Canadian courts issued many patent-related decisions in 2023. This article summarizes a number of the more notable court decisions.
- Concepts of novelty and ingenuity may be considered when assessing patent eligibility of computer-implemented inventions
- Permanent injunction not granted despite infringement
- Court of Appeal addresses role of counsel in the preparation of an expert report in a patent case
- Infringement via inducement confirmed on appeal
- Decisions relating to summary dispositions
- Federal Court denies motion for stay of patent impeachment action pending outcome from patent office re-examination
- Court of Appeal affirms high threshold for contempt of court claim based on alleged breach of patent infringement injunction
- Role of prima facie reasonable inference in sound prediction clarified
- Permanent injunction held appropriate for previous generations of infringing products and election for account of profits after discovery held warranted
- Misleading the Court held to be an aggravating circumstance warranting punitive damages
- Decisions relating to s. 8 of the PM(NOC) Regulations
- Procedural decisions under the PM(NOC) Regulations
- Manufacturer added as party to patent infringement action on its own motion
- Legal principles addressed in complex patent dispute between patentees
1. Concepts of novelty and ingenuity may be considered when assessing patent eligibility of computer-implemented inventions
As reported in more detail here, the Federal Court of Appeal in Canada (Attorney General) v Benjamin Moore & Co, 2023 FCA 168 set aside the new patent eligibility test for computer-implemented inventions that the Federal Court had established in 2022 FC 923 (and which we reported on here).
By way of background, in 2022 the Federal Court established a new test that required that a claim to a computer-implemented invention: (a) be purposively construed; (b) be assessed for whether, as a whole, it consists of only a mere scientific principle or abstract theorem, or whether it comprises a practical application that employs a scientific principle or abstract theorem; and (c) if the construed claim comprises a practical application, be assessed for the remaining patentability criteria (i.e., statutory categories and judicial exclusions, novelty, obviousness, and utility).
In 2023, the Court of Appeal set aside the above (a)-(c) test. In doing so, the Court of Appeal reaffirmed the guidance provided in one of its earlier decisions (Amazon.com Inc v Canada (Attorney General), 2011 FCA 328), which also required as a first step the purposive construction of a claim. Amazon notably established that for a claim to be patentable subject-matter, it must be something with physical existence, or something that manifests a discernible effect or change.
Where the Court of Appeal in Benjamin Moore took issue with the lower Court is with the lower Court's requirement that a certain sequence of steps be followed in assessing subject matter eligibility. In contrast to the above (a)-(c) test, the Court of Appeal found that the concepts of novelty and ingenuity may be considered during the section 2 analysis. The example provided by the Court of Appeal in Benjamin Moore is the use of a book that collects, consolidates, and presents well-known information. In such an example, the book (or its use) would likely not be patentable. The same non-patentability would also likely apply if the book was implemented and its well-known information was presentable by a computer, such as with use of an algorithm.
Otherwise, the Court of Appeal did not establish any strict test or requirement, and instead noted: "the determination of patentability is a highly fact specific exercise, and it is impossible to attempt to define the full spectrum of particular circumstances that may exist depending on the nature of a particular invention implemented by computer in these reasons. This is especially so, considering that the technology is becoming more and more complex with quantum technology and the advent of artificial intelligence."
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2. Permanent injunction not granted despite infringement
The trial decision of AbbVie v JAMP (2023 FC 1520) related to the innovator drug HUMIRA (adalimumab) and JAMP's biosimilar SIMLANDI, and to the alleged infringement and invalidity of three patents under s. 6(1) of the PM(NOC) Regulations and ss. 60(1) and 60(2) of the Patent Act. Two of the patents claimed the use of adalimumab according to particular dosing regimes; these were both declared invalid as being obvious. One patent relating to a formulation of adalimumab was held valid in view of anticipation, obviousness, and double patenting challenges, and was also infringed.
The Court however declined to grant AbbVie a permanent injunction until the expiry of the valid and infringed patent despite the general rule that, given the public interest to ensure the enforceability of the patent system, injunctions will be granted unless equity demands otherwise. On the evidence, SIMLANDI was established to be unique among adalimumab biosimilars in providing an 80 mg/0.8mL dose, resulting in a lower injection volume as compared with other adalimumab biosimilars. In view of evidence that switching from SIMLANDI to a different biosimilar may sometimes have a negative patient impact, a permanent injunction was not granted. JAMP was ordered to compensate AbbVie by way of a running royalty on future sales. AbbVie has appealed (A-347-23 and A-348-23).
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3. Court of Appeal addresses role of counsel in the preparation of an expert report in a patent case
In dTechs EPM Ltd v British Columbia Hydro and Power Authority (2023 FCA 115), the Federal Court of Appeal largely dismissed a patentee's appeal of a trial decision that had found the patent in suit invalid and not infringed. In doing so, it also addressed the matter of counsel involvement in the preparation of expert reports.
As previously reported here, dTechs sued BC Hydro for infringement of a patent directed at a method for detection of "atypical electrical consumption patterns," such as electrical consumption patterns associated with marijuana grow operations. In 2021 FC 190, Justice Fothergill dismissed the claim for infringement and granted BC Hydro's counterclaim for invalidity.
In the course of its judgment, the Court of Appeal addressed the question of counsel involvement in the preparation of expert reports. Provided that an expert's report is the substantive and objective opinion of the expert, the Court of Appeal took no issue with counsel being involved in putting together an expert's report in a patent case.
In this case, the patentee dTechs argued that new information disclosed post-trial concerning BC Hydro's expert suggested that the expert's opinions were not his own. The Court of Appeal did not accept this argument and found that even if BC Hydro's expert's evidence was given no weight (which was, at most, a hypothetical that the Court of Appeal considered), it would not have affected any of the trial judge's non-infringement or invalidity findings, except for possibly the validity of one claim. The Court of Appeal left it open to BC Hydro to seek redetermination of the validity of such (non-infringed) claim.
As of the time of writing, dTechs had sought leave to appeal to the Supreme Court of Canada. A decision on the leave application is expected in early 2024.
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4. Infringement via inducement confirmed on appeal
The Federal Court of Appeal in Apotex v Janssen (2023 FCA 220) affirmed a finding of infringement via inducement in respect of a patent listed against the medicine OPSUMIT (macitentan). The patent at issue claimed the use of a combination of macitentan and a PDE5 inhibitor to treat pulmonary arterial hypertension, while the indication in the generic manufacturer's Product Monograph related only to the (non-infringing) monotherapy use of macitentan.
The inducement question turned primarily on the second prong of the test – the influence exercised by the alleged infringer. While Apotex's Product Monograph omitted references to combination treatment, nothing in Apotex's monograph "suggest[ed] that physicians should depart from well-established prescribing practices, principally combination treatment." Further, prescribing physicians would have known of a landmark study establishing the safe and effective combination treatment that was claimed, and this study was referenced in Apotex's Product Monograph. The Court of Appeal dismissed Apotex's argument on influence, noting that it is not necessarily the case that an absence of explicit instruction equals an absence of influence.
Arguments from Apotex regarding the third prong of the inducement test – Apotex's knowledge – also failed, with the Court of Appeal finding that "it was open to the Federal Court to conclude that Apotex knew or should have known that the Apo-Macitentan [Product Monograph] would influence physicians' prescribing decisions."
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5. Decisions relating to summary dispositions
In 2023, the Courts continued to be restrictive in granting summary dispositions.
In NOCO Company Inc v Guangzhou Unique Electronics Ltd (2023 FC 208), the Federal Court dismissed the Defendant's motion for a summary trial and request for a declaration that its vehicle battery jump starters containing a CC-209 printed circuit board ("PCB") are not infringing the Plaintiff's CA 2,916,782 ("782 Patent").
The Court found the motion to raise multiple, complex issues of claim construction and infringement, unsuitable for summary trial. The Defendant argued that the experts' disagreement on infringement turned on the construction of claim 1, but once the Court construed claim 1 as a question of law, there would be no dispute on how that construction would be applied to establish whether the Defendant's T8 Pro product (representative of all its CC-209 PCB products) infringes the 782 Patent. The Court reiterated that claim construction is not a "pure" question of law, and the level of factual complexity necessary to construe patent claims varies. In this case, there were certain concepts introduced during oral argument that a lay person may have difficulty following.
With respect to the efficient resolution of the action, the Court found that procedural steps leading to trial, including documentary and oral discoveries, would be the most proportionate and efficient way to address the underlying factual basis for deciding infringement, including whether the T8 Pro is representative of the Defendant's CC-209 Products.
In Meridian Manufacturing Inc v Concept Industries Ltd (2023 FC 20), Concept Industries moved for summary judgement dismissing Meridian Manufacturing's action for infringement of its CA 3,036,430 Patent ("430 Patent"), while Meridian moved for a declaration that the asserted claims are infringed and certain claims are not anticipated. Only Meridian provided an expert report, and both parties tendered affidavit evidence from one fact witness from each company.
With respect to infringement, the motion turned on claim construction, with a dispute regarding the essentiality of certain components in both the independent claim and two dependent claims. There was a genuine issue for trial as the factual dispute could not be decided based on the evidence, and the differences between witnesses' opinions may end up turning on credibility.
There was also a genuine issue for trial with respect to validity and whether the 430 Patent claims were anticipated. The parties disagreed on whether a particular agricultural machine constituted relevant prior art, and there was conflicting evidence regarding when it was publicly available. Furthermore, Meridian's expert relied on a drawing of the product that was redrawn 18 months after his initial inspection with fundamental differences. This presented a potential issue of credibility. Collectively, the Court found these issues to be better dealt with at trial.
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6. Federal Court denies motion for stay of patent impeachment action pending outcome from patent office re-examination
In Pfizer Canada ULC v uniQure biopharma BV (2023 FC 629), the Federal Court was faced with the question of whether it should stay an already-commenced patent impeachment (invalidity) action in order to allow a patent office re-examination proceeding initiated by the patentee to proceed to completion. The duration of the proposed stay was expected to be up to approximately 12 months. The action as a whole was expected to reach trial in under three years.
In denying the requested stay, the Court found that the interests of justice would not have been served by granting the stay. In particular, while it was acknowledged that the re-examination proceeding could result in different claims being adopted by the Re-Examination Board, it was also acknowledged that the crux of the invention would remain the same. As such, the allegations of anticipation and obviousness, as well as a section 53 allegation, would remain the same such that there could be no argument that the outcome of the re-examination would dispose of the litigation. While some aspects of the litigation could potentially be narrowed depending on the result of the re-examination proceeding, the Court did not consider them to be significant enough to alter its conclusion that the interests of justice did not favour an up-to-one-year stay of the litigation.
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7. Court of Appeal affirms high threshold for contempt of court claim based on alleged breach of patent infringement injunction
In Deeproot Green Infrastructure LLC v Greenblue Urban North America Inc (2023 FCA 185), the Court of Appeal affirmed the Federal Court's dismissal of a motion for contempt of court based on an alleged breach of a permanent injunction for patent infringement.
In 2022 FC 709, the patentee DeepRoot was unsuccessful in arguing that the Defendant GreenBlue's "design around" product infringed the patent in suit and was thus a breach of the Court's injunction. DeepRoot appealed; however, the Court of Appeal found, among other things, that the evidence did not demonstrate that the design around product met the claim requirement that "at least approximately 85% of the volume [of the claimed structural cell system] can be filled with soil." This is because the Defendant had implemented a design around product that included an "AirForm insert" that reduced the space available to be filled with soil. Relatedly, the Court of Appeal dismissed an argument that the accused design around product infringed based on an "infringing intermediate" argument (i.e., that there was infringement when the AirForm insert had not been inserted), as there was no evidence customers were instructed to assemble the product without the AirForm insert.
In addition, in a related decision (2023 FCA 184), the Court of Appeal dismissed the Defendant's appeal regarding the trial judge's infringement and validity findings, and allowed the patentee's cross-appeal regarding its entitlement to the remedy of an accounting of profits. Regarding the latter cross-appeal, the Court of Appeal found that the trial judge had erred by not establishing a causal connection between GreenBlue's claimed overhead costs and the profits it earned through infringement. In the absence of such causal connection, the Defendant GreenBlue was not in a position to avail itself of full costs accounting, which the trial judge had relied on in order to conclude that GreenBlue had not made any profits on sales of the infringing product. As a result, the issue of the appropriateness of an award of an accounting of profits was remitted to the trial judge for redetermination.
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8. Role of prima facie reasonable inference in sound prediction clarified
In Sandoz v Janssen (2023 FCA 221) the Federal Court of Appeal addressed an argument that the prima facie reasonable inference standard first articulated in Eli Lilly v Novopharm (2010 FCA 197) defines the required threshold for a sound prediction, and that the trial judge erred in failing to recognize and apply that standard. In particular, Sandoz argued that the animal studies upon which a sound prediction was found could not meet the prima facie reasonable inference standard, especially in view of certain human studies being found to constitute "preliminary" evidence to support the claimed subject matter. The argument was rejected, with the Court of Appeal reiterating that the threshold for utility is not high, that it was not an error of law for the sound prediction analysis to be conducted with the prima facie reasonable inference standard, and reiterating the guidance from Apotex v Wellcome (2002 SCC 77) that "the doctrine of sound prediction, in its nature, presupposes that further work remains to be done."
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9. Permanent injunction held appropriate for previous generations of infringing products and election for account of profits after discovery held warranted
In Angelcare Canada v Munchkin Inc (2023 FC 1111) the Court addressed the Plaintiffs' entitlement to a permanent injunction, election for accounting of profits and punitive damages, and determined which Plaintiffs were entitled to seek relief. These motions were considered before the liability phase of a bifurcated trial, after the Plaintiffs' six patents were found valid and infringed (2022 FC 507).
The Plaintiffs were found to be entitled to a permanent injunction related to the Defendants' infringing products that were already removed from Canada, and that the Defendants had no intent to commercialize. The Court affirmed that a permanent injunction is a "natural remedy against infringement on a going forward basis," and issuing one against previous generations of infringing products is appropriate under certain circumstances – particularly since the six patents-in-issue will not expire until 2028.
The Plaintiffs were permitted to elect between an accounting of profits and damages after discovery is completed. The presumptive advantages of allowing an election for an accounting of profits outweighed the Defendants' non-demonstrated concern about the complexity of the proceedings and impractical difficulties with selecting an accounting of profits.
The Plaintiffs were not entitled to punitive damages as the Defendants' failure to differentiate its products enough to avoid infringement did not meet the high threshold of a "marked departure from ordinary standards of decent behavior."
Finally, the Plaintiffs' business relationship, supported by testimonial evidence, established their standing to claim damages under the patentee pursuant to subsection 55(1) of the Patent Act. Whether a plaintiff is a person claiming under the patentee depends on whether the patentee has granted the right to use the invention. The Court affirmed that neither an exclusive or written license between the parties was required to establish that this right was granted.
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10. Misleading the Court held to be an aggravating circumstance warranting punitive damages
In Fromfroid SA v 1048547 Ontario Inc and Frimasco Inc (2023 FC 925) the Federal Court awarded Fromfroid SA ("Fromfroid") punitive damages exceeding compensatory damages for the Defendants' infringement of Fromfroid's CA 2,301,753 Patent ("753 Patent") protecting a rapid cooling ventilation system for food products.
Fromfroid discovered cooling cells resembling its own at the Defendant Skotidakis's facility, four years after loaning Skotidakis a trial cell in hopes of making a sale. Skotidakis claimed that the cells were built after the 753 Patent's expiry, but the overwhelming circumstantial evidence established "a serious, precise and concordant presumption" that the cells were built before the 753 Patent expired. Fromfroid established that both Skotidakis, and the construction company that built the cells, Frimasco, infringed.
Presenting evidence intended to mislead the Court with respect to the date the cells were made was held to be an aggravating factor that warranted punitive damages – this was "highly reprehensible misconduct" warranting a $200,000 and $50,000 punitive damages award against Skotidakis and Frimasco, respectively.
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11. Decisions relating to s. 8 of the PM(NOC) Regulations
A generic pharmaceutical manufacturer may commence a claim for alleged damages via s. 8 of the PM(NOC) Regulations when it succeeds in an underlying proceeding under s. 6(1). 2023 saw one trial decision in which the generic's claim for s. 8 damages under the old (pre-2017) PM(NOC) Regulations was denied, as well as motion decisions on motions relating to s. 8.
As reported here, a claim by Apotex for s. 8 damages in respect of the ADHD medication atomoxetine and Eli Lilly's STRATTERA product was dismissed by Koehnen J. of the Ontario Superior Court of Justice (Apotex v Eli Lilly 2023 ONSC 1968). Apotex had failed in its invalidity allegations in the relevant s. 6(1) proceeding, but the application was dismissed for mootness due to an intervening decision involving a different generic manufacturer. In the circumstances, Apotex was not entitled to s. 8 damages.
In addition, after hearing and considering the evidence at trial, Koehnen J. held that Apotex would not have launched its generic atomoxetine product in the but-for world during any period of potential liability. Apotex thus suffered no loss and was not entitled to any damages for this additional reason.
In Dr. Reddy's Laboratories v Janssen (2023 FC 448) it was not in the interests of justice to adjourn a section 8 trial pending the disposition of a non-party competitor's appeal. Dr. Reddy's Laboratories ("DRL"), Apotex, and Pharmascience ("PMS") each sought s. 8 damages in separate actions after the Federal Court of Appeal affirmed the invalidity of Janssen's patent related to prostate cancer treatment (2022 FCA 184).
Janssen previously brought a motion in each of the three s. 8 actions to compel production by, and discovery of, the companies that are the Plaintiffs in the other two actions. The Court ordered Apotex and PMS to produce specific categories of documents relevant under Rule 233 in the DRL and PMS actions (2023 FC 216). Apotex produced the documents without prejudice, but appealed the Production Order. It argued inter alia that Janssen violated the implied undertaking rule, and used Apotex's productions in the s. 8 actions; as such, if successful on appeal, Apotex reserved its rights to have the produced material returned and/or destroyed. Janssen's motion for adjournment of the DRL s. 8 action was sought pending Apotex's appeal, and was largely based on how Apotex's success on appeal would affect Apotex's productions.
Factors that militated against the interests of justice favoring adjournment included (1) Janssen's seven-month delay in perfecting its Rule 233 motion; (2) the predictability of Janssen's alleged violation of the implied undertaking rule being a main ground of appeal; (3) Janssen's speculation that the Court would be prejudiced if Janssen relied on "tainted information" and the appeal was not decided in its favor, as these possibilities depended on how Janssen uses Apotex's productions to prepare for trial; and (4) the indefiniteness of the adjournment request.
Ultimately, the prejudice to DRL in forcing it to disrupt the plans it has developed for proceeding to trial in two months as scheduled outweighed any potential prejudice to Janssen. While the Court recognized that Janssen may suffer prejudice, the extent of the prejudice would depend on its use of Apotex's productions and other variables related to the disposition of the appeal. Furthermore, there was nothing preventing Janssen from issuing subpoenas to compel Apotex to produce documents during trial.
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12. Procedural decisions under the PM(NOC) Regulations
Actions under the PM(NOC) Regulations contain various unique aspects and procedures, some of which were addressed in the below proceedings.
In Janssen v Apotex (2023 FC 912, rev'd 2023 FCA 253) the Court was faced with a motion for summary judgment on the grounds of abuse and res judicata in actions under subsection 6(1) of the PM(NOC) Regulations. The patent at issue in these proceedings had been litigated previously under the PM(NOC) Regulations in three cases: (1) with Defendant Teva, and issues of obviousness and infringement; (2) with Defendant Pharmascience, and issues of obviousness, method of medical treatment, and infringement; and (3) with Defendant Apotex, with the issue of infringement. In contrast to its first litigation, in the case before the Court Apotex chose to assert invalidity, via method of medical treatment. Janssen sought to have the proceeding dismissed on the grounds of abuse and res judicata.
The motion was denied at first instance, with the Court concluding that the PM(NOC) Regulations do not prohibit successive NOAs regarding the same patent where one NOA alleges non-infringement and a later NOA alleges invalidity. This decision was overturned on appeal. The Court of Appeal found that the Federal Court erred by focusing on the distinction in the PM(NOC) Regulations between non-infringement allegations and invalidity allegations, and the propriety of Apotex's service of multiple NOAs. The proper focus, per the Court of Appeal, should have been on the proceedings more broadly, and in particular whether a litigant would ordinarily be permitted to commence a separate impeachment action after failing in a non-infringement action on the same patent. Absent special circumstances, the Court of Appeal held that such an approach would typically constitute an abuse of process, with Apotex's approach being characterized as an "attempt to split its case and to litigate by instalments."
A motion seeking a variation from the usual order of evidence compelling the Plaintiffs in Boehringer v Sandoz (2023 FC 1149) to serve its inventor fact evidence pertaining to the invention story of their patents before the Defendants' invalidity expert reports was brought and failed. Recognizing this to be a discretionary issue seeking unusual relief, the Court dismissed the motion, holding that the Court's discovery processes and procedures protect against injustice to the Defendants. The Court further agreed with the Plaintiffs that, before the Defendants serve their validity reports, it is difficult to see how the Plaintiffs can know the substance of the Defendants' invalidity case and therefore know what factual evidence surrounding the invention story they may wish to adduce in response to that case.
Takeda v Apotex (2023 FC 63) pertained to a motion for consolidation of two 6(1) actions involving the same parties and ANDS. In the underlying litigations, Apotex had served an initial set of NOAs in late 2021, following by subsequent NOAs in August, 2022 addressing four additional listed patents. Upon evidence from Apotex that its decision to split its NOAs was driven by commercial considerations rather than litigation strategy, consolidation of the proceedings and extension of the 24-month period in the first action was denied, though the second action was stayed bending the final outcome of the first proceeding.
A separate Boehringer v Sandoz decision (2023 FC 241) addressed whether a generic to a 6(1) action under the PM(NOC) Regulations is permitted, by right and without leave of the Court, to counterclaim for invalidity in respect of patent claims not asserted by the innovator in the underlying 6(1) action. Key to the motion was paragraph 6(3)(a) of the PM(NOC) Regulations, which states that a generic may counterclaim seeking a declaration of invalidity or non-infringement "in respect of any patent claim asserted in the action brought under subsection (1)." This issue had been briefly considered in Janssen v Apotex (2022 FCA 184) in the circumstance where the generic sought leave to pursue such a counterclaim, with the Court of appeal leaving "for another day" the question of whether the Defendant generic could pursue such a counterclaim by right. The motions judge permitted the Counterclaim, considering himself bound by the Janssen decision. The matter is currently under reserve before the Court of Appeal.
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13. Manufacturer added as party to patent infringement action on its own motion
In Seismotech IP Holdings Inc v Seismotech Safety Systems Inc (2023 FC 1335), the Federal Court permitted a manufacturer (Ecobee) to be added as a party to a patent infringement action where its legal interests were affected. While the Court recognized well-established principles of party autonomy pursuant to Rule 104, a procedural outcome affecting a party's direct legal interest warranted the overriding of a Plaintiff's choices. In this case, the manufacturer Ecobee's interests went beyond a commercial interest; the action could not be allowed without determining the lawfulness of Ecobee's allegedly infringing products, end users could not infringe Seismotech's patents without Ecobee infringing, and end users (if found to infringe) would likely sue Ecobee in warranty, possibly through a class action.
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14. Legal principles addressed in complex patent dispute between patentees
NCS Multistage Inc v Kobold Corporation (2023 FC 1486) was a complex patent infringement dispute between two patentees where the Court held all of five of NCS Multistage ("NCS")'s patents invalid and not infringed, and one of Kobold Corporation ("Kobold")'s patents valid and infringed. Some clarifications with respect to validity and costs included those for:
- Overbreadth: Determining the essential elements of a claim in this context was held to be distinct from claim construction, with the relevant question being whether the element is "at the core of the invention actually invented or disclosed";
- Double patenting: Where a divisional can be traced back to a direction of the Commissioner (i.e. a forced divisional), it was said to be immune from double patenting attacks. In contrast, a voluntary divisional was said to be vulnerable to double patenting attacks if it does not disclose a different invention at its core;
- Obviousness: If prior art contains information which the patentee disclosed and which third parties disclosed, the third party disclosures may not be shielded by the grace period in section 28.3 of the Patent Act; and
- Lump sum costs: A significant lump sum was awarded to the Defendant as a result of the long and complex proceeding involving sophisticated commercial parties, and in view of the Plaintiffs' conduct.
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