Canada: Court Determines Beneficial Ownership Of Several Patents As Part Of Action For Wrongful Conduct (Intellectual Property Weekly Abstracts Bulletin: Week Of October 13, 2014)

Last Updated: October 16 2014
Most Read Contributor in Canada, November 2017

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


Court Determines Beneficial Ownership of Several Patents as Part of Action for Wrongful Conduct

Nature-Control Technologies Inc. v. Li, 2014 BCSC 1868

This was an action by the Plaintiff for relief arising from the allegedly wrongful conduct of the Defendant Li. The Plaintiff claimed that Li breached the fiduciary duties he owed to it by diverting a business opportunity to one of the co-defendants, a company owned indirectly by Li and his wife (the "Li Company"). One of the issues to be decided in this case was the scope of the Plaintiff's business and, in particular, whether it included the sale of certain products. The Defendants argue that Li agreed to give the Plaintiff certain rights for certain compounds (the "Compounds"), but not for his "specialty bleaching and brightening products" (the "Products"). The Plaintiff maintains that the Compounds and Products were developed by Li at the Plaintiff's laboratory and at its cost. The costs of registering the patents in respect of the Compounds and Products were originally borne by the Li Company, but it was agreed that the Plaintiff would reimburse the Li Company. Therefore, the Court was asked to determine, among other things, whether the Plaintiff beneficially owns the intellectual property (patents and trademarks) in the name of the Li Company.

Following a review of the scope of the Plaintiff's business, the Court determined that two (2) patents and four (4) trademarks are beneficially owned by the Li Company. With respect to the patents covering the Compounds, the Court held that there is a presumption that an inventor, even one who is an employee, is entitled to the benefit of his own invention. However, two exceptions exist: (1) where there is an express contract to the contrary; or (2) where the person was employed for the express purpose of inventing or innovating. Based on the evidence in this regard, the Court held that Li retained the beneficial ownership of the Compound patents. With respect to a "FAS Patent", the Plaintiff was held to be the beneficial owner. The Court held that the parties impliedly intended for the Plaintiff to own the FAS Patent, as it asked Li to "come up with a solution" to address an "opportunity". In addition, the Court found that the conduct of the parties supported this conclusion, as well as the fact that the Plaintiff paid the costs associated with registering the patent. Li was therefore ordered to assign the FAS Patent to the Plaintiff.

Patent Not Eligible for Listing: Patent Claiming One Medicinal Ingredient, but directed to a Fixed-Dose Combination of Medicines

ViiV Healthcare ULC v. Teva Canada Limited, 2014 FC 893

This was an appeal from two decisions for three proceedings before Prothonotary Milczynski, in which she determined that a patent could not be listed on the Patent Register under the PM(NOC) Regulations (the "Regulations"). The issue to be decided on appeal, according to Justice Hughes, is "arcane": "can a patent claiming but one medicinal ingredient be listed by the Minister of Health under the Regulations where the underlying Notice of Compliance ("NOC") is directed to a fixed-dose combination ("FDC") of two or more medicines?"

The Applicant (ViiV Healthcare) and the Minister of Health (the "Minister") are common in all three proceedings, while Teva is the Respondent in one (see 2014 FC 328), and Apotex is the Respondent in the others (see 2014 FC 893). The Prothonotary gave the same Order in the Apotex proceedings as she did in the Teva proceeding. These proceedings concern two of the Applicant's drugs: KIVEXA®, a FDC tablet containing two active ingredients and TRIZIVIR®, another FDC tablet containing three active ingredients. The Applicant's Canadian Patent No. 2,289,753 (the " '753 Patent") was listed on the Register in respect of each of KIVEXA® and TRIZIVIR®.

Prothonotary Milczynski determined that the '753 Patent was not eligible for listing against KIVEXA® or TRIZIVIR®. The Prothonotary based her decision on the product specificity requirements listed at paragraphs 4(2)(a) and (b) of the Regulations (Re: claim for the medicinal ingredient and the formulation, respectively), as well as the decision of the Federal Court of Appeal in Gilead Sciences (see 2012 FCA 254). The Court undertook an extensive review of the current jurisprudence dealing with the propriety of the listing of certain patents under the Regulations as amended in 2006 (see para. 47). Based on the jurisprudence, the Court made the following notable conclusions: (i) absent precise and specific matching between what the patent claims and the product/use/dosage forms for which the NOC has been granted to the first person, the Minister cannot properly list the patent; (ii) a claim for a formulation includes both medicinal and non-medicinal ingredients, while a claim directed to medicinal ingredients, without claims also to non-medicinal ingredients, does not qualify for listing as a formulation; and (iii) where a patent claims only one medicinal ingredient, it cannot be listed as against an NOC obtained for two (or more) medicinal ingredients. The Court rejected a number of policy arguments advanced by the Applicant in favour of listing patents containing FDCs. In addition, the Court addressed the issue of whether FDCs are unique so as to be able to be listed under the Regulations. It concluded in the negative, holding that "every medicine in the envelope [by way of analogy] must be claimed". The Court also noted that, in this case, the evidence was ambiguous as to whether there were separate medicines functioning independently, or whether they interacted and were synergistic. However, the Court found this type of analysis useless: "[a] patent claim for only one medicinal ingredient cannot support a listing under the NOC Regulations where the underlying NOC is for a combination (synergistic or otherwise) of two or more medicinal ingredients."

Therefore, the Court upheld the Orders of Prothonotary Milczynski holding that the '753 Patent was ineligible for listing on the Register. The Applicant's motions, by way of this appeal, were dismissed. The Court stayed its Orders in respect of the Apotex proceedings (to permit the Applicant to file an appeal, if so advised) since the orders effectively terminated those proceedings. Costs were awarded to Teva and Apotex, although Apotex was awarded half the amount since its appeals largely followed Teva's.


Trademark NIC OUT Ordered Struck from Registry in Expungement Proceeding

TLG Canada Corp. v. Product Source International LLC, 2014 FC 924

This was an expungement proceeding for an order striking the registration for NIC OUT, a trademark for cigarette filters that remove tar and nicotine, held by the Respondent, Product Source International LLC ("Product Source"). Product Source brought an infringement action against the Applicant ("TLG Canada") for selling "NIC-OUT" cigarette filters. TLG Canada argued that its Nic-Out product was distributed and sold in Canada as early as 2001, whereas Product Source (NIC OUT) alleged that it started using its product in 2003 (Registration of the NIC OUT mark was in 2008).

The Court held that the registration for NIC OUT should be struck from the Registry because it is invalid under section 18(1)(a) because it was not registrable on the date it was registered. It was found that it was confusing to the Nic-Out trademark and Product Source knew at the time of the application that: (1) the confusing mark NIC-OUT was previously used in Canada, and (2) the trademark NIC OUT was not distinctive. Therefore, Product Source's trademark NIC OUT was expunged from the Registry, and costs were awarded to TLG Canada in the amount of $10,000.


CIPO has released a new document titled the "Search Report", which outlines the search and examination work that is conducted by the Patent Branch examiners during national patent examinations.The document is provided for reference only, and will be annexed to examination reports.

CIPO has announced that it will be holding an official consultation on the report entitled Modernizing the IP Community (the "Report") from October 9, 2014 to December 9, 2014. CIPO is seeking views to assess the degree to which the recommendations contained in the Report meet the needs of the business community and the IP professional community. A summary overview of CIPO's initiative can be found here.

Recent reports have suggested that the government will be seeking to amend the Copyright Act (through the Budget Implementation Act) to provide an exception to copyright infringement for political advertising. According to news reports, the proposed exception will allow free use of "news" content in political advertisements in specific situations, and only by political officials or their agents. The issue was debated briefly in the House of Commons on October 10, 2014, amid the reports.

CIPO has also announced that it is in the process of revising and modernizing the Manual of Patent Office Practice (MOPOP). As of October 1, 2014, minor updates have been made to Chapters 8 and 19.

A minor amendment to the Industrial Design Regulations has been made, repealing subsection 12(3) relating to the electronic filing of documents. In 2009, the Standing Joint Committee for the Scrutiny of Regulations found that the subsection was invalid due to an inconsistency between the English and French versions of the Industrial Design Act. CIPO took the position that it could not, at the moment, amend the Act to correct this one inconsistency. Therefore, the subsection was simply repealed since it was decided that its removal would have no impact on the effectiveness of the Regulations.

The BLG Life Sciences Group has published LIFESIGNS: Life Sciences Legal Trends in Canada, a Report on Intellectual Property, Litigation, Corporate Commercial legal trends and industry developments in Canada.

About BLG

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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