Prosecution History May Not Be Used to Rebut Representations Made by a Licensee

Allergan Inc v Sandoz Canada Inc 2020 FC 1189 Crampton CJ

2,507,002 / silodosin / RAPAFLO / NOC

Section 53.1 of the Patent Act permits the use of prosecution history in claim construction in certain circumstances. In this decision, Crampton CJ held that s 53.1 only permits use of prosecution history to rebut a representation made in litigation by a patentee, not representations made by a licensee. This is a truck-sized loophole in s 53.1, and Crampton CJ noted the prosecution history in question “provides a glaring example of the mischief that is implicitly permitted by the current wording” [135]. Nonetheless, Crampton CJ’s analysis of the provision is entirely compelling.

As noted in Monday’s post, the key issue on infringement was whether “wet granulation” was an essential element of the claims in question. Allergan argued it was not. Sandoz wished to rely on representations made during patent prosecution to rebut this assertion. The difficulty is that s 53.1 permits prosecution history to be introduced to rebut any representation “made by the patentee in the action.” Allergan is not the patentee; it is the exclusive Canadian licensee [1] and is the “first person” under the PM(NOC) Regulations [5]. The patent owner is Kissei Pharmaceutical and the patent was prosecuted on Kissei’s behalf [1], [3]. Kissei was also a defendant to this NOC action, joined pursuant to s 6(2), but crucially, Kissei took no position on the infringement issue, though it adopted Allergan's submissions relating to validity. (Kissei did not appear during the trial [7].)

So, Allergan’s argument was that the prosecution history could not be introduced because it can only be used to rebut a representation by the “patentee” and the patentee, Kissei had not made any representations. The question facing Crampton CJ was therefore whether s 53.1 should be interpreted to allow prosecution history to be used to rebut representations made by a licensee.

As noted, I find Crampton CJ’s reasons on this point to entirely convincing. I don’t have anything to add, so I will simply reproduce the key passage (with some references omitted):

[124] In my view, none of the arguments advanced by Sandoz can overcome the plain wording of subsection 53.1(1), a contextual reading of the Act or the jurisprudence in respect of the definition of the word “patentee” in section 2 of that legislation.

[125] It is trite law that “the words of a statute must be read ‘in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament’”.

[126] The “chapeau” in subsection 53.1(1) plainly limits the scope of that provision to permitting certain written communications to be admitted into evidence to rebut any representation made by the patentee in an action or proceeding, in respect of the construction of a claim in a patent that is at issue in the action or proceeding. In the present proceeding, it is admitted that the patentee is the defendant Kissei, which has not made any representation to the Court with respect to the construction of the ‘002 Patent. Accordingly, in the absence of any clear indication elsewhere within the scheme or object of the Act that Parliament intended to word “patentee” to include a licensee of a patent, subsection 53.1(1) cannot be invoked in this proceeding.

[127] I do not agree with Sandoz’s position that a licensee falls within the meaning of the word “patentee”, as defined in section 2 of the Act, namely, “the person for the time being entitled to the benefit of a patent”. This position was specifically considered and rejected in Electric Chain Co of Canadas Ltd v Art Metal Works Inc, [1933] SCR 581 at 586-587 [Electric Chain]. The effect of that decision was that a licensee had no right to be a party to an infringement action in Canada. As a result, what is subsection 55(1) was added to the Act: American Cyanamid Co v Novopharm, [1972] FC 739 at paras 23-24 (FCA) [American Cyanamid]. That provision, which has undergone some minor amendments that are not germane for the present purposes, states:

“A person who infringes a patent is liable to the patentee and to all persons claiming under the patentee for all damage sustained by the patentee or by any such person, after the grant of the patent, by reason of the infringement.”

[128] It has since been confirmed that a person who is a licensee under a patent is a “person claiming under” the patentee within the meaning of subsection 55(1): Armstrong Cork Canada v Domco Industries Ltd, [1982] 1 SCR 907 at 914; American Cyanamid, above, at paras 31-32.

[129] What is instructive for the present purposes is that while the Act was amended to permit a licensee to sue for infringement, the definition of “patentee” was not amended following the interpretation that it was given in Electric Chain, above.

[130] Moreover, given that Parliament included the words “the applicant for a patent” in clause 53.1(1)(b)(i), but not in the “chapeau” of subsection 53.1(1), it can be inferred that (i) Parliament was aware of the distinction between a patentee and a person who is not the patentee, and (ii) Parliament decided to strictly limit the scope of the “chapeau” to a person who is a patentee.

[131] This interpretation of Parliament’s intent finds some support in the legislative history. In particular, in the submission that IPIC made to the [Senate Banking, Trade and Commerce Committee], discussed at paragraph 123 above, IPIC noted that the language of section 53.1 created a “loophole” that would permit “a patentee to circumvent the operation of this section by acting through a licensee”: IPIC Submission, above, at 12. To address this “loophole”, IPIC recommended that subsection 53.1(1) be amended to include “persons claiming under the patentee”. The specific amendment proposed by IPIC is the underlined wording in the chapeau of that provision:

53.1 (1) In any action or proceeding respecting a patent, a written communication or any part of such a communication, may be admitted into evidence to rebut any representation made by the patentee or a person claiming under the patentee in the action or proceeding as to the construction of a claim in the patent if […]

[132] Ultimately, IPIC’s recommendation was not accepted, and Bill C-86 was passed without any change to the language of subsection 53.1(1). This legislative history provides additional support for the view that, at the time Parliament added subsection 53.1(1) to the Act, it was aware of the distinction between a patentee and a person who is not a patentee, yet it chose to limit the scope of section 53.1 to representations made by patentees.

While Crampton CJ did not rely primarily on the last point, I must say that I find it particularly compelling; this very issue was before the responsible Parliamentary committee, along with a very simple fix, and it was not implemented. The inference that it was considered and rejected is strong, which implies that the “loophole” was specifically intended.

[133] In summary, the plain and ordinary meaning of the language in subsection 53.1(1), together with a contextual reading of the Act and the jurisprudence discussed above, support the view that the word “patentee” in subsection 53.1(1) does not include a licensee. The legislative history also provides some additional support for this interpretation. Sandoz has not identified any contextual consideration to support the alternative interpretation that it has advanced.

While the considerations reviewed by Crampton CJ are textual and contextual, rather than purposive, and there is evidently some kind of purposive argument to be made that this loophole frustrates the operation of the provision, Crampton CJ’s textual and contextual analysis is so entirely compelling that I cannot see that any other conclusion would be possible without an impermissible usurpation of the legislative role.

Sandoz also argued that the prosecution history was admissible entirely apart from s 53.1, relying on the FC decision in Distrimedic 2013 FC 1043 at [210]: [116]. Crampton CJ rejected this argument, in part on the basis that Distrimedic is distinguishable [117]. More importantly Crampton CJ also observed that in light of the bar on the use of prosecution history set out in of Free World 2000 SCC 66 [66], Distrimedic has been “overcome” by the enactment of section 53.1 [115], [118]. I understand Crampton CJ to be saying that the use of prosecution history is now confined to the circumstances set out in s 53.1. This strikes me as undoubtedly correct. Any use of prosecution history in Canada now turns entirely on the interpretation of s 53.1 and any subsequent legislative amendments.

Crampton CJ therefore concluded that “given that no representation has been made by the patentee (Kissei) of the ‘002 Patent in the present action, the file prosecution history is not admissible in evidence in this action. It is barred by the prohibition against extrinsic evidence: Free World, above, at para 66" [133].

Crampton CJ’s holding was driven inexorably by the legislation; he did not necessarily welcome it. On the contrary, he observed “in passing,” that the “file prosecution history in question provides a glaring example of the mischief that is implicitly permitted by the current wording of subsection 53.1(1)” [135]. For those interested in looking at the prosecution history themselves, the documents 02507002 - 2011-08-25 - PRO and 02507002 - 2011-01-19 - PRO emphasize wet granulation to overcome various objections.