A pair of recent court decisions have cast doubt on the long-accepted principle that commercial success is a factor that may be considered when assessing the obviousness or non-inventiveness of a patent.
For decades it has been understood that, though it is not conclusive, commercial success is a secondary consideration on the issue of the obviousness or non-inventiveness of a patent. Even the Supreme Court of Canada has contributed to this principle.1
In Garford Pty Ltd. v. Dywidag Systems International, Canada, Ltd., an action alleging both patent infringement and breach of the Competition Act, a prothonotary had bifurcated the issue of liability from the issues of damages or accounting for profits.
On appeal to a judge, a number of arguments for setting aside the Bifurcation Order were rejected, but one was accepted.2 The judge ruled that the prothonotary should have considered the potential for overlap between the financial information that would be necessary to calculate damages or accounting for profits and that necessary to prove the claim for lessening of competition under the Competition Act. The judge was of the view that this overlap undercut the whole rationale for bifurcation and set aside the Bifurcation Order.
However, the claim under the Competition Act was later summarily dismissed, leaving only patent infringement in issue. Therefore, when the Federal Court of Appeal came to consider the appeal on the setting aside of the Bifurcation Order, the judge's reasoning for overruling the prothonotary no longer applied. The Appeal Court was therefore required to consider the other arguments made against the Bifurcation Order, which had been rejected by the judge.
Relevance of commercial success to obviousness
One of the arguments considered was that there would be overlap between financial documents relevant to the issue of commercial success and those relevant to calculating damages or accounting for profits. Commercial success was in issue because of an allegation that the patent in suit was invalid for obviousness.
Though commercial success is not conclusive evidence of inventiveness, the Federal Court of Appeal had as recently as 2007 cited it as a secondary factor.3 However, in rejecting the commercial success overlap argument, the lower court judge said:
The plaintiff's submission that the financial information is required with respect to the defence of obviousness is unconvincing. "Commercial success" is no longer a central component of the test for obviousness: Apotex Inc. v. Sanofi-Synthelabo Canada Inc., 2008 SCC 61, therefore, the financial information which is clearly relevant to the remedy phase is not relevant to the assessment of the obviousness invalidity attack. [para. 14]
The statement that commercial success is no longer a central component of the test for obviousness is notable. The Supreme Court in Apotex Inc. v. Sanofi-Synthelabo discussed the test for obviousness in depth but did not discuss commercial success. One might argue it is the Supreme Court's silence on the issue of commercial success that suggests it is not particularly important—a very debatable point. The Supreme Court never overrode or criticized the list of factors, including commercial success, provided by the Federal Court of Appeal just the year before.
Discovery on the issue of commercial success
Discovery obligations before trial are normally given a broad scope.4 The lower court finding that financial documents are not relevant to commercial success is notable for this reason. On other occasions, parties involved in patent infringement actions in which obviousness was in issue have been required to produce financial documents relevant to commercial success, even where a Bifurcation Order was in place.5
The Federal Court of Appeal's view
The Federal Court of Appeal has now had an opportunity to consider the judge's statement quoted above.6 In its February 13 ruling, the Appeal Court found that the judge had made no reviewable error here. This appears to support the statement that commercial success is no longer a central component of the test for obviousness.
However, the court went on to address the point more specifically:
... during argument, we were invited to interpret and clarify paragraph 14 of the judge's reasons and the extent to which financial information would be disclosable during the liability phase of the proceedings. We decline to do so except to say that neither the prothonotary nor the judge ruled out the disclosure of any financial information during the liability phase of the proceedings. As a result of our disposition of this appeal, it will be for the prothonotary to rule on any future disclosure issues that arise under her order. [para. 7]
The result is that the Court of Appeal left the Bifurcation Order in place but left open the question of whether financial documents related to commercial success would be the subject of discovery.
Quite aside from the discoverability issue, the big question left open by this pair of decisions is whether, and to what extent, commercial success remains relevant to an allegation that a patent is invalid for obviousness. The view of the Federal Court of Appeal on this issue may have evolved.
1 R. v. Uhlemann (1951), 15 CPR 99 at 106 (SCC).
3 Janssen-Ortho Inc. v. Novopharm Ltd. (2007), 59 CPR (4th) 116 at para. 25.
4 Reading & Bates Construction Co. v. Baker Energy Resources Corp. (1988), 24 CPR (3d) 66 at 70 (FCTD).
5 DePalma v. Bauer Nike Hockey Inc. (9 June 2004), Toronto T-1053-02 (Prothon.).
6 Dywidag Systems International, Canada, Ltd. v. Garford Pty Ltd., 2012 FCA 50. http://decisions.fca-caf.gc.ca/en/2012/2012fca50/2012fca50.html
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