Canada: The Federal Court Finds Two Generic Company's Allegations To Be Unjustified (Intellectual Property Weekly Abstracts Bulletin – Week Of July 7, 2014)

Last Updated: July 11 2014
Most Read Contributor in Canada, November 2017

Edited by Chantal Saunders and Beverley Moore , Adrian Howard and Ryan Steeves

NOC Cases

The Federal Court finds two Generic Company's Allegations to be Unjustified
Allergan Inc. v. Cobalt Pharmaceuticals Company, 2014 FC 566
Allergan Inc. v. Apotex Inc., 2014 FC 567
Drug: Lumigran RC

Two PM(NOC) decisions relating to the same patent were recently released by the Federal Court. In both cases, the applications were allowed, prohibiting the Minister from issuing an NOC to both Cobalt and Apotex for their generic versions of Allergan's drug. The Court's reasons are substantially similar between the two decisions.

The Court described the '691 Patent in issue as relating to eye drops used in the treatment of glaucoma and ocular hypertension. There was an older version of the drug that had already been marketed to patients. This new version of the drug performed as well as the old but with fewer side effects, even though the amount of active drug was decreased.

The Court found that a person of skill in the art would have expected that reducing the active drug would also reduce efficacy. It was found that the increased penetration of active drug resulting from the new combination of substances was not suggested in the prior art. Instead, the Court held that the discovery of a new combination having the efficacy of the old was only found through experimentation and inventive steps, such as the experimental trials that used various combinations of ingredients. The result was found to not be self-evident, and not obvious to try.

The patent was further found to be soundly predicted as the data in the patent set out the factual basis, and the sound line of reading was implicit in the data itself. Lastly, it was found that the later patent was not anticipated by the patent for the earlier version of the drug, even though it fell within the scope of the earlier patent. This was because nothing in the earlier patent would enable a skilled person to arrive at the new invention.

Patent Cases

Court Confirms Interim Injunction as an Interlocutory Injunction to Protect Applicant's Trade Secrets
Enviro Trace Ltd. v. Sheichuk et al., 2014 ABQB 381

The Plaintiff asked the Court to confirm an interlocutory injunction, and related relief, previously granted on notice against the Defendants. The Court granted the application, and the interim, interim injunction was confirmed as an interlocutory injunction.

The Plaintiff (Applicant) asked only for an order preventing the Defendants (Respondents) from using the Applicant's trade secrets and confidential information, rather than one which prevents them from doing business. The Court noted that the proposed order would "merely be a truism, articulating existing law", which is known as a quia timet injunction.

The Applicant established that it was not premature for the Court to grant the injunction requested. In the Court's view, the harm – or disclosure of its trade secret – is great. As to the applicable standard, the Court stated that because the underlying facts are still very much in dispute, the higher standard (i.e. requiring the Applicant to establish a strong prima facie case) does not come into play. Rather, the Court said it should examine (in the context of the balance of convenience part of the three-prong test) the strength of the Applicant's case. Therefore, the Court held that the appropriate standard to be applied in this case was the "serious issue to be tried" standard – a relatively low standard, and one that the Court found the Applicant had met.

The Court noted that a trade secret has a proprietary component, and that it would be illogical for a court to require proof of irreparable harm when something is stolen from another (i.e. "the theft speaks for itself"). Nevertheless, the Court held it is necessary to prove irreparable harm as a prerequisite to the granting of the injunction requested here. In that regard, the Court concluded that the Applicant proved that it would suffer irreparable harm since the loss of a trade secret is harm which cannot be cured by money. The Court further found that the Plaintiff would suffer the greater harm from the refusal of an interlocutory injunction, particularly since the Plaintiff had not asked the Defendants to cease business; it merely asked the Defendants not to use any of the Plaintiff's trade secrets. Lastly, the Court held that, overall, the Applicant has established that it is fair and equitable, or just, to issue the requested interlocutory injunction. It was found that the trade secret in question is more than a "nothing very special" kind of trade secret, and that the Applicant has not delayed in asserting its rights.

In terms of collateral relief, the Court stated that it is "self-evident that the respondents should return to the applicant any trade secrets and confidential information" which belong to the Applicant. Further, the Court found it appropriate to require the Respondents to provide an accounting for all work done by the Respondents for the clients of the Applicant, where there is evidence that, even before leaving the employ of the Plaintiff, some of the Defendants were making overtures to the Plaintiff's clients.

Therefore, the application was granted, and the interim, interim injunction was confirmed as an interlocutory injunction.

FCA Refuses to Stay Injunction Order
Janssen Inc. v. Abbvie Corporation, 2014 FCA 176
Drug: ustekinumab (STELARA®)

Janssen and Abbvie were involved in a patent infringement action. Abbvie was successful in its claim for infringement, and the patent was held to be valid (decision here; summary here). Janssen then moved to stay the remedial phase of the action; which was refused (decision here; summary here). Abbvie then obtained an injunction against Janssen (decision here; summary here). The decision on the merits is still under appeal. By this motion, Janssen sought to stay the injunction, and consolidate a number of related appeals.

The Court of Appeal (FCA) held that since most of the paper has already been filed, the appropriate remedy is to have the appeals heard together. The Court also set the appeals down for hearing in October.

With respect to the request to stay the injunction, the FCA refused to grant the stay, holding that Janssen has failed to establish unavoidable irreparable harm. The FCA held that administrative inconveniences such as training personnel and changing communications cannot support suspending the injunction without more. Furthermore, the FCA was not persuaded by Janssen's concern regarding its reputation with doctors who prescribe STELARA®. Finally, the FCA held that if there are ambiguities in the terms of the injunction, the Federal Court is an adequate forum for that relief. The FCA also held that a party moving to suspend an injunction must show it creates unusual or abnormal burdens, uncertainties and risks, and here that evidence is missing.

Patent Held Invalid for Not Meeting Promise of Improved Therapeutic Profile
AstraZeneca Canada Inc. v. Apotex Inc., 2014 FC 638
Drug: esomeprazole

Apotex was successful in the previous NOC Proceeding. It came to market with an esomeprazole product. AstraZeneca sued for patent infringement and Apotex counterclaimed with allegations of invalidity. The Court held that the patent at issue was invalid.

The Court initially considered Apotex' allegation that AstraZeneca Canada lacked standing. However, this allegation was dismissed as lacking credibility. The Court then considered issue estoppel, as raised by Apotex, with respect to the validity of the patent. The Court held that the doctrine of issue estoppel did not apply as the evidentiary record was not shown to be sufficiently similar. The Court then considered Apotex' allegations of abuse of process; holding that shifting arguments as to the promise is not abusive, but shifting factual positions is more problematic. However, in the end, the Court accepted AstraZeneca's new factual position regarding a limited motivation to investigate enantiomers at the time. The Court then considered the grounds of invalidity alleged by Apotex.

In considering the allegation of inutility, the Court held that one must consider the patent as a whole, from the perspective of a skilled person in relation to the science and information available at the time of filing. The Court held that the promise, if there is an explicit promise, must be related to how the patent will ultimately be used. Thus, "stability against racemization" was held not to be a promise in and of itself; but, rather, an integral aspect of the utility of the drug as a pharmaceutical in therapy.

In the patent, the statement at issue, in relation to the promise, was: "It is desirable to obtain compounds with improved pharmacokinetic and metabolic properties which will give an improved therapeutic profile such as a lower degree of interindividual variation. The present invention provides such compounds..." (para 113). The Court held that the word "will" in this phrase made it a promise. The Court held that the limited data AstraZeneca had on three human livers and six plasma re-analyses could not form the basis for a sound prediction of utility with respect to an improved therapeutic profile, across an entire patient population. Similarly, the Court held that AstraZeneca did not have the factual basis to predict that the enantiomer would have improved pharmacokinetic and metabolic properties, as promised by the patent. Thus the patent was invalid for inutility.

In considering the question of proper disclosure, the Court held that the Supreme Court's decision in AZT, when combined with its obiter remarks in Teva sildenafil overturn previous FCA cases. Thus, "proper disclosure" of utility only applies to new use patents, if it applies at all.

The Court also considered the allegations with respect to lack of novelty and obviousness, but dismissed them both. In considering obviousness, the Court merged its analysis regarding obviousness and obvious to try, holding that the obvious to try inquiry occasionally supplements the fourth step of the general obviousness test, and this was one of those situations.

Trademark Cases

Amendment Relating to Punitive Damages Allowed
Bauer Hockey Corp. v. Sport Maska Inc. dba Reebok-CCM Hockey, 2014 FCA 158

Two appeals were consolidated in this decision in a trade-mark infringement action. The First Order struck reference to aggravated and punitive damages from the Statement of Claim, and the Second Order dismissed Bauer's motion to amend the Statement of Claim to add again aggravated and punitive damages.

The Court of Appeal first considered the standard of review on appeal, concluding that the decision relating to striking or amending a pleading is discretionary and the Court of Appeal will not interfere in the absence of an error of law, a misapprehension of the facts, a failure to give appropriate weight to all relevant factors or an obvious injustice. The Court then distinguished between punitive damages, which are intended to punish the defendant, and aggravated damages, which are still compensatory in nature.

The Court of Appeal dismissed the appeal with respect to the First Order, but granted the appeal with respect to the Second Order, allowing an amendment to add punitive damages, but not aggravated damages. The Court of Appeal found that punitive damages are not limited to litigation misconduct, as was found by the Court.

TMOB Decision Overturned: New Evidence Shows Confusion Unlikely
Micro Focus (IP) Limited v. Information Builders, Inc., 2014 FC 632

This was an appeal by Micro Focus (IP) Limited ("Micro Focus") of a decision of the Trade-marks Opposition Board refusing its application for registration of the trade-mark MICRO FOCUS in association with computer software and related services. The TMOB found that there was a reasonable likelihood of confusion between Micro Focus' mark and the respondent's FOCUS mark.

Micro Focus submitted fresh evidence that its use of the MICRO FOCUS mark would not be confusing. For instance, the evidence showed that Micro Focus has used its mark continuously and extensively since at least 1989, and that it has acquired distinctiveness and a reputation in Canada. Further, there has been no actual confusion between Micro Focus' mark and the respondent's FOCUS mark.

The Court therefore decided the issue of confusion based on the full evidentiary record before it. It found that the factors considering inherent disctinctiveness, length of time in use, and extent of public knowledge, and different wares, services and channels of trade all favoured Micro Focus. It also found that there was no evidence of any consumers actually being confused, and pointed to the respondent's admission to that effect in an earlier co-existence agreement between the parties as being "significant" on the issue of confusion. In view of the Court's findings, the Court found that Micro Focus met its burden of showing that its MICRO FOCUS mark would likely not be confusing with the respondent's mark. Accordingly, the Court set aside the Board's conclusions that the respondent's grounds of opposition under ss. 12(1)(d) and 16(2)(a) of the Trade-marks Act were well-founded.

Therefore, the Court held that Micro Focus presented new evidence that would have materially affected the Board's conclusion. Ultimately, the Court felt that confusion would be unlikely and, as such, allowed the appeal with costs. Micro Focus was permitted to register its MICRO FOCUS mark.

TMOB Decision Overturned – When Sounded, Mark is Deceptively Misdescriptive
Engineers Canada v. REM Chemicals Inc., 2014 FC 644

In an appeal from a decision of the Trade-marks Opposition Board, the Court allowed the appeal and rejected the Respondent's application for the trade-mark REM SURFACE ENGINEERING and Design. At the Opposition, the TMOB rejected the application for the trade-mark REM SURFACE ENGINEERING as deceptively misdescriptive. The Applicant is the national federation of the provincial and territorial associations of professional engineers. The Respondent did not take part in the appeal.

The Court held that the TMOB erred in finding that the mark is not deceptively misdescriptive, and in finding that it is distinctive and registrable, holding that the TMOB did not properly apply s. 12(1)(b) of the Trade-Marks Act. The Court held that the jurisprudence is clear that "when sounded" clearly descriptive or deceptively misdescriptive words cannot be rendered registrable by the addition of design features. The mark is a combination of nondistinctive elements that includes the deceptively misdescriptive words "SURFACE ENGINEERING". Thus, it cannot be distinctive of any trader.

Copyright Cases

Court Dismisses Application for Interlocutory Injunction
Geophysical Service Inc. v. Canada-Nova Scotia Offshore Petroleum Board, 2014 FC 450

Geophysical Service Inc. (the "Applicant") brought a motion for an interlocutory injunction requiring CNSOPB (the "Respondent), to remove from its websites materials over which the Applicant claims copyright pertaining to its work product from seismic surveys it conducted. In 2013, the Respondent published on its website and in paper format two calls for bids (the "Call for Bids"). Among the information contained in the Call for Bids were 12 figures created by the Respondent based on information submitted to it by various operators, including the Applicant. The Applicant contended that the publication of the figures on the website and by other means infringed its copyright.

The Court considered the three-prong test from RJR-MacDonald. With respect to whether the proceeding raises a "serious question to be tried", the Court considered both (i) establishing copyright and (ii) infringement. The Court held that from the Applicant's point of view, there remains at least a serious issue over copyright ownership given all the facts that otherwise demonstrate the Applicant's ownership of the data and major role in its collection and compilation. With respect to infringement, the Court held that there appears to be no serious issue about the alleged infringement by the Respondent, given the lack of any objective similarity between the infringing work and the copyrighted work, or at least a substantial part thereof.

With respect to the consideration of irreparable harm, the Court noted that the figure at issue was the result of extensive reworking and adaptation of materials, and accordingly, the Applicant "must demonstrate by clear and non-speculative evidence that it will suffer irreparable harm, not compensable in damages, between [now] and the outcome of trial if the injunction is not granted." The Court agreed with the Respondent that the Applicant failed to provide such clear and non-speculative evidence of damage. There was no statistical evidence or sales information that would permit some suggestion of a correlation between conducting the Call for Bids and the extent of licensing of the Applicant's seismic data information. In that regard, the Court held that the Applicant had not demonstrated that it would sustain irreparable harm were the injunction not ordered.

With respect to the balance of convenience, the Applicant argued that because no bids were received as part of the Call for Bids, there is no inconvenience to the Respondent in being required to remove the alleged infringing materials from the bid process. The Respondents, on the other hand, argued that there would be significant inconvenience if it was precluded from continuing to use operators' seismic data as part of future calls for bids. The Court concluded that the Applicant had made speculative and largely unsupported potential loss claims and, as such, priority must be given to attempts to achieve the Respondent's mandate for the benefit of Canadians.

On these bases, the Court dismissed the Applicant's motion for an interlocutory injunction, and awarded costs to the Respondent.

Default Judgement Granted Against Defendant; Punitive Damages Awarded
Mitchell Repair Information Company, LLC v. Wayne Long, D.B.A. Future Technology Wizards, 2014 FC 562

The Plaintiff brought a motion for default judgement, as the Defendant had not defended the action. The Court considered the evidence filed on the motion, and declared that the Defendant was served with the Statement of Claim, did not file a Statement of Defence during the appropriate time period, and is in default. The Court also ordered the Defendant to shut down or remove from public viewing any and all advertisements, web pages, profiles and the like which are maintained, used or in any way associated with the Defendant in respect of the Plaintiff's intellectual property.

The Court refused orders against third parties, as they had not been served or otherwise put on notice of the requests for injunctive orders as against them. The Court awarded the Plaintiff statutory damages for copyright infringement, damages for trade-mark infringement and punitive damages.

Successful Plaintiff's Appeal for More Damages Dismissed; Plaintiff also Forced to pay Double Costs due to Defendant's Rule 420 Offer to Settle
Leuthold v. Canadian Broadcasting Corporation, 2014 FCA 173

Ms. Leuthold, a photo-journalist, owned the copyright in several images taken during the terrorist attack on the World Trade Center on September 11, 2001. She later made those photographs available for licensing by news media and others, including the Canadian Broadcasting Corporation (the "CBC"). The CBC commissioned a documentary which made use of 5 of Ms. Leuthold's images (the "images"). This decision is an appeal of the Federal Court's decision (here), in which she was awarded damages and other remedies against the CBC as a result of the admitted infringement of her copyright in the images. Ms. Leuthold appealed that decision because she was awarded approximately US $20,000 when her claim was for $22 million.

There were four issues in this appeal: (1) whether the Newsworld was covered by the "Stills" license entered into between Ms. Leuthold and the CBC; (2) the number of acts of infringement that occurred; (3) the proper measure of damages for the acts of infringement; and (4) whether the Court should order an accounting of profits for the cable companies which were generated by the infringing broadcasts.

The "Stills" license stated that the CBC had the right to broadcast the Stills on Canadian television "for one broadcast on CBC's Network & Regional TV stations." It was found that Newsworld is a separate entity from the CBC for regulatory purposes. While the Court of Appeal did not accept the Trial Judge's reasoning to the extent that conclusions were drawn on the basis of what Ms. Leuthold failed to exclude from the Stills license (i.e. the CBC acquired only those rights which were circumscribed by the Stills license), no rights were acquired by the CBC by virtue of Ms. Leuthold's failure to exclude Newsworld from the grant of a license. The question, the Court of Appeal noted, was whether Ms. Leuthold included Newsworld in the grant of rights found in the Stills license. The Court of Appeal, while acknowledging the Trial Judge's error with respect to the interpretation of the Stills license, found the Trial Judge's conclusion reasonable. As a result, the Court of Appeal held that the broadcast of the images on Newsworld was not an act of infringement of Ms. Leuthold's copyright.

With respect to the number of acts of infringement, Ms. Leuthold's calculation of damages was entirely a function of the large number of distinct acts of infringement which she saw in each broadcast of the documentary. While the Court of Appeal noted there was "some basis" for this approach, it ultimately disagreed with her approach and held that "there is one act of infringement whether the work is communicated to the public via one BDU or via hundreds of them." The Court of Appeal stated that this is consistent with the goal of technological neutrality articulated by the Supreme Court of Canada in ESA v. SOCAN. Therefore, in view of paragraph 2.4(1)(c) of the Copyright Act, the Court of Appeal held that the six transmissions constituted six acts of infringement, as found by the Trial Judge.

The Trial Judge concluded the starting point for the calculation of damages was the price which would have been asked for broadcast licenses, had they been sought in advance of the infringing broadcasts. The Trial Judge set the quantum of damages for each infringement at US $3,200 for each of the six unauthorized broadcasts, which was accepted and adopted by Ms. Leuthold on appeal. However, since Ms. Leuthold's calculation of the number of infringing acts failed, the Court of Appeal upheld the Trial Judge's decision in this regard, and Ms. Leuthold's argument on the measure and amount of damages also failed.

On the issue of accounting of profits from the BDUs, the Court of Appeal noted that Ms. Leuthold only asked for an accounting of profits from the CBC, not the BDUs. Further, the Court of Appeal stated that BDUs are not party to this litigation and, as such, it has no jurisdiction to make an order against the BDUs, nor was it open to Ms. Leuthold, on appeal, to seek a remedy which she did not seek in the Federal Court. This ground of appeal also failed.

Therefore, the appeal was dismissed with costs.

At trial, despite the fact that Ms. Leuthold was the successful plaintiff, she was ordered to pay the CBC double costs (approximately $80,000) because she recovered less than the amount of the CBC's Rule 420 offer to settle. Ms. Leuthold appealed that costs order, which is the subject of the appeal in Leuthold v. Canadian Broadcasting Corporation, 2014 FCA 174. In that appeal, the Court of Appeal reiterated that the CBC's offer (which was $37,500, slightly higher than the ultimate damages award of $19,200 at trial) met the formal requirements of Rule 420. The Court of Appeal found that the Trial Judge did not act on a wrong principle, nor was his decision clearly wrong. Therefore, Ms. Leuthold's appeal as to costs was also dismissed.

Industry News

Health Canada has opened a Consultation regarding Plain Language Labelling. It is open until September 2, 2014.

Health Canada has opened a Consultation on the Draft Guidance Document: Submissions Relying on Third-Party Data [Literature and Market Experience]. It is open until September 13, 2014.

Health Canada has published a Guidance Document - Submission and Information Requirements for Extraordinary Use New Drugs (EUNDs).

Health Canada has published a Policy on Management of product licence applications for natural health products.

CIPO announced that it has changed the agent requirement for applicants applying for an international application at CIPO as the receiving office. As of July 2, 2014, an agent will no longer be required to file an international application for any applicant, regardless if they are inventors or not. This change brings CIPO in line with many other receiving offices, such as the USPTO.

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