Canada: The Federal Court Does The Hokey Pokey With The Disclosure Requirement In The Sound Prediction Of Utility

The doctrine of "sound prediction" was ushered into Canadian law as a means to protect useful inventions. A review of the case law, however, reveals that it has evolved into the impetus for a sharp distinction between demonstrated and soundly predicted utility. As a result, uncertainty has arisen with respect to what the patentee must disclose to the public where utility is predicted.

The Supreme Court of Canada's (SCC) decision in Apotex v Wellcome Foundation1 (AZT ) marked the first step towards an elevated substantive requirement for the disclosure of a sound prediction of utility. In AZT, the SCC established a three-part test for sound prediction:

  1. There must be a factual basis for the prediction;
  2. There must be a sound line of reasoning; and
  3. There must be proper disclosure.

The jurisprudence in both the Federal Court (FC) and Federal Court of Appeal (FCA) demonstrates that the courts continue to struggle with the application of the third step relating to proper disclosure. On one extreme, courts have interpreted this element as requiring disclosure of the factual basis and sound line of reasoning for the predicted utility in the patent itself.2 The "heightened" disclosure has resulted in several pharmaceutical patents being held invalid for lack of utility.3 Other cases have found that this enhanced requirement for disclosure exists only in respect of patents claiming the new use of known compound.4

Importantly, there is no statutory basis requiring that predicted utility be disclosed within the patent and many question whether a utility disclosure requirement exists at all. While a valid patent requires public disclosure of its invention, the enhanced disclosure requirement to establish a sound prediction utility undermines the purpose of the patent system and violates Canada's treaty obligations. In particular, the disclosure requirement for sound prediction goes beyond the substantive requirements of both Article 29.1 of TRIPS and Article 27 of the Patent Cooperation Treaty (PCT), which provisions determine what is necessary to be disclosed in a Canadian Patent.5

Recent Developments

The unsettled law concerning the disclosure requirement continues to plague the FC and FCA in sound prediction cases.

Recently, it appears that the lower court has attempted to reconcile the disclosure requirement for predicted utility with previous case law and the fact that utility and disclosure are treated separately under the Patent Act.

In Astrazeneca Canada Inc v Apotex Inc (Nexium FC )6, Justice Rennie considered the issue of proper disclosure in the context of sound prediction. Justice Rennie concluded that there is no heightened disclosure requirement of utility in all sound prediction cases. Rather, the disclosure requirement "is limited to the context of 'new use' patents, assuming such a utility disclosure requirement exists at all." Justice Rennie relied on the SCC's comments in AZT, together with the SCC's orbiter comments from Teva Canada Ltd v Pfizer Canada Inc7, as the basis for his conclusion. Justice Rennie also noted that his interpretation of AZT was supported in Justice Gauthier's concurring remarks in the Federal Court of Appeal's decision in Sanofi-Aventis v Apotex (Plavix FCA).8

While not a complete resurrection of the original doctrine, Justice Rennie's view that enhanced disclosure applies only to "new use" patents represents a step in the right direction. On appeal, the FCA upheld the decision, but did not address Justice's Rennie's finding concerning the disclosure requirement with sound prediction utility.

More recently, Justice Rennie's conclusion was adopted in Gilead Science Inc v Idenix Pharmaceuticals Inc9, where Justice Annis held that there was no utility disclosure requirement in respect of Idenix's patent that related to a sound prediction of utility for a new composition.

Unfortunately, there have been two FC decisions in 2016 that have specifically rejected Justice Rennie's reasoning and reverted back to the elevated standard for disclosure. In Eli Lilly Canada Inc v Hospira Healthcare Corp10, Justice Barnes reaffirmed the disclosure requirement for sound prediction in all cases. Justice Zinn echoed this view in Allergan Inc v Apotex Inc11. In particular, Justice Zinn noted that in the absence of clear direction from the FCA or SCC, the factual basis and the sound line of reasoning, apart from matters of common general knowledge, must be included in the patent.

It is evident from these cases that the FC remains divided on the issue of proper disclosure in the context of sound prediction.

In March 2016, the SCC granted leave to appeal in the Nexium case. Hopefully, the SCC will address the issue of proper disclosure and provide some much needed guidance to restore the doctrine of sound prediction back to its original form.


1 2002 SCC 77

2 See for example, Eli Lilly v Apotex, 2009 FCA 97 at paras 12-15; Eli Lilly v Novopharm, 2010 FCA 197 at para 83; Apotex Inc v Pfizer Canada Inc, 2011 FCA 236 paras 42-44 & 51-52; Eli Lilly Canada Inc v Hospira Healthcare Corp, 2016 FC 47; Allergan Inc v Apotex Inc, 2016 FC 344

3 See for example, Eli Lilly & Co v Teva Canada Limited, 2011 FCA 220; Sanofi-Aventis Canada Inc v Apotex Inc, 2011 FCA 300; Ratiopharm Inc v Pfizer Ltd, 2009 FC 711; Eli Lilly Canada Inc v Novopharm Limited, 2011 FC 1288

4 See for example, Sanofi-Aventis v Apotex, 2013 FCA 186 at 134; Astrazeneca Canada Inc v Apotex Inc, 2014 FC 638, aff'd 2015 FCA 158; Gilead Science Inc v Idenix Pharmaceuticals Inc, 2015 FC 1156.

5 Agreement on Trade-Related Aspects of Intellectual Property Rights, 15 April 1994, 1869 UNTS 299, art 29.1; Patent Cooperation Treaty, 19 June 1970, 28 UST 7647 as amended, art 27.

6 2014 FC 638, aff'd 2015 FCA 158

7 2012 SCC 60

8 2013 FCA 186

9 2015 FC 1156

10 2016 FC 47

11 2016 FC 344

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