Canadian patent law: 2019 year in review

19 minute read
26 February 2020

There were various developments in Canadian patent law in 2019. Numerous decisions of the Federal Court of Appeal and Federal Court will have a notable impact on patent law in Canada going forward. In addition, the Patent Rules were the subject of significant amendments that will impact both prosecution and enforcement of patent rights in Canada for years to come.

Summary judgment granted in a patent infringement action

The most significant decision of 2019 was Canmar Foods Ltd v TA Foods Ltd, 2019 FC 1233 ("Canmar"), a decision in which Justice Manson granted summary judgment of non-infringement in a patent infringement action. We have previously reported on this decision and discussed it in further detail.

Historically, it was basically unheard of for a patent action to be disposed of by way of summary judgment. Among other things, Courts preferred to see disputes over expert evidence concerning claim construction resolved at trial where a trial judge has the benefit of seeing live testimony and assessing witness credibility in person.

In Canmar, there was no expert witness evidence and the Court determined that it was able to construe the claims at issue without the need for an expert. Because claim construction is ultimately a question of law, the Court was able to decide the infringement issues in dispute to the point where it was satisfied there was no genuine issue to be tried.

Canmar is also notable because the Court interpreted and applied the new file wrapper estoppel provision of the Canadian Patent Act (section 53.1). In particular, the Court considered the scope of section 53.1 and whether it covered communications between patentees and foreign patent offices.

It was found that section 53.1 generally should be limited to communications between the patentee and the Canadian Patent Office. However, consideration of foreign prosecution histories was found to be permissible in extraordinary circumstances. Canmar was found to be such a case, as the patentee acknowledged that the claims of its Canadian patent were amended to be substantially the same as claims submitted in another jurisdiction, and these amendments were admitted to have limited the scope of the claims in order to make the claims novel and non-obvious.

Federal Court of Appeal decisions on obviousness

Obviousness remains a high bar to meet

In the companion cases Teva Canada Ltd v Pfizer Canada Inc, 2019 FCA 15 and Apotex Inc v Pfizer Canada Inc, 2019 FCA 16, the FCA dismissed the obviousness challenge to the polymorph patent covering PRISTIQ® for the treatment of depression.

The focus of the appeal was on the proper approach to obviousness. The FCA held that the obviousness analysis is not to be performed in a rigid way; on the contrary, it must proceed as part of a flexible, contextual, expansive and fact driven inquiry.

The Court also affirmed the primacy of the leading Sanofi v Apotex (2008 SCC 61) decision. The FCA took into account the inventors' course of conduct, accepting the application judge's findings that the number of experiments required was "extremely large" and in the nature of a research program. Teva and Apotex had both argued that the nature of the invention only required routine experimentation.

Palpable and overriding error is also a difficult standard to meet

The FCA dismissed an appeal on the issue of obviousness in Millennium Pharmaceuticals Inc v Teva Canada Ltd, 2019 FCA 273. The primary argument that the FCA rejected was that the trial judge erred in applying the test for obviousness from Sanofi v Apotex.

Justice Stratas referred to the standard for palpable and overriding error as one where the entire tree must fall and found that, in this case, the appellants "have picked at the leaves and branches, but the tree remains standing." The Court criticized the appellants' approach of parsing individual paragraphs of the FC's reasons and alleging defects without considering the context of the FC's reasons in their entirety.

Application of common general knowledge to prior art

An appeal was allowed in respect of two patents in Tetra Tech EBA Inc v Georgetown Rail Equipment Company, 2019 FCA 203. On one patent, the trial judge was overturned on a construction issue. On the other patent it was held that the FC failed to properly account for the skilled worker's common general knowledge.

On the basis of its analysis the FCA declared certain claims of the patents invalid and, in respect of other claims, sent the matter back to the FC for redetermination in accordance with the FCA's reasons.

Decisions under the new PM(NOC) Regulations

Some interlocutory decisions from 2019 provide guidance as to matters of procedure and interpretation of the still-new PM(NOC) Regulations.

In Genentech v Celltrion Healthcare, 2019 FC 293, the Court found that proceedings brought under section 6(1) of the PM(NOC) Regulations cannot be brought against non-second persons.

A trilogy of decisions ruled on the issue of notional "joinder", and specifically whether, and in what circumstances, proceedings under the PM(NOC) Regulations involving the same patent(s) and innovator parties can be de facto consolidated (2019 FC 191, 2019 FC 1039 and 2019 FC 1408). In the result, the Court ruled that four proceedings that were all commenced within six months of each other were to proceed via a common validity trial, and that this does not offend the letter, purpose or intent of s. 6.02 of the PM(NOC) Regulations. It held that such a procedure, where multiple proceedings raised similar issues and were started in relatively close proximity to each other, would lead to the just, most expeditious and least expensive determination of the issues in both actions on their merits.

By contrast, a case started about eight months after the first of the proceedings was not permitted to join the common trial. The Court ruled that allowing that proceeding to join would imperil the Court's ability to hear and determine the initial actions within the period mandated by the PM(NOC) Regulations, and would put unreasonable strain on the patentee's resources.

Coming into force of the amended Patent Rules

On October 30, 2019, the amended Patent Rules came into force. As summarized on our Changes to Canada's patent practice page, the Patent Law Treaty has now been implemented in Canada. Among other things, the Patent Rules have been updated to shorten deadlines for office action responses (now four months), final fee payments (now four months), examination requests (now four years), and reinstatement for unpaid maintenance fees (now six months from the missed deadline or two months from a corresponding Patent Office notice, plus a "due care" requirement for reinstatement after six months and up to 18 months), as well as to eliminate the 12-month grace period for PCT national entries such that following the 30-month deadline national entry is only possible where the deadline was unintentionally missed (and must in any event be met by the 42-month mark). In addition, there is now a new ability for applicants to make amendments after allowance, and new third party rights in certain cases where a patent or application has gone abandoned.

Shifting views on protective orders

The jurisprudence on protective orders continued to evolve in 2019. Unlike confidentiality orders, protective orders had been routinely granted in the context of intellectual property litigation until the release of recent decisions that introduced uncertainty. Notwithstanding the uncertainty that was introduced, more recent cases restored the threshold back to a low bar. Relevant cases in this regard are discussed as follows.

Motions dismissed when the more stringent test was applied

In Pliteq Inc v Wilrep Ltd, 2019 FC 158, Prothonotary Tabib declined to grant Pliteq a protective order because it did not meet the Sierra Club test used for confidentiality orders. Pliteq's affidavit evidence supporting the belief that Wilrep may misuse the information disclosed was discredited. As such, Prothonotary Tabib saw no reason to believe that Wilrep would breach its obligations under the implied undertaking rule. The motion was dismissed because Pliteq failed to establish the confidential nature of most of the documents.

In Canadian National Railway Company v BNSF Railway Company, 2019 FC 281, ("CNR") despite the fact that the parties moved on consent for a protective order, Justice Locke dismissed the motion. The Sierra Club test was applied and the issue was whether the requested order is necessary because reasonably alternative measures will not prevent the risk of the parties' interest in the confidential information. In Justice Locke's view, any gaps in the implied undertaking rule can be filled by the terms of a protective agreement, and a protective order is therefore unnecessary.

The "low test" for protective orders returns

On the other hand, the Sierra Club test was not applied in two subsequent decisions released two days apart on the basis that it applies to confidentiality orders and not protective orders. In dTechs EPM Ltd v British Columbia Hydro & Power Authority, 2019 FC 539, Justice Lafrenière highlighted the fact it has been the practice of the Federal Court to grant requests for protective orders, which should not be confused with confidentiality orders. A protective order is intended to govern the handling of confidential information during discovery. The open court principle underlying confidentiality orders does not apply because there is no presumed right of the public to participate in the discovery process.

With respect to necessity, Justice Lafrenière explained that although the implied undertaking rule and protective agreements are adequate in most cases, intellectual property cases involving highly confidential competitive financial information are considered "cases of exceptional prejudice". Further, parties may find it challenging to agree on the terms of a protective agreement and experience substantial delay in the absence of the threat of a motion.

In addition, Justice Lafrenière listed the many benefits of a protective order, which "lubricates the wheels for the process of discovery" and encouraged parties to apply informally to the Court with reference to the Notice to the Parties and the Profession.

Similarly, in Paid Search Engine Tools, LLC v Google Canada Corporation, 2019 FC 559, Justice Phelan granted a protective order.

The test for protective orders was stated as requiring that 1) the information at issue has been treated at the relevant times as confidential; 2) the information is confidential in nature; and 3) there is a reasonable probability that disclosure of the information could cause harm to proprietary, commercial and scientific interests. The onus is on the applicant.

Very recent developments confirming protective orders are here to stay

The Federal Court published a Model Protective Order [1] in late 2019, and very recently in early 2020 the Federal Court of Appeal released a decision in an appeal of the CNR decision discussed above that confirmed the Court should not impose a high threshold for the granting of protective orders on consent. Both of these very recent developments provide further and welcome guidance to litigants.

Assertions of overbreadth as a ground of invalidity

In the post-promise doctrine era, attempts to resurrect the doctrine have been dismissed with comments like "whack the zombies dead once and for all." Despite such judicial remarks, promise-like invalidity allegations under the guise of overbreadth have emerged and have for the first time been applied to invalidate patent claims.

In Aux Sable Liquid Products LP v JL Energy Transportation Inc, 2019 FC 581, Justice Southcott held that certain claims of JL Energy's patent were broader than the invention disclosed and were also invalid for inutility, anticipation and unpatentable subject matter.

The invention at issue related to reducing the energy required to transport natural gas in a pipeline by adding higher molecular weight hydrocarbons. Claims 9 and 10 were not limited to adding heavier hydrocarbons, and Justice Southcott found claims 9 and 10 were broader than the invention disclosed.

In Les Laboratoires Servier v Apotex Inc, 2019 FC 616, Justice Roy held Servier's patent relating to the new arginine salt of perindopril marketed as VIACORAM® to be invalid on the grounds of overbreadth and obviousness.

A key issue was the construction of the "arginine salt". The Court rejected Servier's argument that the arginine salt refers to L‑arginine and accepted Apotex's construction that it must also include D‑arginine and the racemic mixture. The Court the found overbreadth on the basis that the inventors had not made or soundly predicted the usefulness of each and every arginine salt combination.

Other notable patent cases

Last PMNOC Application Granted Under the Old Scheme

In Janssen Inc v Apotex Inc, 2019 FC 1355, Justice Phelan granted Janssen's application for an order prohibiting the issuance of a Notice of Compliance to Apotex for its generic version of ZYTIGA®. The Court rejected Apotex's challenges of unpatentable subject matter, obviousness, inutility and improper listing.

The patent at issue claimed the use of the combination of abiraterone acetate (AA) and prednisone (PN) for the treatment of prostate cancer. That an improved anti-cancer effect than each of AA or PN treatments on their own was claimed was sufficient to overcome the subject-matter attack. Inventiveness was found \because AA and PN had not previously been combined to treat prostate cancer and the combination was not more or less self-evident to try. In addition, utility was demonstrated by the relevant date based on two small clinical studies which showed that patients responded to the combination treatment.

Regarding infringement, Justice Phelan viewed this as a clear case where Apotex intended to use the same drugs in the same amounts and for the same overall purposes as was claimed. Lastly, the Court found the patent to be eligible for listing given that the ZYTIGA® Product Monograph discusses the role PN in combination with AA to contribute to anti-cancer effects, in addition to the approved role of PN to manage side effects.

Interim Injunction Granted in a Patent Infringement Action

In Arysta LifeScience North America v. Agracity Crop, 2019 FC 530, Justice Pentney granted an interim injunction in a patent infringement case. In granting the interim injunction, the Court found that there was sufficient doubt as to the ability of the defendant to pay an award of damages. While the defendant had argued that no injunction should be granted because the plaintiff's product was not practicing the patented technology, the Court did not accept this argument and noted that the plaintiff is still entitled to at least a reasonable royalty in such circumstances.

$1 Million Punitive Damages Award Upheld on Appeal

In Airbus Helicopters S.A.S. v. Bell Helicopter Textron Canada Limited, 2019 FCA 29, the FCA dismissed an appeal by the successful plaintiff in a patent infringement action regarding the quantum ($1 million) of a punitive damages award. At trial, it was held that, among other things, the defendant was a sophisticated entity that had knowledge of the plaintiff's patent, yet proceeded to infringe. A detailed discussion of the lower Court decision is available here.

On appeal, the plaintiff sought $25 million in punitive damages. It argued this was necessary to achieve the objective of deterrence given the defendant was a large company and $1 million would be relatively insignificant. Ultimately, the FCA found that the $1 million award for punitive damages was grounded in a correct interpretation of the applicable law and in a reasonable assessment of the facts.

[1] The FC website indicates that changes to a model order must be reflected by redlining.

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