Short Blogging Break

I’ve fallen behind in my blogging as I’ve been struggling to understand the shocking majority decision in Nova v Dow 2022 SCC 43 — and now exam time is upon me. I’ll try to post something short on Nova v Dow next week, with a longer piece to follow. Then I’ll follow up with posts on some of the other decisions I have missed.

Validity of Non-asserted Claims May Be Attacked in NOC Action

Janssen Inc v Apotex Inc 2022 FCA 184 Locke JA: Mactavish, Monaghan JJA affg Janssen Inc v Apotex Inc 2021 FC 7 Phelan J

2,661,422 / abiraterone acetate & prednisone / ZYTIGA / NOC / FC Expectation of Success

In this decision, the FCA affirmed Phelan J’s holding (see here) that Janssen’s 422 patent, relating to the combination of abiraterone acetate (AA) and prednisone (PN) for the treatment of prostate cancer, was invalid for obviousness. Phelan J also held that the 422 patent was not invalid for lack of utility, and that it would have been infringed by inducement if it had been valid, but the only issue addressed on appeal was obviousness [8]. The main point of legal interest is the holding that the Federal Court has jurisdiction in a PM(NOC) proceeding to hear a counterclaim attacking the validity of claims that are not asserted in the action, at least on agreement by the parties.

Phelan J’s obviousness analysis turned on the facts, and the FCA affirmed on the same basis: see [31]–[32] finding there was a sufficient factual basis for the key obviousness finding. There were two “palpable” errors in the decision [24], [35], but reading the decision as a whole, Locke JA considered that the errors did not reflect any error in Phelan J’s appreciation of the evidence; both were merely a “slip of the pen” [26], [35]. In another slip of the pen in both the decision [FC 261] and the Judgment itself [56], Phelan J had erroneously dismissed the counterclaim, even though he had found the claims to be invalid. Locke JA accordingly ordered that the Judgment be amended to grant the counterclaim, reflecting the Judgment that Phelan J should have made [58].

Janssen had argued that Phelan J had erred in treating a particular statement in the 422 patent as a binding admission [19], but Locke JA found that Phelan J had not in fact treated the statement as a binding admission, and therefore it was unnecessary to address the circumstances under which an admission in a patent will be binding on the patentee [22].

On the procedural point, Phelan J had also made orders allowing a late addendum to an expert report addressing claims that were not asserted by Janssen, and also allowed an amendment to the counterclaim challenging the validity of the non-asserted claims. In a separate appeal, Janssen v Apotex 2022 FCA 185 (not blogged) the FCA affirmed these orders. While Phelan J’s decision is not entirely clear, it seems that he held the non-asserted claims to also be invalid, as being “essentially the same” [FC 118] as the asserted claims. While Phelan J’s Judgment is not appended to his reasons that are available online, he apparently consequently ordered the 422 patent to be removed from the Patent Register [1], [56].

Janssen challenged this on the basis that the Federal Court does not have jurisdiction under s 6(3)(a) of the PM(NOC) Regs to address non-asserted claims [40]. Locke JA concluded that Phelan J had assumed jurisdiction to address the non-asserted claims on the basis that Janssen had consented to counterclaim [44]. Locke JA therefore addressed the question of “whether such a counterclaim is permitted with leave. As did the Federal Court, I will leave for another day, the question of whether a defendant in an action under subsection 6(1) may make such a counterclaim by right” [46, original emphasis]. Locke JA noted that there were reasonable arguments to be made on either side of the question [49], but after a review of the text, context (including the RIAS) and purpose of the legislation, Locke JA concluded that “In my view, the intention of the Regulations is to leave to the Federal Court the discretion to permit a counterclaim under subsection 6(3) that includes non-asserted claims” [54]. I note that Phelan J apparently based his decision to consider the counterclaim on the “consent” of Janssen [FC 232], [FC 235], but the FCA has held that a counterclaim including non-asserted claims is permitted at the discretion of the Federal Court. Janssen’s consent is evidently not required, but is simply one factor that the Federal Court may consider in the exercise of its discretion.