March 6, 2018
2017 saw a number of important court decisions and legislative developments with respect to intellectual property in Canada. Here we provide a brief summary and links to some of the highlights and comment on what is on the horizon for the life sciences in 2018.
The Promise Doctrine Comes to an End
In June 2017, the Supreme Court of Canada (“SCC”) released their unanimous decision in AstraZeneca v Apotex, 2017 SCC 36 (“AstraZeneca”) finding that the Promise Doctrine “is not good law” and clarifying the utility requirement under section 2 of the Patent Act. The case related to Canadian Patent no. 2,139,653 that provided patent protection for AstraZeneca’s Nexium®, a small molecule used for the treatment of acid reflux disease. The SCC noted that the Promise Doctrine was “excessively onerous”, and regarded it as running “counter to the words of the Act by requiring that where multiple promised uses are expressed, they all must be satisfied for the patent to meet the utility requirement”.
For many years, the Promise Doctrine was a thorn in the side of innovators and patent holders in Canada. A number of patents, particularly in the pharmaceutical field, had been held to be invalid for lack of utility because they failed to demonstrate or soundly predict all uses that were “promised” in the description.
The SCC has now set out a two-step analysis for assessing utility whereby courts must: 1) identify the subject-matter of the invention as claimed in the patent; and 2) ask whether that subject-matter is useful; i.e., whether it is capable of a practical purpose or an actual result. The AstraZeneca decision effectively puts an end to the Promise Doctrine and recent attempts to revive it have been unsuccessful.
The AstraZeneca decision came after a tribunal decision in an unrelated NAFTA arbitration suit brought by Eli Lilly against the Government of Canada claiming that the Promise Doctrine constituted new and arbitrary law and was discriminatory. Eli Lilly’s suit was ultimately dismissed; however it garnered a significant amount of press coverage and highlighted concerns regarding application of the Promise Doctrine on patent holders and innovation in Canada. More details on the NAFTA tribunal decision can be found here.
While 2018 may see additional legal challenges and refinements of the test for utility in Astrazeneca, the clarity of the SCC decision and the end of the Promise Doctrine should bring a degree of predictability and comfort to patent holders.
Changes to the PM(NOC) Regulations and the Arrival of CSPs
On September 21, 2017, a number of substantive changes to patent law came into force following the implementation of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union. Notably, amendments to the Patented Medicines (Notice of Compliance) Regulations (the “PM(NOC) Regulations”) significantly changed the landscape for patent linkage and pharmaceutical litigation in Canada. The introduction of Certificates of Supplementary Protection (CSPs) also now provide for a maximum of 24 months of limited patent term extension for new pharmaceutical products protected by an eligible patent.
Previously, proceedings under the old PM(NOC) Regulations were based on a paper record and the burden of proof was on the Innovator (first person or patent owner) to prove that the allegations of invalidity and/or non-infringement made in a Notice of Allegation (NOA) by the second person (typically a generic drug company) were not justified. Proceedings were limited to determining whether the Minister was prohibited from issuing a Notice of Compliance (NOC) in view of claims for the medicinal ingredient, formulation, dosage form, or use of the medicinal ingredient only. Appeals by Innovators were moot as the marketing authorization had already issued. Proceedings under the old PM(NOC) Regulations were typically followed by a separate validity/infringement trial, leading to a duplication of efforts by the parties and the court.
Under the new PM(NOC) Regulations, proceedings are full-fledged patent infringement/validated actions complete with documentary and oral discoveries as well as live witness testimonies at trial. Furthermore, any claim included on a patent or CSP (see below) listed on the Patent Register can now be litigated. Moving forward, patents that could have been litigated under the PM(NOC) Regulations will be prohibited from being litigated afterwards unless the first person or patent owner did not have a reasonable basis for bringing an action under the PM(NOC) Regulations within the prescribed period.
2017 also saw the arrival of a limited form of patent term extension in Canada in the form of Certificates of Supplementary Protection (CSPs). The CSP is a sui generis intellectual property right that is loosely based on European Economic Area’s supplementary protection certificate. There are strict timeframes for applying for a CSP and they are only available for a patent that contains at least one product claim, product-by-process claim or use claim for a medicinal ingredient or for all the medicinal ingredients contained in a drug for which an authorization for sale (NOC) issued on or after September 21, 2017.
More details on the new PM(NOC) Regulations and CSPs can be found here.
Amendments to the Patent Act and Patent Rules
In 2017 the Patent Act was amended to further Canada’s commitments under CETA as well as the Patent Law Treaty signed in 2001. Applicants for a patent who do not reside or carry on business in Canada are no longer required to appoint a Canadian representative for service. The Patent Act was also specifically amended to allow for the provision of CSPs (see above).
Proposed amendments to the Patent Rules were open to public consultation in 2017 and will be pre-published in the Canada Gazette in 2018 for further input from the public. The amended Patent Rules are expected to come into force sometime in 2018 or 2019.
The revamped rules are projected to simplify filing requirements and accelerate patent prosecution in Canada. For example, the payment of filing fees will no longer be required to secure a filing date and the deadline for requesting examination will be reduced from five years after the filing date to three years. The general period for responding to an office action will be reduced from six months to four months. The proposed amendments also include new provisions for the restoration of priority and changes to the existing provisions for restoring abandoned applications.
The proposed amendments include a new provision that requires an application not to contain more than one copy of a particular sequence listing, regardless of whether it is in paper or electronic form. Furthermore, where a sequence listing is submitted in electronic form, excess page fees that are due with the issue fee will no longer apply. This is good news for any patent applications in the life sciences that have voluminous sequence listings.
Furthermore, with respect to biological deposits the draft Patent Rules provide that the deposit of biological material with an international depository can be made by the applicant’s predecessor in title, in addition to the applicant. If samples are transferred to a substitute international depository authority or a new deposit is made to another international depository authority, the requirement that the name of the second international depository authority be provided has been removed.
MOPOP Updates and Diagnostic Methods
2017 also saw a number of revisions to the Manual of Patent Office Practice (MOPOP). The MOPOP does not have the force of law but provides a guide to the procedures and examination practices of the Canadian Intellectual Property Office (CIPO).
Chapter 12 of the MOPOP directed to subject-matter and utility was updated to remove references related to the “Promise Doctrine” in view of the Supreme Court of Canada’s decision in Astrazeneca (see above).
Chapter 17 of the MOPOP directed towards biotechnology and medicinal inventions was amended to reflect CIPO’s practice with respect to antibodies, including more guidance on monoclonal antibodies including humanized, fully human and chimeric monoclonal antibodies. Chapter 17 was also amended to provide guidance on CIPO’s approach to determining whether claims to diagnostic methods are patentable subject matter. Section 17.03.04 now outlines a “problem solution” approach and provides a series of examples reflecting a purposive construction of the claims.
By using the problem solution approach, an Examiner will determine whether the problem relates to “data acquisition” or “data analysis”. The odds of a claim being considered patentable subject-matter are high if it is considered to solve a “data acquisition” problem. Conversely, pegging a claim as solving a “data analysis” problem will in most cases create a significant hurdle for applicants trying to establish that a claim is patentable.
Patented Medicines Prices Review Board (PMPRB) Decisions
In the judicial review application Galderma Canada Inc v Canada, 2017 FC 1023, the Federal Court found that the Patented Medicines Prices Review Board (PMPRB) wrongly asserted jurisdiction over Differin® pricing which was no longer the subject of its own patents. The relevant patents for Differin® which claim 0.1% adapalene had expired, but the PMPRB found that a later patent covering 0.3% adapalene “pertained” to Differin® as contemplated in section 79(2) of the Patent Act, thereby providing the PMPRB jurisdiction over the drug and to require the applicant to disclose relevant information.
Justice Phelan found that the PMPRB’s failure to review the whole of the applicant’s patent is contrary to its obligation under section 79(2) or at the very least is an unreasonable approach to “reviewing the face of the patent” and inconsistent with the PMPRB’s own policy. In particular, Justice Phelan found that PMPRB had failed to explain how a patent for 0.3% adapalene can be used for a medicine with 0.1% adapalene. The judicial review was granted and the decision of the PMPRB was quashed.
In Alexion Pharmaceuticals Inc v Canada (Attorney General), 2017 FCA 241, the appellant wished to challenge the constitutional validity of the provisions of the Patent Act that give the PMBRB the authority to make remedial orders where it finds that a patentee of an invention pertaining to a medicine is selling or has sold the medicine at a price the PMPRB determines is excessive. Rather than raising the issue before the PMBRB, Alexion chose to commence an application for judicial review in the Federal Court, seeking a declaration of unconstitutionality and an order prohibiting the PMBRB from proceeding.
Prothonotary Aalto had dismissed Alexion’s judicial review application on the basis that it had no chance of success, as the issue had been recently determined in Canada (Attorney General) v Sandoz Canada Inc, 2015 FCA 249 (“Sandoz”). Justice Simpson upheld the decision by Prothonotary Aalto as well as agreeing that the provisions being challenged by Alexion were constitutional and Sandoz was binding authority. Alexion’s appeal to the Federal Court of Appeal was dismissed.
In April 2017, the Government of Canada introduced Bill C-45, the proposed Cannabis Act. Subject to the approval of Parliament, the federal government intends to bring the proposed Cannabis Act into force in the summer of 2018. In anticipation of the legalization of cannabis, many companies are staking their claims in marks associated with goods and services. In addition to trademarks, protection of intellectual property rights relating to cannabis may involve utility patents, design patents, plant variety rights, and trade secrets.
Revisiting the Canadian Test for Obviousness
Two decisions in 2017 by Justice Pelletier of the Federal Court of Appeal (“FCA”) took steps towards clarifying what is meant by “inventive concept” within the context of determining obviousness.
In Bristol-Myers Squibb Canada Co v Teva Canada Limited, 2017 FCA 76 (“BMS”), the FCA examined step 2 of the four-step Sanofi obviousness analysis, which directs courts to “identify the inventive concept of the claim, or if that cannot be readily done, construe it”. While the FCA considered the “inventive concept” to be “the solution taught by the patent”, it took issue with how “inventive concept” should be determined. In cases where the identification of the inventive concept could lead to unnecessary satellite debate, Justice Pelletier endorsed construing the claims rather than getting too involved in determining the “inventive concept.”
Justice Pelletier also examined the use of the “obvious to try” test in obviousness analysis and commented that not every case requires recourse to the "obvious to try" test and not every recourse to the "obvious to try" test must follow in the furrow of the preceding application of that test. In BMS, the FCA found that it was unnecessary to apply the “obvious to try” test in view of the facts of the case.
In Ciba Specialty Chemicals Water Treatment Limited v SNF Inc., 2017 FCA 225 (“Ciba Specialty”), Justice Pelletier again referred to the notion of “inventive concept” and noted that because “inventive concept” remains undefined, the search for it has created uncertainty in the law of obviousness. He suggested that the uncertainty can be reduced by simply avoiding the “inventive concept” altogether and pursuing the alternate course of construing the claim.
Ciba Specialty also addressed the issue of what constitutes the “state of the art”. Justice Pelletier noted that in some lower court decisions as well as in BMS, a simplification of the Sanofi test led to the introduction of an error in the framework when “the matter cited as forming part of the ‘state of the art’” was substituted by “the common general knowledge”. Justice Pelletier remarked that the “state of the art” is a reference to the prior art, and so the proper approach at step 4 of the Sanofi test is to compare the inventive concept to the prior art, and to determine whether the differences can be bridged by a skilled person using only their common general knowledge and those elements of the prior art that could be found by the skilled person through a reasonably diligent search.
Interestingly, the FCA found that Claim 1 of the patent in question is obvious, and since all other claims are directly or indirectly dependent on Claim 1, the patent is invalid. This appears to be a departure from the case law.
Ciba Specialty has filed leave to appeal to the Supreme Court of Canada on January 16, 2018.
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