Eli Lilly's '356 patent claims raloxifene and other
benzothiophenes for use in treating or preventing osteoporosis or
bone loss, particularly in post-menopausal females, and
particularly without eliciting significant estrogenic responses in
primary sex tissues.
For a patent to be valid in Canada, a patent must have
"utility." The inventor must be in a position to
establish utility as of the date the patent is applied for, based
on either demonstrated utility or a sound prediction.
Not surprisingly, at the time Eli Lilly filed its patent, it did
not yet have data demonstrating the utility of the claimed use.
Rather (and as the court observed), the invention was based on a
The court noted that the '356 patent disclosed that:
raloxifene is a known compound having certain known medical
uses in estrogen treatment, and it is known how to make it;
studies on rats with raloxifene showed that bone loss is
prevented with minimal increases in uterine weight; and
studies on post-menopausal women were contemplated and expected
to show that raloxifene is effective in inhibiting bone loss.
The rat studies were positive, but the claim that raloxifene
could have the same effect on women — in particular,
estrogen-deficient, post-menopausal women who suffered from bone
loss — was necessarily based on a prediction.
Eli Lilly conceded that the basis for the soundness of the
prediction was a study it had conducted on 251 post-menopausal
women in Hong Kong; this study showed that raloxifene held promise
as a skeletal anti-resorptive.
The Test for Sound Prediction
The court referred to the decision of the Supreme Court of
Canada in Apotex Inc. v. Wellcome Foundation Ltd
 SCC 77, which provided a three-fold test for the requirement
of sound prediction:
There must be a factual basis for the prediction.
The inventor must have, at the date of the patent application,
an articulable and sound line of reasoning from which the derived
result can be inferred from the factual basis.
There must be proper disclosure.
The Court of Appeal held that when a patent is based on sound
prediction, the disclosure must include the underlying
factual basis for the prediction and the sound line of
reasoning that grounded the inventors' prediction. Because
the prediction in this case was made sound by Eli Lilly's
"Hong Kong Study," the court held that the results of
this study should have been disclosed in the patent itself for
there to have been sufficient disclosure. Eli Lilly's
failure to do so was fatal to its patent.
McCarthy Tétrault Notes:
This is a watershed decision that is particularly relevant to
the filing of patent applications henceforth.
It is not unusual for claimed utility to be based not on
demonstrated utility but rather prediction. This decision now
requires, for the first time, that all data and studies that
constitute the factual basis upon which the prediction is made
should be disclosed clearly in the patent specification itself. In
addition to including this data, patent applications should also
articulate the science, logic and reasoning behind the prediction
as it relates to the data disclosed.
Without both items being clearly set out in the patent
application (i.e., the disclosure and prediction), the patentee is
at risk of having its patent found invalid.
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$314,000 in damages, $66,000 in costs at first instance, plus solicitor-client costs on the appeal (which was found to be "without merit"). In Lam v. Chanel S. de R.L., 2017 FCA 38, the Federal Court of Appeal confirmed these awards for four instances of selling counterfeit CHANEL goods at a Toronto-area mall between 2011 and 2013
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