Canadian patent law: 2021 year in review

21 minute read
02 March 2022

Last year was a busy one for the Federal Courts and included a number of developments in Canadian patent law. This article summarizes notable court decisions on patent law and practice in Canada from 2021.  

  1. Summary dispositions of patent infringement cases
  2. Federal Court of Appeal weighs in on "file wrapper estoppel"
  3. Federal Court of Appeal affirms role of inventive concept in appeal regarding VYVANSE® patent
  4. Summary dismissal of statute of monopolies claims
  5. Supreme Court of Canada grants leave to appeal regarding largest ever monetary award in Canadian history for patent infringement
  6. Further Appeal by Apotex in respect CEFACLOR® dismissed by Federal Court of Appeal
  7. Marijuana grow-ops patent invalidated and not infringed
  8. Federal Court of Appeal comments on overbreadth, sufficiency and entitlement to profits
  9. Federal Court of Appeal touches on several legal points in Western Oilfield
  10. Excess claim fees coming to Canada
     

1. Summary dispositions of patent infringement cases

Historically, patent litigants did not seek summary disposition of patent infringement cases, as it was typically seen as being too challenging to satisfy the Court that no "genuine issue for trial" was present when there were competing expert witnesses and questions such as witness credibility that were best left for a trial judge to assess in a live courtroom.

More recently, the Federal Courts Rules were amended to permit summary trials on a subset of the issues in a case (as opposed to the historically more challenging summary judgment process).  An example of a patent infringement summary trial is ViiV Healthcare Company v Gilead Sciences Canada, Inc, 2021 FCA 122.  At the lower Court level, the motion for summary trial was found to be appropriate, as it entailed only the construction (and resulting analysis confirming non-infringement) of a single claim element. In effect, Viiv was akin to a Canadian Markman hearing.

On appeal, the Court of Appeal dismissed both of the appellant's main arguments, namely, that a summary trial proceeding was not appropriate in the particular case, and that the lower Court erred in its construction and non-infringement findings. Regarding the appropriateness of the summary trial, the Court of Appeal concluded that a judge may consider a number of factors before deciding whether or not a case is appropriate for summary disposition. Ultimately, the Court must be satisfied that the prerequisites in the Federal Courts Rules for summary judgment or summary trial are met and that it is able to grant summary judgment, fairly and justly, on the evidence adduced and the law. Regarding the non-infringement judgment, the Court of Appeal considered but rejected all of the appellant's various alleged errors of claim construction.

In addition, and as previously reported in this article about the new rules of Canadian patent litigation, in CanMar Foods Ltd v TA Foods Ltd, 2021 FCA 7, the Federal Court of Appeal upheld an underlying decision on a summary judgment motion dismissing CanMar's patent infringement action in its entirety. CanMar was the first decision in many years where the Federal Court had granted summary judgment in a patent case.  At the Court of Appeal, the appellant's argument that it was premature to grant summary judgment before discovery had taken place was rejected. In addition, the Court of Appeal upheld the lower Court's conclusions on claim construction, and correspondingly non-infringement, notwithstanding an absence of expert evidence on the summary judgment motion. In this regard, the Court of Appeal concluded that construction of a patent is always a matter of law for the Court, and there is no authority to support the view that expert evidence is mandatorily required in every circumstance.

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2. Federal Court of Appeal weighs in on "file wrapper estoppel"

As noted above, the Court of Appeal in CanMar Foods Ltd v TA Foods Ltd, 2021 FCA 7 upheld the underlying decision on a summary judgment motion in a patent action.

The underlying decision was also the first time that the Federal Court interpreted and applied section 53.1 of the Patent Act (previously discussed in this article: Patentees beware: Federal court rules foreign patent file histories could come back to haunt you), which relates to admission of statements from prosecution into evidence in a patent trial – sometimes referred to as "file wrapper estoppel". In this appeal, Justice de Montigny writing for the Court of Appeal acknowledged that introduction of section 53.1 resulted in a significant shift in the Canadian approach on this issue and a better alignment of Canadian law with its British and American counterparts. The Court confirmed that a prosecution file may play a role in claim construction to the extent it may rebut a patentee's representation.

CanMar objected to the use of foreign prosecution history in a related patent application for the purposes of claim construction. In the circumstances of this case, the Federal Court of Appeal found that the motion judge should have refrained from taking into consideration the prosecution history of the corresponding foreign application. However, the broader issue of whether the prosecution history of a foreign application can ever be considered pursuant to section 53.1 of the Patent Act was left to another day.

In Bauer Hockey Ltd v Sport Maska Inc (CCM Hockey), 2021 FCA 166, Justice Locke writing for the Court of Appeal added in obiter that section 53.1 does not abolish the general prohibition against reliance on prosecution history for the purposes of claim construction. Rather, section 53.1 is limited to using portions of a patent's prosecution history "to rebut any representation made by the patentee in the action or proceeding as to the construction of a claim in the patent (previously discussed in this article: Federal Court of Appeal upholds CCM's defence of Bauer's patent infringement lawsuit).

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3. Federal Court of Appeal affirms role of inventive concept in appeal regarding VYVANSE® patent

The Federal Court of Appeal dismissed appeals by Apotex against Takeda (Shire) in respect of the ADHD medicine VYVANSE® (2021 FCA 52). Apotex advanced allegations of anticipation and obviousness on appeal. In respect of anticipation, Apotex argued that the disclosure of a class of compounds necessarily anticipated the specific compound lisdexamphetamine ("LDX") that was claimed in Takeda's 646 Patent. Regarding obviousness, Apotex argued that the "end point" of the inquiry was the claimed compound LDX, and that the alleged ease with which LDX could be made rendered the claims obvious even though the advantageous properties of LDX were not obvious in view of the prior art.

The FCA rejected Apotex's arguments. Regarding anticipation, General Tire and Sanofi were relied on to reject the proposition that a class of compounds in the prior art necessarily infringes, and thus anticipates, a later claim to a single compound. In respect of obviousness, the FCA affirmed the relevance of the inventive concept to the end point of the inquiry, distinguishing the scope of protection afforded by a claim (elucidated via claim construction) from the basis of its inventiveness (the inventive concept).

Apotex sought and was denied leave to appeal to the Supreme Court on the issue of obviousness.

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4. Summary dismissal of statute of monopolies claims

In Apotex v Eli Lilly, 2021 ONSC 1588, Justice Schabas of the Ontario Superior Court dismissed an action brought by Apotex for treble damages, an accounting of Eli Lilly's profits, and damages at common law in its entirety. This was the first final decision issued in respect of a series of cases brought by Apotex for similar claims in the Ontario and Quebec Superior Courts (previously discussed in this article: Ontario Superior Court of Justice dismisses statute of monopolies action via summary judgment).

Apotex's claim seeks relief for alleged harm associated with its delayed market entry in respect of the medicine olanzapine caused by the statutory stay of the Patented Medicines (Notice of Compliance) Regulations and an associated Order of Prohibition issued thereunder.

Schabas J. granted summary judgment on three grounds. First, all steps taken by Eli Lilly under the PM(NOC) Regulations were authorized by law and not actionable, with any harm caused by Apotex was due to the operation of the statutory scheme. Second, the PM(NOC) Regulations and its section 8 damages provision constitute a complete code in respect of remedies that flow from delays to generic market entry caused by the statutory regime. Third, each of the individual causes of action asserted by Apotex – the Statutes of Monopolies, Trademarks Act, and the tort of conspiracy – were of no merit and were not established on the evidence.

A claim brought under the Statutes of Monopolies and Trademarks Act by Apotex against Pfizer (2021 ONSC 6345) was summarily dismissed later in 2021 on similar grounds.

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5. Supreme Court of Canada grants leave to appeal regarding largest ever monetary award in Canadian history for patent infringement

In Nova Chemicals Corporation v Dow Chemical Company, 2020 FCA 141, the Federal Court of Appeal upheld the Federal Court's earlier judgment awarding Dow Chemical $644M, the largest monetary award by a Canadian Court in history for patent infringement. As we previously reported in this article: $644M award for patent infringement upheld on appeal, the Court of Appeal stated that the aim of an accounting of profits is not to compensate for injury but to remove the benefits the wrongdoer has made as a result of the infringement. As part of an accounting of profits analysis, only actual profits that have resulted from the patent infringement are disgorged. An infringer is therefore not in a position to argue what "could have", "should have", or "would have" happened. 

Nova Chemicals sought and was granted leave to appeal to the Supreme Court of Canada on May 20, 2021. Among other things, Nova Chemicals is arguing that the lower Courts erred in allowing Dow Chemical to retain profits not attributable to the infringement. Specifically, Nova Chemicals is arguing that courts should consider what an infringer would have done if it had not infringed in order to ensure a patent owner is only compensated for profits attributable to the invention, and no more. A hearing of the appeal is currently scheduled for April 2022.

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6. Further Appeal by Apotex in respect CEFACLOR® dismissed by Federal Court of Appeal

The Federal Court of Appeal upheld an award of compound interest as damages for the time value of money lost in respect of the drug CECACLOR® (2021 FCA 149). This was the second appeal brought by Apotex in respect of its damages owing following a finding of infringement in 2009, with damages first quantified in a 2014 reference. The damages owed by Apotex had been found to include amounts that would compensate Eli Lilly for the time value of money lost over the 17+ years that it took for damages to be awarded to Eli Lilly.

The FCA rejected Apotex's arguments that the Federal Court failed to assess causation and mitigation, finding that Lilly did show causation, with its evidence establishing the loss that it suffered on account of the time value of money.

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7. Marijuana grow-ops patent invalidated and not infringed

As reported in more detail in this article: Patent for detecting marijuana grow-ops, the Court in dTechs EPM Ltd v British Columbia Hydro and Power Authority and Awesense Wireless Inc, 2021 FC 190 invalidated a patent directed generally to monitoring usage of electrical utilities to detect potential instances of atypical consumption or theft, such as theft of electricity related to the indoor cultivation of marijuana.  

In particular, numerous prior art disclosures led the Court to conclude the asserted claims were anticipated and obvious. A notable ground of invalidity relates to a prior disclosure by the inventor, who was a former police officer, and had disclosed his alleged invention to the Calgary Police Service and to the electrical utility ENMAX. The Court rejected the patentee's argument of inherent confidentiality due to an alleged "police operational plan" context of the disclosure.  The Court held that disclosure to "the public" means disclosure to any single person who is "free in law and equity to examine it". As the Court found that the inventor exercised no control over the persons to whom the document was distributed or their use of the document, the disclosures to both Calgary Police and ENMAX were anticipatory.

The defendants were also found to have not infringed the patent in suit – either directly or indirectly (based on inducement or by common design). Regarding indirect infringement, the patentee argued that the supply of hardware and software by one defendant to another resulted in liability. The Court rejected this argument stating that the supply of hardware and software cannot in itself infringe method claims. Inducing infringement requires more than the mere provision of equipment that can be used to infringe; there must be some form of "control over the manner" in which that equipment is used for inducement to even arise as a possibility.

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8. Federal Court of Appeal comments on overbreadth, sufficiency and entitlement to profits

In Seedlings v Pfizer, 2021 FCA 154, the Federal Court of Appeal upheld Justice Grammond's decision invalidating the claims of Seedlings' patent that were asserted against Pfizer for infringement. While ultimately the dismissal of the case was upheld, the Federal Court of Appeal found several notable errors in the trial judgment with respect to overbreadth, sufficiency and remedies.

Justice Locke writing for the Court of Appeal disagreed with much of the Federal Court's reasoning in its discussion of overbreadth. In particular, it is incorrect to limit claims to the embodiments described in the disclosure and to hold claims beyond the described embodiments to be overbroad. In addition, the mere fact that certain elements or their arrangement are original does not require they be claimed, and failure to claim them also does not render the claims overbroad.

Ultimately, Justice Grammond's finding that certain claims were overbroad was confirmed on the basis that the patent at issue does not describe how to make the invention without the omitted elements, which are present in all of the embodiments but not the claims, and that a skilled person would not know how to make the invention. The Federal Court of Appeal recognized that this basis for a finding of overbreadth in this case "would seem to lead more readily to a conclusion of insufficiency than overbreadth." The Federal Court of Appeal accordingly held these claims insufficient. The trial decision had temporarily set a unique precedent that a claim can be invalid for the sole reason that it is overbroad. Seedlings no longer stands for such a precedent.

Another anomaly in the trial judgment was an endorsement for the principle that if a patentee does not practice the invention but rather licenses it to others to practice, it should not be entitled to compensation beyond a reasonable royalty. The Federal Court of Appeal rejected such a broad principle. While a patentee's decision to license its invention may be a factor to consider in the analysis, it will not necessarily deny a patentee the right to elect an accounting of profits.

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9. Federal Court of Appeal touches on several legal points in Western Oilfield

The lower court decision was largely upheld on the facts in Western Oilfield Equipment Rentals Ltd v M-I LLC, 2021 FCA 24. Nonetheless, the Federal Court of Appeal addressed the law on a number of issues including the Gillette defence, obviousness, best mode and added subject matter.

Prompted by the respondent's submission that suggested a common misunderstanding about the nature of the Gillette defence, Justice Locke commented on the issue. While the Gillette defence can offer a shortcut around the issues of claims construction, and subsequent determinations of validity and infringement, in practice, the application of the Gillette defence is superfluous and unnecessary where the court has disposed of the issues of construction, validity and infringement. The Court of Appeal further explained that the success of a Gillette defence does not depend on a conclusion of anticipation or obviousness, and conversely, a Gillette defence does not necessarily fail where anticipation has not been established.

On the issue of obviousness, Justice Locke could not say whether he would have reached the same conclusion on obviousness if tasked with it at first instance, but deferred to the Federal Court on the basis of standard of review. The Court of Appeal did however point out that the four-step Sanofi test is a useful approach, but not mandatory in every case.

Regarding sufficiency, the Court of Appeal acknowledged that despite the wording of section 27(3)(c), there is considerable doubt as to whether the best mode requirement is limited to machines.

On the issue of section 38.2, which prevents claim amendments "to add matter that cannot reasonably be inferred" from the patent application on its filing date, Justice Locke affirmed that  the test is reasonable inference from, and not clearly and unambiguously disclosed in, the original application.

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10. Excess claim fees coming to Canada

Up until now, patent applicants in Canada can file an unlimited number of claims without having to pay any excess claim fees. However, as we have previously reported in this article: Patent applications - consider requesting examination now to avoid proposed excess claim fees, proposed amendments to the Patent Rules will result in patent applicants being required to pay excess claim fees ($100 per claim for regular entities for each claim in excess of 20) at the time of requesting examination, or at the time of final fee payment (for any additional claims where the fee was not previously paid). Applicants can avoid the new fees by requesting examination before the coming into force of the amended Patent Rules. As of the time of writing of this article, the coming-into-force date is not yet known, but is expected to be in the first half of 2022.

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Should you have any specific questions about this article or would like to discuss it further, you can contact the authors or a member of our Patents Group.


NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

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