. In Bayer v Apotex 2014 FC 436 a prior NOC case involving the ‘426 patent, the same argument was raised that these same clinical trial were anticipatory. Hughes J held that they were not, on the primary basis that Bayer benefited from an experimental use exception to anticipation. The following key passage from Hughes J's decision was quoted by Fothergill J [159]:

[121] In the present case clinical studies were necessary to prove that the drug was safe and effective and, thereby, gain government approval for sale. Until this had been demonstrated, no commercial sale of the drug could have been made. Bayer took reasonable steps to ensure the confidentiality of the relevant documents and to ensure that unused tablets were returned. The theoretical possibility that some tablets were retained and analyzed is just that, theoretical. This theoretical possibility does not preclude the fact that the studies were experimental, and of necessity, conducted by the provision of tablets to members of the public. Thus these clinical studies are exempted from public use.

As I said in my blog post on Hughes J’s decision, this seemingly establishes a broad experimental use exception to what would otherwise be anticipating disclosure, which applies to any clinical trial, so long as reasonable steps are taken to ensure that the unused tablets are returned. Fothergill J agreed with Hughes J both as to this statement of the law and its application to the facts of this case [156], [159]. Fothergill J also clarified that the fact that these trials had been conducted for the purpose of gaining regulatory approval did not take them outside of the experimental use exception [162].

In my post on Hughes J’s decision, I suggested that his decision was notable because, while there was some case law supporting such a broad exception, it was not well-established. Fothergill J’s holding is therefore significant as reinforcing the law stated by Hughes J.

Blinding Expert Witnesses
Apotex argued that the evidence of its expert witnesses should be preferred to those of Bayer’s witnesses because its experts had been “blinded.” Like Brown J in the recent VIREAD decision, 2016 FC 857 (blogged here), Fothergill J was unimpressed by the arguments in favour of blinding. Fothergill J noted that “[t]he fact that expert witnesses were blinded may be persuasive and helpful in weighing their evidence where credibility concerns arise” [65], but, citing Locke J in Shire 2016 FC 382, [45] (blogged here), he continued to say that “if an expert’s opinion is well supported, then there may be no reason to place less weight on the expert’s evidence merely because he or she was not blinded to certain facts when forming that opinion” [66]. In this case, “I have not found the blinding of expert witnesses to be a significant factor in deciding the legal and factual issues raised by this case” [66]. It is still too early to be sure, but the tide may be turning against “blinding.”

"Some leeway" Standard of Review for Claim Construction

NOVA Chemicals Corporation v The Dow Chemical Company, 2016 FCA 216 de Montigny JA: Webb, Boivin JJA aff’g 2014 FC 844 O'Keefe J here
            2,160,705 / film-grade polymers / ELITE SURPASS / Action

At trial in this action O’Keefe J held Dow’s ‘705 patent related to film-grade polymers to be valid and infringed by NOVA. In my post on that decision I noted that “[t]he result turned largely on the evidence, and no novel points of law were raised.” Unsurprisingly, the FCA has now affirmed, noting that “[a]ll of the arguments raised by the appellant amount to no more than mere disagreements with the Judge’s factual findings and assessment of the expert evidence” [93]. With that said, there are a few points of general interest in the decision relating to the nature of claim construction, the meaning of “comprising,” and the promise of the patent.

The most significant point is the Court’s remarks on the nature of claim construction:

[15] On the other hand, the construction of the patent is to be reviewed on the basis of correctness. As the Supreme Court has stated in Whirlpool Corp. v. Camco Inc., 2000 SCC 67 at para. 61, [2000] 2 S.C.R. 1067, “claims construction is a matter of law”. That being said, I share the concerns of my colleague Justice Stratas that it will often be difficult, if not unrealistic and artificial, to distinguish between those aspects of claim construction that flow from the trial judge’s assessment of expert evidence from the words of the claim themselves (see Cobalt Pharmaceuticals Company v. Bayer Inc., 2015 FCA 116 at paras. 16-24, [2015] F.C.J. No. 555). After all, the construction of a patent is heavily dependent on the evidence given by persons skilled in the art, and that evidence will bear heavily on the judge’s findings. For that reason, I accept (as I must) that the construction of a patent is a question of law to be reviewed on a standard of correctness, but trial judges are nevertheless entitled to some leeway as they are often in a much better position than appellate judges to understand the intricacies of the art underlying the invention disclosed in a patent.

“Some leeway” is an interesting caveat to the correctness standard, which arguably amounts to a halfway (quarterway?) house between correctness and deference. Substantively, it is seems like a reasonable position in light of the concerns identified by the FCA. In principle the expert evidence enables the court to understand the meaning of the technical terms – a factual inquiry – while the court interprets the claims in light of that understanding – a legal inquiry. But since words take their meaning partly from the context in which they are used, it is not possible to separate the two inquiries so neatly. However, as the FCA notes, claim construction is a matter of law, and the standard is therefore correctness, and it is not clear that giving the trial court “some leeway” is consistent with the correctness standard. Moreover, whether as a third level of deference, or simply a caveat to correctness which is applicable to claims construction, it runs counter to the general trend of simplifying the standards of review, as illustrated by Dunsmuir [2008] 1 SCR 190, Housen v Nikolaisen 2002 SCC 33, and most recently in the FCA’s own decision in Hospira 2016 FCA 215 (discussed here). I note that the FCA did not embrace the correctness standard on its merits, but rather because of binding SCC authority. Do I detect some dissatisfaction with the SCC’s holding in this paragraph? Perhaps the FCA is hinting that it would prefer a fully deferential standard of review for claim construction and “some leeway” is the furthest it felt it could go in light of Camco. But a fully deferential standard would have its own significant problems, and maybe it is better to accept the decision on its face, as fully endorsing a standard of correctness with some leeway, even if that leaves a tension with broader trends.

On another claim construction point, the FCA affirmed O'Keefe J’s construction of the word “comprising” as meaning “including, but not limited to” [81]. The FCA stated that Nova’s argument to the contrary “is inconsistent with the ordinary meaning of the word ‘comprising’” [82] The Court also noted that “the traditional meaning of the word ‘comprising’ is ‘including but not limited thereto’” [82]. This is a welcome departure from the FCA’s decision in Purdue Pharma / TARGIN 2011 FCA 132, where, as discussed here, the FCA held in effect that “comprising” has no presumptive meaning. The FCA in this case did acknowledge that “a presumption should not be applied inflexibly” [83], so it is possible that “comprising” might be interpreted as limiting in the context of a different patent. However, even that statement helpfully recognizes that there is indeed a “presumption” that “comprising” is not normally limiting.

Finally, the utility argument at trial had turned on the construction of the promise of the patent, and O’Keefe J had held that there was no promise at all, so that utility should be assessed against a scintilla standard. The FCA affirmed, referring to the “presumption that an inventor should only be held to an elevated standard where a clear and unambiguous promise has been made,” and citing Celecoxib 2014 FCA 250 [66] (blogged here), for the proposition that “[w]here the validity of a patent is challenged on the basis of an alleged unfulfilled promise, the patent will be construed in favour of the patentee where it can reasonably be read by the skilled person as excluding this promise” [24]. It might be possible to read this as generally emphasizing the need for restraint in construing the promise of the patent, reinforcing Plavix 2013 FCA 186 (here). However, as the FCA also emphasized, in this case the argument for an enhanced promise was weak in any event. We’ll learn more when the FCA next reviews a construction of the promise that is closer to the line, one way or the other.

UPDATE: In preparing this post, I neglected to review Cobalt v Bayer 2015 FCA 116, which was cited by the FCA in the key paragraph 15, quoted above. As discussed in my post on that decision, Stratas JA explicitly argued for a deferential standard of review in construction of the patent at [12]-25]. So the answer to the question I posted above, as to whether the FCA in this case is expressing some dissatisfaction with the correctness standard and hinting that it would prefer a more deferential standard, is evidently "yes." In my post on Cobalt v Bayer I argued that while there are compelling arguments against reviewing claim construction on a correctness standard, there are also problems with a fully deferential standard. I'm now inclined to think that the modestly deferential "some leeway" standard might be the best approach, notwithstanding the trend towards simplification of standards of review.

VIREAD Patent Valid on the Facts

Gilead Sciences v Apotex Inc 2016 FC 857 Brown J
            2,261,619 / tenofovir disoproxil / VIREAD / NOC

In this NOC decision. Apotex’s validity attacks on the ‘619 patent, based on anticipation / invalid selection, obviousness and lack of utility, all failed on the facts. The main point of legal interest is Brown J’s agnostic approach to the question of “blinding the witness.”

Tenofovir, or PMPA, is a nucleotide reverse transcriptase inhibitor which was known to be effective against retroviral infections such as HIV. However, its oral bioavailability was poor and it was only effective when administered intravenously [32]. The claim of the ‘619 patent at issue, Claim 32, claims tenofovir disoproxil (TD) and its salts, tautomers and solvates [6], [70]. TD is an oral prodrug of tenofovir, which allows effective oral admininstration of tenofovir [31].

The Limits of Stare Decisis

Hospira Healthcare Corporation v The Kennedy Institute of Rheumatology, 2016 FCA 215 Nadon JA: Pelletier, Rennie, de Montigny, Gleason JJA
            2,261,630 / infliximab / INFLECTRA

As discussed in yesterday’s post, in Hospira the FCA held that the standard of review for discretionary decisions of prothonotaries set out in Aqua-Gem should be abandoned and replaced by the standard of review set out in Housen 2002 SCC 33. As well as the issue of whether Aqua-Gem should be abandoned, there was a question as to whether Aqua-Gem could be abandoned, because the Aqua-Gem standard had been approved by the SCC, and it was established FCA law. Hospira therefore raises the question of when the FCA can depart from SCC authority, and when it should overrule its own prior decisions.

Housen Standard of Applies to All Types of Appellate Review

Hospira Healthcare Corporation v The Kennedy Institute of Rheumatology, 2016 FCA 215 Nadon JA: Pelletier, Rennie, de Montigny, Gleason JJA
            2,261,630 / infliximab / INFLECTRA

The Hospira decision, with Nadon JA writing for a unanimous five member panel of the FCA, is important in several respects. Most prominently, it changed the standard of review for discretionary decisions of prothonotaries, replacing the standard set out by the FCA in Canada v Aqua-Gem Investments Ltd [1993] 2 FC 425 with the Housen 2002 SCC 33 standard. Relatedly, Hospira held that the Housen standard should also apply to appellate review of a motions judge reviewing an order of a prothonotary, and to appellate review of discretionary decisions of judges [78], [83]. On the substantive point at issue, the FCA clarified the law relating to the limits on examination for discovery. Hospira also addressed broader jurisprudential questions. The Court considered when it could depart from SCC precedent, and it also implicitly overruled its own prior decision in Miller 2002 FCA 370, as to when its own decisions should be overruled. And the decision is also institutionally significant, as it was heard by a five judge panel – the first five judge panel since Aqua-Gem itself, more than 20 years ago [29]. This post will deal with the first issue.

In the underlying dispute Hospira is seeking a declaration that Kennedy’s ‘630 patent is invalid and not infringed [4]. Hospira requested two days for discovery of each of the inventors, but Kennedy refused, saying one day was sufficient. Hospira conducted one day of examination of each of the inventors, in London and New York (both inventors reside in the UK, but one happened to be in New York). At the end of the day, examination was terminated by Kennedy. Hospira then brought a motion seeking to continue the examination, in person, for one day per inventor [7], [104]. Prothonotary Milczynski heard the motion, and ordered the examination be continued for one-half day, by teleconference [8]. Hospira appealed, and the Motions Judge, Boswell J, applied the Aqua-Gem standard and dismissed the appeal [9]. Hospira then brought this appeal to the FCA.

Standard of review of discretionary orders of a prothonotary
A central question on the appeal was whether the standard of review set out in Aqua-Gem as applicable to discretionary orders of a prothonotary, should be abandoned and replaced by the standard of review set out in Housen v Nikolaisen 2002 SCC 33 [19]-[37] as being applicable to the decisions of trial judges. Under the Aqua-Gem standard, a discretionary order of a prothonotary ought not to be disturbed unless (1) the question is vital to the final issue, in which case it is subject to a de novo review; or (2) “the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts” [42]. Under Housen, factual conclusions reached by a trial judge are subject to deferential review for palpable and overriding error; for questions of law and questions of mixed fact and law, where there is an extricable legal principle at issue, the applicable standard is that of correctness [66]. The FCA held that despite the different language, there was no real difference between the second branch of Aqua-Gem and the deferential standard set out Housen [26], [68]. Thus the question was whether the first branch of Aqua-Gem, which provides for de novo review on questions that are vital to the final issue, should be abandoned [26].

The FCA held that the de novo review branch of Aqua-Gem should indeed be abandoned, most importantly because it was wrong in principle [51]-[55]. The FCA adopted the reasoning of Low J in Zeitoun v. Economical Insurance Group 2008 CanLII 20996 aff’d 2009 ONCA 415, which had effected the same change in Ontario law [51]-[55]. This point boils to recognizing “a presumption of fitness that both judges and masters were capable of carrying out the mandates which the legislator had assigned to them” [53]. Masters may once have been assistants to judges, but they are now independent judicial officers [63]. There is consequently no justification for applying a different standard of review based merely on notions of judicial hierarchy [51].

The FCA further held that the Aqua-Gem standard should be replaced by the Housen standard [79]. On this point, I take the Court to be saying that even though the first branch of Aqua-Gem was substantially the same as the Housen standard, it is the Housen standard itself which should be used, and not some alternative formulation, even if putatively equivalent. The FCA also held that the Housen standard should be applied in reviewing discretionary decisions of motions judges, as was held in Imperial Manufacturing 2015 FCA 100, and doing away with the possibly conflicting formulation set out in Turmel 2016 FCA 9 [74]-[78]. The FCA also held that the same standard applies to appellate review of a motions judge reviewing a discretionary order of a prothonotary pursuant to Rule 51 [80].

Consequently, the law has been significantly simplified. There is now only one standard of review for discretionary decisions of prothonotaries and discretionary decisions of judges, which is the Housen standard [79]: absent error on a question of law or an extricable legal principle, intervention is warranted only in cases of palpable and overriding error.