Canada: Patents Year In Review 2012

This article summarizes the most noteworthy Canadian patent law decisions of 2012.

1. Viagra: Supreme Court Addresses Sufficiency of Disclosure

In 2012, the Supreme Court of Canada handed down its landmark decision clarifying the law of sufficient disclosure and serving notice that "gaming the system" will not be tolerated.   

In Teva Canada Ltd. v. Pfizer Canada Inc., 2012 SCC 60 (Viagra), the Supreme Court examined the disclosure requirements under section 27 of the Patent Act. Section 27 requires, among other things, that a "specification of an invention must correctly and fully describe the invention and its operation or use as contemplated by the inventor." Reminiscent of its decisions stretching back from Consolboard to Whirlpool, the Supreme Court reaffirmed that a patent's disclosure forms the basis for the bargain, or quid pro quo, of the patent system. That is, the inventor is granted exclusive rights in a new and useful invention for a limited time in exchange for disclosure of the invention so that society can benefit from this knowledge. However, Viagra raises the price of the bargain.

Pfizer's patent at issue included a set of cascading claims covering subject matter broad to specific. While claim 1 encompassed 260 quintillion compounds, the dependent claims that followed contained smaller and smaller groups of compounds. Ultimately, claims 6 and 7 were directed at the use of just one compound each.

In the disclosure of Pfizer's patent, it was noted that "one of the especially preferred compounds" had been shown to be effective in treating erectile dysfunction (ED). While the evidence before the Court was that only sildenafil — the subject of claim 7 — was the effective compound, there was nothing specific in the disclosure that distinguished sildenafil from the other especially preferred compounds, or that confirmed sildenafil was the compound confirmed to be effective in treating ED.

The Supreme Court held that, as a result of the lack of specific disclosure of sildenafil as the compound that was tested and shown to work, Pfizer's patent was "void" for lack of sufficiency under section 27 of the Patent Act (notwithstanding that this proceeding was pursuant to the PM(NOC) Regulations which do not provide for the invalidation of patents). In coming to this conclusion, and in contrast to lower Court decisions in the case, the Supreme Court stated that the invention must be construed on the basis of the whole specification, not on a claim-by-claim basis. Although sildenafil was specifically disclosed in claim 7, so too was another compound in claim 6. The Supreme Court noted that a person of ordinary skill in the art would look to the claims and would note that two claims were directed to the use of individual compounds. The Court noted that this may properly suggest the invention was focused accordingly, however, it cited evidence that it would have taken a "minor research project" to determine which of claims 6 and 7 was the only working invention. As such, the person of ordinary skill could not have made the same use of the invention as could the inventor.

In addition to the disclosure issue, the Court addressed the subject of utility. In particular, the Court held that at the time of filing the application for Pfizer's patent, sildenafil could assist in treating ED. This alone satisfied the requirement for utility: there was no further requirement to disclose an invention's utility in the patent application. The Court did not comment further on disclosure issues related to sound prediction of utility, as sound prediction was not at issue in the case.

2. Eurocopter: Punitive Damages and Promised Utility in Mechanical Inventions

The decision of the Federal Court of Canada in Eurocopter v. Bell Helicopter, 2012 FC 113 is important from the perspectives of (i) the prospect of an award of punitive damages in a patent infringement action, and (ii) the application of the Court's relatively new promised utility doctrine in the context of a mechanical invention.

A Court will generally award punitive damages only where a defendant's activities have been malicious, oppressive and high-handed, have offended the Court's sense of decency, or have represented a marked departure from ordinary standards of decent behaviour. Until Eurocopter, it was rare for a patent dispute to attract an award of punitive damages.

Based on evidence related to Bell's development activities, including the finding that Bell's product was a "slavish copy" of the patented technology, and the marketing of Eurocopter's patented technology as Bell's own, the Court held Bell liable for punitive damages. This conclusion was reached notwithstanding that Bell was quick to change its product design to something non-infringing as soon as it became aware of Eurocopter's lawsuit. Indeed, the Court placed emphasis on the fact that Bell had implied knowledge of Eurocopter's patent. That is, notwithstanding that there was no evidence that Bell had any knowledge of Eurocopter's patent, the Court found that there was "willful blindness or intentional and planned misappropriation of the claimed invention" on the part of Bell, and that Bell was a "sophisticated corporate entity" such that it must have known or ought to have known of the patent.

With respect to the "promise of the patent" doctrine, this relatively new concept has typically been applied in pharmaceutical cases. Eurocopter is the first trial decision that applies this doctrine in a mechanical context.

In construing the promise of Eurocopter's patent, the Court found that it was more than merely providing a working product (i.e., landing gear for helicopters). In particular, the Court found a promise to significantly reduce prior art shortcomings. Although there was no evidence that the invention would not work or would not meet the construed promise, the next step for the Court was to consider whether the invention's utility was demonstrated or soundly predicted as of the Canadian filing date. In this regard, the Court found that, as a result of testing, utility could be demonstrated with respect to only one claim. All other claims included embodiments that either were not the subject of demonstrated utility (i.e., pre-filing date testing), or were not soundly predicted. Therefore, those claims were held to be invalid.

Both Eurocopter and Bell have appealed the trial Court's decision.

3. Promised Utility in Pharmaceutical Inventions

Canada's Federal Court and Federal Court of Appeal have continued to closely examine a patent's disclosure, as opposed to its claims, for the purpose of construing the "promise of the patent." In this regard, the Court has, in some cases, elevated laudatory statements in a patent disclosure to become promises of utility.

Prior to 2005, patents in Canada were seldom invalidated due to an alleged inadequate patent disclosure. Since then, disclosure-related allegations of invalidity have become commonplace, and have found considerable success. While recognition of a promise in a patent disclosure is not new, it was rarely invoked as a key enabler in an allegation of invalidity. Promised utility was traditionally considered in respect of the claims or very explicit statements of utility in the disclosure. In contrast, the recent incarnation of the "promise of the patent" has become the threshold issue for analyzing utility and validity.

Under the mantra of "promise of the patent," the Courts have ventured beyond explicit promises to dissect the specification and elevate statements of benefit or advantage to become promises of utility. Each "promise" has become a battleground to test the validity of a patent.

In AstraZeneca Canada Inc. v Mylan Pharmaceuticals ULC, 2012 FCA 109, the Federal Court of Appeal heard Mylan's appeal from a decision granting a prohibition order with respect to the drug anastrozole (ARIMIDEX). There was no dispute that the claimed compound was useful. However, Mylan argued that the phrase "[i]t is a particular object of the present invention to provide ... fewer undesirable side effects" should be elevated to the status of a promise of utility. The Court of Appeal, in rejecting this argument, held that the phrase was merely aspirational such that its effect depended on its context and the rest of the patent. In this case, there was nothing else in the patent discussing side effects.

In Mylan Pharmaceuticals ULC v. Pfizer Canada Inc., 2012 FCA 103, the Federal Court of Appeal heard Mylan's appeal from a decision granting a prohibition order with respect to the drug donepezil (ARICEPT). The Court of Appeal held that the patent in suit did not contain any promise related to side effects or toxicity, notwithstanding that it was an object to develop a drug having "a persistent activity and a high safety." In particular, the Court of Appeal made it clear that just because a disclosure may refer to potential benefits or advantages over the prior art, such statements are not necessarily promises. In this regard, use of the specification of a patent in order to construe its promise "is not to serve as an invitation to a zealous lawyer to read a patent specification in such a way as to persuade a Court, one way or the other, as to what the promise is." Rather, the disclosure in the specification is to be understood from the viewpoint of a skilled person in the art or science to which the invention pertains, without resort to technicalities but rather for the purpose of seeking a construction of the claims which is reasonable and fair for both the patentee and the public.

In Fournier Pharma Inc. v. Canada (Health), 2012 FC 741, the Federal Court placed emphasis on the claims when construing any promise of a patent. In particular, the Court held that "promise of a patent" is nothing more than the utility the inventor claims for his invention. Statements found outside the claims should be presumed to be mere statements of advantage unless the inventor clearly and unequivocally states they are part of the promised utility. That is, the disclosure should not be examined microscopically to find additional promises that are outside the scope of the inventor's claimed monopoly.

In Bristol-Myers Squibb Canada Co. v. Mylan Pharmaceuticals ULC, 2012 FC 1142, the Court rejected Mylan's argument that the promise of the patent, based on the disclosure, was that the compound at issue potently inhibited all major resistant mutant HIV reverse transcriptase strains. In particular, the Court found that Mylan's reference to and reliance on "stray words" found in the disclosure were not appropriate. Because testing data for only certain mutant strains was disclosed, it was not appropriate to construe the claims as promising utility against other, untested strains.

In Eli Lilly Canada Inc. v Novopharm Limited, 2012 FCA 232, which affirmed Eli Lilly Canada Inc. v Novopharm Limited, 2011 FC 1288, the Court declined to uphold the validity of the patent in suit on the basis that, as of the Canadian filing date, the construed promise of the patent (namely, that the compound at issue met the promise that it would provide markedly superior clinical treatment with a better side-effects profile) was neither demonstrated to be useful, nor soundly predicted. The conclusion regarding demonstrated utility was made notwithstanding that Lilly had a number of studies, including studies in dogs, studies with volunteers, and preliminary clinical trial data, as the studies were not enough to demonstrate the promised utility as construed. Notwithstanding that there was a sufficient factual basis for the prediction, the Court concluded that utility was not soundly predicted, as an inference could not be drawn that the promised utility would be met.

4. Damages under Section 8 of the PM(NOC) Regulations

In 2012, the Federal Court released its first decisions related to quantification of damages under section 8 of the PM(NOC) Regulations. Section 8 provides that an innovator is liable to compensate a generic in damages in the event that the innovator's application for a prohibition order under the PM(NOC) Regulations is unsuccessful.

In Teva Canada Limited v. Sanofi-Aventis Canada Inc., 2012 FC 552, and Apotex Inc. v. Sanofi-Aventis Canada Inc., 2012 FC 553, both of which relate to the drug ramipril, the Court made a number of key findings related to section 8 proceedings.

First, the Court upheld the validity of section 8, and awarded damages based on the finding that an authorized generic and another generic would have entered the market. In another section 8 case (namely, Apotex v. AstraZeneca Canada, 2012 FC 559), the Court also upheld the validity of section 8. In determining damages, the Court stated that each case must be decided on its own facts: the Court rejected the submission of Sanofi-Aventis that a single "but for" conclusion should be drawn in respect of all generics.

With respect to the period of time that on which the quantification of section 8 damages is to be based, the Court found that the period cannot begin before the first day on which the statutory stay under the PM(NOC) Regulations begins.

In addition, the Court held that a generic may not claim "lost business value" beyond the date on which the generic receives its Notice of Compliance. In particular, future lost profits and duplicate ramp-up losses are not recoverable. This finding is consistent with the Court of Appeal's earlier decision in Apotex Inc. v. Merck & Co., 2009 FCA 187.

5. Gilead: Eligibility of Patents for the Patent Register 

In Gilead Sciences Canada, Inc. v. Canada (Minister of Health), 2012 FCA 254, the Court of Appeal maintained strict product specificity requirements for patentees who intend to list patents on the Patent Register for the purposes of the PM(NOC) Regulations.

Three ingredients were claimed in the patent at issue: two were specific to the drug (COMPLERA), and one was a general class (namely, an antiviral agent that could be a non-nucleoside reverse transcriptase inhibitor (NNRTI)). COMPLERA included rilpivirine, an NNRTI, as one of its ingredients.

The Court of Appeal held that the claims of a patent must specifically identify, by name or by chemical structure, the medicinal ingredients within a drug for that patent to be listed on the Patent Register. It is not enough that the medicinal ingredient, although not specifically identified, may still be covered by the claims, and therefore infringed by a generic. Accordingly, because rilpivirine was not specifically claimed, the patent at issue was held to be ineligible for listing on the Patent Register.

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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