What to expect in 2021: Pending patent decisions from the Federal Courts

The end of 2020 and start of 2021 have been busy with Federal Court judges writing, and the patent bar reading, several interesting patent decisions. That trend may continue in 2021. There are several pending decisions from patent trials and patent appeals heard in 2020, or early 2021. This article provides a snapshot of those trials and appeals, and what issues we can expect to be addressed by the decisions.

Pending decisions from patent trials

Merck Sharp & Dohme Corp v Wyeth LLC (T-1184-17):

This impeachment action relates to Wyeth's PREVNAR® 13 vaccine for the prevention of pneumococcal disease in children. Wyeth has four patents listed on the Patent Register and it appears that Merck has challenged three of them – one composition patent and two formulation patents.

Merck's invalidity arguments in relation to the composition patent include anticipation, obviousness and overbreadth/lack of utility. In a pre-trial motion dealing with reply evidence, Justice Gagné (the trial Judge) characterized the last issue as "overbreadth/lack of utility". It will be interesting to see from the decision if Merck's argument is another attempt to raise the now abolished promise doctrine in the context of overbreadth.

For the formulation patents, Merck alleges anticipation, obviousness and double patenting.

The new file wrapper estoppel provision in the Patent Act (section 53.1) also appears to be at play, with Merck relying on the prosecution history to rebut construction arguments presented by Wyeth.

The 13 day trial before Justice Gagné was completed on December 22.

Guest Tek Interactive Entertainment LTD v Nomadix Inc (T-448-17):

This patent infringement case is between what Prothonotary Tabib described in an interlocutory motion as "fierce competitors in Canada and the United States." The technology relates to systems and methods for venues to offer, regulate and manage internet access for guests. Guest Tek has asserted two Canadian patents against Nomadix.

Guest Tek argues that Nomadix has both directly infringed and induced certain Canadian hotels to infringe its patents. Nomadix has raised a number of defences, including alleged obviousness and anticipation in respect of both patents. Nomadix also denies infringement, both directly and by inducement, in respect of both patents. Issues of the quantum of damages were bifurcated to a reference if infringement is established.

The 15 day trial before Justice McHaffie as to liability was completed on October 28. It proceeded entirely by videoconference, including all testimony from expert and fact witnesses, and opening and closing arguments. However, the parties were recently granted permission to make additional submissions to the court with respect to the recent Western Oilfield decision from the Federal Court of Appeal, 2021 FCA 24.

Our colleagues Doak Horne, Patrick Smith and Kevin Unrau represented Guest Tek at trial.

Rovi Guides, Inc et al v Videotron Ltd / Telus Corporation et al / BCE Inc et al (T-921-17 / T-206-18 / T-113/18):

In these patent infringement actions, Rovi and TiVo claim that Videotron, Telus and Bell have infringed several patents relating technology used in set-top boxes. There were initially six patents asserted against each defendant, but it appears that two patents owned by TiVo have been discontinued against Videotron and Telus.

The first proceeding started and the first trial heard was against Videotron. Videotron has alleged that the asserted patent claims are invalid for anticipation, obviousness and double patenting. This proceeding does not appear to be bifurcated and, based on an interlocutory Order in 2019,^[1] it appears that one legal issue is whether a patentee can seek disgorgement of profits in relation convoyed sales.

The trial against Videotron started on March 9, 2020 before Justice Lafrenière, on the eve of COVID pandemic shutdowns. The trial was adjourned on March 13 due to COVID. Justice Lafrenière then decided to proceed with trial-by-Zoom, notwithstanding Videotron's arguments against this approach. Justice Lafrenière's Order included a protocol to follow for Zoom trials, which is now known in the Federal Court as the "Rovi Order" and has been re-used in several subsequent trials, with some modifications.

The evidence portion of the Videotron trial completed in June 2020, and closing arguments were to be held at a later date.

Before closing arguments were heard, the Court of Appeal released its decision in Nova Chemicals Corporation v Dow Chemicals Company, 2020 FCA 141. Videotron sought to re-open the evidence portion of the trial based on what it described as a "sea change" in the law relating to the accounting of profits remedy. On January 6, 2021, this request was granted with additional expert evidence being introduced. The closing arguments were heard on January 20-22, 2021.

The trials against Bell and Telus were also heard by Zoom in 2020. Unlike the case against Videotron, these two cases were bifurcated with remedies to be determined at a later date. Closing arguments against Bell were heard on January 14-15, 2021. The closing arguments against Telus were scheduled for January 2021, though the Court docket does not specify when they were heard.

Deeproot Green Infrastructure, LLC et al v Greenblue Urban North America Inc (T-954-18):

This patent infringement case between competitors relates to two patents (2,552,348 and 2,829,599) in relation to urban landscape technology. Specifically, the two patents relate to technology for structural support systems for sidewalks and other paved areas to allow tree roots to grow and storm water to flow without causing hardscape damage.

The 13 day trial before Justice McDonald was completed on December 21, 2020.

Pending decisions from patent appeals

Alexion Pharmaceuticals Inc v AG of Canada et al (A-237-19; appeal from Justice Gleeson in 2019 FC 734):

This appeal arises from a judicial review application in relation to the Patented Medicines Prices Review Board ("PMPRB"). The drug at issue is SOLIRIS®, which is used to treat two rare and life-threatening blood-related disorders. The PMPRB determined that SOLIRIS® was priced excessively under sections 83 and 85 of the Patent Act, exceeding the lowest price in seven comparator countries. It ordered Alexion to lower the price of the drug and make a payment to the federal Crown to offset its past excess revenues resulting from the excessive pricing.

The PMPRB used the Lowest International Price Comparison (LIPC) test as the benchmark for determining whether the price of SOLIRIS® was excessive. However, this test was not contained in the PMPRB's "Compendium of Policies, Guidelines and Procedures of the Board" when the excessive revenues were earned.

Before Justice Gleeson, Alexion raised four issues:

1. Was the PMPRB's adoption of the LIPC test inconsistent with the Patent Act and therefore unreasonable?
2. Was the PMPRB's refusal to give weight to CPI changes unreasonable?
3. Was the PMPRB's refusal to consider provincial rebates unreasonable?
4. Was it unreasonable for the PMPRB to order past "excess revenues" to be forfeited based on the HIPC test after conceding there was insufficient evidence on which to establish liability based on that test?
5. Justice Gleeson upheld the PMPRB's conclusions on each issue.

On the first issue, Justice Gleeson found that the PMPRB has discretion to adopt the LIPC test, subject to the test being reasonable. He found that the LIPC test is not, on its face, inconsistent with the Patent Act and the Patented Medicines Regulations.

The application of this test may be an issue addressed on appeal. Specifically, whether the PMPRB can apply a test that was adopted after the revenues being tested were earned. In other words, can the PMPRB move the excessive revenue goal posts retroactively?

On the second issue, Justice Gleeson disagreed with Alexion that the PMPRB erred by subsuming any consideration of CPI changes within its consideration of the LIPC test. He found this approach to be reasonable.

However, the facts of this case illustrate Alexion's concern with the PMPRB's approach. Alexion never raised the price of SOLIRIS®. Rather, the PMPRB compliance issues arose due to exchange rate fluctuations, and because PMPRB relies on comparisons to other jurisdictions. The exchange rate fluctuations were either lost or minimized by failing to consider CPI independently from the LIPC test. This issue may be addressed on appeal.

On the third issue, Justice Gleeson also held that the PMPRB was reasonable in refusing to consider provincial rebates in assessing the quantum of excess revenue order. The PMPRB decided that since, based on binding precedent, provincial rebates are not relevant to the determination of whether a price is "excessive", they cannot be relevant to determining the quantum of excess revenue order. Alexion argued that these two analyses are distinct, and that rebates ought to be considered for the latter. Justice Gleeson rejected this argument and accepted the PMPRB's analysis.

The effect of this finding is that a patentee's excessive revenue payment may be more than the revenue it earned, once PLAs and provincial rebates are taken into account. This finding may be addressed on appeal.

On the fourth issue, Justice Gleeson found that section 83(2) of the Patent Act gives the PMPRB significant discretion in determining an excessive revenue order. Within this discretion, there was nothing preventing the PMPRB from using a more conservative test (the High International Price Comparison or HIPC test) than that applied to determine whether the price was excessive under section 85(1) (i.e., the LIPC ). The PMPRB's rationale for using the more conservative HIPC test was that this test was applicable at the time the excessive revenues were earned, while the LIPC test was not.

Justices Stratas, Webb and Rennie heard this appeal on October 20, 2020.

The appeal will be decided in the context of upcoming amendments to the Patented Medicine Regulations and Guidelines.^[2] These amendments were recently challenged in the Federal Court^[3] and the Quebec Superior Court.^[4]

The Minister of Health v GlaxoSmithKline biologicals' SA ( A-138-20; appeal from Justice Barnes in 2020 FC 397 ):

Justice Barnes' decision was one of two 2020 decisions in which the Federal Court interpreted the Certificate of Supplementary Protection Regulations (the "CSP Regulations").^[5] In this instance, GSK sought judicial review of the Minister's decision to refuse a CSP in relation to Canadian Patent No. 2,600,905 and the drug SHINGRIX®. The 905 Patent pertains to a vaccine for the prevention or amelioration of shingles in adults older than 50, or in immunocompromised persons.

The Minister denied the CSP because, in her view, an eligible patent must include at least one claim to one or more medicinal ingredients or to their use. The 905 Patent was not so limited because each of the claims includes an adjuvant (i.e., a non-medicinal ingredient). Although GSK had adduced undisputed scientific evidence that the adjuvant used in SHINGRIX® is essential to its clinical efficacy, the Minister found that the CSP Regulations must be interpreted consistently with other guidelines, which treat adjuvants as through they are inactive excipients. Furthermore, the Minister opined that because vaccine adjuvants do not independently initiate an immunological reaction, they cannot be considered to be medicinal ingredients.

Justice Barnes acknowledged that the origins of Canada's CSP regime lie in Chapter 20 of CETA. He found that the Minister's decision failed to appropriately consider Canada's CETA commitments and the full scope and purpose of the applicable statutory provisions. Based on the language in CETA, biological activity was the basis for CSP eligibility in Canada. By interpreting Canada's CSP Regulations in a manner excluding adjuvant vaccines, the Minister would exclude many novel vaccines from CSP eligibility. Just Barnes found that "no apparent practical purpose [was] served" by this interpretation.

The matter was sent back to the Minister for redetermination in accordance with the Court's reasons. However, the Minister appealed the decision. The appeal decision will provide guidance on CSP eligibility in Canada, which could have broader application than adjuvant vaccines.

This appeal was heard on February 10, 2021 before Justices Gauthier, Rivoalen and Locke.