Caution as to Whether a Single Direct Infringer Is Required for Inducement

Packers Plus Energy Services Inc v Essential Energy Services Ltd 2019 FCA 96 Gleason JA: Boivin, Rivoalen JJA aff’g 2017 FC 1111 O’Reilly J
            2,412,072

In this decision, the FCA upheld O’Reilly J’s finding that Packers Plus’ 072 patent was invalid for obviousness, essentially on the basis that absent an extricable error of law, the standard of appellate review is deferential [29]-[31], and the appellant's arguments either mischaracterized O’Reilly J’s findings or attempted to reargue findings on which deference was owed [34].

O’Reilly J had also addressed anticipation and obviousness, holding that the patent was invalid as anticipated, but if it had been valid, it was not infringed. Perhaps the most interesting aspect of the FCA decisions is the remark that in light of its holding regarding obviousness “it is unnecessary to address the arguments regarding anticipation and infringement, other than to note that these Reasons should not be viewed as endorsing the Federal Court’s findings or Reasons in respect of these issues” [3]. This of course does not mean that O’Reilly J’s holding was wrong on either of these points, but it does mean that his holdings on these issues should be treated cautiously, and do not carry the same weight as a matter of comity that they might otherwise. In my view, discussed here, the most problematic aspect of his decision related to infringement by inducement. The first branch of the Weatherford test for inducement requires that “the act of infringement must have been completed by the direct infringer” 2011 FCA 228, [162]. Even though the patented invention had been performed [38], O’Reilly J held the first branch had not been established because there was no single party who had performed it [55]. That is, he read the test as requiring not just that the act of infringement be completed, but that it must have been completed by a single direct infringer. This point had not established in the prior case law. It may be that it was this point that the FCA intended should remain open (though it may also have been some point related to anticipation, discussed here).

Is ‘But for’ Causation Necessary to Establish Inducement?

I have a working paper entitled "Is ‘But for’ Causation Necessary to Establish Inducement?" which is now available on SSRN. Comments are welcome. Here is the abstract:

The established Weatherford test for inducing patent infringement requires, as its second branch, that inducement by the indirect party be the “but for” cause of the direct infringement. This article shows that such a requirement of “but for” causation leads to problematic results, particularly when the evidence indicates that the direct infringers do not heed the encouragement provided by the indirect party. The article argues that while the “but for” causation requirement is often stated, it has rarely actually been applied, and there are several cases which suggest a less stringent requirement. This article argues that the best way to reconcile the cases is to recognize that causation in the second branch of the inducement test may be established on the basis of material contribution, rather than “but for” causation, while also recognizing that “but for” causation remains necessary for an award of any monetary remedy. This approach, combining material contribution as the substantive causation requirement at the second stage of the inducement test, with “but for” causation in awarding monetary remedies, also appropriately balances the policy concerns of ensuring effective enforcement of the patentee’s rights while avoiding the problem of overbroad enforcement.

Contributory Infringement in Canadian Law

I have a new paper entitled "Contributory Infringement in Canadian Law," forthcoming in the CIPR. A draft version is available on SSRN. Here is the abstract:

Contributory infringement arises when a party knowingly supplies a direct infringer with a product especially adapted for use in a patented invention. Canadian courts have regularly stated that there is no liability for contributory infringement in Canadian law, in the absence of inducement. This article shows that there are nonetheless few cases actually refusing to impose liability on a contributory infringer, and none at the appellate level. The article argues that the reasoning and results in almost all the leading cases support a rule that supply of a product especially adapted to infringe, and with no substantial non-infringing use, constitutes indirect infringement, even in the absence of active inducement. The current shape of the law is a result of a misreading of the early leading case of The Copeland-Chatterson Company Ltd v Hatton, in combination with the problematic decision in Slater Steel Industries Ltd v R. Payer Co, which is the only prominent case refusing to impose liability in such circumstances. Slater Steel has been confined to its facts in both subsequent Court of Appeal decisions to address it, and this article argues that Slater Steel was wrongly decided on its facts. The article concludes that it is open to the courts to recognize that liability for contributory infringement may be imposed in Canadian law.

Medical Records Patents Valid and Infringed

Bessette c. Québec (Procureure générale du Québec) 2019 CF 393 LeBlanc J

2,233,794 / 2,329,598 / Distributed network system for management of medical records

This very long decision, holding M Bessette’s 794 and 598 patents to be infringed and most of the key claims to be valid, turned largely on the evidence. M Bessette was an emergency physician at a Montreal hospital in the 1990s. Patient information was held in multiple locations and even when found, the crucial information was often buried in detail. He conceived of a system which enable medical staff to quickly access relevant medical information. Rather than collecting all the information in one place, the system used a data structure with pointers to the remote location for retrieval on demand [4], [60]-[65]. The 794 patent related to a distributed network system for accessing medical records. The 598 patent was an improvement which enabled automatic “push” updating of the information [5].

While a system of this type would doubtless have been developed eventually as a result of increasing pervasiveness of distributed internet based database systems, M Bessette’s thinking was ahead of its time – exactly how far ahead is a matter for the obviousness discussion. In any event, it was certainly a very good idea. In 1998 M Bessette set out to commercialize his invention. He initially attracted considerable interest from a number of parties, including private sector technology firms, and the Quebec government, which would have had to implement the system in the Quebec hospital system. For reasons that are not entirely clear, the Quebec government ultimately lost interest by about 2000 [66]-[77]. Several years later, in around 2005, the Quebec government again decided that an internet based medical records system was a good idea. After several years of development, the accused infringing system, the Dossier Santé Québec [DSQ], was implemented in 2013 [2], [253]-[257]. There seems to be an interesting business school case study here regarding government nimbleness in innovation, but that is not really relevant to the patent case.

So far as infringement is concerned, there was the usual detailed construction of the terms of the claims (all of which were agreed to be essential [108], [242]). But the 794 patent was quite broad, and while the DSQ system had a number of features not disclosed by the 794 patent, the question, of course, is not whether the patent discloses all of the features of the allegedly infringing system, but the opposite, whether the defendant’s system incorporates all the essential features of the patented system [295], [331]. At the end of the day, Claims 1 to 8 of the 794 patent were infringed [320], as were many of the claims of the 598 patent.

The main invalidity attack on the 794 patent was based on anticipation. While various prior publications had disclosed aspects of the patented inventions, no single publication disclosed everything. One key difference was that the invention used pointers, and particularly a two-component pointer [412], [425], [427].

Given the rapid development of internet based data systems, a key question related to the 794 patent in particular would seem to be whether it was truly an inventive technical advance, or whether M Bessette was simply the first to see an opportunity which was obvious in light of the rapidly advancing state of the art. This situation calls to mind the infamous Selden automobile patent, which essentially claimed the automobile. It is now generally considered to have been a paradigmatic example of a bad patent, as the true advance in the basic automobile was not the concept of putting an engine on a cart, but rather the development of a light enough engine. Now, all inventions are obvious once the state of the art has advanced far enough, and it is entirely possible that M Bessette was sufficiently visionary that his conception would have been inventive at the relevant time. It is also possible that his particular implementation, using pointers, was inventive. But one way or the other, this would seem to be the key question. Curiously, the expert for the defendants barely touched on this issue, with a few conclusory statements rather than a detailed analysis [437]. The expert for the plaintiff therefore was instructed not to address the issue either [438]. Consequently, LeBlanc J was left to decide the issue of obviousness largely without the benefit of expert evidence on this factually driven inquiry [439]. Remarking that the obviousness argument “repose sur une preuve largement déficiente” [443], he rejected the attack, partly on the basis of the burden [441], and partly on what evidence was available [442].

The 598 patent was attacked for obviousness, insufficiency and overbreadth [448]. The key point on obviousness was the use of “push” notifications, and those claims which omitted this feature were held to be obvious [488], while the attack was otherwise rejected. The overbreadth and insufficiency arguments were also rejected on the facts.

The trial was bifurcated and damages was not addressed.

Short Blogging Break

Exam period is upon us, and I'll be taking a short blogging break to make up and grade exams. I'll return soon and start with any decisions I might have missed, including the very long Bessette c. Québec 2019 CF 393.

A Stay in Favour of Provincial Superior Courts Will Be Granted Only in the Clearest of Cases

Stelpro Design Inc. v. Thermolec Ltée, 2019 FC 363 St-Louis J

While the Federal Court has exclusive jurisdiction to annul a patent (Federal Courts Act s 20(1)), its jurisdiction in respect of infringement is concurrent with that of the provincial superior courts: s 20(2). In Stelpro, the patentee, Thermolec, brought an action in the Superior Court of Québec, and Stelpro defended there in part on the basis that the patent was invalid. Stelpro then brought an impeachment action before the Federal Court. Stelpro moved to have Quebec action stayed; that motion was refused by the Quebec court: [9]. Thermolec in turn sought to have the Federal Court action stayed by the Federal Court. That motion was also refused by St-Louis J in this decision.

The facts are similar to those in Safilo Canada Inc v Contour Optik Inc 2005 FC 278, in which Safilo brought action for impeachment in the Federal Court a few hours before the patentee, Contour, brought an action in the Superior Court of Québec. (In Safilo it is clear that the patentee was motivated to bring its action in the Quebec courts in part by the prospect of obtaining an interlocutory injunction, which is of course essentially impossible for a patentee to obtain in the Federal Court, and which was granted by the Quebec court. One might speculate that Thermolec’s motivation was the same, as it was also granted an interlocutory injunction in Quebec).

In considering whether to grant a stay, both de Montigny J in Safilo and St-Louis J in the case at hand, referred to the list of relevant factors summarized by by Dubé J. in White v EBF Manufacturing Ltd, 2001 FCT 713:

1. Would the continuation of the action cause prejudice or injustice (not merely inconvenience or extra expense) to the defendant?

2. Would the stay work an injustice to the plaintiff?

3. The onus is on the party which seeks a stay to establish that these two conditions are met.

4. The grant or refusal of the stay is within the discretionary power of the judge.

5. The power to grant a stay may only be exercised sparingly and in the clearest of cases.

6. Are the facts alleged, the legal issues involved and the relief sought similar in both actions?

7. What are the possibilities of inconsistent findings in both Courts?

8. Until there is a risk of imminent adjudication in the two different forums, the Court should be very reluctant to interfere with any litigant's right of access to another jurisdiction.

9. Priority ought not necessarily be given to the first proceeding over the second or, vice versa.

Two important additional factors emerged in Safilo.

First, only the Federal Court can rule on the in rem validity of the patent and dispose of it at a national level, while the Superior Court judgment would only be valid between the parties and in Quebec. This strongly suggests that the FC action should not be stayed. To address this difficulty, the patentee in Safilo, who was seeking to pursue the action in Quebec, gave an undertaking that if the final result in the Quebec litigation was that the patent was invalid as between the parties, the patentee would agree to the striking out of the patent by the Federal Court [33]. (This practice was derived from the copyright case of Apotex v Astrazeneca [2003] 4 FC 826.) A similar undertaking was given in this case. In Safilo de Montigny J indicated that an undertaking “makes moot the distinction between the in rem and in personam nature of the remedies which the Federal Court and Superior Court may grant respectively” [34]; in this case, St-Louis J quoted this statement and remarked “I have no reason to disagree” [45]. The undertaking thus removes one major substantive objection to staying the FC action.

As noted by St-Louis J at [42], a second important consideration emerging from Safilo is the relative state of advancement in the proceedings in each of the courts. In Safilo, de Montigny J granted the stay, essentially on basis that case was further advanced in Quebec and in light of undertaking to expunge given by the patentee [38]. (And see also YKK Zipper v Wahl Bros (1972), 8 CPR(2d) 131, also granting a stay when the proceedings in the Superior Court of Québec were very far advanced when the FC action was initiated.)

In Stelpro, in contrast, St-Louis J refused to stay the Federal Court action. The decisions are straightforwardly distinguishable, because, as St-Louis J emphasized, in Stelpro, unlike in Safilo, the proceedings on the merits were at an early stage in both courts [47].

St-Louis J concluded that

[48] As per the Safilo Canada guidelines, the power to grant a stay may only be exercised sparingly and in the clearest of cases. As can be shown from the paragraphs above, I have not been convinced that this is “the clearest of cases”, and will thus not grant the stay.

This is despite the undertaking given by Thermolec to agree to consent to the entry of a judgment in the Federal Court that mirrors the Superior Court’s future decision on the validity of the patent [9], and despite the fact that a stay had been refused by the Superior Court of Québec, giving rise to a real prospect of duplicative litigation and conflicting outcomes.

This illustrates that the principle that a stay will granted only in the rarest of cases is an important one. Per the 8^th point from White v EBF, “the Court should be very reluctant to interfere with any litigant's right of access to another jurisdiction.” While I acknowledge the force of that principle, and St-Louis J’s decision in this case does appear to be consistent with the prior caselaw, I must say that the result does not seem entirely satisfactory.

UKSC Weighs in on Obvious to Try and Golden Bonus

Actavis v ICOS [2019] UKSC 15 (27 March 2019) Lord Hodge: Lady Hale, Lords Kerr, Sumption, Briggs aff’g [2017] EWCA Civ 1671 Kitchin LJ: Lewison, Floyd LLJ rev’g [2016] EWHC 1955 (Pat) Birss J

EP (UK) 1,173,181 / tadalafil dosage / CIALIS

In Actavis v ICOS the UKSC has affirmed the decision of the EWCA holding ICOS’s dosage patent for tadalafil to be obvious on an obvious-to-try analysis. As discussed here, the EWCA decision was consistent with the way the obvious-to-try analysis has consistently been applied by the Federal Courts. The decision of the UKSC provides further reassurance, if any was needed, that the Canadian approach is sound. Along the way, the UKSC expressly affirmed the “golden bonus” rule: if a particular invention is obvious for one reason, it does not become non-obvious simply because it had additional unexpected or non-obvious advantages.

The obvious-to-try analysis was endorsed by the SCC in Sanofi 2008 SCC 61, where the Court stated that:

[65] I am of the opinion that the “obvious to try” test will work only where it is very plain or, to use the words of Jacob L.J., more or less self-evident that what is being tested ought to work.

This might lend itself to the view that it must be self-evident, prior to any experimentation, that the claimed invention will solve the problem at hand. But the Court immediately went on to say that for an invention to be “obvious to try”, there must be evidence that it was “more or less self-evident to try to obtain the invention” [66]. That is, it is trying that must be self-evident, not that that the specific claimed invention would work. In Actavis v ICOS, the UKSC addressed exactly this question.

The facts in Actavis v ICOS are simple, and raise a paradigmatic version of the obvious-to-try analysis. The key claim was to a 5mg daily dose of tadalafil for the treatment of ED.^* Tadalafil was known to be an effective oral treatment for ED, but the optimal dosage was not part of the the prior art [23]. It was obvious to carry out a dose-ranging study to determine the appropriate dose. The initial dose ranging study would be of on demand dosing using 25, 50 and 100mg doses. This study would have revealed a therapeutic plateau in that range [35]-[36]. Birss J held that it was “very likely” that a skilled team would then investigate lower doses. Both the EWCA and the UKSC treated this “very likely” finding as meaning that it would have been obvious to do so; ie, that it would have been obvious to try lower doses. Birss J held that if they had done so they would have discovered that a 5mg dose tadalafil was efficacious and had reduced side effects; that is, the posita would have discovered the invention. There would, however, have been no prior expectation that a dose of 5mg would have been efficacious; on the contrary, it would have been surprising that such a low dose would be effective [37]. It would have doubly surprising that the 5mg dose also had reduced side-effects [37].

Birss J held that claims at issue to be non-obvious, essentially because “the claimants failed to prove that efficacy at 5mg tadalafil was predictable or worth considering by the skilled team based on the properties of tadalafil as compared to sildenafil,” and “[a]ssuming a 5mg/day dose of tadalafil was tested, it would not be tested with a reasonable expectation of success” [38]. In other words, Birss J held that the 5mg dose was not obvious because, if the skilled team had been asked, prior to testing, whether a 5mg dose would have been efficacious, the answer would have be "probably not". In Birss J's view, the conclusion of non-obviousness followed notwithstanding that the entire course of research leading to the invention would have been obvious to try. The EWCA reversed, and Lilly (the exclusive licensee), appealed.

The key question was summarized in Lilly’s central submission [50]:

the question which the Court of Appeal should have asked was whether at the priority date, before the skilled team embarked on its investigation, it was obvious in the light of [the knowledge that tadalafil is effective for treating ED], and without knowledge of the alleged invention, that a 5mg per day dose of tadalafil would be a safe and effective treatment, with minimal side effects, for sexual dysfunction.

That is, the invention is not obvious unless there would be a reasonable expectation, prior to undertaking the dose-ranging study, that the 5mg dose would work. A reasonable expectation that some minimum dose would be safe and effective, and that the minimum could be determined from a dose-ranging study, would not suffice, unless there was a reasonable expectation that the 5mg dose in particular would work.

The UKSC rejected this submission [52]: “uninventive steps which the skilled team would take after the priority date to implement the [knowledge that tadalafil is effective in treating ED] are not excluded from consideration in assessing the obviousness of the alleged invention at the priority date” [59]. On the facts, the UKSC affirmed the EWCA in holding the patent to be obvious [105]. This is a clear holding that the mere fact that there would be no reasonable prior expectation that the particular claimed invention – the 5mg dose – would work, does not in itself mean the invention is non-obvious.

The UKSC elaborated with nine points.

First, “it is relevant to consider whether at the priority date something was ‘obvious to try’” [65]. I take this to mean the same as the SCC meant in Sanofi when it held at [64] that the “obvious to try” inquiry is one factor to be considered in the obviousness inquiry. An invention which is obvious to try is not necessarily obvious for that reason alone, as there may be invention in getting it to work.

The second point was that “the routine nature of the research and any established practice of following such research through to a particular point may be a relevant consideration” [66]. Even if it was not obvious in advance that the invention would work, it may nonetheless be obvious, if the route to success was obvious to try, and there were no difficulties along the way requiring invention. The Court continued by saying that this is “weighed against the consideration that the claimed process or product was not obvious to try at the outset of a research programme” [66]. This is a bit obscure to me. The point appears to be that the fact that the particular claimed product – the 5mg daily dose – was not obvious to try at the outset is a consideration. I’m not sure why that should be a consideration, as the premise here is that the specific claim product would not have been predicted in advance, even though it was the outcome of a routine investigation.

“Thirdly, the burden and cost of the research programme is relevant” [67]. The parallels the Sanofi factor asking as to the “extent, nature and amount of effort required to achieve the invention? Are routine trials carried out or is the experimentation prolonged and arduous, such that the trials would not be considered routine?” [69] Even trials that are technically routine might nonetheless rise to the level of invention if sufficiently arduous: “A patient searcher is as much entitled to the benefits of a monopoly as someone who hits upon an invention by some lucky chance or an inspiration” (Halocarbon [1979] 2 SCR 929).

“Fourthly, the necessity for and the nature of the value judgments which the skilled team” [68]. Routine work is no longer routine if it requires extensive exercise of judgment.

“Fifthly, the existence of alternative or multiple paths of research will often be an indicator that the invention contained in the claim or claims was not obvious” [69]. Again, this corresponds to Sanofi (by coincidence also at [69]): “Are there a finite number of identified predictable solutions known to persons skilled in the art?”

“Sixthly, the motive of the skilled person is a relevant consideration. The notional skilled person is not assumed to undertake technical trials for the sake of doing so but rather because he or she has some end in mind. It is not sufficient that a skilled person could undertake a particular trial; one may wish to ask whether in the circumstances he or she would be motivated to do so” [70]. The invention may lie in the decision to try a pursue a particular line of investigation, even if the inquiry is routine after that decision is made. Put another way, an invention that is not obvious to try, is not obvious under the obvious to try test. The invention may lie either in the decision to pursue a particular line of inquiry, or in overcoming obstacles along the way.

“Seventhly, the fact that the results of research which the inventor actually carried out are unexpected or surprising is a relevant consideration as it may point to an inventive step, at least in so far as it suggests that a test was not obvious to try or otherwise the absence of a known target of the research which would make it less likely that the skilled person would conduct a test” [71]. I take this to be related to the previous point. Mere unexpected results – as on the facts, the unexpectedly low effective dosage – does not establish non-obviousness, but the unexpected nature of the results may be relevant to the extent that it supports a finding that the inquiry was not obvious to try in the first place.

“Eighthly, the courts have repeatedly emphasised that one must not use hindsight, which includes knowledge of the invention, in addressing the statutory question of obviousness” [72]. This point is very well recognized by the Canadian courts.

The ninth point is particularly significant, as it is the first time, to my knowledge, that the UKSC has expressly affirmed the “golden bonus” rule. If a particular invention is obvious for one reason, it does not become non-obvious simply because it had additional unexpected or non-obvious advantages. The leading case is Hallen & Co v Brabantia (UK) Ltd [1991] RPC 195 (EWCA), in which it was obvious to coat a corkscrew with slippery PTFE in order to aid its penetration into the cork. The EWCA held that the invention did not become non-obvious simply because it turns out that it also had a non-obvious benefit of improving extraction of the cork. That holding has now been approved in principle by the UKSC [73], and also apparently applied it on the facts, as the 5mg dosage had a surprising beneficial property of minimal side effects, which nonetheless did not make that dosage regime an invention [31].

While the UKSC held the claims at issue to be obvious, the Court took pains to say that dosage patents are not suspect per se, approving the view that: “there [is] no policy reason why a novel non-obvious dosage regime, which was the product of expensive and unpredictable research, should not be rewarded with a patent of a Swiss-form claim” [76], [103]. Moreover, there is no general rule “that the product of well-established or routine enquiries cannot be inventive” [103]. 

It should not be very surprising that the SCC and UKSC jurisprudence on obvious-to-try are consistent, given that the SCC in Sanofi relied heavily on the prior UK case law. It is nonetheless reassuring that a consistent body of jurisprudence has developed, as this indicates that the charted path was the right one.

*The representative claim was Claim 7, which was effectively to a dosage form of tadalafil suitable for oral administration up to a maximum total dose of 5 mg per day, for the treatment of sexual dysfunction.

Common Hearing of Common Issues in NOC Proceedings is not Impermissible Joinder

Bayer Inc v Apotex Inc 2019 FC 191 Tabib J
            2,547,113 / 2,624,310 / 2,823,159 / rivaroxaban

Bayer is the plaintiff in two NOC actions, one against Teva, and a second, brought a month later, against Apotex [2]. Tabib J was appointed the case management judge in both actions [3]-[4]. It appears that she proposed that the common invalidity issues be tried together, as in Biogen v Taro 2018 FC 1034, in order to avoid unnecessary duplication and facilitate scheduling [22]. Both generics were amenable, but Bayer objected on the basis that doing so would constitute a joinder of actions prohibited by s 6.02 of the NOC Regulations.

Tabib J explained that what was being proposed was not consolidation, but rather common hearing of the common issues [12], [14]. Discoveries might be coordinated on consent, but need not be, and “the trials of both actions would proceed together, but only in respect of common issues, namely, claim construction and invalidity, for which the evidence would be adduced only once for the purposes of both; with respect to all other issues, including any issue of infringement, the trials would continue separately; finally, and just as importantly, two separate judgements would necessarily issue, each having binding effect only on the parties to which it relates, and each of which could even issue at different times” [14]. 

She noted that on a plain reading s 6.02 prohibits only joinder or consolidation, not a common hearing [16]. She also noted that the purpose of the prohibition was to restrict the number of issues in dispute in order to facilitate timely resolution of the action and to avoid complicating the assessment of damages [17]. She observed that ordering a common hearing of common issues was consistent with a purposive construction of the section, as the common hearing would likely facilitate timely resolution of the cases by facilitating scheduling [21], and would not introduce complications such as the need for amendments to the pleadings and so on, because the actions remain separate [20].

Tabib J therefore ordered that the two actions would be heard concurrently in respect of all common invalidity issues, but would proceed separately in all other respects.