Pre-issuance Defects in Administrative Process Cannot Render a Patent Void

Apotex Inc v Pfizer Inc 2017 FCA 201 Gauthier JA: Stratas, Boivin JJA aff’g 2016 FC 136 Diner J
            1,339,132 / latanoprost / XALATAN

The precise issue in this case will probably never arise again, as it is “is the first and most likely the last case involving section 73 of the 1989 Act” [4]. Nonetheless, Gauthier JA’s decision for the Court sets out an important general principle that “pre-patent issuance defects in the administrative process for applying for a patent cannot be relied upon by an alleged infringer to render a patent void” [59]. The Court also suggested a principle of interpretation which may have even more far-reaching implications, to the effect that the courts should strive to interpret the Canadian Patent Act so as to achieve substantive consistency with the patent law of our trading partners.

The applicant that filed the application which matured into the ‘132 patent (Pharmacia Aktiebolag, Pfizer’s predecessor) was a large entity. It did not claim small entity status, and it paid large entity fees — except for the final fee, for which, for reasons which are unknown, it paid the small entity fee [8]. For reasons which are also unknown, the Patent Office accepted that fee, even though small entity status had not been claimed [9]. On subsequent inquiry by the patent agent, the Patent Office  acknowledged, erroneously, that large entity fees had been received [10]. Thus, the applicant was a large entity, and the proper large entity fee had never been paid [11].

On these facts, in the context of s 8 litigation, Apotex sought a motion for summary judgement that the 132 patent is invalid for failure to pay the proper application fee [12]. Diner J dismissed the motion, and Apotex appealed.

Apotex made a straightforward argument [49]. It relied on s 59, which provides that when defending an infringement action, a defendant “may plead […] any fact or default which by this Act or by law renders the patent void,” in combination with subsection 27(1) of the 1989 Act, which provided (my emphasis):

inventor […] may, on presentation to the Commissioner of a petition setting out the facts […] and on compliance with all other requirements of this Act, obtain a patent granting to him an exclusive property in the invention

27(2) The requirement to pay the fee is the in Act, so the applicant had not complied with all other requirements of the Act, and this, the argument went, renders the patent void. The wording of the current 27(1) is slightly different, but the same argument would arise, as it provides that the Commissioner shall issue a patent if “all other requirements for the issuance of a patent under this Act are met.”

Gauthier JA remarked that the “literal approach” advocated by Apotex was attractive, but she rejected it in light of the context and purpose [50]-[51]. The FCA held that it was bound by Fada Radio [1927] SCR 520, in which the SCC had held that an untrue statement in the application (that the invention had not been patented with the applicant’s knowledge in any country) would not invalidate a granted patent, which stands for this “essential concept”:

[57] pre-patent issuance defects in the administrative process for applying for a patent cannot be relied upon by an alleged infringer to render a patent void.

Similarly, the FCA cited its own prior caselaw for the principle that

[58] defects in the pre-patent issuance process that do not come within the ambit of provisions dealing expressly with the voidance of a patent, like section 53 of the 1989 Act, cannot be relied upon by an alleged infringer to render a patent void.

This is evidently a general principle, not tied to the 1989 version of 27(1).

Gauthier JA also referred to the absurdity of “enabling an alleged infringer to void a patent (here a successful pharmaceutical patent worth millions if not billions of dollars) say ten years later or even after its expiration, on the basis that the petitioner was a few pennies short” [72].

Therefore, “the law” referred to by s 59 is substantive patent law, not administrative law matters which might be raised on judicial review: [69], [70]. Gauthier JA noted that the Economic Action Plan Act, s 138, not yet in force, “makes it clear that non-payment of fees payable before the issuance of a patent will not invalidate the said patent” [3], but this played no part in her reasoning, so the interpretation stands even if this provision is never proclaimed in force.

This seems to me entirely sound as a purposive analysis of the Act. It also strikes me as consistent with the literal text of the Act. S 59 refers to any fact which renders the patent void, and nothing in 27(1), then or now, refers to validity; it refers to the conditions on which the Commissioner may (or, now, shall) issue a patent.

The Court’s final observation may have even more wide-ranging implications:

[77] Considering the importance of patents nowadays, and the importance given to intellectual property law in trade treaties, courts should obviously be careful before adopting an interpretation that would put Canada at odds with its trading partners. Thus, I am comforted by the fact that my purposive interpretation of the 1989 Act does not require the addition or the recognition of the new grounds of invalidity that Apotex’s view in respect of sections 27 and 59 would entail and that could be in direct conflict with those generally recognized in England, Europe and the United States.

This observation is entirely salutary. It is consistent with the observation of the House of Lords as to the importance of establishing a common approach in Europe (see e.g. HGS v Lilly [2011] UKSC 51, noting that the Bundesgerictshof is of the same view). Of course, in Europe the common basis of the EPC provides an additional rationale for harmonization, but Lord Neuberger [96]-[99] also remarked on the importance of more general harmonization in promoting the basic objective of the patent system, to provide an incentive to innovation.

The UKHL has adopted harmonization with the EPO has a principle of interpretation of the UK Act. The FCA in this decision has not gone so far. Gauthier JA simply “drew comfort” from the observation, and it did not play any direct part in her reasoning. Nonetheless, it opens the door to invoking the desirability of harmonization as an independent principle of interpretation of the Patent Act.