Patents year in review 2013

This article summarizes noteworthy Canadian patent law decisions and developments from 2013.

1. Plavix: Court of Appeal Addresses "Promise of the Patent" Doctrine

For several years, Canada's Federal Court and Federal Court of Appeal have wrestled with the "promise of the patent" doctrine. In some cases, the Courts have ventured beyond explicit promises to dissect the specification and elevate statements of benefit or advantage to become promises of utility. Where those benefits or advantages were neither demonstrated nor soundly predicted, patents have been invalidated.

In sanofi-aventis v. Apotex Inc., 2013 FCA 186, the Court of Appeal addressed the validity of the Plavix® patent. Previously, the trial judge in an impeachment action brought by Apotex had found the patent invalid on the bases of inutility and obviousness. The trial judge invalided the patent notwithstanding an earlier decision of the Supreme Court of Canada in 2008 (Apotex Inc. v. Sanofi-Synthelabo Canada Inc., 2008 SCC 61), made in the context of a Patented Medicines (Notice of Compliance) Regulations proceeding, which endorsed the patent's validity.

At trial, the judge found that the patent promised that the claimed compound could be used in humans; however, he also found that such use was not soundly predicted on the basis that there was insufficient disclosure in the patent's description in to support the prediction.

On appeal, the Federal Court of Appeal disagreed with the trial judge's finding of lack of utility. In particular, the Court of Appeal clarified that the "promise of the patent" doctrine does not necessarily apply in all cases. In this regard, where there is no explicit promise in a patent description, no promise should be "read in" to a patent. In the case of Plavix, there was no explicit promise of use in humans, but rather only identification of certain advantages over the prior art. As such, because those advantages were demonstrated by the patentee, the patent was declared valid. In addition, the Court of Appeal overturned the trial judge's finding of obviousness.

The Court of Appeal's decision is not the end of the road for the Plavix patent. Recently, Apotex was granted leave to appeal the Court of Appeal's decision to the Supreme Court of Canada. A hearing is scheduled for November 3, 2014.

2. Eurocopter: Court of Appeal Addresses the Disclosure Requirement for Sound Prediction and Confirms an Award of Punitive Damages for Patent Infringement

In Bell Helicopter Textron Canada Limitée v. Eurocopter, société par actions simplifée, 2013 FCA 219, the Court of Appeal addressed, among other things, the issues of sound prediction in the context of a mechanical invention and punitive damages for patent infringement.

With respect to the doctrine of sound prediction, the patentee, Eurocopter, had argued that the doctrine only applied to inventions in the fields of chemistry and biology because results in those fields are difficult to predict. In contrast to those fields, Eurocopter argued that the utility of mechanical inventions can be demonstrated through mathematical calculations and known rules of physics, therefore the doctrine should not apply to those types of inventions.

The Court of Appeal disagreed with Eurocopter's arguments, and held that prior cases support the proposition that sound prediction may be relevant in mechanical or other non-pharmaceutical inventions. Thus, in order for utility to be demonstrated in the case of a mechanical invention, the requirement set by the Court of Appeal was for "evidence that establishes that the embodiment at issue does in fact work in a manner that gives rise to the advantages stated in the patent". If the evidence merely consists of "calculations to the effect that the embodiment should work in the manner claimed in the patent, or should give rise to the advantages," in some situations utility will not be demonstrated, but rather must be predicted. In this case, the Court of Appeal upheld the trial judge's finding that the utility of severalpatent claims was neither demonstrated based on the evidence nor soundly predicted based on what was disclosed in the patent.

In coming to this conclusion, the Court of Appeal made noteworthy comments regarding the degree of disclosure required in the context of a sound prediction analysis. In particular, the Court of Appeal held that:

where the sound prediction is based on knowledge forming part of the common general knowledge and on a line of reasoning which would be apparent to the skilled person (which is often the case in mechanical inventions), the requirements of disclosure may readily be met by simply describing the invention in sufficient detail such that it can be practiced. A contextual approach is thus appropriate in each case.

With respect to punitive damages, the Court of Appeal upheld the trial judge's finding that such damages were warranted in this case based on a number of factors, including Bell Helicopter's "slavish" copying of Eurocopter's patented product, and that Bell Helicopter, as a "sophisticated" company, ought to have known of Eurocopter's patent. The Court of Appeal cautioned that punitive damages are only available in patent cases where "the evidence shows that there has been high-handed, malicious, arbitrary or highly reprehensible conduct that departs to a marked degree from the ordinary standards of decent behaviour". Nevertheless, it appears that the only remarkable behaviour at issue in the case involved the defendant's copying with imputed knowledge of the patent.

3. Noteworthy Decisions Regarding Remedies in Patent Cases

In 2013, there were several noteworthy decisions dealing with remedies in patent cases:

1. Merck & Co., Inc. v. Apotex Inc., 2013 FC 751: the Federal Court in this case awarded Merck over $119 million in damages, plus interest, for Apotex's infringement of Merck's patent for the anti-cholesterol drug lovastatin. In awarding damages, the Court rejected Apotex's argument that the existence of a "non-infringing alternative" should be considered in determining a plaintiff's lost profits "but for" the infringer's activities.
2. Apotex Inc. v. Takeda Pharmaceuticals and Abbott Laboratories, 2013 ONCA 555: the Ontario Court of Appeal in this case upheld the Superior Court's dismissal of Apotex's claim for disgorgement of Takeda's and Abbott's profits in the context of the Patented Medicines (Notice of Compliance) Regulations. Section 8 of the Regulations provides a generic drug manufacturer with the ability to be compensated for any losses suffered as a result of a delayed market entry caused by a patentee's application under the Regulations to prohibit such generic's market entry. A key finding of the Court of Appeal was that, according to section 8, the recoverable loss may be no more than the generic's damages and does not extend to an innovator's profits. In addition, the Court of Appeal rejected Apotex's allegation of unjust enrichment on the basis that the Regulations provide a valid juristic reason for an innovator's exclusive presence in the market.
3. Apotex Inc v. Takeda Canada Inc., 2013 FC 1237: the Federal Court in this case departed from previous jurisprudence and found that it was within the Court's discretion to disregard market entry ramp-up experienced by a generic in the context of determining the hypothetical world for assessing a generic's damages under section 8 of the Regulations. In addition, the Court held that, in this hypothetical world, the successful generic challenger is not subject to the Regulations while potential competitors are, conversely, subject thereto.
4. Apotex Inc. v. H. Lundbeck A/S, 2013 FC 192: the Federal Court in this case ordered a generic to pay a patentee $1.7 million as an accounting of the generic's profits for patent infringement. In order for a patentee to succeed with a claim for an accounting of profits, it must show that at least some of the infringer's profits were attributable to the patented invention. Where an infringer's profits would have been no different had a non-infringing alternative been used, a patentee will not be able to recover any of the infringer's profits. In the present case, the patentee succeeded with its recovery of significant profits of the generic because all of those profits were realized as a direct result of infringing the patent in suit, which covered a specific active ingredient that was the only active ingredient included in the generic's product.

4. The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and Canada's Patent Regime

CETA contemplates several noteworthy changes to patent landscape in Canada, particularly in the context of pharmaceutical patents:

1. Patent term restoration: where innovative pharmaceutical companies' drug approvals are delayed, CETA provides that an additional two years of market exclusivity following patent expiry may be granted.
2. Appeal rights for innovators: currently, innovators are unable to appeal the dismissal of an application to prohibit the regulatory approval of a generic entering the market with a particular drug. In contrast, generics are able to appeal court orders that prohibit the regulatory approval of their product. CETA changes this situation by providing that an innovator will have the right of appeal, just like a generic.
3. Duplicative litigation: under the current regime, if either an innovator or a generic loses at the initial stage, i.e., the stage where an order prohibiting market entry of a generic is sought, the losing party may still bring a traditional patent action (either for infringement if the plaintiff is the patentee, or for declarations of invalidity and/or non-infringement). In contrast, CETA provides that there shall not be such duplicative litigation, though the details as to how this will be implemented are currently unknown.

5. Application of New Canadian Patent Office Guidelines for Computer-Implemented Inventions

In 2013, the Canadian Patent Office released two Practice Notices that are relevant to computer-implemented inventions. The first Notice addresses claim construction; the second notice addresses subject matter eligibility for computer-implemented inventions.

Recent application of the new Practice Notices by the Patent Appeal Board confirms that the correct approach for construing claims is to follow a purposive construction that determines which elements of a claim are essential vs. non-essential. In the context of computer-implemented inventions, applicants must carefully draft their patent applications such that, for example, something more than a mere algorithm is claimed. In this regard, there should preferably be physical or tangible elements or equipment that are claimed in the patent claim. In particular, it may not be sufficient to simply recite a "computer-implemented" system or method in a claim preamble and then fail to claim any physical or tangible components in the body of the claim.