Canada's Federal Court of Appeal last week released a decision in Corlac Inc. v. Weatherford Canada Ltd. that makes clear that the failure to respond in good faith to a requisition made during prosecution of the underlying patent application cannot be used to invalidate an issued patent. This decision should be welcomed by patentees, who were concerned about a developing line of law that seemed to import a U.S.-style "inequitable conduct" ground for invalidating patents, which the Court's decision seems to foreclose.
Unless the Supreme Court of Canada grants leave to appeal, the decision should preclude any more patents being invalidated on the basis of the applicant's communications with the patent office during prosecution, short of material misstatements caught by section 53 of the Patent Act. The Court of Appeal's reasoning also strongly suggests that other forms of non-compliance with the requirements of section 73(1) of the Patent Act during prosecution, including non-payment of fees or payment of incorrect fees, will not constitute grounds for invalidating a patent once it has issued.
Section 73(1) of the Act sets out a variety of circumstances in which a patent application is deemed "abandoned" during prosecution, including a failure to (i) "reply in good faith to any requisition made by an examiner;" (ii) respond to certain notices that the Commissioner of Patents can issue in the course of prosecution; or (iii) pay certain types of fees. At the time the Act was amended to include section 73(1), the patent bar understood that it was intended to be a tool that the Commissioner of Patents could use in dealing with applicants that had not complied with a procedural or timing requirement under the Act during prosecution of a patent application. The section gave the Commissioner the express statutory power to deem such an application abandoned; section 73(3), however, gave the applicant the right to reinstate the application within one year of the deemed abandonment.
Notwithstanding the bar's original understanding of the purpose of section 73(1), it was significantly broadened by two trial-level decisions. In G.D. Searle & Co. v. Novopharm Ltd. and Lundbeck Canada Inc. v. Ratiopharm Inc., the Federal Court found that the requirement to "reply in good faith" was not merely an obligation that could be applied during prosecution of an application. Rather, the Court found that an applicant's failure to "reply in good faith" during prosecution allowed the Court to reach back and retrospectively deem the application to have been abandoned, meaning that the patent that had issued from this application would be invalid. This led to a Canadian version of the U.S. inequitable conduct defence, by which infringers or intended infringers could delve into a patent's prosecution history to find an inaccurate or incomplete statement and ask the Court to declare the patent invalid on that basis.
The Federal Court of Appeal, in Weatherford, has put an end to the use of section 73(1)(a) as a ground of patent invalidity. The Court held that section 73(1)(a) is operative during the prosecution of a patent application, but does not apply once the patent has issued. Several reasons were given for this interpretation of this section.
First, the Court provided what appeared to be an exhaustive list of grounds for patent invalidity: "The grounds for attacking the validity of a patent are delineated in the Act. Specifically, they relate to: utility, section 2; novelty (anticipation), section 28.2; obviousness (inventiveness), section 28.3; and sufficiency of disclosure, subsection 27(3). In addition to validity grounds, a patent can be found to be void if the conditions of subsection 53(1) are met." Section 73(1) is not part of this list, and therefore not a ground for invalidating a patent under the Patent Act.
Second, the Court indicated that section 53 of the Patent Act is intended to deal with misrepresentations in a patent that has issued, whereas section 73 is intended to deal with misrepresentations during prosecution, which is not for the Court to determine. It explained the rationale for this: "It is for the Commissioner to determine whether an applicant's response to a requisition from an Examiner is made in good faith, not for the courts. The courts do not issue patents."
Third, the Court made a point of distinguishing between abandonment of a patent application and the invalidity of a patent, stating that the "point of demarcation" between them is the issuance of the patent. Something that might cause a "deemed abandonment" before the patent issues is not relevant to its validity after it has issued.
Finally, to ensure that there is no lingering uncertainty on the status of the good faith requirement as a possible ground of invalidity, the Court took the unusual step of expressly commenting that "[t]o the extent that the Federal Court decisions in G.D. Searle and Lundbeck can be interpreted as standing for the proposition that paragraph 73(1)(a) can be relied upon for the purpose of attacking the validity of a patent, they should not be followed" (emphasis added).
Are There Remaining Questions?
Barring an appeal, this decision is bound to guide future judicial consideration of the other circumstances for which an application may be deemed abandoned under section 73(1). The Court of Appeal's 2003 decision in Dutch Industries v. Commissioner of Patents caused a stir in the patent world by finding that the Commissioner had no jurisdiction to accept late top-up payments from applicants who had paid the wrong maintenance fees, and that their applications would, therefore, be deemed abandoned. This decision gave rise to a debate among patent prosecutors about whether payment of the wrong fees during prosecution could lead to invalidation of an issued patent on the basis of retroactive "deemed abandonment" of the underlying application. In light of the logic employed by the Court of Appeal in Weatherford, it appears much more likely that all of the grounds of deemed abandonment under section 73(1) – and not just the good faith provision in section 73(1)(a) – apply only during the application process and will not invalidate a patent once issued.
2011 FCA 228 [Weatherford].
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.