"Whack the Zombies Dead Once and for All"

Apotex Inc v Abbott Laboratories, Ltd 2018 ONSC 5199 Quigley J

The now defunct rule that a patent would be invalid for lack of utility under s 2 of the Act if the invention failed to meet the promise of the patent is known as the Promise Doctrine. The Promise Doctrine was abolished by the SCC in AstraZeneca 2017 SCC 36 (see here). In a series of cases, defendants have sought to resurrect it in another guise, with almost uniform lack of success. In this decision, another attempt to revive the promise doctrine was rejected by Quigley J in the strongest possible terms.

The decision concerned a motion by Apotex to amend its pleadings in litigation in which Apotex has been seeking damages under s 8 of the NOC Regulations against Abbott and Takeda in the Ontario courts, in respect of lansoprazole [1]. (Some of the history of this very complex litigation is provided here.) Abbott and Takeda have counterclaimed against Apotex for patent infringement, and hence a central issue is the validity of Abbott and Takeda’s patents relating to lansoprazole; if the patents are valid, then damages on the counterclaim will substantially reduce or even entirely negate Apotex’s s 8 damages [4].

Apotex had defended against the counterclaim by alleging the patents were invalid for failure to meet the promise of the patent. Apotex has conceded that as a result of AstraZeneca, these allegations are not longer capable of supporting an argument for invalidity [19]. In this motion, Apotex therefore sought to amend its pleadings to allege invalidity for insufficiency, overbreadth, and material misrepresentation under s 27(3) and s 53 [23], without any changes to the underlying factual allegations [18]. Consequently:

[22] The question on this motion is clear: While abolishing the “Promise Doctrine”, did the Supreme Court nevertheless intend that promise based claims of patent invalidity could now be brought under ss. 27 and 53 of the Act? Apotex says yes. Abbott and Takeda say no.

It is, I think, uncontroversial that prior to AstraZeneca, the Promise Doctrine was not legally coextensive with insufficiency and material misrepresentation. That is, facts which would support an allegation of invalidity for failure to meet the promise of the patent would not necessarily support an allegation of insufficiency or material misrepresentation. For example, in the Olanzapine litigation an attack based on s 53(1) was rejected 2009 FC 1018, [150-53], even though the patent was ultimately held invalid, by the same judge, for failure to satisfy the promise of the patent: 2011 FC 1288, [209]-[210] aff’d 2012 FCA 232. Of course, in some cases the same facts might support multiple grounds for invalidity, just as a single piece of prior art might render a patent invalid for both anticipation and obviousness. 

Apotex therefore argued that AstraZeneca substantively changed the law of insufficiency and material misrepresentation [6]. The argument was effectively that the substance of the Promise Doctrine is still good law, and the only change wrought by AstraZeneca is that it must be pleaded as a matter of s 27(3) or s 53, rather than as a matter of s 2, which is what Apotex's proposed amendments sought to do. In contrast, Abbott and Takeda argued that “AstraZeneca had no effect on the law as it relates to any other ground of invalidity (including insufficiency, overbreadth, or fraud on the Commissioner of Patents)” [17, original emphasis]. 

In support of its position, Apotex relied on the following passage from AstraZeneca (my emphasis):

[45] Supporters of the doctrine assert that the consequences of the Promise Doctrine play a key role in ensuring patentees do not “overpromise” in their patent applications. That is, a patentee will be dissuaded from stating the invention can be used for things that are not sufficiently established at the time of filing if doing so would risk invalidating the entire patent. The utility requirement should not be interpreted, however, as the Federal Courts have done, to address such concerns. Nonetheless, overpromising is a mischief.

[46] The scheme of the Act treats the mischief of overpromising in multiple ways. There are consequences for failing to properly disclose an invention by claiming, for instance, that you have invented more than you have. A disclosure which is not correct and full, or states an unsubstantiated use or operation of the invention, may be found to fail to fulfill the requirements of s. 27(3). An overly broad claim may be declared invalid; however, under the operation of s. 58 of the Patent Act, remaining valid claims can be given effect. As well, this mischief may result in a patent being void under s. 53 of the Act, where overpromising in a specification amounts to an omission or addition that is “wilfully made for the purpose of misleading”.

The question is whether this passage was intended to change the law of sufficiency, overbreadth and material misrepresentation, as Apotex argued, so that they would now reflect the promise doctrine; or merely to acknowledge that some forms of overpromising had always been addressed by those doctrines, as Abbott and Takeda argued. My view is that the latter interpretation is correct. For example, s 53 has an intent requirement of wilful misleading that was never part of the promise doctrine. Wilfully overpromising for the purpose of misleading is undoubtedly a “mischief.” Prior to AstraZeneca it might have engaged both s 53 and the Promise Doctrine; after AstraZeneca it will still engage s 53. But that does not mean that overpromising that was neither willful nor for the purpose of misleading will now engage s 53, even though it might have engaged the defunct Promise Doctrine.

Quigely J held unequivocally in favour of Abbott and Takeda on this issue.

[27] Having specifically overruled the Promise Doctrine as bad law, it is not evident and indeed is counterintuitive that the Supreme Court intended that promise based arguments would simply be imported into claims of overbreadth or misrepresentation under those sections.

Quigley J found support in this conclusion in the consistent holdings to the same effect in the Federal Court [28] (and see here, discussing these holdings). He also cited my blog posts for the position that “we should ‘whack the zombies dead once and for all’” [28]. While I don’t believe I ever said exactly those words, I wish I had, and the statement certainly captures the gist of my comments.

Quigley J then went on to consider whether the factual allegations made by Apotex would nonetheless support an allegation of invalidity under s 53, notwithstanding that it had not initially been pleaded as such [31]-[32]. He concluded that they did not [33], [39].

Further, he awarded costs on the motion on a substantial indemnity basis [48]:

[47] “the caselaw is plain that any party against whom such unfounded and deficient s. 53 fraud allegations are made, in this case Takeda, will be severely prejudiced if they are permitted to be advanced. . . . The allegation alone may severely damage Takeda’s reputation, as well as the reputation of its inventors. The mere publication of fraud allegations causes reputational harm. As such, I agree that the making of the allegation without foundation must entitle Takeda to heightened costs on this motion.