Canada: Key Developments in Canadian Patent Law in 2010

Over the past year, patent law in Canada has continued to evolve in significant ways. This review discusses seven key developments based on recent Canadian judgments, as well as amendments to the Federal Courts Rules and the Patent Rules.

I. PATENTABLE SUBJECT MATTER

On October 14, 2010, Justice Phelan of the Federal Court released a pivotal decision with the potential to reshape the patent law landscape in Canada for years to come with respect to patentable subject matter.

Patent protection is not available for all types of inventions. For example, higher life forms such as genetically modified mice, as well as methods of medical treatment are not patentable in Canada. In Amazon.com, Inc. v. Canada (Attorney General),, the Court emphatically stated that business methods are patentable subject matter in Canada in appropriate circumstances. This statement represents a marked departure from the recent practice of the Canadian Intellectual Property Office (CIPO), which has made it difficult for applicants to obtain patents for business methods.

In opening the door to business method patents in Canada, the Court in Amazon overturned the decision of the Commissioner of Patents, who had rejected Amazon's patent application for its"one-click" invention as being non-patentable subject matter. Justice Phelan rejected virtually all of the findings of the Commissioner of Patents, including the requirement that an invention be "technological" in nature. Additionally, the Court concluded that with respect to the practical application requirement of a patent, i.e., the requirement that a patent not be a mere idea or abstract theorem, it was sufficient for a machine, such as a computer, to be used to implement the invention, as was the case with Amazon's one-click invention.

Justice Phelan's decision is currently being appealed by the Commissioner of Patents, and a hearing is expected in May 2011.

II. ROLE OF THE PATENT'S DISCLOSURE

Over the last year, Canadian patents have become vulnerable to growing demands on the sufficiency of a patent's disclosure.

In a recent decision in Bridgeview Manufacturing Inc. v. 931409 Alberta Ltd, the Court's heightened focus on a patent's disclosure limited the scope of the invention to the preferred embodiment as found in the disclosure, notwithstanding objectively broader claims. This represents a drastic shift from the traditional view that a claim term should not be limited to the preferred embodiment in the disclosure, and we await to see how the decision is interpreted in future cases.

Another concern, which is particularly pressing for pharmaceutical patents, is the uncertainty over the degree of disclosure required to establish sound prediction when the utility of the invention cannot be demonstrated. In the past, the Supreme Court of Canada has held that to establish sound prediction, details regarding the prediction must be disclosed. This can be a particularly onerous requirement in the pharmaceutical context where extensive testing is often required merely to make a prediction. In Novopharm Limited v. Eli Lilly and Company, the Court dealt with the issue of soundly predicting utility head-on and found that an additional obligation arises. In particular, it was held that failure to include or disclose in the patent the findings of a study used to make the prediction meant that the test for sound prediction was not satisfied.

Prior to 2005, successful validity challenges on the basis of an inadequate patent disclosure were extremely rare. However, the situation has changed. The courts have recently invalidated patents on various grounds, such as failure to disclose what the inventors contemplated as their invention or an overly narrow or insufficient disclosure.

It should also be noted that the heightened focus on a patent's disclosure has created uncertainty extending beyond Canadian borders for inventors seeking uniform disclosure with respect to Patent Cooperation Treaty (PCT) applications and other foreign applications.

III. NO "INVALID SELECTION"

The validity of the "selection patent," which is a type of patent relevant to complex pharmaceutical inventions, has been challenged in recent years. In the 2008 Supreme Court of Canada case Apotex Inc. v. Sanofi-Synthelabo Canada Inc., the Court affirmed that a "system of genus and selection patents is acceptable in principle."

However, in 2010, another generic drug manufacturer took a different approach to challenging the validity of selection patents. In Eli Lilly Canada Inc. v. Novopharm Ltd., Novopharm challenged the validity of the subject patent on the basis that it was an "invalid selection." The Federal Court of Appeal rejected this line of argument, affirming that a selection patent does not in its nature differ from any other type of patent.

As such, it is important to keep in mind that selection patents are not given "special treatment" by the courts and patentees do not need to protect their selection patents against special grounds of attack not available to other patents. The validity of a selection patent is determined on the same grounds as all other patents, including novelty, obviousness, sufficiency of disclosure and utility.

IV. NEW RULES FOR EXPERT WITNESSES

On August 3, 2010, new Federal Court Rules governing expert witnesses and their evidence came into force, representing a drastic change in how expert evidence will be received by the court. The new rules, which were forcefully debated, were proposed to address perceived concerns with expert testimony, including concerns over the independence and objectivity of experts. The amendments hope to clarify the role of expert witnesses in the litigation process and to discourage experts advocating on behalf of a party.

The new rules attempt to streamline the qualification of experts, and provide a code of conduct governing the duties and responsibilities of the expert witness in relation to the courts. The availability of jointly-appointed experts and an expert conference, where experts from all sides can discuss issues amongst themselves prior to trial to potentially narrow the issues for trial, has also been introduced.

The underlying objective of the amendments is to increase co-operation, not confrontation, amongst expert witnesses for the purpose of narrowing issues. However, the new rules inciting most debate are those governing the presentation of concurrent expert evidence, also known as "hot-tubbing." The argument raised is that if experts must put forward their opinions directly against other experts, those with more extroverted personalities may have greater influence over the judge; a result which would thwart, rather than encourage, productive cooperation among witnesses.

To date, no trials have employed an expert hot tub. It remains to be seen how this and the other new procedures will unfold.

V. NEW PATENT RULES

On October 1, 2010, the Patent Rules were amended in several ways for the general purpose of reducing the administrative burden placed on applicants for patents. Amendments include simplifying the definition of the patent "description" to mean the part of the specification other than the claims, consolidating provisions addressing the filing date of a patent, and providing clarity regarding the confidentiality period before a patent is laid open for public inspection.

Of particular note is an amendment to remove the requirement to file a "Declaration of Entitlement" which presented problems for many applicants. Where the inventor is the applicant, he or she must make a statement to that effect. If the applicant is not the inventor, but rather an assignee, such applicant must provide a declaration as the "legal representative" of the inventor. With the amendment, the legal representative declaration is not a completion requirement of the patent application, and, therefore, no deadlines or fees apply to the filing of this declaration. With respect to PCT national phase applications, it is sufficient for the applicant to simply satisfy the PCT regulations.

Ultimately, these amendments make filing applications easier and less costly in Canada.

VI. DOSAGE RANGES AS A METHOD OF MEDICAL TREATMENT

Canadian jurisprudence has long held that methods of medical treatment are not patentable subject matter in Canada. This raises concerns for those seeking pharmaceutical patents claiming a dosage range for a medicinal compound, as such patents can be interpreted as methods of medical treatment.

Indeed, a recent decision by the Federal Court has confirmed this concern. In Janssen Inc. v. Mylan Pharmaceuticals ULC, a patent claimed the dosage administration of a drug over the course of time. The Court found that these claims amounted to an attempt to monopolize the prescribing practices of physicians of a known compound for an established purpose. This was held to be a method of medical treatment and therefore not patentable.

Although the decision is being appealed, it is potentially troubling for applicants drafting patent claims covering dosage ranges over which their drugs are effective.

VII. DISCLAIMERS AND INVALIDITY

In Hershkovitz v. Tytco Safety Products Canada Ltd., the Federal Court of Appeal recently affirmed that a disclaimer can only narrow patent claims, not broaden them . A party generally files a disclaimer subsequent to patent issuance when they believe a portion of what they have claimed may be subsequently invalidated. To avoid the risk of having an entire claim or patent invalidated, the patentee chooses to disentitle itself of only a portion of what it has claimed. However, a patentee may only disentitle itself of a portion of its patent if it can establish that this part of the patent was claimed by mistake, accident or inadvertence, and not by willful intent to defraud or mislead the public.

In Hershkovitz, the Court was faced with a situation where the disclaimer was held to be invalid because it sought to broaden the patentee's claims. According to the Court, in making its disclaimer, the patentee has effectively conceded that its original claim was too broad in scope, and was not permitted to resile from such an admission. Consequently, not only was the patentee's disclaimer invalid, but also the Court held that the original claim was invalid for being overly broad.

This case should serve as a caution for patentees wishing to make a disclaimer. Patentees must be mindful that a disclaimer is an admission that the original claim is invalid, and must ensure that any disclaimer only seeks to narrow a patent claim.

The authors wish to acknowledge the contribution of Tushar Tangri, student-at-law, in the preparation of this article.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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