Canada: Good Faith In Patent Prosecution, A Canadian Perspective

Last Updated: October 17 2011
Article by Donald H. MacOdrum

Introduction

In the United States, judge-made doctrines of inequitable conduct in the Patent Office which could render a patent unenforceable have been a significant factor in increasing the cost and length of patent litigation in that country. In Therasense v Becton, Dickinson,1 the United States Court of Appeals for the Federal Circuit referred to the inequitable conduct doctrine as the "atomic bomb" of patent law.

In Canada, we have to date been largely spared the negative effects of such a doctrine.

Prior to 1996, it was settled that, in the absence of proof of fraud, the validity of a patent could not be challenged on the basis of failings of or on behalf of the patentee during prosecution of the patent application and in no case was enforcement of the patent refused on the basis of "inequitable conduct" during the patent application process.

As part of extensive amendment of the Patent Act effective October 1, 1996, section 73(1)(a) was introduced. It provides that an application for a patent in Canada shall be deemed to be abandoned if the applicant does not reply in good faith to any requisition made by an examiner in connection with an examination, within six months after the requisition is made or within any shorter period established by the Commissioner. An application which is deemed to be abandoned can be reinstated if the applicant requests reinstatement, takes the action that should have been taken in order to avoid the abandonment, and pays the appropriate fee within 12 months from the date of deemed abandonment.2

Two decisions of the judges of the Federal Court3 asserted a more general duty of good faith, supported in part by the reference to "good faith" in s. 73(1)(a), raising the spectre that we were headed down the US–style road of battles over the prosecution of the patent application in Canadian patent litigation.

In Weatherford v Corlac,4 the Federal Court of Appeal affirmed a decision of another Federal Court judge that s. 73(1)(a) was applicable only while the application was in the Patent Office and did not provide a post-grant basis for finding a patent to have been deemed to be abandoned.

This was a highly welcome decision. Patent litigation can be long and expensive as it is without introducing into Canadian law challenges based on patent prosecution acts or omissions which do not rise to the level of fraud.

However, an application for leave to appeal to the Supreme Court of Canada from the decision of the Federal Court of Appeal has been filed.5 Thus it remains to be seen whether the Supreme Court will take up this issue or leave it as determined by the Federal Court of Appeal.

Background

It has long been held that defects in the prosecution could not affect the validity or enforceability of an issued patent in the absence of fraud. In Fada Radio Limited v Canadian General Electric,6 Anglin CJC confirmed this view:

... [W]e are satisfied that any insufficiency in the material on which the Commissioner acts ... cannot, in the absence of fraud, which in this instance has not been suggested, avail an alleged infringer as a ground of attack on a new patent issued under s. 24. It is not a "fact or default, which, by this Act, or by law, renders the patent void" (Patent Act, s. 34). The recital of the patent that the applicant as assignee of the Langmuir patent no. 196,390, "has complied with the requirements of the Patent Act" is conclusive against the appellant in the absence of fraud.

The wording of the current patent grant is similar. It states: "The requirements of the Patent Act have been complied with."

The principle set out in Fada Radio was applied to preclude an allegation of failure to disclose to the examiner that certain claims had been rejected in the United States7 and an allegation that the applicant failed to disclose to the Patent Office some allegedly relevant prior art during the prosecution of its patent application.8

The assertion of a general duty of candour in the prosecution of a patent application was rejected by the Federal Court of Appeal in Bourgault Industries Ltd v Flexi-Coil.9 In Bourgault, an action for infringement of a patent relating to an agricultural packer, it was alleged that the patent was invalid by reason of lack of candour for failure of the applicant or its agent to provide certain allegedly relevant prior art to the Patent Office during the prosecution of the application. Campbell J. rejected the argument that there was a general duty of candour requiring the applicant to cite all prior art known in relation to the patent application and this point was expressly affirmed by the Federal Court of Appeal.10

Patent Act – introduction of section 73(1)(a)

As previously noted, s. 73(1)(a), quoted above, was introduced effective October 1, 1996.11

This was the first reference to a "good faith" requirement in the Act or Patent Rules and it is specific to the responses to requisitions of an examiner or the Commissioner. Neither the Act or the Patent Rules expressly enacted a general duty of candour. There is no provision in the Patent Act or Rules that provides to a third party a right to invalidate a patent for fraud or lack of good faith during the prosecution of the application.

GD Searle v Novopharm and Lundbeck v Ratiopharm

In GD Searle v Novopharm,12 a NOC prohibition application, it was alleged that the patent in issue was invalid or deemed abandoned on the ground of violation by the patentee of the duty to reply "in good faith" to any requisition. Two such alleged failures were alleged: (1) an alleged misstatement regarding the claims that had been allowed in the corresponding EPO application; and (2) an alleged misrepresentation of fact in distinguishing over certain prior art compounds. The argument was that pursuant to s. 73(1)(a) the application had been abandoned because of the failure to respond in good faith, and had not been reinstated.

In GD Searle, Hughes J. referred to the U.S. jurisprudence regarding "inequitable conduct." He also considered Canadian jurisprudence on this point, distinguishing Fada Radio and Bourgault. He referred to the fee payment cases as a precedent for using section 73 as a basis for, in effect, holding a patent to be invalid or lapsed. Hughes J. said that "since at least sixty years ago there has been a doctrine of good faith in respect of patents", although the authority cited13 related to a duty to exercise good faith in the disclosure in the patent specification. He said that an application for a patent is effectively an ex parte proceeding and, applying the law as to ex parte applications to a court, concluded that there is an obligation on those seeking to gain a patent to act in good faith in dealing with the Patent Office and that there must be "full, frank and fair disclosure" in dealing with the examiner. He found that the representations about the European application were not material, but found that the applicant failed to provide the Patent Office with material information regarding a disclosure made by one of the applicant's scientists.14 On this basis he held that the patentee had not lived up to its obligation of good faith, and the patent application was therefore abandoned and was invalid.

On appeal,15 the Federal Court of Appeal held that the disclosure was covered by the one year grace period and therefore was exempt from any consideration as to obviousness, there was no need to disclose it and no deemed abandonment. The Court of Appeal made no comment in that case on whether or not non-compliance with section 73 could result in a finding of abandonment in relation to an issued patent, and if so, how section 73 is to be construed and applied.

In Lundbeck v Ratiopharm,16 also a NOC prohibition application, Mactavish J. concluded that one of the patents in issue was deemed to be abandoned for failure to respond in good faith to a requisition of the examiner, specifically that in a submission to the examiner as to the state of the art, the applicant failed to discuss a prior art reference, referred to as the "Wenk" which the court concluded was the most pertinent reference. The Wenk article had been disclosed in earlier correspondence with the examiner as one of two references cited in the international search report, but the court noted that there is no discussion of the significance of Wenk in the patent agent's response, nor was a copy of the article provided to the patent examiner at that time and most significantly to the court it was not discussed by the applicant in its later submissions as to what was taught by the art.

In Lundbeck, Mactavish J. held that s. 73(1)(a) explicitly imposes a duty on patent applicants to reply in good faith to any requisition made by an examiner in connection with an examination and concluded that therefore there is a duty of candour on the part of applicants in the prosecution of a patent application in Canada. She noted that in GD Searle the Federal Court of Appeal did not take issue with Justice Hughes's review of the law with respect to the duty of good faith in the prosecution of patent applications and she accepted his review as an accurate overview of the obligations on an applicant. In particular, she agreed with the analogy that he drew between an application for a patent and an ex parte court proceeding.

Corlac v Weatherford

In Corlac v Weatherford,17 the Federal Court of Appeal held that Parliament in enacting s. 73(1)(a) did not intend to revolutionize the law as it then stood and that, as a matter of statutory interpretation, section 73(1)(a) did not provide a basis for attacking the validity of an issued patent. Layden-Stevenson J.A. reviewed the history and interpretation of section 73(1)(a) and concluded:18

To be clear, the concept of abandonment in paragraph 73(1)(a) operates during the prosecution of the application for a patent. Its operation is extinguished once the patent issues. Post-issuance, the provisions of subsection 53(1) must be utilized with respect to allegations of misrepresentation. To conclude otherwise would result in absurdity. An issued patent would be subject to retroactive scrutiny by the courts in relation to the submissions made by an applicant to the Patent Office during prosecution (generally many years prior), judged against unknown criteria. 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.

She also said that to the extent that the Federal court decisions in GD Searle and Lundbeck can be interpreted as standing for the proposition that section 73(1)(a) can be relied upon for the purpose of attacking the validity of a patent, they should not be followed.

Discussion

Fortunately, the Federal Court of Appeal in Corlac has affirmed the continued applicability of Bourgault and its holding that there is no general duty of good faith which can be the basis for invalidating a patent. Post grant, section 53(1) must be utilized as to any allegation of misrepresentation.19 This is as it should be. Patents should not be deemed abandoned by subsequent second guessing the patent agent and the Patent Office, in the absence of a demonstration of fraud or deliberate malfeasance approaching fraud.

Apart from the express provision in section 73(1)(a) of the Act and section 97 of the Patent Rules which are limited to responses to requisitions, there is no mention of any duty of candour or duty of good faith in the Act or in the Patent Rules. The statute does not provide a general duty of candour.

It is not appropriate to view patent prosecution as analogous to an ex parte court proceeding. The examiner is not analogous to a judge, but has considerable prior art resources available and makes his or her own searches. While the prosecution does result in a patent, the patent is subject to challenge by any person interested on the basis of a much more extensive investigation than is available to the applicant or the examiner.

Also, it seems inappropriate to deem a patent application to have been abandoned long after any re-instatement is possible and after the application has been issued by the Patent Office as a patent. As noted above, the wording of the current patent grant is similar to that cited by the Supreme Court in Fada Radio and the same conclusion should be applicable.

Footnotes

1 Therasense Inc v Becton, Dickinson and Company, 649 F 3d 1276 (9th Cir 2011).

2 Patent Act, s 73; Patent Rules, s 98.

3 GD Searle & Co v Novopharm Ltd, 2007 FC 81, reversed 2007 FCA 173, leave to appeal refused, [2007] SCCA No 340 (SCC) [GD Searle]; Lundbeck Canada Inc v Ratiopharm Inc, 2009 FC 1102 [Lundbeck].

4 Weatherford Canada Inc v Corlac Inc, 2010 FC 602, aff'd 2011 FCA 228 (sub nom Corlac Inc v Weatherford Canada Ltd) [Corlac].

5 Application for leave to appeal filed October 2, 2011, SCC Docket 34459.

6 Fada Radio Limited v Canadian General Electric Company Limited, [1927] SCR 520 at 523-524 [Fada Radio].

7 Lovell Manufacturing Co v Beatty Bros Ltd (1962), 41 CPR 18 (Ex Ct).

8 Eli Lilly and Co v Apotex Inc (1998), 80 CPR (3d) 80 at 86-88 (FCTD).

9 Bourgault Industries Ltd v Flexi-Coil Ltd (1998), 80 CPR (3d) 1 (FCTD), aff'd (1999), 86 CPR (3d) 221 (FCA) [Bourgault].

10 Bourgault concerned a patent governed by the Patent Act prior to the introduction of s. 73(1)(a).

11 SC 1993, c 15, s 52. Pursuant to the transition provisions (ss 78.1 to 78.5), section 73(1) is applicable to all patent applications filed after October 1, 1989, which had not issued before October 1, 1996, as well as to applications on or after October 1, 1996.

12 Supra note 3.

13 Minerals Separation North American Corp v Noranda Mines Ltd, [1947] Ex CR 306 at 317, 12 CPR 99 (Ex Ct).

14 Such disclosure had been made within the one-year grace period, but before the claim date. Hughes J. held that the term "applicant" in section 28.23(a) was to be narrowly construed and the grace period was inapplicable.

15 GD Searle, supra note 3, 2007 FCA 173, leave to appeal refused, [2007] SCCA No 340.

16 Lundbeck, supra note 3.

17 Corlac, supra note 4, 2011 FCA 228. at paras 137-151.

18 Ibid at para 150.

19 Corlac, supra note 4, 2011 FCA 228 at para 150.

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2011 McMillan LLP

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