Canada: New Developments On The Patent "Utility" Debate In Canada


There have been a number of notable developments in recent weeks in respect of patent utility law in Canada.

On October 30, 2014, the Federal Court of Appeal upheld prohibition orders against Mylan Pharmaceuticals ULC and Apotex Inc. (the Appellants) with respect to the drug CELEBREX® (celecoxib). This decision provides further guidance on assessing a "promise" of patent utility by holding that a "promise" must be explicitly and unambiguously made and may be construed on a claim-by-claim basis.

In another development, while issues of patent utility were expected to be addressed by the Supreme Court of Canada in Apotex Inc. et al. v. Sanofi-Aventis et al. (re: PLAVIX®) on November 4, 2014, this case was discontinued by Apotex, on consent, on the eve of hearing.

In the background, Canada's international obligations in respect of patent utility continue to be the subject of debate at the international level, with a challenge by Eli Lilly and Co. against Canada under the North American Free Trade Agreement, Chapter 11 investor-state dispute provisions.

Further information on these recent developments is provided below.

Federal Court of Appeal restates the "promise of utility" doctrine in favour of patent owners

Cases: Apotex Inc. v. Pfizer Canada Inc. et al. and Mylan Pharmaceuticals ULC v. Pfizer Canada Inc. et al.
2014 FCA 250 (celecoxib)

Nature of cases: Appeals of two s.6 prohibition orders pursuant to the PM(NOC) Regulations
Date of decisions: October 30, 2014

Federal Court of Appeal decision in celecoxib

The Federal Court of Appeal heard a consolidated appeal of two decisions of Justice Harrington, cited as 2014 FC 38 (the Mylan Decision) and 2014 FC 314 (the Apotex Decision). Before the Court of Appeal, Apotex advanced four distinct invalidity arguments, namely: (1) lack of utility in treating inflammation in humans; (2) lack of utility in reducing side effects; (3) lack of utility in preventing colorectal cancer; and (4) insufficient disclosure1. Mylan's submissions were directed to the second of these arguments. Mylan argued that because Canadian Patent No. 2,177,576 (the '576 Patent) failed to meet a "promise" of reduced side effects in humans, it was invalid for lack of utility. The 576 Patent's specification stated that "(t)he compounds are useful as anti-inflammatory agents [...] with the additional benefit of having significantly less harmful side effects". The Appellants further contended that the Respondents had conceded in earlier prohibition proceedings against Novopharm Ltd. (the Novopharm Case) that reduced side effects were necessary to establish celecoxib's utility and were now abusing the Court's process by taking a different position.

A "promise" must be "clear and unambiguous"

The Court of Appeal confirmed that the threshold to establish utility is "generally quite low" being no more than a "scintilla of utility" absent an explicit promise of a specific result. A patentee will only be held to an elevated "promise" of utility that is "clear and unambiguous". Where the validity of a patent is challenged on the basis of an allegedly unfulfilled promise, the patent will be construed in favour of the patentee where it can reasonably be read by the skilled person to exclude the elevated/unfulfilled promise.

Apotex asserted that where a patent "lays claim" to a particular use, that use necessarily forms part of the "promise" of the patent. The Court of Appeal rejected this "broad proposition", holding that a result or advantage asserted in a patent's claims "will generally be seen as a promise of utility". Apotex failed to establish how any of the '576 Patent claims contained an explicit promise of treatment in humans. The claim language referred to "subjects", and nothing outside the claims could be said to represent the sort of unequivocal language required. While a promise may appear in the specification if the language to that effect is "clear and explicit", statements made outside of the claims "should not be presumed to be promises".

A single "promise" may not apply to each patent claim

Apotex asserted that the entire patent should be invalidated since a claimed use of the compound in preventing colorectal cancer was neither demonstrated nor soundly predicted as of the patent filing date. The Federal Court of Appeal held that the jurisprudence failed to support Apotex's proposition and that some promises may only apply to a subset of claims. The Court further upheld the application judge's application of section 58 of the Patent Act that invalid claims do not affect valid ones.

No support for abuse of process / stare decisis / judicial comity

The Appellants argued that it was an abuse of process for Pfizer to reject reduced side effects as part of the '576 Patent's "promise", on the basis that Pfizer had previously conceded this point of utility in the Novopharm Case. Apotex argued that a patentee cannot take inconsistent positions in different proceedings dealing with the same patent, relitigate an issue by adducing additional evidence or "elevate the inventive concept to support non-obviousness and then read down the promised utility". Although the Court accepted that "there may be instances where a concession made in one proceeding under the Regulations may be construed as binding upon the conceding party in a later proceeding involving a different party", there is no absolute precedent. As a result, the trial judge did not proceed on an improper principle or a wrongful exercise of discretion. The Court of Appeal also rejected the applicability of stare decisis or comity.  Stare decisis is not unlimited in scope and not every statement in a judgment will be binding on lower courts. In determining the authoritative force of any given passage of a decision, one must essentially ask "What did the case decide?". Whether the '576 Patent's utility included reduced side effects was not decided in the Novopharm Case. Comity or "horizontal stare decisis" is not binding, and there is no legal sanction for a judge's failure to apply comity.

The PLAVIX® appeal to the Supreme Court of Canada is discontinued on consent on the eve of trial

On January 30, 2014, the Supreme Court of Canada (SCC) granted Apotex et al. leave to appeal a decision of the Federal Court of Appeal which overturned a trial decision declaring Canadian Patent No. 1,336,777 claiming clopidogrel bisulphate (commercialized as PLAVIX®) to be invalid.

The hearing was scheduled for November 4, 2014 and six parties were granted leave to intervene, including: Fédération internationale des conseils en propriété intellectuelle, Canada's Research-Based Pharmaceutical Companies, the Centre for Intellectual Property Policy, the International Association for the Protection of Intellectual Property, BIOTECanada and the Canadian Generic Pharmaceutical Association. The SCC was expected to address issues on patent utility including the assessment of the "promise" of the patent and heightened disclosure requirements triggered by the sound prediction analysis.

The appeal to the SCC was discontinued on consent on November 3, 2014.

Eli-Lilly takes further step in NAFTA challenge before arbitration panel

On September 29, 2014, Eli Lilly and Co. filed its Claimant's Memorial (the common name for an advocacy brief in international arbitration proceedings), in the course of its challenge under Chapter 11 of the North American Free Trade Agreement (NAFTA) claiming that Canada's judicial treatment of the "Promise Utility Doctrine" discriminates against pharmaceutical patents and contravenes Canada's international commitments under NAFTA and the Patent Cooperation Treaty (PCT).

In the challenge filed with an arbitration panel on June 13, 2013, US-based pharmaceutical company Eli Lilly and Co. is demanding $500 million in compensation from the Government of Canada for a violation of its obligations to foreign investors under NAFTA, on the basis that it has allowed the Canadian courts to invalidate its patents pertaining to Strattera® (atomoxetine) and Zyprexa® (olanzapine).

Eli Lilly's claim is based on the application of Chapter 11 of NAFTA, which protects the investments of companies and foreign investors having commercial operations in NAFTA's signatory countries. Eli Lilly specifically alleges that the application of the "promise utility" doctrine by Canadian courts is "arbitrary in its application" and "discriminatory in its effects", and is thus in conflict with Canada's commitments under the provisions of Chapter 11, as well as Chapter 17 which requires Canada to provide patents for inventions, in all fields of technology, that are "new, result from an inventive step, and are capable of industrial application".

A Counter-Memorial from the Government of Canada dealing with liability and jurisdiction is due on January 27, 2015. The hearing of this matter is scheduled for May 30, 2016 for a duration of 10 days.

Links to materials:

The Federal Court of Appeal celecoxib decision may be found here.

A copy of Eli Lilly's Claimant's Memorial can be found here.

Other publicly available materials pertaining to the Eli Lilly matter can be found here.


1 Apotex's allegations of insufficient disclosure were rejected on the basis that Apotex failed to properly advance these arguments in its Notice of Allegation.

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