Canada: Prosecute With Candour In Canada

Last Updated: January 11 2011
Article by Nathaniel Lipkus and Shonagh McVean

Originally published February 2010 in Managing IP.

Patent prosecution in Canada is often managed from abroad and typically takes a back seat to prosecution of corresponding patents in larger markets, such as the US and Europe. In fact, only 12% of Canadian patent applications are filed by Canadians, with only one of the top 10 patentees (Schlumberger Canada) and only two of the top 10 patent applicants (Schlumberger Canada and Research in Motion) based in Canada (see chart on page 25).

A December 2009 decision from Canada's Federal Court threatens to upturn the top-down manner of prosecuting Canadian applications. The Court in Lundbeck Canada Inc v Ratiopharm Inc (known as the Memantine decision) determined that patent applicants and their Canadian agents must be full and frank in their responses to examiner requisitions in order to fulfil their so-called duty of candour. Practically speaking, however, it is too early to know precisely what conduct will fulfil this duty, which is now indeterminate in its scope (see box on page 26).

A new set of risks

Consider a Canadian application that is prosecuted following preliminary findings of invalidity of the proposed claims of a corresponding US application, which were overcome by narrowing the US claims. The Canadian examiner will have the benefit of all the prior art that was before the USPTO and may look to the US prosecution history and find the proposed claims to be invalid on the basis of the same prior art that concerned the US examiner.

Until Memantine, dealing with this situation in Canada was straightforward: advocate fiercely that the subject matter in the application is inventive over the prior art of interest. Although the Patent Act is clear that patent applications are required to behave in good faith in replying to office actions, never had a Canadian court rendered a patent unenforceable on the basis of the forcefulness with which an applicant responded to prior art allegations. Memantine complicates matters. The Memantine judge imposed a new standard of practice on Canadian patent agents in replying to office actions containing prior art allegations.

In his opinion, the judge said: "A proper understanding of the prior art is clearly critical to patent examination. The duty of good faith ... requires that this prior art be fully and fairly described by applicants and their agents when answering requisitions from the Patent Office."

This passage suggests that Canadian patent agents and their clients may no longer passionately advocate that an application is inventive over the prior art, as is traditionally done. Rather, a dispassionate view of all known prior art appears to be required. This "full and fair" approach far exceeds the US standard, which merely requires that applicants not intentionally deceive the Patent Office in respect of information material to patentability.

Under these circumstances, Canadian patent agents are now expressing serious concerns about how they are to address prior art allegations in responses to office actions, including whether they should make any arguments at all.

A new defence to patent infringement?

With patent prosecution perceived as a cost centre rather than revenue generator in innovative businesses, there is a temptation to continue with the status quo (subordinating Canadian prosecution to prosecution in more lucrative foreign markets) as a cost-saving measure. However, this could have long ranging consequences.

Post-Memantine, patent infringement defendants now smell blood in the water and are adapting their litigation strategies to advance duty of candour allegations. It is a safe bet that if a patent is important enough to be the subject of infringement litigation in Canada, then Canadian defence counsel will avail themselves of any defence available based on a violation of the duty of candour by the plaintiff. In one example, not one week after publication of the Memantine decision, a client of this author's firm faced a barrage of attacks on its patent based on an alleged duty of candour violation.

The duty of candour stems from a provision in Canada's Patent Act, which deems a patent application to be abandoned if the applicant does not "reply in good faith to any requisition made by an examiner in connection with an examination" within a specified time period. The Patent Office will not notify the applicant if the patent has been abandoned; rather, it is not until the patent becomes contentious in the marketplace that potential infringers will retrospectively allege that the patent was irretrievably abandoned at the time of the alleged bad faith.

This development obviously introduces enormous uncertainty for patentees, applicants and Canadian patent agents seeking to meet an elevated, yet indeterminate, professional standard of care. Should companies stop patenting in Canada? Should patent applications be abandoned if an examiner issues a rejection based on prior art? On the contrary, not only can a properly-coordinated global patent prosecution strategy address the risks associated with Canadian prior art objections, but careful compliance with the duty of candour can sanitise a patent application so that it is as potent as possible when litigation ensues.

The key: a coordinated patent strategy

The content of the duty of candour has not yet been fleshed out by Canadian courts, and it is still possible that an appellate court will revisit the issue and limit the scope of the duty of candour. However, as of today, the duty of candour exists, meaning that more care will be required in prosecuting Canadian patents. Here are four tips to assist companies in complying with their newfound prosecution obligations while not compromising their global patent protection objectives:

Do not depart from positions taken in respect of foreign patents

Often, Canadian patent agents are not in a position to determine whether an office action response reflects a full and frank account of the applicant's knowledge relating to a particular prior art issue. This is because the Canadian agent is normally not the agent responsible for doing prior art searches or having knowledge of prosecution abroad.

Canadian courts have been critical of patent prosecution carried out by patent agents who fail, for a lack of knowledge or otherwise, to accurately represent the invention as developed by the inventors. One of Canada's most reputable patent judges, Justice Roger Hughes, recently criticised Pfizer's patent prosecution for its amlodipine besylate patent, which was carried out by an in-house patent agent trainee with little knowledge of the applicable chemistry, and who had little guidance from the inventors (Ratiopharm Inc v Pfizer Limited, Federal Court, 2009). In part based on intentionally misleading misstatements found within the patent, the Court invalidated the patent.

Following Memantine and the Court's scrutiny of slipshod prosecution, litigants can now expect patent defendants to use foreign filings and prior inconsistent statements made to foreign patent authorities in advancing their duty of candour defence. To overcome such attacks, companies should stay consistent with relevant positions taken before foreign patent examiners for any corresponding or related patent. This will permit the Canadian agent to know whether the company is meeting the "full and frank disclosure" standard articulated by the Federal Court in Memantine.

To minimise the risk of inconsistency between Canadian and foreign applications, companies should not only harmonise their international advocacy before the various patent offices, they should also carefully consider making their Canadian claims correspond with claims submitted in other countries. Even though the Canadian Patent Office often allows broader claims than those approved in other jurisdictions, an applicant may face a dilemma if it obtains a broad claim in Canada that has been rejected as obvious in a foreign jurisdiction. An anomalously broad Canadian claim invites the scrutiny of the court, and the reward for aggressive Canadian prosecution may well be a court finding that the entire patent was retroactively abandoned.

Ask the question: If I omit this information, am I ceasing to be "full and frank" in my disclosure?

In a contentious prosecution, it is often unavoidable to take a strong position on a key issue. As knowledgeable practitioners, Canadian patent agents are normally aware of the strengths and weaknesses of their position, and it is expected that strengths will be emphasised, and weaknesses minimised, in office action responses. However, an adversarial approach to advocacy before the Patent Office has suddenly become a much riskier proposition.

Full and frank disclosure requires that companies carefully consider what they have omitted from an office action response in the course of advocating their position. In the Memantine case, Lundbeck was penalised for failing to discuss a prior art reference in response to an obviousness rejection, even though the company had brought the reference to the examiner's attention. After Memantine, prudent applicants will at least acknowledge the existence of information known to be directly relevant to the patentability issue raised by the examiner.

Emphasise facts over argument in advocating before the Patent Office

Canadian office action responses should be reviewed carefully for unnecessary rhetoric. In finding that Lundbeck had violated the duty of candour in Memantine, the Court focused primarily on a single statement made by Lundbeck's Canadian agent in an office action response:

It is therefore the applicant's opinion that the teachings of the prior art as a whole would not have prompted the skilled person, faced with the problem of formulating a composition for the treatment of mild cognitive impairment or dementia, to elaborate the instant composition and that consequently the claims on file are not obvious in view of the prior art. Therefore, withdrawal of this objection is respectfully requested.

By drawing a conclusion regarding "the teachings of the prior art as a whole [emphasis added]", Lundbeck's agent suddenly placed an onerous obligation on itself with respect to the entire body of relevant prior art. Was this necessary to properly respond to the patent examiner? Likely not. Had Lundbeck merely concluded its response simply by stating that the claims were not obvious, the Court may have identified nothing misleading in the response, thereby saving the patent.

Patent law issues are especially complex and ill-suited for application of the principle of res ipsa loquitur (meaning literally, the thing speaks for itself). However, patent applicants would be wise to present prior art information to patent examiners in a more dispassionate style than has traditionally been used, allowing the facts to speak for themselves. Submissions should be heavy on persuasive facts and light on forceful rhetoric, except where such rhetoric is fully supported by the entire factual record.

Seek updated information on your Canadian prosecution obligations at regular intervals

As of today, the law imposes a duty of candour of patent applicants, meaning that more care is required in prosecuting Canadian patents. However, the law relating to Canadian prosecution obligations is in flux, and it is possible that the Federal Court of Appeal will face a similar question and express disagreement with the Memantine decision, leading to a narrowing or non-recognition of the duty of candour. Innovators would be wise to be mindful of Memantine but to also watch for future court decisions that dictate the rules of engagement for innovative companies before the Canadian Patent Office.

The Memantine decision

The Memantine decision resulted from an administrative patent proceeding under Canada's Patented Medicine (Notice of Compliance) Regulations, wherein Lundbeck sought an order prohibiting ratiopharm from obtaining authorisation from Health Canada to market its generic memantine (marketed under the name Ebixa) product. Lundbeck asserted two patents, one of which – Canadian patent number 2,426,492 (the 492 Patent) – involved the use of memantine, an Alzheimer's drug – in combination with one of several cholinesterase inhibitors also indicated in the treatment of Alzheimer's. The Court found that the second patent did not pose a barrier to market entry.

The Court addressed ratiopharm's allegation that the 492 Patent had been abandoned, and this is where it delved into the existence and scope of the duty of candour in Canada. The Court's analysis arises from paragraph 73(1)(a) of the Patent Act, which deems an application for a patent to be abandoned if, amongst other things, the applicant does not "reply in good faith to any requisition made by an examiner in connection with an examination, within six months after the requisition is made or within any shorter period established by the Commissioner" [emphasis added].

Ratiopharm alleged that the applicants for the 492 Patent misrepresented during examination that the prior art "taught away" from using a combination of memantine and a cholinesterase inhibitor in the treatment of Alzheimer's disease. Although ratiopharm and the Court acknowledged that a key prior art document by Wenk had been brought to the attention of the Patent Office, ratiopharm alleged that the applicants failed to discuss the significance or provide a copy of the Wenk article in responding to an office action finding of obviousness.

In its office action response, the applicants discussed several pieces of prior art that, taken together, could have been taken to suggest that a skilled person would not have been motivated to combined memantine with a cholinesterase inhibitor. The response then went on to conclude that:

It is therefore the Applicant's opinion that the teachings of the prior art as a whole would not have prompted the skilled person, faced with the problem of formulating a composition for the treatment of mild cognitive impairment or dementia, to elaborate the instant composition and that consequently the claims on file are not obvious in view of the prior art. Therefore, withdrawal of this objection is respectfully requested [emphasis added].

In reviewing this exchange of communication, Justice Mactavish of the Federal Court first affirmed that s. 73(1)(a) imposes a duty of candour on the part of applicants in the prosecution of a patent application in Canada.

In affirming the existence of this duty, Mactavish drew on Justice Hughes's reasoning in GD Searle & Co v Novopharm Ltd (2007). Mactavish accepted Hughes's analysis as an accurate overview of the obligations on an applicant. In particular, she approved of Hughes's analogy between an application for a patent and an ex parte court proceeding, finding that "the ordinary checks and balances of the adversary system are not operative".

In applying the duty of candour, Mactavish observed that the patent examiner was concerned with obviousness, and in particular the obviousness of combining memantine with cholinesterase inhibitors for the treatment of mild cognitive impairment or dementia. Instead of alerting the examiner to the importance of the Wenk article, the patent agents advised the patent examiner of other articles warning against combining NMDA antagonists (of which memantine is one) with cholinesterase inhibitors because NMDA antagonists attenuate the effect of the cholinesterase inhibitors.

Missing from the patent agents' office action response was the fact that Wenk was directly relevant to the claimed combinations (unlike the articles cited), and that Wenk came to the opposite conclusion of those other articles. Specifically, Wenk explained that certain "reversible" cholinesterase inhibitors such as those contemplated in the 492 Patent did not lose their therapeutic effect when used in conjunction with memantine. In view of Wenk, Mactavish found that the patent agents did not fairly represent the teachings of the prior art when they said that "the prior art clearly teaches away" from the invention alleged in the 492 Patent. Prior disclosure of the existence of the Wenk article did not change the fact that the statements made in the response "were not a full, fair or complete depiction of the teachings of the prior art". There is no appeal possible from this decision.

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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