The IP Year 2008 In Review: Trademarks (Part 2)

The IP Year 2008 In Review: Copyrights (Part 3)

Following our very successful The IP Year 2007 in Review,1 rated most popular Canadian article on the MONDAQ® website ( in February 2008, Fasken Martineau's Intellectual Property ("IP") Group is pleased to again present The IP Year 2008 in Review. Our synopsis of the noteworthy decisions and developments in Canadian IP law this past year will be helpful and informative for those doing business in Canada since your rights with regard to patent, trade-mark and copyright protection may be impacted.





E-File This Under PCT.

Kevin Holbeche

A Patent Prosecution Pilot Project.

Alexandre Abecassis & Mark D. Penner

Will Bilski Stop "Business Method" Patents In The U.S.?

Tai W. Nahm & Alexandre Abecassis

A U.S. Court Voids The New U.S. Rules Of Practice.

Serge Lapointe

Take My Money, Please! – Federal Court Addresses Payment Of Maintenance Fees.

Timothy Squire

Inducement By Replacement Is Not Repair.

Cécile Chevalier

The Saga Continues: Claim Construction Rules Different For Patent Re-examination Board?

David Turgeon

"Selection" Patents Revisited.

Mark D. Penner & Philip A. Swain

Pay Attention To Details (Part 1): Beware The Boilerplate.

Philip A. Swain

Pay Attention To Details (Part 2): Take Care When Responding To CIPO Office Actions And Communications.

Dan Polonenko

Pay Attention To Details (Part 3): Cannot Delete Priority Date To Extend National Phase Entry In Canada.

Tai W. Nahm

For Maximum Costs Award, Pursue All Allegations Of Invalidity.

Philip A. Swain

Section 8 Interpreted At Long Last.

Leanne Shaughnessy & Pascal Bouchard

Scope Of Discovery In NOC Proceedings.

Timothy Squire

Need To Be Specific In Patent Lists.

David Turgeon

An Obscure Reference, Even If Publicly Available, Is Not Admissible As Prior Art

Serge Lapointe

No Inducement To Infringe For Sales Outside Canada.

Serge Lapointe

Issue Estoppel: No Estoppel Based On Foreign Patent Litigation In Canadian Patent Litigation Or Prior Considerations Of Validity.

Mark D. Penner & Armand M. Benitah

Impacted Third Parties May Not Intervene In Appeal.

Mark D. Penner

What's The "Use"?

Mark D. Penner

The "X" File - The Truth Is Out There.

Timothy Squire

CIPO Begins Consultations On Changes To Canadian Patent practice

Kevin Holbeche


The year 2008, saw many patent developments in Canada. The Canadian Intellectual Property Office ("CIPO") updated its filing procedures to allow for electronic filing of Patent Cooperation Treaty (PCT) applications. A number of changes to the Canadian Patent Rules2 have also been proposed for consultation.3 As with previous years, judicial activity in 2008 focused mostly on pharmaceutical patent disputes under the Patented Medicines (Notice of Compliance) Regulations ("NOC Regulations").4

There were other important developments in the United States in 2008 that will be of interest in Canada, including the status of the controversial amendments to the U.S. Patent Rules.


E-File This Under Pct. In September 2008, CIPO launched an online tool enabling international patent applications to be electronically filed with CIPO under the Patent Cooperation Treaty ("PCT").5 Previously, CIPO only allowed limited portions of PCT applications (i.e., the abstracts and request forms) to be submitted electronically, and even then, only by way of CDs or DVDs which were to accompany paper submissions. With the previous system, CIPO manually generated an International Application number within approximately one week after filing.

Now, however, the International Application number can be generated instantaneously: no more need to submit CDs or DVDs. Neither, in fact, is there any need to file by paper. With CIPO's new "PCT e-Filing" initiative, the entire process may now be performed electronically. PCT Applicants – or their patent counsel – simply require: (i) the latest version of the PCT-SAFE software, available online from the World Intellectual Property Office ("WIPO");6(ii) a digital certificate issued to the e-Filer by WIPO;7 and (iii) an online account and login credentials with Industry Canada.8

International patent applications can be prepared using the PCT-SAFE software, and then signed with the WIPO-issued digital certificate. PCT e-Filing allows for international patent applications to be uploaded and for the prescribed filing fees to be paid through the CIPO website. Applications are verified just prior to submission, and the International Application number is automatically generated. As an additional benefit, the new PCT e-Filing initiative also provides clients with improved access to their filing history.

In exchange for the service upgrade and convenience, CIPO's PCT e-Filing system comes with a lower bottom line, since applicants using the new system may be eligible for payment of reduced government filing fees.9

A Patent Prosecution Pilot Project. In early 2008, a one-year "Patent Prosecution Highway" ("PPH") pilot program was launched between CIPO and the United States Patent and Trademark Office. According to the CIPO website,10 the PPH is expected to significantly accelerate examination of patent applications if examination work has already been conducted at another intellectual property office. If claims of an application have been found to be acceptable by one intellectual property office, an accelerated examination can be requested at a participating intellectual property office. The Canada-U.S. PPH pilot program commenced on January 28, 2008 and will end on January 28, 2009, unless extended for another year.

This initiative may be of great interest since Canada and the United States are usually jurisdictions of choice for many applicants seeking patent protection, and any procedures to fast track prosecution in these jurisdictions may be welcome, especially in fast moving industries such as biotechnology or high technology.


Will Bilski Stop "Business Method" Patents In The U.S.? In a much anticipated en banc decision by the U.S. Court of Appeals for the Federal Circuit ("CAFC"), the criteria for patentability of "processes" in software, business method and computer-implemented inventions appears to have been altered to favor a newly resurrected "machine-or-transformation test" over the "useful, concrete, and tangible result" analysis that had been relied upon since the release of the famous State Street Bank decision a decade ago. While strictly a U.S. decision, this case will be of great interest for Canadian companies in software, financial and high technology industries seeking patent protection for "business methods" in the U.S.

In Bilski,11 the Court reasoned that "[t]he Supreme Court...has enunciated a definitive test to determine whether a process is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself." According to the CAFC, a claimed process is patent-eligible in the United States if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing (the "machine-or-transformation test").

With respect to the transformation part of the test, the majority opinion indicated that there must be a transformation of an article into a different state or thing and that the transformation must be central to the purpose of the claimed process. The majority opinion stated that "purported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances." The majority opinion added that "the process as claimed encompasses the exchange of only options, which are simply legal rights to purchase some commodity at a given price in a given time period" and concluded that the claimed invention "... does not involve the transformation of any physical object or substance, or an electronic signal representative of any physical object or substance."

As to whether the Bilksi decision will entirely stop business method patents in the U.S., the dissent by Circuit Judge Mayer appears to suggest otherwise – that the "machine-or-transformation test" set out by the majority opinion may be circumvented by careful claim drafting. However, the new test does appear to have raised the bar for meeting the requirements for patentable subject matter in the U.S., and thus places even greater importance on careful and proper drafting of "process" claims for software, business method and computer-implemented inventions.

A U.S. Court Voids The New U.S. Rules Of Practice. In last year's The IP Year 2007 in Review, we reported on the successful temporary order which was obtained by GlaxoSmithKline preventing the United States Patent and Trademark Office ("USPTO") from implementing its new rules of practice concerning primarily claims and continuation applications ("New Rules").12 In April, the Virginia District Court permanently enjoined the USPTO, its director and employees from implementing the New Rules. While this was a U.S. decision, the rejection of the New Rules is of particular interest to Canadian companies seeking patent protection in the U.S.

The U.S. District Court for the Eastern District of Virginia declared the New Rules "null and void" as "otherwise not in accordance with law" and "in excess of statutory jurisdiction [and] authority". The court ruled that the proposed New Rules were substantive rather than procedural, as the USPTO had argued, and that the Office therefore did not have the authority to promulgate them. Although the U.S. Patent Act empowers the USPTO to "establish regulations, not inconsistent with law" and to "govern the conduct of proceedings in the Office", the USPTO is not vested with any "general substantive rulemaking power", the Judge said. The New Rules were found to be "substantive rules that change existing law and alter the rights of applicants... under the Patent Act". The New Rules "constituted drastic departure from the terms of the Patent Act as they are presently understood".

The battle is not over yet however. In May, the USPTO filed a Notice of Appeal with the Court of Appeals for the Federal Circuit, challenging the earlier decision. It is likely that the ultimate fate of the New Rules will not be decided for a while.

Take My Money, Please! – Federal Court Addresses Payment Of Maintenance Fees. As noted in our previous IP Reviews, the correct payment of maintenance fees continues to be a problem for applicants. In the recent decision in Sarnoff Corporation v. The Attorney General of Canada13, the Federal Court ruled on who may pay maintenance fees in respect of a pending patent application. In this case, Sarnoff had filed a patent application in 1999 and for the next five years, Sarnoff's patent agent paid the maintenance fees for the application on Sarnoff's behalf. In 2004, Sarnoff replaced its patent agent with a new patent agent, which then paid the maintenance fees for the application in 2006 and 2007.

Following the receipt of the 2007 maintenance fee, and having accepted the 2006 maintenance fee without complaint, CIPO contacted Sarnoff's new patent agents and advised that it had no record of a notice of change of agents. This was followed by another letter advising that Sarnoff's patent application was abandoned because the maintenance fee had not been paid by the appropriate person. The new agent wrote CIPO requesting that the application be reinstated, and with its letter, submitted the 2008 maintenance fee on Sarnoff's behalf. CIPO responded that the 2008 fee could only be accepted from an authorized correspondent, and reiterated that the patent application had been deemed abandoned.

Sarnoff commenced an application for judicial review of the Patent Office's decision, and on behalf of the Federal Court, Justice Hughes corrected this apparent injustice. In arriving at his decision, Justice Hughes first noted that the Patent Act provides that the "applicant" for a patent shall pay maintenance fees to the Patent Office. He also found that in this specific case, the new patent agent was an authorized agent according to the fundamental laws of agency, and was otherwise empowered to act on behalf of its principal. Justice Hughes then noted that for the purpose of prosecuting or maintaining an application, CIPO shall only communicate with an authorized correspondent; The term "authorized correspondent" being defined, among others, as the inventor or a patent agent appointed by the inventor or applicant. Having concluded that the new agent was a legal agent of Sarnoff, the only question in Justice Hughes' mind was whether it was of any consequence that the Patent Office did not have on file a notice to the effect that the new patent agent had been appointed. On this issue, Justice Hughes noted that neither the Patent Act nor the Patent Rules state when a notice of appointment of agent has to be submitted to the Patent Office, and went on to conclude the Patent Rules should not be read so restrictively so as to prohibit a principal or a principal's agent from engaging in matters so routine and clerical in nature as paying maintenance fees. In this context, and given the fact that the new agent paid the maintenance fees in a timely manner, Justice Hughes stated that CIPO had acted unreasonably. The decision deeming Sarnoff's application as abandoned was therefore set aside.

Inducement By Replacement Is Not Repair. According to a Federal Court of Appeal decision, there can be inducing infringement when an alleged infringer knew of parts replacements made by customers. In MacLennan et al. v. Les Produits Gilbert Inc.,14 the Court of Appeal reversed the lower court's decision and held that replacement components designed to be incorporated into a patented combination constituted inciting infringement.

MacLennan's patent concerned a circular saw blade with removable and replaceable teeth for use in the forest industry, allowing operators to replace saw teeth without replacing the entire circular blade. The patent did not protect the individual saw teeth per se but rather claimed the combination of a replaceable saw tooth and a detachable tooth holder for attachment to a circular saw blade. Gilbert manufactured and sold replaceable teeth for circular saws which were copies of the teeth of the patented combination and which could only be installed on the tooth holders of the patented combination. The lower Court found that the use of replacement saw teeth was simply a repair of the saw blade, and as such, did not constitute infringement according to well established Canadian law.

The Federal Court of Appeal disagreed and held that the replaceability of the saw teeth was the essence of the patent claims, and therefore there was a direct infringement every time a tooth sold by Gilbert was used to replace a tooth of the patented combination. Gilbert distributed a price list that identified the teeth of the patented combination that its teeth were intended to replace and invited customers to buy its saw teeth for installation. The Court of Appeal concluded that there was direct infringement by the users, that this infringement was influenced by Gilbert, and that Gilbert knew that, without his influence, users would not had infringed the patent.

The Saga Continues: Claim Construction Rules Different For Patent Re-Examination Board? The Genencor International Inc. v. Commissioner of Patent "re-examination saga" continued in 2008. In our 2007 Review,15 we reported that Novozyme was denied the status of party or intervenor in an appeal to the Federal Court of a Patent Re-examination Board ("PRB") decision. In Genencor International Inc. v. Canada (Commissioner of Patents), the PRB cancelled the claims of Genencor's patent following re-examination proceedings triggered by Novozyme. This year, the Federal Court heard the substance of the appeal and dismissed the case. 16

In the appeal of the PRB decision the Federal Court was called to determine the standard of review of PRB decisions. The Court established that issues of natural justice and procedural fairness must be dealt with on a "correctness" standard while issues of the merit of the PRB decision are questions of mixed fact and law that must be dealt with in accordance with the "palpable and overriding error" standard.

The Federal Court also had to determine whether supplementary submissions filed by Novozyme in the course of re-examination proceedings raised issues of natural justice and procedural fairness. Genencor argued such unfairness since it never received Novozyme's supplementary submissions, nor was it provided with the opportunity to respond to those supplementary submissions. The Federal Court nevertheless stated that this situation did not raise issues of natural justice since the evidence showed that these supplementary submissions were never considered by the PRB. As such, the PRB had no duty to provide Genencor with the supplementary submissions or to give it the opportunity to respond.

The substance of the PRB decision was also challenged before the Federal Court. Genencor argued that the PRB did not follow the claim construction principles put forward in earlier uses and came to an improper conclusion with respect to claim anticipation. The Federal Court asserted that these claim construction principles only apply to trial and appeal Court judges, but not to patent examiners in the course of examination or re-examination; this burden is mandated for courts but is inappropriate for the PRB. The appeal was thus dismissed.

"Selection" Patents Revisited. In a trio of cases, Canadian courts revisited concerns surrounding selection patents.17 As reported in our The IP Year 2006 in Review,18 a selection patent can be sought where there has been a selection of one or more compounds from a previously discovered group of compounds. To meet the statutory utility requirement under the Patent Act, the selected compound must also have an advantage over the larger group or class of compounds as a whole and the selection must be established through "sufficient representative testing". Based on the 2008 cases, it remains to be seen what exactly "sufficient representative testing" means for establishing a valid selection patent. Clearly, the more comparative data the patentee includes in an application for a selection patent, and the more the patentee articulates the selection's advantages over the previous genus, the stronger the argument will be for a proper patentable selection.

In Pfizer Canada Inc. v. Canada (Health),19 Ranbaxy alleged that Pfizer's patent was invalid on a number of grounds. When considering anticipation, the Court of Appeal found that a "... claim to a specific chemical compound cannot be anticipated by a prior art reference which only teaches a broad class of compounds into which the compound falls because the prior art reference does not give directions which inevitably result in the specific compound." As Ranbaxy did not allege that the prior art taught that the calcium salt of atorvastatin would have greater inhibition activity than expected, there was no anticipation.

In Glaxosmithkline Inc. v. Pharmascience Inc.,20 the second case of the trio, GlaxoSmithKline ("GSK") sought an order prohibiting the issuance of a Notice of Compliance ("NOC") to Pharmascience for its antiviral drug VALTREX (valacyclovir) as it sale of Pharmascience's product would infringe GSK's selection patent. At issue were two of GSK's Canadian patents, one of which covered amino acid esters of the antiviral compound acyclovir; the other, the selection patent, covered valacyclovir (marketed as VALTREX), which is a valine ester of acyclovir allegedly having improved oral bioavailability. Although the Court found the selection patent was valid on the basis of anticipation and obviousness, it held that GSK had failed to establish that the patent was a valid selection because the evidence that GSK presented in support of the claimed utility did not speak to the advantage of valacyclovir over the genus from which it was chosen. Indeed, GSK's selection patent only presented comparative oral bioavailability data for valacylovir against three esters chosen from the genus. The Court found that this was insufficient evidence to support GSK's claim that valacylovir had unique oral bioavailability properties over the genus of compounds in its earlier patent. The Judge noted that a patentee of a selection patent need not test every compound in a genus but rather must determine the selection based on "sufficient representative testing" that a person skilled in the art could soundly predict would not be expected to be found amongst other members of the genus.

Given two decisions from the lower courts, the Supreme Court of Canada in a late 2008 decision, weighted into the issue. In Apotex Inc. v. Sanofi Synthelabo Canada Inc.,21 Sanofi Synthelabo Canada Inc. ("Sanofi") held a patent to a class of over 250,000 possible compounds useful in inhibiting platelet aggregation activity in the blood. In a subsequently filed patent, Sanofi claimed a selected member of the earlier claims genus, PLAVIX (clopidogrel bisulphate) as an anti-coagulant that exhibits platelet aggregation inhibiting activity. PLAVIX is an optical isomer obtained from a mixture of isomers (e.g. a racemate) that was selected based on less toxicity and better tolerance than the other optical isomer or the racemate. Apotex had alleged that the patent was invalid for anticipation, obviousness and double patenting.

For a successful anticipation claim, the Supreme Court outlined and affirmed the two-step approach, namely that the requirements of "prior disclosure" and "enablement" should be considered separately and proven. As for prior disclosure, where there is no disclosure of the special advantages of the selection patent, the genus patent does not anticipate. For "enablement", the person skilled in the art must have been able to perform the invention without "undue burden". How much trial and error or experimentation is permitted before it becomes an "under burden"? The skilled person may use his or her common general knowledge of the relevant art at the relevant time to supplement information contained in the prior genus patent and may conduct routine trials without being considered an undue burden, but prolonged or arduous trial and error experiments would not be considered routine. In this case, there was no anticipation since there was no evidence that a person skilled in the art would know, from reading the earlier genus patent of the specific beneficial properties associated with the more active isomer and that it would be less toxic than the racemate or other isomer. While not necessary to consider enablement further, the Supreme Court did conclude, however, that based on the evidence submitted, separating the racemate into its isomers, identifying clopidrogel, its bisulfate salt and their advantageous properties required "...extensive investigation over a period of months".

The allegation that the selection patent was invalid on the basis of obviousness was also considered. In considering this, a court must further consider whether the nature of the invention was such that it would have been "obvious to try". "For a finding that an invention was 'obvious to try', there must be evidence to convince a judge on a balance of probabilities that it was more or less self-evident to try to obtain the invention. Mere possibility that something might turn up is not enough." In this case, the invention was not self-evident from the prior art and common general knowledge. In particular, there was no evidence that a person skilled in the art would have known which of the established separation techniques would work with this racemate. "The course of conduct and the time involved throughout demonstrate that the advantage of the claimed isomer was not quickly or easily predictable."

Finally, the challenge to selection patents based on the ground of double patenting had to fail. A selection patent may be sought by a party other than the inventor or owner of the original genus patent. In addition, selection patents encourage improvements over the subject matter of the original genus patent because that selection does something better than what was claimed in the genus patent. There is no "same invention" double patenting because the claims of the two patents were not identical or coterminous and the former is broader than the latter. Further, as the claims in the selection patent reflect a patentably distinct compound in the patent case, the invention was not invalid for "obviousness" double patenting.

Pay Attention to Details (Part 1): Beware The Boilerplate. According to a Federal Court decision, Applicants should be wary of using form letters as a "quick fix" to minimize the agent's risk without having to address a specific issue. In Acetlion Pharmaceuticals Ltd v Canada (Commissioner of Patents),22 the Federal Court of Appeal dismissed an appeal to revive an abandoned patent application despite vague language to pay any applicable fee.

As a result of incorrect internal docketing, the due date for paying a maintenance fee was missed. Within the necessary time period, the agent responded with what the agent believed to be instructions to CIPO to pay the outstanding maintenance fee and the reinstatement fee. In its response, however, the agent did not state that the applicant desired reinstatement of the abandoned patent application, as required by the Patent Act. Instead, the letter merely authorized the Commissioner to "...debit any additional fee...associated with this communication..." The application went irretrievably abandoned because CIPO did not construe the letter to contain explicit instructions to reinstate the abandoned application. While the agent argued that the "boilerplate" instructed it to pay the required reinstatement fee, CIPO disagreed, claiming that the letter did not contain explicit instructions to reinstate the abandoned application.

Drawing on Wicks v Canada (Commissioner of Patents),23 the Court underscored the importance that all requisitions to CIPO must comply with the Patent Act. When applicants rely on vague correspondence, CIPO will not accept responsibility if it is subsequently misconstrued.

Pay Attention To Details (Part 2): Take Care When Responding To CIPO Office Actions And Communications. A Federal Court of Appeal decision underscores the importance of addressing and responding to each issue raised by CIPO in their Office Actions and Communications. The consequences of not doing so may include irretrievable abandonment of patent applications resulting in the permanent loss of potential patent rights in Canada. Much like the Dutch Industries decision,24 this decision will likely have an impact on all future correspondence with CIPO.

As reported in our The IP Year 2007 in Review,25 the applicant in DBC Marine Safety Systems Ltd. v. Commissioner of Patents26 failed to respond to a request for prior art. As a result, the application was deemed abandoned. The lower court held that the applicant could not avoid the legal consequences of failing to satisfy all its obligations. In a short and to the point decision, the Court of Appeal dismissed the appeal. The Court noted that the patent regime is "... firmly established by the Patent Act and the Patent Rules. Together, the various legislative provisions set out a complete code governing the duties of an applicant for a patent, the consequences of a failure to comply with those duties, and the steps that may be taken to avoid those consequences." In agreeing with the lower court that there is no discretionary decision, the Court of Appeal concluded that where an applicant fails to respond to a requisition and the application is not reinstated within the year provided to rectify the situation, the patent application is abandoned as a matter of law.

Pay Attention To Details (Part 3): Cannot Delete Priority Date to Extend National Phase Entry in Canada. Under Canadian patent practice, it is possible to request late National Phase entry into Canada up to 42 months from the earliest priority date. In Antiballistic Security and Protection Inc. v. The Commissioner of Patents,27 the Federal Court refused to allow an Applicant to withdraw a priority claim to extend the time required for late national phase entry in Canada from an International Patent Cooperation Treaty ("PCT") Application.

Having missed the 42 month deadline for entering the National Phase in Canada as calculated from the filing date of the first application, the applicant sought to "disclaim" priority from a first application while retaining priority from the second and third applications. The applicant then attempted to enter into the National Phase in Canada based on the request being made within 42 months of the filing date of the second application. Upon reviewing this request for late entry, the Commissioner of Patents (the "Commissioner") refused the request, stating that it was unable to accept the "disclaim" of priority from the first application as the regulations under the PCT only allowed for a withdrawal of a priority claim prior to the expiration of 30 months from the priority date. The Commissioner therefore maintained that the Applicant had not entered the National Phase in Canada within the allowable time of 42 months from the earliest priority date. The Applicant challenged the Commissioner's decision on the basis that nothing prohibited it from "disclaiming" the applicable priority date.

The Federal Court also rejected the applicant's arguments since the relevant priority date for the Applicant's entry into the National Phase in Canada was the filing date for the first application. Under the Patent Rules, upon payment of a late payment fee, the National Phase application must be filed within 42 months after that priority date. Finding the definition of "priority date" to be critical, the Court held that the "priority date" of the International Application is the "filing date of the earliest application whose priority is so claimed", which in this case was the filing date of the first application.

For Maximum Costs Award, Pursue All Allegations Of Invalidity. In Shire Biochem Inc. v. Canada (Minister of Health),28 the Federal Court dismissed an application under the NOC Regulations to prohibit the Minister of Health (the "Minister") from issuing an NOC to Apotex for modafinil tablets until after the expiration of the relevant patent. The patent holder, Cephalon, granted a license to Shire Biochem to market modafinil as ALERTEC to treat sleep disorders. Apotex challenged the validity of the patent on several grounds: anticipation, obviousness, lack of invention, lack of utility, mere discovery, sufficiency of disclosure, and overly broad claims. In its defense, Shire Biochem challenged the validity of Apotex's Notice of Allegation ("NOA") alleging that it failed to act on an additional number of alleged grounds of invalidity including double patenting, improper selection patent, and "patent fraud" under the Patent Act.

At issue were the essentiality of the particle size and the consistency of the particle size of modafinil, and the effect particle size has on modafinil's potency and safety profile. The Judge found that the claims to modafinil's particle size and use in a pharmaceutical composition were anticipated by a previously published PCT application, and noted that on that finding alone Cephalon's patent should fall. Shire Biochem argued that prior art did not disclose the dosage range of modafinil of between 50mg and 700mg; the Judge, however, disagreed stating that in fact somnolent disorders were commonly treated using doses in this range. Furthermore, the Judge concluded that it would be obvious for a person of ordinary skill in the art to investigate particle size when preparing a drug. Shire Biochem also failed to prove that the "invention" had the requisite utility, that is, that the modafinil of the claimed particle size range was more potent or safer than previous versions.

In conclusion, the Court found that Cephalon's patent was invalid on the grounds of anticipation, obviousness and utility. Interestingly, even though Court awarded costs to Apotex, they were reduced by 25% for failure to pursue all the allegations of invalidity, including an implication of fraud under the Patent Act that the NOA raised. The Judge underscored the fact that if such an allegation of fraud under the Patent Act is raised but not pursued, there should a cost penalty to the applicant.

Section 8 Interpreted at Long Last. In Apotex Inc. v. Merck & Co., Inc. et al,29 a decision of first instance, the Federal Court has ruled on the type of compensation contemplated by section 8 of the NOC Regulations which provides a mechanism by which a generic is entitled to seek compensation for losses incurred due to an innovator company commencing a prohibition proceeding against them pursuant to the NOC Regulations, which is later withdrawn, discontinued or dismissed by the court. This is the first action of its kind to go to trial, and to date there has been little in-depth judicial commentary as to section 8 specifically.

In February, 2003 Apotex Inc. ("Apotex") sent a NOA to Merck Frosst Canada Ltd. and Merck Frosst Canada & Co. (collectively "Merck") with respect to its generic "alendronate". Merck subsequently commenced proceedings to prohibit the issuance of a NOC, which otherwise would have permitted Apotex to sell its generic version of the alendronate drug in Canada (the "Prohibition Proceedings"). On February 3, 2004 (the "Certification Date") the Minister advised Apotex that its application was approved, subject to the Prohibition Proceedings. On May 26, 2005, the Court dismissed the Prohibition Proceedings.

Apotex thereby brought an action against Merck for losses as a result of the Prohibition Proceedings, under section 8.

In its decision, the Court first had to find that section 8 was within the competence of the Federal Court to hear and determine an action brought thereunder; enabled by the Patent Act and intra vires the constitutional authority of the Federal Parliament of Canada.

The court then went on to consider issues with respect to the nature and extent of the remedy afforded by section 8. The main issues were whether Apotex, since it was successful under the NOC proceeding, was entitled to make an election as to its profits; the appropriate length of the period of liability for Merck and the date upon which damages would begin running (whether the "start" date should be the Certification Date or another more appropriate date); and whether Apotex could recover damages for loss of future profits or permanent market share.

In his decision dated October 21, 2008, Justice Hughes ordered that Apotex was entitled to claim damages or its lost profits for the period from February 3, 2004 (the Certification Date) to May 26, 2005 (the dismissal of the Prohibition Proceedings), but was not entitled to elect an account or the disgorgement of the profits of Merck. Apotex was also entitled to claim damages for lost sales and lost permanent market share for a period beyond May 26, 2005, provided the evidence demonstrates that such loss was not rectified and could not have been rectified before that date. No costs were awarded to either party.

The quantification of the damages or lost profits will be the subject of a trial at a later date.

Scope Of Discovery In NOC Proceedings. The decision in Pfizer Canada Inc. v. Pharmascience Inc.30 has confirmed that in relation to documentary discovery, the issues in NOC Proceedings are restricted to those issues raised in the Notice of Allegation. In this case, Pharmascience had filed a submission with the Minister for a NOC in respect of amlodipine mesylate products, in part, to Pfizer's Norvasc 5 and 10 mg tablets. The filing certificate issued by the Minister recorded the submission as an abbreviated new drug submission ("ANDS"). However, Pharmascience asserted that the certificate was in error, and characterized the submission as a new drug submission ("NDS").

Following this submission, Pharmascience served a NOA on Pfizer in respect to certain patents relating to its NORVASCTM product. In response, Pfizer filed an application under the NOC Regulations for an order prohibiting the Minister from issuing a notice of compliance. However, Pfizer also alleged that Pharmascience's originating submission was an ANDS, not a NDS, and on this basis, demanded extensive production of documents from Pharmascience in the proceeding, including all correspondence between Health Canada and Pharmascience. Pharmascience did not provide all of the documents requested, and Pfizer commenced a motion for production which was refused by the Prothonotary. On appeal, the Prothonotary's ruling was confirmed by the Federal Court, citing the Federal Court of Appeal decision in G.D. Searle & Co. v. Novopharm Ltd.31 which stated that the NOA defines the issues to be determined in proceedings under the NOC Regulations. On this basis, the court concluded that even though it was pleaded in Pfizer's notice of application, the question whether Pharmascience's originating submission was an ANDS or an NDS was not raised in the NOA, and was therefore not an issue to be determined in the proceeding. The court justified this decision on the basis that whether or not the originating submission was an ANDS or an NDS had no bearing on the key issues of infringement and validity.

Need To Be Specific In Patent Lists. As noted in our The IP Year 2006 in Review,32 the NOC Regulations were previously amended to impose timing, relevance and subject-matter requirements for patents to be added to a patent list maintained on the Patent Register. Essentially, there must now be a link between the subject-matter of a patent on a patent list and the content of the submission. Patents must be relevant to the strength, dosage form or route of administration of the drug that the innovator is approved to sell. Patents can be listed in relation to supplemental new drug submissions only if its purpose is to obtain approval for a change in use, formulation or dosage form and the patent contains a claim thereto. In Canada (Attorney General) v. Abbott Laboratories Ltd.,33 the Federal Court of Appeal was asked to determine whether the Minister properly applied the 2006 amendments when the Minister deleted one of Abbot's patents from the Patent Register.

Following an original New Drug Submission ("NDS"), the Minister issued to Abbott in 1995, an NOC with respect to PREVACIDTM (lansoprozole), for use in treatment of duodenal ulcers, gastric ulcers and reflux esophagitis. In early 2006, Abbott filed a Supplementary New Drug Submission ("SNDS"), seeking the approval for a new indication for PREVACIDTM, namely healing and reduction of risk of Non-Steroidal Anti-Inflammatory Drug ("NSAID")-associated gastric ulcers. This SNDS was followed by a patent list, which included a patent that had been filed two years after Abbot's initial NOC.

The appeal raised two questions. The Court of Appeal had first to determine whether the amendments to the NOC Regulations published on June 16, 2006 and in force since October 5, 2006 were applicable to the patent list filed on July 20, 2006. The Appellate Court found that the relevant section of the NOC Regulations indeed applied to Abbott's patent as it was on a patent list filed between the publication date of the amendments and the date such amendments came into force.

The Federal Court of Appeal then turned to determine whether the Minister was correct in deleting Abbot's patent from the patent register. The patent contained a claim for the treatment of ulcers. The evidence before the lower court showed that a person skilled in the art would have recognized that the term "ulcer" would be broad enough to include NSAID ulcers. However, the Court of Appeal found that it was not sufficient for the patent to comprise non-specific claims broad enough to include the changed use in order to comply with the amended regulations. The NOC Regulations require a patent to specifically claim the change in use. Since Abbott's patent did not include such specific claims, the appeal was dismissed.

An Obscure Reference, Even If Publicly Available, Is Not Admissible As Prior Art. According to the Federal Court of Canada, a poster presented during a scientific symposium was not considered "prior art" for the purpose of an obviousness analysis. The Court appears to suggest that an obscure reference, even if publicly available, may not be admissible as prior art if a skilled person is not able to locate it.

In Janssen-Ortho Inc. and Daiichi Sankyo Company Limited v. Apotex34 the Court indicated that, by definition, prior art must be publicly available. The two criteria for public availability are: (1) the art must be in public domain (i.e. a publication that is private or restricted, for example, is not admissible as prior art for the purpose of an obviousness analysis); and (2) a skilled person conducting a reasonably diligent search must have been able to locate the art.

With respect to the poster, the Court upheld that "...the poster was not published by way of distribution and could not have been found using a reasonably diligent search as of 1985. A public display for three hours at a scientific meeting does not mean that the poster has entered into the body of prior art of which a person skilled in the art could be said to possess or of which they could make themselves aware through a reasonably diligent search".

No Inducement To Infringe For Sales Outside Canada. In Laboratoires Sevier v. Apotex,35 Laboratoires Servier asserted that Pharmachem and Apotex Inc. (collectively "Apotex") infringed and induced infringement of its Canadian patent by the manufacture of its drug perindopril which is sold under the trademark COVERSYL". In its defense and counterclaim, Apotex asserted that the patent was invalid.

Apotex claimed that there was no issue of inducement. Apotex's sales to affiliated foreign companies did not in Apotex's view, constitute an act of inducing infringement of the patent. According to the evidence, Apotex and the foreign entities did not intend title of the product to pass in Canada. According to the Court, only if some part of the activity takes place in Canada can an act of infringement be completed by the direct infringer. The Court was not persuaded, therefore, on the basis of the evidence that the product sold by Apotex passed to the foreign purchasers in Canada.

Apotex was also successful in convincing the Court that it should not be liable for any infringement relating to some specific amounts of perindopril that were produced during commercialization because these amounts fell under the experimental and regulatory use exemption of section 55.2(1) of the Patent Act. The Court was satisfied that the amounts which were generated for submission, analytical, testing and the like, as may be required by the regulatory authorities in Canada, the United States and other jurisdiction, constituted uses of perindopril which qualified under the statutory exemptions of the Patent Act.

Apotex was less successful in arguing that the patent was invalid for obviousness. The Federal Court maintained the approach with respect to obviousness espoused in the 2007 Janssen-Ortho Inc. case.36 However, Apotex was relying on art outside of the relevant field of the drug. The Court indicated that "it cannot be assumed that the unimaginative, non-inventive technician skilled in the art would consider art in other fields". The Court further indicated that "there must be some reason, supported by evidence, which would justify a person skilled in the art to look beyond the field at issue". Here, there was no such evidence.

Issue Estoppel: No Estoppel Based on Foreign Patent Litigation in Canadian Patent Litigation or Prior Considerations of Validity. According to the Federal Court of Canada, a patentee cannot be estopped from alleging infringement based on similar litigation in foreign jurisdictions. In Johnson & Johnson Inc. v. Boston Scientific Ltd.37, the Federal Court found that an admission made in a foreign patent proceeding, which is expressly stated to be for the purpose of that proceeding only, cannot be relied in Canada.

Since 1997, Boston Scientific sold stent devices in Canada. Johnson & Johnson Inc. asserted that the sale by Boston Scientific Ltd. of stents in Canada had infringed rights in two of its Canadian patents. Boston Scientific denied infringement and countered that, by virtue of admissions made by Johnson & Johnson and findings of fact in litigation in other jurisdictions relating to corresponding foreign patents, it is estopped from alleging that the Boston Scientific stents infringed.

With regard to issue estoppel, the Court found that issue estoppel was not applicable to the current case. As "... patents are 'among the most complex legal documents that can be produced'...", differences in practice and procedure in each country can result in different documents. Corresponding patents are not identical since there are distinctions in claimed subject matter arising from these differences. More importantly, claim construction is a question of Canadian law and since it is antecedent to issues of infringement and validity, res judicata cannot apply.

In another case involving issue estoppel, the Federal Court of Appeal grappled with whether, in reaching its conclusion that a Canadian patent was anticipated, the lower court erred in its application of the doctrine of issue estoppel based on an earlier 2005 decision. In Calgon Carbon Corporation v. Corporation of North Bay (City),38 the Federal Court of Appeal considered an appeal of a lower court decision in which that court found the Canadian patent invalid on the basis of anticipation and thus dismissed the claim for infringement by the patentee Calgon Carbon. In the 2005 decision, the Federal Court of Appeal found that patent recited valid subject matter but specifically declined to deal with the issue of whether the patent was invalid on the basis of anticipation. In the 2008 case, as the Federal Court simply considered the issue of anticipation and there was no issue of contradictory claim construction, the Federal Court of Appeal found there was no case for issue estoppel.

Impacted Third Parties May not Intervene in Appeal. In 2007, the Federal Court found in Pfizer Canada Inc. v. Canada (Health),39 that the "Saccharin Doctrine" applied not only to processes but also to products.40 The Saccharin doctrine provides that there is patent infringement in Canada where a patented process is used in the production of a substance that was then imported into Canada for sale, provided, however, that the use of the patented processes in the production was not "merely incidental". As a result of the Federal Court decision in that case, both parties appealed the decision. In Ranbaxy Laboratories Limited v. Pfizer Canada Inc.,41 Apotex Inc. ("Apotex"), involved in a similar but separate proceeding with Eli Lilly, sought leave to intervene on the basis that its rights would be impacted by any decision.

Apotex had been sued for patent infringement by Eli Lilly in an unrelated patent and claimed that an issue in that trial would be affected by the decision in the Ranbaxy case. Pfizer opposed the motion on the basis that the legal issue raised by Apotex had not been raised by the parties to the appeal and that Apotex, if allowed to intervene, would be seeking to have this Court answer a legal question which was not raised by any of the parties.

In dismissing Apotex's application to intervene, the Federal Court of Appeal found that if Apotex were allowed to intervene, one would expect Eli Lilly to require the same relief. It would be difficult for this Court to exclude Eli Lilly if Apotex was allowed to transport the main issue in its proceeding with Eli Lilly into this appeal. Allowing both Apotex and Eli Lilly to intervene would undoubtedly complicate and delay the appeal.

What's the "Use"? With respect to many drugs, "use" claims are commonly employed to overcome or avoid objections based on methods of medical treatment, which are not patentable in Canada. What happens, however, when there are multiple uses, some of which are patented and others are not? In 2008, Canadian courts had two opportunities to revisit the issue of infringement of use claims.42

In Sanofi-Aventis Canada Inc. v. Laboratoire Riva Inc., Laboratoire Riva Inc. ("Riva") wanted to sell its generic version of ramipril (Riva-Ramipril) in Canada. In accordance with the NOC Regulations, Riva served a NOA on Sanofi-Aventis asserting that the patents listed in respect of Sanofi's drug would not be infringed. Sanofi opposed the application on the basis that Riva would induce physicians, pharmacists and patients to infringe Sanofi's "use" patents.

Citing Pharmascience v. Sanofi-Aventis Canada Inc.,43 the court affirmed that, under the NOC Regulations, infringement can be direct or induced. In that case, the Court of Appeal held that the NOC Regulations are not intended to prevent all infringement, only infringement by, or induced or procured by, generic drug manufacturers. In Sanofi-Aventis Pharma Inc. v. Apotex,44 the Court of Appeal found that the mere sale by a generic pharmaceutical drug producer of a medicine subject to a "use" patent is insufficient to constitute infringement under the NOC Regulations. Something more was needed in the way of conduct to make a manufacturer liable in an action for infringement, such as procuring or inducing others to infringe. The issue in this case, therefore, was whether Sanofi could prove on the balance of probabilities that Riva had done something more. In this case, the requirement for "something more" was not met since mere passive recognition that "off-label" prescription or consumption will occur is not enough.

In Solvay Pharma Inc v. Apotex Inc.,45 Solvay Pharma Inc. and Altana Pharma AG ("Solvay") sought an order prohibiting the issuance of a NOC for Apotex's enteric coated tablets of pantoprazole sodium. Altana failed to establish any causal link between Apotex' actions (and its proposed monograph) and the direct infringement the court was asked to assume. Further, Altana had failed to establish, on a balance of probabilities, that the "tablets would not be marketed or promoted to doctors, pharmacists or others to be used..." in an infringing manner.

The "X" File - The Truth Is Out There. Are there circumstances in which a statement of claim should be allowed to issue against a known corporation identified only as Company "X", involving a known patent identified only as the "X" patent, for a known drug identified only as the "X" drug? This was the question before the Federal Court in Novopharm Limited v. Company "X".46

In this case, Novopharm intended to commence an action to impeach the "X" Patent on various grounds of invalidity. However, prior to having the statement of claim issued, Novopharm brought an ex parte motion for a protective order prohibiting the disclosure of the identity of the defendant, the defendant's patent, and the drug that was the subject of the patent. In support of the motion, Novopharm alleged that it was currently developing a generic version of the "X" drug, and that no other generic versions of the drug were on the market or under development. In this context, Novopharm argued that if its competitors were aware of its plans to impeach the "X" patent and potentially enter the market with a generic version of the "X" drug, those competitors would also develop a generic version of the "X" drug and Novopharm would therefore lose its competitive advantage.

The Federal Court denied Novopharm's motion, citing the Supreme Court of Canada decision in Atomic Energy of Canada Limited v. Sierra Club of Canada47 The Supreme Court decision determined that in order to obtain a protective order, it is necessary to establish: (1) that public disclosure presents a serious risk to an important interest, and (2) that the granting of the protective order creates a beneficial result which outweighs the injurious effect of precluding open and accessible court proceedings. In the case of Novopharm's motion, the Federal Court found that while Novopharm's own commercial strategy was potentially at risk, protective orders are intended to protect a greater public interest. Protecting Novopharm's commercial interest did not outweigh the public's right to know the identity of parties before the courts and the issues in the proceedings, including the name of a drug in issue.

CIPO Begins Consultations On Changes To Canadian Patent Practice. Beginning in late 2008, the Patent Branch of CIPO announced two official consultation periods concerning Canadian patent practice which were scheduled to end in early 2009:

(1) from November 27, 2008 until January 5, 2009, a consultation concerning a first set of proposed changes to the Patent Rules,48 including proposed changes to the definition of "description", establishment of the Filing Date, the small entity declaration (Form 3) within the petition, Instructions relating to Form 3, and completion requirements;49 and

(2) from December 8, 2008 until January 16, 2009, a consultation on a proposed new Practice Notice concerning the Title of the Invention and the making of changes thereto.50

CIPO describes the first set of proposed changes to the Patent Rules as being of a "generally housekeeping [...] nature and [... as dealing] with minor legalities and procedural issues as opposed to questions of substantive policy."51

In 2009, in what promises to be another busy year, CIPO plans to conduct three further consultations (over periods yet to be determined at the time of print) concerning other contemplated changes to the Patent Rules. The subsequent consultations will concern: (i) authorized correspondents, requests for examination, fees related to Sequence Listings, and reinstatement periods; (ii) amendments to Patent Appeal Board and final action procedures; and (iii) disclaimers, Section 29 of the Patent Rules, and claiming practice.52


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