Canada: The IP Year 2007 In Review: Patents (Part 1)

This first part of The IP Year 2007 in Review covers the year's developments in patents. See parts 2 and 3 for a discussion of trade-marks and copyright.

Following our very successful The IP Year 2006 In Review,¹ rated most popular Canadian article on the MONDAQ® website (www.mondaq.com) in February 2007, Fasken Martineau’s Intellectual Property ("IP") Group is pleased to present The IP Year 2007 in Review. Our synopsis of the year 2007 significant IP related decisions and noteworthy developments in IP law will be helpful and informative for those doing business in Canada since these may affect your rights with regard to patent, trade-mark and copyright protection. Many of these recent developments reflect the ever-changing international aspects of the commerce as well as the influence of technology, electronic media and the internet on IP acquisition, maintenance and enforcement.

A number of interesting patent developments occurred in 2007. Of particular note, recent legislative changes amended the Patent Rules to streamline the patenting process and to provide a mechanism for top-up payments from incorrect small entity status claims. The Canadian Intellectual Property Office ("CIPO") also issued a statement regarding its position on the patentability of electromagnetic and acoustic signals. In a Canadian first, the Commissioner of Patents (the "Commissioner") granted the first licence to a Canadian generic drug manufacturer, to manufacture and export a combination AIDS therapy to Rwanda. In the vein of 2006, judicial activity in 2007 focused mostly on pharmaceutical patent disputes under the Patented Medicines (Notice of Compliance) Regulations ("NOC Regulations").² However, there were also a number of interesting decisions dealing with abandonment and reinstatement of cases.

There were other important developments in the United States in 2007 that will be followed in Canada, including the injunction to stop the most significant amendments to the U.S. Patent Rules in several decades.

Small Entity 2.0: Updating The Patent Rules As of June 2, 2007, there were a number of amendments to the Canadian Patent Rules,³ which attempted to address a number of concerns, most notably ongoing "small entity" concerns and changes to sequence listing requirements.⁴

The Patent Rules now require a small entity declaration submitted either as part of the petition or as a separate document. The declaration must also provide that the applicant believes that it is entitled to pay fees at the small entity level. More importantly, it will now be possible for the Commissioner to provide an extension of time allowing correction of fees mistakenly paid on or after June 2, 2007 at the small entity level. In its October practice notice,⁵ the Patent Office provided a further update with respect to claiming "small entity" status. According to the notice, where a fee (e.g. maintenance fee) is paid at the small entity level after June 2, 2007, CIPO will only accept that fee if there is either a signed small entity declaration on file or a signed small entity declaration is filed concurrent with that fee payment. More importantly, CIPO now takes the position that if the fee is required to maintain a patent application or issued patent in good standing and the fee is paid at the small entity level without there being a signed small entity declaration on file, the patent application or issued patent will be considered abandoned and must be reinstated on or before the one year reinstatement period. CIPO will not identify all cases where a previously filed declaration is inadequate and thus will not be taking the active step of rejecting the payment.

Whereas prior to June 2, 2007, any changes in title or ownership that occurred prior to the filing of an application for a patent required evidence such as an assignment, applicants now need only provide a declaration indicative of the chain of title events. We recommend that applicants still file assignment documents with CIPO as a means of maintaining a complete chain of title with CIPO.

The Canadian format for sequence listing has now been amended to comply with the Patent Cooperation Treaty standard provided under the World Intellectual Property Organization ("WIPO").

Patent Office Practice Regarding Signals In its August practice notice,⁶ CIPO indicated its position on claims to electromagnetic and acoustic signals. According to CIPO, electromagnetic and acoustic signals are forms of energy and do not contain matter even though the signal may be transmitted through a physical medium. As such, electromagnetic and acoustic signals do not constitute statutory subject matter within the meaning of the definition of invention in section 2 of the Patent Act.

Canadian Drug Help May Be on The Way In 2005, Canada was one of the first countries to amend its Patent Act⁷ and the Food & Drugs Act⁸ to include provisions whereby a manufacturer could produce patented pharmaceutical products for export to countries experiencing public health crises under the Canadian Access to Medicines Regime Program ("CAMR").⁹ The goal of CAMR was to assist under developed and developing countries with little or no pharmaceutical manufacturing capacity to have access to drugs to combat HIV/AIDS, tuberculosis, malaria and other diseases. As one of the first countries to enact such a regime, Canada created a model for addressing the problems created by the intersection of significant public health issues and patent rights for pharmaceutical products. These 2005 amendments set out a mechanism whereby an applicant can apply for and be granted an "authorization" to make, construct and use a patented invention solely for sale or export to specified countries. The authorization once granted is valid for a period of two years, is nonexclusive, is non-transferable, and is renewable for a further two-year period.

In another Canadian first, the Commissioner granted the first licence to Canadian generic drug manufacturer Apotex under CAMR in September to manufacture and export APOTRIAVIR^TM, a triple combination AIDS therapy, to Rwanda.¹⁰

No Revival Of Dead Applications After Failure To Make Payments Within Reinstatement Period In Harry O. Wicks v. The Commissioner of Patents,¹¹ the Federal Court found that curative provisions of the Patent Act provide a remedy for deficient payments only, not for the failure to pay the applicable government fee. As noted in last year’s Review,¹² Section 78.6 of the Patent Act came into force on February 1, 2006 to address the harshness of the Dutch Industries decision, and allowed a one-year window of opportunity (extending from February 1, 2006 to February 1, 2007) for patent holders and applicants to "fix" their applications by topping up their payments. This window of opportunity is now shut, but CIPO has introduced new regulations to address deficient fee payments as noted above.¹³

In Wicks, the applicant of a number of abandoned Canadian patent applications attempted to revive them by arguing that Section 78.6 of the Patent Act applied retroactively to cure missed maintenance fee payments. The applicant failed to pay annuity fees and, as a result, the patent applications were deemed abandoned. Within one year of the deemed date of abandonment, the applicant submitted a form claiming small entity status and requested reinstatement of the patent applications submitting the appropriate fees as a small entity. When the applications were later abandoned again, the applications were not revived and were allowed to lapse.

In order to revive the cases, the applicant argued that the maintenance fee payments should have been made at the large entity rate all along, and the enactment of subsection 78.6(1) provided a remedy by allowing a one-year window of opportunity for patent holders and applicants to "fix" their applications by topping up their payments, thereby allowing for the reincarnation of the dead patent applications.

In refusing to allow the revival, the Federal Court found that the applicant could not bring himself within the purview of subsection 78.6(1) since "[i]t is evident that section 78.6, on its face and in accordance with Parliament’s intent, was enacted to remedy the harsh effects of the Dutch Industries decision…. If the applicant had continued to pay small entity maintenance fees, albeit in error (as a result of Dutch Industries), the applicant would come within the purview of section 78.6."

Last Minute Reprieve For Controversial Amendments To U.S. Patent Rules In a surprising turn of events, the U.S. District Court for the Eastern District of Virginia delivered what is perhaps the most significant ruling in U.S. patent law this year.¹⁴ That Court granted GlaxoSmithKline's motion for a temporary restraining order and preliminary injunction to prevent the U.S. Patent and Trademark Office ("USPTO") from implementing its contentious amendments to the U.S. Patent Rules.¹⁵ The retroactive amendments were set to be implemented on November 1^st, 2007.

The amendments are significant in that they restrict the number of claims as well as the number of patent applications that can be filed to the same invention as well as the total number of claims. While in the past, there was no limit on the number of applications that could be filed in a patent family, the amendments restrict the number of applications to one original application and two continuations or continuations-in-part as well as restricting an applicant to only a single request for continued examination. The new rules also restrict applicants to no more than five independent claims and 25 claims in total. The USPTO will not only consider the total number of claims directed towards an invention disclosed in a single specification, but will consider all the claims of any co-pending application containing one claim that is not patentably distinct from a claim in a different application.

GlaxoSmithKline filed a preliminary injunction to stop the amendments coming into force before their effective date. On October 31, 2007, the U.S. District Court delivered an oral decision temporarily enjoining the USPTO from implementing the new rules. Therefore, the changes to the rules did not go into effect on November 1^st, 2007 and the USPTO employees were instructed to continue processing and examining patent applications under the rules and procedures in effect on October 31, 2007, until further notice.

Of course, this decision is only preliminary. Further hearings have been set for mid February next year and it is possible that there will be a decision in late winter or early spring. Since it can be expected that the unsuccessful party will appeal, it is conceivable that the ultimate fate of the new rules will not be determined until summer 2008. If this hasn’t been done already, we strongly recommend that applicants begin working with their patent counsel as soon as possible to devise strategies for protecting their inventions in the event the new rules are implemented.

Broadening the Test: Considering Obviousness in the United States While strictly speaking not a Canadian decision, the decision of the U.S. Supreme Court in KSR International Co. v. Teleflex Inc. may have an impact on Canadians trying to obtain patent protection in the United States. In this case, KSR International Co. challenged the validity of Teleflex’s patent directed to adjustable pedal technology. The Court of Appeals for the Federal Circuit had employed the traditional "TSM test" (i.e. teaching, suggestion or motivation) under which a patent may be obvious only if the prior art, the nature of the problem or the knowledge of a skilled person revealed some motivation or suggestion to combine the prior art. The U.S. Supreme Court noted that the Court of Appeals had applied the TSM test too strictly. More importantly, the U.S. Supreme Court noted that a court, when considering obviousness "…must ask whether the improvement is more than the predictable use of prior art elements according to their established functions". To achieve that "…it will often be necessary to look at interrelated teachings of multiple patents; to the effects of demands known to the design community or present in the marketplace; and to the background knowledge possessed by a person having ordinary skills in the art." By effectively broadening the field of inquiry, it may now be easier to invalidate U.S. patents or U.S. patent application on the arguably more expansive test of obviousness under U.S. patent law.

In an attempt to provide some clarity, the USPTO released guidelines in late 2007 as to how examiners are to apply the new obviousness test in view of KSR International when considering patent applications.¹⁶

Maintaining A Narrower Approach: Considering Obviousness In Canada While the U.S. Supreme Court appears to be broadening the test for obviousness in the United States, Canadian courts appear to be maintaining a narrower approach under Canadian law. In an appeal of the 2006 decision of the Federal Court of Canada, the Federal Court of Appeal reviewed and considered the obviousness test in Canada.

In Novopharm Limited v. JanssenOrtho Inc.,¹⁷ the Court of Appeal listed six principal factors and two secondary factors when considering obviousness. According to the Court, this list was "…a useful tool, but no more. It is not a list of legal rules to be slavishly followed; nor is it an exhaustive list of the relevant factors." In each case, obviousness should be determined on the basis of the evidence, sound judgment and reason, and the weight, if any, to be given to the listed factors and any additional factors that may be presented. The Court of Appeal noted that catchphrases, such as "worth a try", "directly and without difficulty" and "routine testing" are not to be treated as if they are rules of law. The principal issues include (a) considerations of what is the invention (i.e. what is claimed as construed by the Court); (b) the skills possessed by the hypothetical person skilled in the art; (c) the knowledge of that person; (d) the climate in the relevant field at the time the alleged invention was made; (e) the motivation at the time of the alleged invention to solve the recognized problem (e.g. the reason why the claimed inventor made the claimed invention, or it may mean the reason why one might reasonably expect the hypothetical person of ordinary skill in the art to combine elements of the prior art to come up with the claimed invention); and (f) the time and effort involved in the invention. The secondary factors, which may be relevant, generally bear less weight because they relate to facts arising after the date of the alleged invention and include: (a) commercial success; and (b) meritorious awards.

Following the Novopharm case, the Federal Court in Pfizer Canada Inc. v. Apotex, Inc.¹⁸ also considered the obviousness factors outlined above. The patent at issue was directed to the use of sildenafil (VIAGRA^TM) for erectile dysfunction. Despite the caution about "catchphrases", the Court was of the view that the prior art taught only that it was "worth a try" to use oral sildenafil as a treatment for erectile dysfunction, which is not enough to constitute obviousness in Canada.

U.S. Supreme Court Limits The Extraterritorial Reach of U.S. Software Patents In a significant patent decision, the U.S. Supreme Court dealt with the issue of whether Microsoft was liable for damages for patent infringement on a worldwide basis under the U.S. Patent Act.¹⁹ In Microsoft Corp v. AT&T Corp, the issue revolved around whether Microsoft’s liability under U.S. patent law extended to computers made in another country when loaded with WINDOWS™ software copied abroad from a master disk or electronic transmission dispatched by Microsoft from the United States. While this case deals with a specific section of the U.S. Patent Act, and applies to allegedly infringing exporting activity carried out in the U.S., it will nevertheless be of interest to Canadian technology companies with research and development facilities based in the U.S. and elsewhere.

AT&T held a U.S. patent on a computer used to digitally encode and compress recorded speech, and had brought a patent infringement suit against Microsoft alleging that Microsoft’s WINDOWS™ operating system included code that when loaded into a computer would render the computer capable of infringing AT&T’s patent. In the lower courts, Microsoft was found to infringe AT&T’s patent for installing the WINDOWS™ operating system on its own computers during its software development process in the U.S., and also for inducing infringement by licensing the operating system to manufacturers of computers sold in the U.S. However, in addition to damages for infringement within the U.S., AT&T sought damages from Microsoft for each computer running the WINDOWS™ operating system overseas, on the basis that Microsoft had exported a component of a patented invention for combination abroad in contravention of the U.S. Patent Act. The Court of Appeals for the Federal Circuit had affirmed that software could be a "component" of a patented invention and that software replicated abroad from Microsoft’s master version exported from the U.S. was caught within the U.S. Patent Act, thereby effectively extending the reach of AT&T’s U.S. patent to encompass foreign sales of Microsoft’s WINDOWS™ operating system.

In overturning the lower court, the U.S. Supreme Court held that "[t]he master disk or electronic transmission Microsoft sends from the United States is never installed on any of the foreign-made computers in question. Instead, copies made abroad are used for installation. Because Microsoft does not export from the United States the copies actually installed, it does not ‘suppl[y]… from the United States’ ‘components’ of the relevant computers, and therefore is not liable under §271(f) as currently written." According to the U.S. Supreme Court, the "…presumption that United States law governs domestically but does not rule the world applies with particular force in patent law. The traditional understanding that our patent law ‘operate[s] only domestically and d[oes] not extend to foreign activities,’ is embedded in the Patent Act itself, which provides that a patent confers exclusive rights in an invention within the United States."

With this decision, the U.S. Supreme Court appears to have clarified the limits of extraterritorial reach of U.S. software patents, based on a technical interpretation of whether the master disk itself was ever used for installation abroad. Canadian companies with global operations should, however, continue to be alert to how the U.S. Patent Act may be interpreted when patented software code is shared between their research and development operations in the U.S. and elsewhere.

No Discretion to Refuse A Disclaimer Filed by a Patentee The Patent Act provides that a patentee may narrow the scope of its patent by effectively disclaiming a portion of the issued claims.²⁰ In Richards Packaging Inc. v. Canada (Attorney General),²¹ the Federal Court concluded that the Commissioner has no discretion to refuse entry or recordal of disclaimers. In this case, the applicant, Richards Packaging Inc., filed a disclaimer with respect to its Canadian patent but the CIPO refused to consider the disclaimer on the basis that the proposed amended claims would result in claiming more than what was originally protected in the patent. The Federal Court, in overturning the commissioner, held that although it is a possibility that a disclaimer filed by the patentee may be defective and thus subject to litigation, the words of the Patent Act are clear and unambiguous and provide no discretion to refuse to accept the filing or recordal of an applicant’s disclaimer. The Court affirmed that that the Patent Act "…does not empower the Commissioner to make any decision; nor does it vest him with any discretion; it merely imposes on him the duty to record certain documents."

Avoiding "Self-Inflicted Wounds" In The Specification The Federal Court of Appeal has affirmed that claim ambiguity is resolved by determining the intention of the inventor. This case illustrates the importance of drafting both the patent specification and claims with a view to covering as many possible scenarios as possible.

In Astrazeneca AB et al. v. Apotex Inc.,²² AstraZeneca AB and AstraZeneca Canada Inc. were seeking an order prohibiting the Minister of Health (the "Minister") from issuing a notice of compliance ("NOC") to Apotex Inc., with respect to Apotex’s omeprazole tablets. The claim at issue covered an oral pharmaceutical dosage form comprising, inter alia, a core material containing a proton pump inhibitor and an alkaline reacting compound. Apotex’s formulation used omeprazole as both the proton pump inhibitor and the alkaline reacting compound. Apotex argued that the grammatical structure of the claim made it clear that the proton pump inhibitor and the alkaline reacting compound are two separate components. The patentee, on the other hand, argued that one compound could fulfill both roles as the claim did not preclude both functions in one compound and to do so would be "…tantamount to asking the Court to read in additional requirements that are not present on a fair reading of the claim."

In following well known Canadian jurisprudence that claims are to be interpreted in a "purposive" fashion,²³ the purpose of the patent, based on the disclosure and expert testimony, was that the two functions are to be found in separate and discrete components. "Such a construction is sympathetic to the accomplishment of the inventor's purpose, expressed or implicit, in the text of the claims and it does not require that anything be read in. If the inventor has misspoken or otherwise created an unnecessary or troublesome limitation in the claims, it is a self-inflicted wound." On appeal, Astra argued that the trial judge, having recognized that the recited language could include a single substance that functions as both a proton pump inhibitor and an alkaline reacting compound, was not entitled to consider any other interpretation. The Federal Court of Appeal, however, found that when faced with such an ambiguity, the trial judge properly considered the language of the patent claim and the disclosure, informed by a detailed analysis of conflicting expert evidence.

Undertaking Avoids Infringement of "Use" Claims By offering an undertaking not to sell their drug product for patented uses, Apotex avoided infringement of Pfizer’s "use" patents. In Pfizer Canada Inc. v. Canada (Health),²⁴ Pfizer had obtained a patent directed to the treatment of cardiac and vascular hypertrophy and hyperplasia by administration of angiotensin converting enzyme ("ACE") inhibitors. Apotex in its product monograph for APO-QUINAPRIL^TM, an ACE inhibitor, indicated that it is "…intended to be used for both hypertension and congestive heart failure." In its Notice of Allegation ("NOA"), Apotex undertook that it would "… ensure that the only indication is for treatment of hypertension and that any use for treatment of cardiac and/or vascular hypertrophy, and/or hyperplasia [would be] excluded."

Pfizer argued that the use of the undertaking noted above was not permitted under the NOC Regulations. Pfizer contended that in view of the nature of the diseases, the use of the Apotex’s product would infringe Pfizer "use" patent. As noted in last years Year In Review, it is well established that incidental treatment of a patented use through the administration of medicine to treat a non-patented use is not grounds, on its own, to prohibit the grant of the NOC; something more was needed.²⁵ According to Pfizer that "something more" in this case, was the product labels and draft product monograph which would induce infringement.

According to the Court, the undertaking provided in the NOA was a complete answer to infringement. Secondly, if physicians engage in "off label" use by prescribing Apotex’s product for something other than the approved use, Apotex can only be said to infringe Pfizer’s patent if it is implicated in inducing the infringing use by a physician or pharmacist. There was no evidence that Apotex would "…actively induce physicians to prescribe quinapril pills to treat hypertrophy." As such, the Court dismissed Pfizer’s application and allowed Apotex’s NOC provided that the undertaking was included.

Need to Put Your "Best Foot Forward" For Proceedings Under Noc Regulations In 2007, the Federal Court attempt to limit pharmaceutical litigation under proceedings involving the NOC Regulations.²⁶ In a series of decisions both at the appellate and trial level, the Federal Court applied the doctrine of estoppel in several cases to deny the right of parties to bring forward new arguments on the validity of patents where they previously had opportunities to present such arguments and had failed to do so.

In Pharmascience Inc. v. Canada (Health), ²⁷ the Federal Court of Appeal upheld a lower court decision where Pharmascience was attempting to raise, for a second time, the issue of invalidity of a patent by relying on grounds of invalidity not brought forward in previous proceedings. The lower court held that Pharmascience was precluded by the doctrine of estoppel from relying on the allegations in a second NOA regarding the patent and prohibited the Minister from issuing an NOC to Pharmascience. On appeal, the Court of Appeal held that generic drug manufacturers should be precluded by the doctrine of estoppel from alleging for a second time that a patent is invalid, even on new grounds, unless the basis relied upon for the subsequent allegation could not be determined with reasonable diligence at first instance, or some special overriding circumstance exists to warrant a judge exercising discretion not to do so. In essence, a party must "put its best foot forward by raising all arguments with respect to an issue at first instance."

Similarly, in Sanofi-Aventis v. Pharmascience et al,²⁸ Pharmascience unsuccessfully alleged invalidity of Sanofi’s patent on the basis of double patenting. Other generics were subsequently successful in challenging the patent on the basis of lack of sound prediction.²⁹ Pharmascience then tried to follow on the successful invalidity findings. Relying on the first Pharmascience case noted above,³⁰ Sanofi-Aventis argued that Pharmascience should be estopped from alleging the invalidity of its patent in the second NOC proceeding. Pharmascience submitted that the decisions of the court in favour of the other generic companies constituted a change in the law which allowed the Court to exercise its discretion not to apply the principle of issue estoppel. In addition, Pharmascience provided that it would be unfair if it were the only generic that was unable to benefit from the decisions that invalidated the patent.

The Federal Court applied the principle of issue estoppel which was applicable even though the issues were not exactly the same. In finding that the previous decisions did not constitute a change in law, the Court concluded that Pharmascience had to live with its strategic decision to move quickly as it should have known that it would have been precluded from advancing other grounds of invalidity.

But the burden to deliver the best arguments not only lies on those alleging invalidity of a patent. In Sanofi-Aventis Canada inc. v. Novopharm et al.,³¹ the main issue related to the scope of the principle of abuse of process. In previous NOC proceedings involving Apotex, Sanofi-Aventis failed to persuade the court that Apotex’s allegation of invalidity on the basis of lack of sound prediction was unjustified. Novopharm then alleged invalidity on the basis of lack of sound prediction. In response, Sanofi-Aventis filed additional evidence to that filed in the Apotex case. Novopharm successfully moved to dismiss Sanofi-Aventis’s application on the ground that it constituted and abuse of process since the issue of lack of sound prediction had already been decided in the earlier case and Sanofi-Aventis’ intention was to relitigate this issue.

In upholding the lower court’s decision, the Court of Appeal found that the issue of lack of sound prediction was an issue of fact and that unlike a question of law, one court’s finding of facts is not binding on another judge considering a similar issue. Nonetheless, the majority held that Sanofi-Aventis, who had control over the evidence, could not hold back evidence in the first proceeding and use it in a second one in relation with an issue that is virtually the same. Sanofi Aventis had to put its best foot forward in the earlier proceeding.

Based on these decisions, it can be expected that generic manufacturers will take no chances and allege any ground of invalidity possible in their NOA and that, as a corollary, the patent holders will file the strongest evidence they can against the first generic in an NOC proceeding. Since it is typical of the NOC proceedings to involve various generic companies, one can expect that these will be filing motions for summary judgements on the basis of abuse of process when issues can be found sufficiently similar between two proceedings.

Challenges to the Data Protection Regulations As reported in our The IP Year 2006 In Review,³² the Regulations under the Canadian Food & Drug Act³³ (the "Data Protection Regulations") were amended in 2006 to provide increased "data protection" for information submitted pursuant to regulatory approval. Shortly thereafter, two separate actions were initiated challenging the validity of these amendments. In Apotex Inc. v. Canada (Governor in Council³⁴ and Canadian Generic Pharmaceutical Association v. Canada (Governor in Council)³⁵, Apotex and the Canadian Generic Pharmaceutical Association challenged the legislation on the basis that these Regulations were ultra vires the enabling legislation, namely subsection 30(3) of the Food and Drugs Act.³⁶

In the Canadian Generic Pharmaceutical Association case, the Association filed an application for judicial review seeking an order that the 2006 amendments were ultra vires. The Federal Court found that it was the decision to enact the Data Protection Regulations that was being challenged, not a specific decision with respect to a specific drug submission. In other words, the Court was "…being called upon to determine the validity of the Regulations in a factual vacuum." The Government moved for an order striking the judicial review proceedings on the grounds that the Association had no standing as it is not a drug manufacturer and the Data Protection Regulations cannot possibly apply to it. The Court dismissed the motion on the basis that the Association had raised serious issues and it was not plain and obvious that it lacked standing in its own right or as representing a class of litigants.

In Apotex, the Government was more successful with its motion for an order striking out the application and dismissing the proceeding on the basis that Apotex had no standing to make this judicial review application. Unlike the Canadian Generic Pharmaceutical Association case, the Federal Court found that such an application could only be made by a person directly affected. Until the situation arises in which a manufacturer (e.g. Apotex) has sought a NOC and the Minister has acted on it, or refused to act on it, pursuant to the Data Protection Regulations, the "matter" will have no direct effect, and no party will be directly affected.

In November, the Court of Appeal issued decisions in both cases.³⁷ In considering the Canadian Generic Pharmaceutical Association case, the appeal was dismissed while the appeal was successful in Apotex. In Apotex, the Court of Appeal found that it was unclear how Apotex could seek a NOC since the NOC Regulations require Apotex to file a submission while the Data Protection Regulations prohibit Apotex from filing an NDS or ANDS until six years after the date of the first NOC issued to the innovator’s drug. As a result, the Court found that it was not plain and obvious that Apotex was not directly affected by the Data Protection Regulations therefore allowing the appeal.

Only Failure to Materially Reply in "Good Faith" Leading to Abandonment As reported in last year’s Review,³⁸ the Federal Court of Appeal in Pason Systems Corp. v. Varco Canada Limited held that failure to respond to the Examiner’s prior art requisition could be considered a failure to "act in good faith" before the Patent Office. The Patent Act provides that an application will become abandoned should an applicant not reply in good faith to any requisition made by an Examiner.

The Federal Court, in G.D. Searle & Co, v. Novopharm Limited,³⁹ again considered this issue in deciding whether the failure to respond to an Examiner’s prior art requisition could fall under section 73(1)(a). Novopharm alleged that Searle’s Canadian patent was invalid, as Searle misled the Examiner by stating the European Patent Office ("EPO") had allowed more of the claims than it actually had, and by misrepresenting particulars about a reference disclosed prior to the filing date of the patent. The Court found that the failure to correctly state which claims had been allowed by the EPO was not material, and that evidence of intent was lacking, as the only claims remaining in issue for the Canadian patent had, in fact, been allowed by the EPO and that Searle had later provided the correct information. However, the Court concluded that Searle’s failure to disclose the particulars of the published reference was not acting in "good faith"; therefore, the application had been abandoned and the patent was invalid.

The Federal Court of Appeal⁴⁰ reversed this finding and reinstated the patent, on the basis that the disclosed reference was not material to patentability as it had been made by the applicant, and therefore was entitled to the "grace period" of one year under Canadian law. As such, no disclosure was required.

Missing a Minor Prior Art Requisition Can Have Major Consequences The decision in DBC Marine Safety Systems Ltd v. the Commissioner of Patents et al.⁴¹ underscores the importance of complete responses to each and every requisition by Canadian patent examiners. Following on the heels of G.D. Searle & Co., the Federal Court held that when there is a complete failure to reply to a requisition, there cannot be a reply in "good faith".

During prosecution of the subject patent in DBC Marine, the Patent Office issued an office action in which there were a number of requisitions, including a call for the "…identification of any prior art cited in respect of the United States and United Kingdom applications describing the same invention on behalf of the applicant… ." The applicant had no connection to the U.K. application to which the requisition referred; the document had been referenced in another pending Canadian patent application for a similar invention. The requisitioned information for the corresponding U.S. application was either already before the examiner in the application materials or was readily available to him through online access to the USPTO.

The Applicant’s patent agent responded to all of the requisitions in the official action, but inadvertently omitted a response to the request for the prior art. As a result, the application was deemed abandoned for the failure to completely respond to each requisition. Subsequently, the applicant paid and CIPO accepted a maintenance fee payment without providing the applicant with a courtesy notice indicating that the application was considered abandoned. Once the abandonment was identified, the applicant attempted to reinstate the application by providing a reply to the earlier requisition. The request was rejected by the Commissioner on the basis that CIPO did not have the discretion to reinstate an application after the reinstatement period had expired. Upon judicial review of the Commissioner’s decision, the Federal Court held that, while the Patent Office erred in failing to follow their normal practice of providing a timely "courtesy" notice, the applicant was not relieved of its legislated obligations nor could it avoid the legal consequences of failing to satisfy those obligations, even though CIPO did not follow its guidelines. Consequently, the application was abandoned by operation of law and the Court was unable to provide a remedy.

How Sweet it is: The Saccharin Doctrine in Canada Applies to Products Based on earlier U.K. case law, the Saccharin doctrine provides that there is patent infringement in Canada where a patented process is used in the production of a substance that was then imported into Canada for sale, provided, however, that the use of the patented processes in the production was not "merely incidental". In Pfizer Canada Inc. v. Canada (Health),⁴² the Federal Court extended this doctrine to apply not only to processes but also to products.

Ranbaxy Laboratories Limited, manufacturing its atorvastatin (LIPITOR^TM) in India, applied for NOC approval to sell in Canada. In contesting the issuance of Ranbaxy’s NOC, Pfizer Canada Inc. contended that Ranbaxy used a patented intermediate in its process to make the amorphous material contained in its formulation and thus infringed under the Saccharin doctrine. Ranbaxy argued that there could be no infringement since the Saccharin doctrine should be limited to process claims and could not be extended to products that are used as intermediates.

The Federal Court, however, held after reviewing the "evolving jurisprudence", focus should be "… on whether the inventor has been deprived, even in part or even indirectly, of the full enjoyment of the invention." The Court went on to state that "… as a matter of Canadian law, the Saccharin doctrine is not limited to process claims." In addition, "…there must be a strong link established between the use of the patented process or product and the product sold into Canada." As the function of the intermediates was not incidental in this case, the Federal Court held that the use of the intermediate in India constituted infringement.

Third Parties Have Limited Role in Re-Examinations Re-examination is a process by which any person may request post-issuance examination of any claim of an issued patent.⁴³ According to the Federal Court of Appeal in Genencor International Inc. v. Commissioner of Patents,⁴⁴ third parties may initiate the process but they have no right to be involved in the process.

A re-examination of Genencor’s patent was requested by Novozymes in which Novozymes argued its patent anticipated the claims of the Genencor patent. The Patent Re-examination Board ("PRB") concluded that all of the claims of Genencor's patent were indeed anticipated by Novozymes’ patent and issued a certificate cancelling all the claims. When Genencor appealed the PRB decision, Novozymes sought to be added as respondent.

In denying respondent status to Novozymes, the Federal Court of Appeal reiterated that re-examination is a two step process. The first step involves the filing of a request for re-examination by a requester followed by the establishment of the PRB and a preliminary assessment of the request. Once the PRB has established that there is a question as to patentability, the second step involves the patentee, who is given notice of the determination and is entitled to make submissions (e.g. amendments) after which the PRB proceeds to re-examine the claims. Although a third party can trigger the re-examination process, it cannot, according to the Court of Appeal, participate in the second step. The Patent Act did not intend that parties requesting re-examination participate in any process nor did it intend to such parties a role in subsequent appeal.

Having been denied party status, Novozymes then sought intervener status in 2007.⁴⁵ In applying the test for intervener status, the Federal Court found that, although Novozymes pecuniary interests may be sufficient in an impeachment action pursuant to the Patent Act, such economic interest is not a direct legal interest. The impeachment action would therefore be the appropriate vehicle for Novozymes to submit the question to the Court and, as such, denied intervener status.

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