Sufficient Description

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Fresenius Kabi Canada Ltd v Canada (Health) 2020 FC 1013 Manson JIDACIO / HUMIRA / adalimumabAbbVie is the owner of several patents relating to adalimumab / HUMIRA. AbbVie andFresenius Kabi entered into a confidential licensing agreement evidently allowing Fresenius Kabito market its biosimiliar IDACIO. Fresenius Kabi then sought an NOC relying on s 7(2) of thePM(NOC) Regulations which permits the Minister to grant an NOC if the owner of the patentconsents to "the making, constructing, using or selling of the drug." AbbVie wrote to theMinister consenting to "the making, constructing, and, on and after February 15, 2021, to theusing and selling" in Canada by Fresenius Kabi of IDACIO [4]. Evidently the temporal split inthe consent was to allow Fresenius Kabi to stockpile the drug for launch on February 15. TheMinister refused to accept this as effective consent for the purposes of s 7(2), on the basis that the"or" should be read as "and" to avoid an absurd result [12]. Manson J reversed on reasonablenessreview [9], holding that "or" should be read as "or" [22]-[25] and that this did not result in anyabsurdity [31]-[33]. Manson J also noted that the Minister's interpretation failed to recognize thatone purpose of the Regulations is to allow the timely market entry of generics [29]-[30]; if thetemporal split in consent were not permitted, this would result in delayed launch [35].Manson J s analysis strikes me as being entirely compelling. The direct practical implication isthat the NOC Regulations will not prevent parties from entering into an agreement that ensureslaunch on a specific date, but not before.A broader point is that different judges of the Federal Court have consistently interpretedreasonableness review under Vavilov 2019 SCC 65 as endorsing a fairly robust review of HealthCanada s statutory interpretation decisions: in addition to this decision of Manson J, see alsoNatco 2020 FC 788 McHaffie J (here); ViiV Healthcare 2020 FC 756 Fuhrer J (here);Glaxosmithkline 2020 FC 397 Barnes J (here), all reversing Health Canada on statutoryinterpretation issues. (I m not an admin law expert, so I don t really know how different theresults would have been prior to Vavilov.) Substantively, I m pleased to see this, as HealthCanada s interpretation struck me as unreasonable in all these cases and the FC intervention hashelped ensure that the law develops in the manner that would have been intended by thelegislature. Of course, Health Canada isn t always wrong in its stat interp decisions seeJanssen 2020 FC 904 (here) (though even there Health Canada was simply following an FCAdecision) but statutory interpretation just doesn t seem to be one of Health Canada s strengths.That is fair enough, given that their mandate is focused on helping Canadians maintain andimprove their health. Bombardier Recreational Products Inc v Arctic Cat, Inc2020 FC 946Roy J 2,350,264After protracted litigation and a couple of trips to the FCA, Bombardier Recreational Products (BRP) finally prevailed in its patent litigation against Arctic Cat and was granted a permanent injunction. In this motion Arctic Cat and its dealers sought to vary that injunction usingRule 399. This is Arctic Cat s third attempt to avoid the injunction. The final substantive decision in this litigation was the 15 June decision of Roy J in2020 FC 691: seehere. After prevailing on the merits of the 264 patent (one of several that had been asserted), BRP had requested the usual permanent injunction, which would have the effect of prohibiting Arctic Cat and all its dealers from selling Arctic Cat s current model year snowmobiles. Arctic Cat had resisted vigorously, arguing that the injunction should not be granted at all. Roy J rejected Arctic Cat s arguments [178-94], and granted a permanent injunction to restrain the Defendants, their . . . distributors and dealers having knowledge of the injunction from selling or offering for sale, making, using or distributing in Canada any [infringing] snowmobile. BRP notified all the dealers after the injunction was granted, [12]-[13], so there was no dispute that the inventors had knowledge of the injunction. Arctic Cat then sought a stay pending appeal, which was refused:2020 FCA 116, discussedhereandhere.In this motion Arctic Cat, as well as some of its dealers (who had not previously been directly involved in the litigation), tried again, bringing motions underRules 399(2) and 399(1), respectively, seeking an order to vary the injunction [1]. The effect of the variation would be to allow dealers to sell infringing snowmobiles that they held in stock as well as pre-ordered snowmobiles. The motions were unsuccessful, largely because Rule 399 isn't a vehicle for varying an injunction that has been granted after full argument on the merits.While I agree with Roy J s holding in the context of Rule 399, I would suggest that Canadian courts should be more willing to consider staying or tailoring a permanent injunction (eg by carving out certain products) in appropriate circumstances. As I discussedin a recent post onNova v Dow, sunk costs and the difficulty of doing full patent pre-clearance means that the patent system can hinder rather than advance innovation. InPatent Remedies and Complex Products: Towards a Global Consensus 4.4.3, p155-56, we argue that tailoring of injunctive relief in appropriate circumstances can mitigate some of the worst effects. This case was arguably appropriate for tailoring. I must acknowledge that inmy poston Roy J s decision granting the injunction, I noted that Roy J s analysis was brief and I agree entirely. However, because the analysis was brief I didn t fully grasp the issues, and moreover, the argument was framed as denying the injunction rather than staying or otherwise tailoring it. After blogging on the more recent proceedings, I have a better handle on the issues, and while I won t say that the injunction in this case should necessarily have been stayed or tailored, I will say that the possibility should have been taken more seriously.I am the author of the Canada chapter in a forthcoming book on the comparative law of tailoring injunctions, Contreras Husovec (eds) Injunctions in Patent Law: a Trans-atlantic Dialogue on Flexibility and Tailoring (Cambridge U Pr) (expected release in spring 2021). In their synthesis chapter, Professors Contreras and Husovec divide countries into four groups. In Group A injunctions are granted essentially as of right, while in Group B injunctions are in fact discretionary. There are two subgroups in each category: A1 with automatic issuance upon a finding of infringement, most prominently Germany; A2, with automatic issuance upon a finding of infringement owing to attitudes of judges, despite the fact that that the law gives them some discretion eg Poland; B1, in which injunctions generally issue, but there is an individualized assessment in some cases, most prominently the UK; and B2, with individualized assessment in all cases, comprising only the US. While injunctions are clearly discretionary in principle in Canada, the suite of decisions in theBombardier v Arctic Catlitigation, as well as decisions such asValence v Phostech2011 FC 174(seehere) indicate that Canada belongs in Group B2. I would like to see Canada move closer to the UK position, where injunctions are normally granted, but there is a real possibility of tailoring after a principled analysis in appropriate cases.This point is only tangential to the main holding in the decision at hand. The thrust of Roy J s decision was that if the injunction was to be tailored, it should have been done at first instance or on the application for a stay pending appeal; the opportunity has now passed. That seems right to me.However, I raise the point because some of Roy J s obiter remarks suggest tailoring or staying injunctive relief is almost never appropriate. I recognize that Roy J s remarks are broadly consistent with those of Rivoalen JA in the stay application in this litigation, and also with Gauthier J s brief analysis inValence v Phostech. It is because precisely because this series of decisions from different judges indicates a general view in the FC/FCA that I feel the point is worth pursuing. At the same time, I should also point out that Roy J s original decision does show the possibility of tailoring, as Roy J deliberately refused to order delivery up of infringing snowmobiles in possession of the dealers, so as to allow them to sell those machines after the expiry of the patent. It is just this kind of flexibility that I suggest should be more often considered.With that long preface, I ll turn to the decision itself.The main substance of Roy J s decision dismissing both motions was fairly straightforward. Rule 399(2), relied on by Arctic Cat itself, allows the Court to set aside or vary an order by reason of a matter that arose or was discovered subsequent to the making of the order. There simply wasn t any new matter [30]. Arctic Cat tried to argue that the scope of the injunction was unclear and this was discovered after the order was made [31], but this argument failed because any lack of clarity did not arise subsequent to the making of the order, so Rule 399(2) was not applicable [30]. In any event, the order wasn t actually unclear at all [31]. CitingAbbvie2014 FCA 176[43], Roy J noted that Rule 399 is applicable [o]nly if there is specific, particularized evidence of significant, unforeseen difficulty in following the terms of an injunction [27]. The motion sought to allow the dealers to sell infringing snowmobiles that they owned and that were in their possession, but this was clearly prohibited by the express terms of the order restraining dealers having knowledge of the injunction from selling or offering for sale any infringing snowmobile. This could hardly be clearer [41]. Moreover, the scope of the injunction was not a mistake. Roy J noted that dealers hadnotbeen ordered to deliver up infringing snowmobiles in their possession. Roy J made this order deliberately, so as to allow dealers to retain those snowmobiles and sell them after the expiry of the patent [33]. But this reinforces the point that Roy J intended that dealers be prohibited from selling during the term [41]. Arctic Cat also argued that the pre-ordered sleds were already sold to the final customers, or at least that there was ambiguity on this point. Roy J had no difficulty concluding that the title to the pre-ordered sleds which had not yet even been manufactured had not passed to the customers [21].The motion made by the dealers raised essentially the same issues. It was brought under Rule 399(1), which allows the court to set aside or vary an order that was made (a) ex parte; or (b) in the absence of a party who failed to appear by accident or mistake or by reason of insufficient notice of the proceeding. Again, the motion did not fit within the scope of the rule as the order was not made ex parte, and the dealers were not parties who failed to appear by mistake, as they were not parties at all [53]-[54].With that said, the motion by the dealers raises an interesting issue precisely because they were not parties and they are now bound by the injunction even though they never had a chance to argue its merits. As Roy J pointed out, non-parties may be bound by an injunction:MacMillan Bloedel[1996] 2 SCR 1048. But that being the case, it would seem all the more reason why third parties who are bound by an injunction should have the chance to challenge the injunctionafterit has been granted, as they will not be in a position to argue the merits before the fact. Roy J remarked that the issues raised by the Dealers were defended by Arctic Cat with a great deal of vigour. In essence, the Dealers seek to litigate that which has already been litigated [53]. In a practical sense there is a great deal of force to that observation. But in our legal system parties normally have a right to be heard, and I am not very comfortable by dismissing this right by saying Don t worry, someone else argued your case for you without telling you about it, and we think they did a pretty good job even if it is true that the case was well argued. Given that breach of an injunction may be sanctioned by contempt, it seems to me that there is a strong prima facie argument that any party bound by an injunction should have the opportunity to challenge it on the merits. I doubt that such an opportunity would be abused. If indeed the original party did argue the case well, then the third party seeking to re-argue the injunction would face an uphill battle; it would probably lose and then would have to bear its costs as well as some part of the plaintiff s costs. None of this is to criticize Roy J s holding. Even if such a mechanism is desirable, it seems clear that Rule 399 isn t the right vehicle. I have to wonder whether there is a procedural gap in the law in this respect, though I have not researched the point thoroughly.Thus, I do agree with Roy J s analysis and holding in respect of Rule 399. But Roy J also indicated that he would not have been inclined to vary the order in any event [36]-[37]. In part, this was because doing so would be tantamount to a compulsory licence: The monopoly conferred by a patent is gone: moral hazard is a thing of the past, as there is an incentive to increase one s exposure to risk by infringing on a patent because the infringer will not bear the whole cost. The infringer does not have to abide by an injunction as it can be substituted for a compulsory royalty [38]. To repeat a point I made inan earlier post, this litigation has been ongoing since 2011, and BRP has been in effect subject to a compulsory licence for that entire period, as we now know that Arctic Cat was infringing the entire time, with the only consequence that it is liable in damages. The reason for this is that the Federal Court will never grant an injunction in patent cases, on the view that damages are an adequate remedy. If an interlocutory injunction was refused because damages are an adequate remedy, how can we then say that a permanent injunction must be granted because damages are inadequate? Certainly, there is a stronger case for a permanent injunction because we now have a substantive holding on the merits that the patent was valid and infringed; but this is a separate consideration from the adequacy of damages.Roy J also remarked as follows (my emphasis):[38] In the context of an infringement of theCopyright Act(RSC, 1985, c C-42), the Federal Court of Appeal found inR. v James Lorimer Co.[1984] 1 FC 1065[77 CPR(2d) 262] [James Lorimer], that the copyright owner isprima facieentitled to an injunction restraining further infringement (p. 1073). The Court goes on to find no authority for requiring a copyright owner to acquiesce in a continuing infringement against payment of a royalty. That is tantamount to the imposition of a compulsory licence.In the absence of legislative authority, the court has no power to do that . There is no reason to depart from the principle described in James Lorimer.With due respect, to the extent that the emphasized statement suggests that the court has no power to refuse an injunction, it is wrong. In the first place, the provision of thePatent Actauthorizing injunctive relief,s 57(1), provides that a court may. . . make such order as the court or judge sees fit. This expressly gives legislative authority to grantorrefuse an injunction. Moreover, as a matter of general principles, injunctive relief is inherently discretionary as being an equitable remedy: The traditional rule is that an injunction will be granted only where damages would provide an inadequate remedy Sharpe on Injunctions and Specific Performance 1.60. Now, it is true that [w]here the plaintiff complains of an interference with property rights, injunctive relief is strongly favoured, and the conventional primacy of common law damages over equitable relief is reversed. Where property rights are concerned, it is almost that damages are presumed inadequate and an injunction to restrain continuation of the wrong is the usual remedy. However, as always with equity, this must be understood to be a principle rather than a rule Sharpe 4.10. Thus it is perfectly clear that a court has the inherent jurisdiction to refuse injunctive relief. It is true that there is only one Canadian case refusing to grant a permanent injunction to a successful patentee, namelyUnilever(1993), 47 CPR(3d) 479 (FCTD)(1995), 61 CPR(3d) 499 (FCA) (though injunctive relief was moot on appeal as the patent had expired). But the fact that injunctive relief is normally granted does not mean the courts do not have the authority to refuse it. Indeed, in the UK at least, injunctive relief has been refused even in the case of trespass to land: seeJaggard v Sawyer[1995] 2 All ER 189 (EWCA).I hope I have not been unfair in dwelling unduly on an issue that was not central to Roy J s holding. But his views, coming on the heels of those of Rivoalen JA, suggest there may be a widespread view in the Federal Courts that a permanent injunction should always be granted. I do agree that an injunction should normally and presumptively be granted, but it is quite clear that the courts do have the authority to tailor or stay a permanent injunction, in appropriate circumstances, and I would welcome a more rounded discussion of when tailoring might be appropriate.Flatwork Technologies, LLC (Powerblanket) v Brierley 2020 FC 997 McVeigh J2,383,341 / hydraulic boom heating wrapThe 341 patent relates to a heating wrap for articulated hydraulic booms, to keep themoperational in very cold temperatures such as in the oilfields of northern Alberta where theinvention was developed. In this decision McVeigh J granted a motion for summary judgment,holding the 341 patent invalid for obviousness, essentially on the basis that equipment heatingwraps eg for a blowout preventer, were a standard part of the prior art and it was not inventive toapply such a wrap to an articulated hydraulic boom [94].Janssen Inc v Canada (Attorney General) 2020 FC 904 Zinn Jesketamine hydrochloride / SPRAVATO Janssen applied for data protection for SPRAVATO, in which the medicinal ingredient is esketamine hydrochloride, an enantiomer of the ketamine hydrochloride [3]. Ketaminehydrochloride is the medicinal ingredient in the previously approved drug KETALAR [7]. A drug is onlyeligible for data protection if it is an innovative drug under section C.08.004.1(1) of the Foodand Drug Regulations, which provides that a drug is not eligible if it is a variation of apreviously approved drug such as a salt, ester, enantiomer, solvate or polymorph. In a splitdecision in Takeda 2013 FCA 13 the FCA interpreted this provision as providing thatenantiomers are per se ineligible for data protection: see here. Relying on Takeda, the Ministerrefused Janssen s application.Janssen then sought judicial review of the Minister s decision. In a straightforward decision, ZinnJ applied Takeda to dismiss the application, on the basis that there are no factual differenceswhich could permit him to depart from Takeda [26]. Nova Chemicals Corporation v Dow Chemicals Company 2020 FCA 141 Stratas JA: Near JA / Woods JJA dissenting, aff g 2017 FC 350, 2017 FC 637 Fothergill J 2,160,705 / film-grade polymers / ELITE, SURPASSYesterday s post discussed Stratas JA s holding that in an accounting of profits, an infringer mayalways deduct some portion of its fixed costs [162]. That holding was based on Stratas JA srejection of but for causation, which does not make allowance for fixed costs unless theinfringer had an outside opportunity. I am of the view that but for causation, and thedifferential profit approach from Schmeiser 2004 SCC 34 [102], which follows from it, is soundin principle. Nonetheless, I acknowledge that a real inequity may arise if a deduction for fixedcosts is prohibited in cases in which the infringer did not have any outside opportunity. This isnot only a moral inequity; it is a serious concern in terms of innovation policy. In this post, I willargue that the ultimate reason for this injustice is not the treatment of fixed costs, but rather thetreatment of sunk costs. Consequently, the solution must look beyond an accounting to broaderremedial principles, especially principles relating to injunctive relief. This post is based on the following remark:[160] Denying the deduction of fixed costs generates a distorted picture of the infringer sprofits. It may be the case that an infringer has minimal variable costs but very highoverhead costs such that the product is not, in fact, profitable. The incremental approach.. . could force that infringer to disgorge profits from an unprofitable product.This statement is somewhat obscure and I treated it cursorily in yesterday s post, noting that thereis nothing wrong to requiring the infringer to disgorge profits from an unprofitable product if itwould have been even less profitable but for the infringement. But the phrase alluding to the distorted picture of the infringer s profits suggests a differentpoint. I m not sure whether it reflects what Stratas JA had in mind, so I didn t want to treat it atlength yesterday, but it s interesting enough that I decided to devote a post to it. The basic idea isthat sunk costs are real costs that must be incurred to make an infringing product, and if noallowance is made for sunk costs the infringer may be required to disgorge more than its actualprofits. Nova Chemicals Corporation v Dow Chemicals Company 2020 FCA 141 Stratas JA: Near JA / Woods JJA dissenting, aff g 2017 FC 350, 2017 FC 637 Fothergill J 2,160,705 / film-grade polymers / ELITE SURPASSAs explained in my first post, Stratas JA s decision for the majority in Nova v Dow departedfrom established law by rejecting but for causation in the context of an accounting of profits infavour of using a non-infringing baseline to assess the amount to be disgorged. Subsequentposts have discussed various conceptual issues: see here and here. This post turns to the specificquestion of deductibility of fixed costs. This question is important in practice deduction offixed costs can have a substantial impact on quantum it is conceptually difficult, and the caselaw is unsettled. Stratas JA s decision would always allow an infringer to deduct some portion offixed costs, regardless of whether the infringer had another opportunity that it would otherwisehave pursued [162]. This is a bold holding, which departs from prior Canadian practice and is incontrast with the UK and Australia law. Unfortunately, Stratas JA s holding on fixed costs isbased on his unorthodox approach to causation, and consequently, as I will suggest in this post,it is unsound in principle.It s not clear to me how trial courts and litigants will deal with this issue going forward. On theone hand, the majority in Nova v Dow held that a proportion of fixed costs are always deductible,but on the other hand this holding is based a rejection of but for causation in the context ofan accounting and is therefore, in my view, inconsistent with the SCC authority in Schmeiser2004 SCC 34. Now, in many cases, deduction of a portion of fixed costs is permitted bySchmeiser, so it may be some time before a case arises in which the two approaches diverge.When such a case does arise, I would guess that the FC judge will do the calculation both ways,pick one, and then let the FCA sort it out on appeal. Perhaps that day will come sooner ratherthan later, as the uncertainty created by Nova v Dow will make it more likely that an accountingof profits dispute will go to trial rather than settling.Nova Chemicals Corporation v Dow Chemicals Company 2020 FCA 141 Stratas JA: Near JA / Woods JJA dissenting, aff g 2017 FC 350, 2017 FC 637 Fothergill J 2,160,705 / film-grade polymers / ELITE SURPASSIn an accounting of profits the infringer is required to disgorge its profits caused by theinfringement. In the standard approach causation is determined using the but for test, in whichthe amount the infringer actually earned by using the infringing technology is compared withwhat the infringer would have earned in the hypothetical but for world in which it used the bestnon-infringing option: Schmeiser 2004 SCC 34 [102]. As explained in last week s post, StratasJA s decision for the majority in Nova v Dow rejected but for causation in the context of anaccounting of profits. He proposed instead to assess the profit to be disgorged by comparing theinfringer s actual profit against a non-infringing baseline, which, in his view, better reveals thevalue added by the invention itself [62], which is to say the value associated with the inventivequality of the patented technology [78]:[73] Non-infringing alternatives are used not to determine what the infringer could havedone instead of infringing (i.e., but for reasoning), but instead to establish anon-infringing baseline to isolate the value of the patent. Stratas JA did not provide an explicit definition of the non-infringing baseline, but ratherillustrated its nature with one or two examples. While I appreciate the intuition underlying StratasJA s examples, the rule under established law is that the infringer must disgorge the profitscaused by the infringement, not the profits associated with the inventive quality of the patentedtechnology. The established but for test isolates the profits caused by the infringement and inmy view this is sound as a matter of policy.Stratas JA emphasized the need for a causal nexus throughout his decision, but he made the pointin a couple of subtly different ways. In many places he emphasized the need for a causalconnection between the profits to be disgorged and the patent infringement [46]; and seesimilarly [27], [32]. In other places he stated that the disgorgement of profit must focus on thevalue added by the invention itself [62]; and see similarly [61] ( causally attributable to thevalue of the patent ), [78] (quoted below). I ll argue that there is a difference between these twoways of framing the causation requirement, and that the first is correct while the second is not.First we need to understand what Statas JA meant by the value added by the invention itself. He gave a couple of examples to illustrate what he meant:[64] What is the value of a patented pain reliever that provides eight hours and oneminute of pain relief when there is a non-infringing alternative that provides eight hoursof relief? The patentee did not invent pain relievers; the patentee only invented a drug thatadded an extra minute of relief. In this example, the pain reliever that provides eight hours of relief is the baseline againstwhich the value of the patented pain reliever is to be assessed. To the extent that the eight hourpain reliever is readily available on the market, but for causation and the non-infringingbaseline give the same result. But for the infringement, the infringer would have used the eighthour pain reliever, and the benefit from the patent is the extra one minute of pain relief, which isalso identified by Stratas JA as the value of the patent. Stratas JA s suggestion at [73] thatnon-infringing alternatives have really been used to establish a non-infringing baseline seems tobe saying that in many cases, such as the pain-reliever example, but for reasoning does end upwith the correct baseline comparator.Nova Chemicals Corporation v Dow Chemicals Company 2020 FCA 141 Stratas JA: Near JA / Woods JJA dissenting, aff g 2017 FC 350, 2017 FC 637 Fothergill J2,160,705 / film-grade polymers / ELITE SURPASSIn an accounting of profits the infringer is required to disgorge its profits caused by theinfringement. In the standard approach causation is determined using the but for test, in whichthe amount the infringer actually earned by using the infringing technology is compared withwhat the infringer would have earned in the hypothetical world in which it used the best non-infringing option: Schmeiser 2004 SCC 34 [102]. As explained in last week s post, Stratas JA sdecision for the majority in Nova v Dow rejected but for causation in the context of anaccounting of profits. In so doing, he gave two thought-provoking examples which raisefoundational questions regarding the nature of the but for world. In this post and the next, I willargue that it is not necessary to reject but for causation in order to address the issues raised byStratas JA s examples.The first example, which is the subject of this post, raises the issue of whether the law takes asubjective or objective approach to the infringer s behaviour in the but for world. As Iunderstand Stratas JA s analysis, he is of the view that the but for test for causation requires apurely subjective inquiry into what the particular infringer would have done but for theinfringement. I will argue that on the contrary, but for causation often incorporates an objectiveelement, both in the law generally and in the patent context. I will suggest that the prior caselawis consistent with an approach in which the but for world is constructed by asking what aninformed and prudent party in the position of the infringer would have done but for theinfringement. Such an approach would address the concerns raised by Stratas JA s first example.To turn to the details, Stratas JA provides two examples to illustrate the proposition that [t]heuse of hypotheticals and the but for test . . . has no place in an accounting of profits [67]. In thefirst, the infringer, but for the infringement, would have invested in speculative stocks:[69] For example, if an infringer could prove in evidence that, but for the infringement, itwould have used its capital to invest in, say, Apple or Amazon before their marketascendance then the infringer could retain the vast majority, if not all, of its profits. Butfor the infringement, the infringer would have earned much more investing in Apple orAmazon than selling the infringing goods. By Professor Siebrasse s but for logic, theinfringer would not have to disgorge anything because using the infringing product wasactually detrimental to the infringer s overall profitability.[70] The reality is that infringers may not always pursue the next best non-infringingalternative. It may be the case that without access to the patented product, the infringermight have pursued an entirely different course, for example, speculative investments inemerging tech companies, and would have lost everything.I ll call this the Apple / Amazon example. The reference is to my 2004 article, A RemedialBenefit-Based Approach to the Innocent-User Problem in the Patenting of Higher Life Forms (2004), 20 CIPR 79, that was cited with approval in Schmeiser [102].Stratas JA emphasized throughout his decision that an accounting requires disgorgement of allprofits caused by the invention, and only profits caused by the invention: [27], [32], [39], [46],[61], [ 62]. I agree. Stratas JA is evidently of the view that the value of the patented seed does notdepend on whether, but for the infringement, the infringer would in fact have invested in Appleat its nadir or Yahoo at its peak. Again I agree. More broadly, I take his point to be that the valueof the invention should not necessarily be assessed on solely the basis of a strictly factual inquiryas to what the particular defendant would have done but for the infringement. Here again, I agree.However, Stratas JA offered this example to show that [t]he use of hypotheticals and the butfor test . . . has no place in an accounting of profits [67]. That is, Stratas JA is evidently of theview that the but for test for causation does not get us to the right result in the Apple / Amazonexample: By Professor Siebrasse s but for logic, the infringer would not have to disgorgeanything because using the infringing product was actually detrimental to the infringer s overallprofitability [691]. From this I infer that Stratas JA is of the view that the use of a hypothetical but for test for causation necessarily entails a subjective approach, requiring an inquiry as towhat the particular infringer would have done had it not infringed; therefore, in his view, if theinquiry is not subjective, it is necessary to reject the but for test for causation. This is where Idisagree. The law of causation permits the use of an objective approach, or at least an objectiveelement, in assessing the defendant s behaviour in the but for world, and the concern raised bythe Apple / Amazon example can be addressed within the standard framework by using anapproach that asks how a reasonable infringer in the position of the defendant would behave.Now, a purely subjective approach is not as unreasonable as it might appear at first impression,notwithstanding the intuitive appeal of the Apple / Amazon example. If a purely subjectiveapproach were used then in some cases, as Stratas JA pointed out, the profits to be disgorgedwould be much less than the true value of the invention; an inventor who, but for theinfringement, would have gambled and won, would be better off than one who had investedprudently [69]. On the other hand, as Stratas JA also pointed out, in some cases the award wouldbe higher than the true value of the invention, in cases in which the infringer would havegambled and lost [70]. In theory, this should all come out in the wash. Sometimes the infringerwould win, sometimes it would lose, but these random deviations from the true value of theinvention would all average out. Since the patent incentive is prospective, the expected return toinvention would stay the same and incentive function of the patent system would not beimpaired.However, there are two second order problems with a purely subjective approach. First, on thefacts of any given case, the award might fail to reflect the value of the invention if the infringerwould have behaved idiosyncratically. If a patentee received half the value of their invention, itwould be cold comfort to tell them that some other patentee in some other trial would get twicewhat they deserved. Similarly, an infringer hit with an award much greater than the value of theinvention to them would not appreciate being told, Don t worry, some other infringer will getoff scot free. Second, there is a selection bias problem. Patentees who anticipated that theaccounting award would be unduly low as a result of idiosyncratic behaviour by the infringerwould elect damages instead. This means that it would not all come out in the wash: theaccounting cases would disproportionately reflect cases in which the infringer would be requiredto disgorge more than the value of the invention.Thus, I agree that the Apple / Amazon example raises a real problem. But the solution is not toabandon but for causation. Rather, it is to use an objective approach to the infringer sbehaviour in the but for world.So, in Mustapha 2008 SCC 27, the defendant owed a duty to the plaintiff and breached its dutyby supplying bottled water with a dead fly in it. This in fact caused significant mental harm to theplaintiff. While the trial judge awarded damages, the SCC reversed, holding that the damagessuffered were too remote to be viewed as legally caused by the defendant s negligence, unless itcould be shown that a person of ordinary fortitude would suffer serious injury in the samecircumstances: [18]. Thus, the trial judge erred by applying a subjective standard looking solelyto the effect on the particular plaintiff when an objective standard looking to a person ofordinary fortitude should have been used. Now, Mustapha was a negligence case, andforeseeability considerations are not relevant in intentional torts, and have not generally beenraised in patent infringement. But the broader point is simply that but for causation does notinherently require a subjective inquiry into the effect of the wrong on the particular defendant.Nor is the but for inquiry purely subjective in patent law generally. For example, if a patenteecannot prove damages in the form of lost profits, it is entitled to damages in the form of areasonable royalty. The reasonable royalty is determined on the basis of a hypotheticalnegotiation between the infringer and the patentee at the time of the infringement. Thishypothetical negotiation is not simply a reconstruction of what would have in fact happened butfor the infringement; on the contrary, it is commonly applied when it is clear on the facts that thepatentee would have refused to licence to the infringer on any terms. As the en banc FederalCircuit remarked in the leading case of Rite-Hite v Kelly 56 F3d 1538, 1554 n13 (Fed Cir 1995),the willing licensor/willing licensee characterization is inaccurate, and even absurd, when, ashere, the patentee does not wish to grant a license. Moreover, it is well established, at least inUS law, that the parties to the hypothetical negotiation are taken to bargain on the basis that thepatent was valid and infringed, even though parties to an actual negotiation would not haveknown that the patent was valid and infringed, and so would normally be expected to allow adiscount to allow for the possibility of invalidity. As another example, it would seem that apatented alternative will not be considered a legitimate alternative, even if the infringer would infact have used it: see Cefaclor 2018 FCA 217 [55] and here.The problem of idiosyncratic defendant behaviour specifically has also been raised in the patentinfringement context. In Cefaclor 2018 FCA 217 the question was whether the putative NIAwould have been economically viable. Gauthier JA for the FCA held that while the subjectiveperspective of the infringer may be relevant [72], it is not determinative (original emphasis):[72] In my view, economic viability is not something that is assessed solely from thesubjective perspective of an infringer such as Apotex. . . . [73] However, as I noted earlier, the court s goal is to assess the real value of thepatented invention(s). Such value cannot be assessed on a purely subjective basis.Evidently, the court must be satisfied that the NIA invoked was objectively aneconomically viable substitute at the relevant time. To say otherwise would mean that thevalue of a patent could be artificially reduced by an infringer who behaves in anunorthodox manner, or whose adoption of a substitute is motivated by reasons other thaneconomic ones.This seems to me to be a direct answer to the Apple / Amazon example. Gauthier JA identifiedexactly the same problem raised by Stratas JA, and addressed it by holding that a purelysubjective approach to the but for world should not be used.With that said, I do not want to endorse a strictly objective approach to the defendant s behaviourin the but for world. The main difficulty with an objective test is determining what is in factobjectively reasonable. As Gauthier JA pointed out in Cefaclor, what the particular infringerwould have done helps inform what a reasonable party in the same position would have done[72]. If the actual infringer is in fact reasonable, then the two inquiries will give the same result.In the business context, at least, it is probably sound to presume that the particular infringer wasreasonable: see here. That means that even if we adopt an approach to infringer behaviour in the but for world that is objective in principle, a subjective inquiry will almost always be necessaryand will often be determinative. In most cases it will difficult to disentangle whether the inquiryis subjective or objective, and unnecessary to do so.So, my point here is not to argue for a specific objective test. Rather, my argument is simply thatit is not necessary to entirely reject but for causation to deal with the issue of idiosyncraticinfringer behaviour. The could have and would have test for assessing whether a putative non-infringing alternative may be considered was originally set out in Lovastatin 2015 FCA 171.While that test continues to develop through the case law, it provides a good framework forbalancing subjective and objective considerations in constructing the but for world.Consequently, in my view the existing legal framework of but for causation is entirely capableof addressing the problem raised by the Apple / Amazon example.I ll end with a couple of tangential notes. First, the issue of a subjective or objective approach tothe but for world was not decided in Schmeiser. The question in Schmeiser was the whether theentire actual profits were to be disgorged or only the differential profits. It did not purport tosettle all the details of the way in which the differential profit approach should be applied, in thesame way that the SCC s endorsement of but for causation in Athey [1996] 3 SCR 458 did notsettle the precise nature of the test in the context of psychological injury that was addressed inMustapha. Second, it is not clear to me why Stratas JA was of the view that the logic in my 2004article would imply a subjective approach [69], given that the description I gave in the passagequoted by Stratas JA at [68], suggested that the touchstone would be an objective one, of adefendant acting in a prudent and informed manner while trying to maximize its profit withoutinfringing. With that said, I have to admit that my suggestion of an objective test in my 2004article was largely fortuitous, as the focus of my argument was that the differential profits shouldbe disgorged, and not the entire actual profits. In any event, the issue needs to be addressed inlight of the case law as it has developed since Schmeiser, in cases in which these problems ariseon the facts.Nova Chemicals Corporation v Dow Chemicals Company 2020 FCA 141 Stratas JA: Near JA / Woods JJA dissenting, aff g 2017 FC 350, 2017 FC 637 Fothergill J 2,160,705 / film-grade polymers / ELITE, SURPASSThe decision of Stratas JA for the majority in Nova v Dow raises a panoply of importantconceptual and practical issues related to an accounting of profits, and non-punitive monetaryremedies more broadly: whether the test for causation is the same in an accounting and damages;whether an accounting should provide a disincentive to infringe; the nature of the non-infringingalternative in the but for world; whether the hypothetical world should be constructed onsubjective or objective terms; the role of opportunity costs; and the deductibility of fixed costs.And this is not to mention other less foundational but nonetheless significant issues ofdisgorgement of springboard profits and the date for currency conversion. Unfortunately, thisdecision is not likely to settle any these issues; on the contrary, it is likely to increase uncertaintyin this entire area of law.In a series of decisions, following from the seminal decision of the SCC in Schmeiser, 2004 SCC34, the FCA has built up what I consider to be a sound and principled approach to non-punitiveremedies: see Lovastatin Damages 2015 FCA 171; Venlafaxine s8 2016 FCA 161; PerindoprilAccounting #1 2017 FCA 23; Cefaclor Damages 2018 FCA 217; Perindopril Accounting #2 2020 FCA 60. While some important loose ends remain outstanding, the foundations were solid.Stratas JA s decision for the majority in Nova v Dow has thrown a grenade into that edifice andrattled it down to those foundations. The general statements of principle set out by Stratas JAconstitute, in my view, a radical and unsound departure from established principles, includingthose set out by the SCC in Schmeiser. Some specific holdings might be seen as refinements ofprior law, but even then, because of the unorthodox reasoning, it is not clear whether even thesepoints can now be considered settled.Eli Lilly Canada Inc v Apotex Inc 2020 FC 814 St-Louis J2,492,540 / tadalafil / CIALIS ADCIRCA In this case, Lilly asserted that the processes used by Apotex to make tadalafil infringed Lilly s540 process patent. In addition to non-infringement, Apotex argued that the 540 patent wasinvalid for anticipation, obviousness, lack of utility and overbreadth. St-Louis J held that whilethe 540 patent would be infringed if it were valid, it was invalid for anticipation and obviousness,though the attacks based on lack of utility and overbreadth failed [204]. So far as I can tell, theholdings of invalidity on the basis of anticipation and obviousness turned on the facts and not onany point of law, though I have to say that the facts were quite complex and it is possible that Imissed an issue.There were a few other points of interest: (1) St-Louis J rejected an overbreadth attack as beingakin to the promise doctrine; (2) there was a discussion of the presumption relating to processpatents; and (3) there was a discussion of obvious errors in a claim, which related to the utilityargument. OverbreadthApotex argued that the 540 patent was overbroad on the basis that a particular (redacted) solventhas been tested and found not to work, but the disclosure nonetheless stated that it was useful[350]. St-Louis J rejected this argument, saying:[356] The way that Apotex articulated the allegation of overbreadth in this case appearsindeed very akin to the promise doctrine, abolished in AstraZeneca SCC. What Apotexreally asks the Court to do is to parse the disclosure, conclude that [redacted solvent]promises to be useful for the PSR, import [redacted solvent]into Claim 1 in the absenceof any ambiguity, and strike Claim 1 as a result. She noted that the SCC in AstraZeneca SCC warned against this, and stated that As such, thedoctrine of overbreadth should not be applied in the manner suggested by Apotex, akin to thepromise doctrine [358].St-Louis J s comments strike me as entirely sound (with the caveat that her description ofApotex s argument at [350] is very brief, so that can t assess for myself her characterization of itat [356]). I have a paper on Overbreadth in Canadian Patent Law forthcoming in the IPJ, inwhich I argue that the approach to overbreadth adopted in Amfac (1986), 12 CPR (3d) 193 (FCA) if widely adopted, risks invalidating patents for inventions which are new, useful and non-obvious, on the basis of an arbitrary parsing of the disclosure, in a manner reminiscent of thepromise doctrine. A draft version is available on SSRN (note that this draft was updated on 10June from the first SSRN version). In that paper, I also show that overbreadth is almost alwaysredundant, as merely restating a statutory ground of invalidity (most commonly lack of soundprediction of utility). In this case, if I understand Apotex s argument correctly, it would appearthat the preferable statutory basis for the attack would have been s 53(1); if St-Louis J hadallowed the attack to go forward on the basis of overbreadth, this would have side-stepped thestatutory requirements and related case law requiring wilfulness and materiality.Presumption regarding a process patentThe 540 patent is a process patent, and Lilly argued that the burden should be reversed, so thatApotex would have to prove non-infringement on the basis of s 55.1, which provides that whenthe claim is to a process for obtaining a new product it should be presumed that the productwas produced by the patented process. Lilly wished to argue that new meant that the producthad not been sold on the market before, while Apotex argued it mean new in the sense of beingpreviously known, whether or not it had received marketing authorization: [37], [38]. The priorcaselaw at the FC level is against Lilly, which therefore did not press the point, but merely soughtto preserve its rights on appeal [41].Lilly also argued that the burden should be reversed on the basis of the common law rule that ismore or less to the effect that when the subject-matter of the allegation lies particularly withinthe knowledge of one of the parties, that party must prove it, whether it be an affirmative ornegative character [42]. The exact nature of the common law presumption is unsettled. InCefaclor, 2009 FC 991, [221], Gauthier J held that the presumption would have applied giventhe particular circumstances of this case, if Lilly had taken reasonable steps to obtain thisinformation. St-Louis J relied on this to hold that the presumption did not apply because the evidence did not allow her to conclude that Apotex did not diligently seek to provide therequested process documents, nor that Lilly diligently sought further information from Apotex [45]. This is reasonable enough as an application of Gauthier J s holding to the facts of this case,though the caveat in Cefaclor regarding the particular circumstances of this case, suggests thatthe holding might be a fairly narrow one. It will be interesting to see how this line of reasoningdevelops in future cases.Obvious Error in the ClaimClaim 12 had an obvious error. It read:12. A method of preparing [tadalafi] comprising the steps of: . . .(b) reacting [C] with [D] to provide [E];(c) reacting the product of step (b) with [F] and [G] to provide [E];. . .The product of step (b) is E, so reacting it with F and G would clearly not provide E. In fact, step(b) would not produce E, but rather a different compound, not otherwise mentioned in the claim[197]. The claim was otherwise correct, so that carrying out step (c) on the product of step (b)would indeed produce E. It appears Apotex acknowledged that the error was obvious [343], and St-Louis J found on thefacts that indeed a skilled person would understand Claim 12 to bear [sic] a mistake, and wouldmake tadalafil by following the sequence of actions [349]. Nonetheless, Lilly did not ask thecourt to correct the error [197], [347]; instead they are asking the Court to simply accept theevidence of the experts providing how a skilled person would read Claim 12c. Essentially, Lillyargue that the skilled person understands the error and accordingly understands the scope of theclaim, which accords with the purposive approach construction [197]; and see [347].There is ample authority holding that an obvious error this type will not affect the construction ofthe claims: see eg Procter Gamble (1979), 42 CPR (2d) 33, 36-37 (FCA); Cefaclor 2009 FC991, [159]; Lovastatin 2010 FC 1265, [99]. Varco 2013 FC 750; Azithromycin 2005 FC 1421,[36]. The notion that the claim is not being corrected but merely read as a skilled person wouldread it is a technical distinction which is somewhat difficult to grasp. In Procter Gamble at 37 the FCA simply held that the claims should be interpreted in theonly way that makes sense in Cefaclor at [159] Gauthier J stated that a skilled person would understand the claim to apply as it should have been written; in Lovastatin at [99], Snider Jheld that the error would not change the meaning ascribed to the phrase by the skilledaddressee in Azithromycin at [36] Mosely J stated that the incorrect word in the claim is atypographical error and is of no moment. These statements are all a bit ambiguous as towhether the error was being corrected or rather that the claim was being read as a skilledperson would read it. Phelan J in Varco at [336], on the other hand, expressly held that the errorwould be corrected: [the plaintiff s expert] opined that a Skilled Person would see the error andmake the necessary corrections; and would not be confused or misled. [The defendant s expert]all but admitted the same. Even a judge hearing this case could see the error and make thecorrection (my emphasis).In any event, a person untrained the law would say that an obvious error in the claim will becorrected. Even for a lawyer, that s the easiest way to remember the rule. However one phrases it,the rule is very well established, with St-Louis J s decision adding to the already ample authority.Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC 2020 FC 816 St-Louis J2,371,684 / tadalafil / CIALIS ADCIRCA Yesterday s post discussed the issues raised by the anticipation analysis of this decision. Thispost discusses the issues related to selection patents. To repeat the background from yesterday s post, Lilly markets 2.5mg, 5mg, 10mg and 20mgstrengths of tadalafil for the treatment of erectile dysfunction [11]. The defendants in this action arevarious generics that want to sell tadalfil in those dosage forms [13] The asserted claims of the684 patent are to dosage forms of tadalafil for treating ED, namely doses from 1 to about 20mg, as well as specific doses within that range, including 2.5, 5, 10 and 20 mg doses: [197-213]. The question in this case was whether the 684 patent is valid over the prior art 2,226,784application, which claims tadalafil for the treatment of ED, and discloses unit doses of tadalafilfrom 0.2 to 400 mg. St-Louis J held on the facts, that starting from the knowledge that dosesfrom .02 to 400 mg were useful, it would be routine for the skilled team to carry out the trialsnecessary to narrow that down to the range providing the best balance between efficacy, andsafety and tolerability, and they would be motivated to do so [325-28]. The claimedinvention was therefore obvious to try [323, 330].While that much was straightforward, the decision has a long discussion of whether the 684patent is a selection patent, ultimately concluding that it is not [116 136]. Everyone, includingSt-Louis J and both parties, seems to have been of the view that this was central to theassessment of validity: the determination that a patent is not a selection patent hasconsequences, as the purported advantages relied upon by the patentee, if not in the claims, maynot be considered in the assessment of novelty and inventiveness, as examined later on [128];the defendants argued that the 684 Patent is necessarily anticipated and invalid unless it is aselection patent [226], on the basis that a dosage range out of a broader disclosure isanticipation, unless the patent qualifies as a selection [229]. See also [136], [235], [238], [263],[306], [310], and throughout, distinguishing cases depending on whether or not they related to aselection patent (see eg [286 88]).In my view, this wrong. In Lilly / olanzapine 2010 FCA 197, [4], [27], [33], the FCAemphatically affirmed that the conditions for a valid selection patent set out in IGFarbenindustrie (1930), 47 RPC 289 (Ch), and approved by the SCC in Sanofi at [9]-[11], do notconstitute an independent basis upon which to attack the validity of a patent. The argument inthis case seems to be that these conditions can nonetheless be an independent basis upon whichto uphold the validity of a patent, though not to attack it, because the putative advantages can beconsidered if it is a selection patent, but not otherwise. This must be wrong. In the first place, as the FCA pointed out in Lilly / olanzapine the Act contains no reference toinvalid selection [29]. This point cuts the other way: validity is determined on the basis of thestatutory conditions, not otherwise. It doesn t matter whether selection patents are uniquelysusceptible to attack, or uniquely immune from attack, because neither option has any basis in theAct.Further, the distinction between attacking and upholding a patent on the basis of it being aselection is not tenable. St-Louis J relied on the IG Farbenindustrie conditions as setting out therequirements that must be met before an unexpected advantage can be considered [129]. She heldthat because those conditions were not satisfied, the unexpected properties could not beconsidered [136]. So, failing to satisfy the IG Farbenindustrie conditions is not in itself a groundfor invalidity, but failing to possess these qualities may result in a patent being held invalidbecause the unexpected properties that might be invoked to save the patent if the conditions weresatisfied, cannot be considered. To my mind, this is simply a roundabout way ofinvalidating the patent for failure to satisfy the IG Farbenindustrie requirements. Consequently,this analysis is contrary to the FCA holding in Lilly / olanzapine 2010 FCA 197. (I expect that St-Louis J s analysis was influenced by the decision of de Montigny J in the NOCproceedings involving the same patent, 2015 FC 125, which has some of the same problems (see eg [147 48], even though he started off by emphasizing, correctly in my view, that thejurisprudence has established that a selection patent is like all other patents and is governed bythe same legal principles [108].)St-Louis J s determination on the facts of whether the 684 patent was a selection patent alsodemonstrates problems with the whole approach. Her discussion is quite brief. I note first thatthe 684 Patent, filed in 2000, makes no mention of the 784 Application, published in 1997"[131]. The difficulty with this observation is that it is not set out in IG Farbenindustrie, oranywhere else that I know of; it is certainly not based on the Act. Next, and [m]ore importantly :[132] in regards to Lilly s argument that the substantial advantage of the 684 Patent liesin the better than sildenafil flushing side effect at 2 to 20mg, I conclude that there isnothing in the specification, or the claims themselves, to the effect that the advantage ispeculiar to this particular dosage to the exclusion of any other unit dose, nor does it assertthat a larger number of unselected doses do not possess the same advantage, which is anessential characteristic of a selection patent.This evidently addresses the third IG Farbenindustrie requirements, which is that Theselection must be in respect of a quality of a special character peculiar to the selected group. . . .if research showed that a larger number of unselected compounds possessed the same advantage,the quality of the compound claimed in the selection patent would not be of a special character. An initial difficulty is that St-Louis J s statement could be construed as saying that the fact thatthe patent does not state that the advantage was peculiar to the particular dose is in itself fatal,whether or not the advantage is in fact peculiar to the dose. If so, it is a novel requirement. It is more likely that St-Louis J is simply saying that that the evidence did not establish that thethird condition is satisfied. This suggestion is taken up at [133]. The difficulty here is that thethird condition has no clear statutory basis. The FCA in Lilly / olanzapine stated at [32] that thenotion of selection permeates the entire analysis in relation to each of the grounds of allegedinvalidity : which statutory basis for invalidity is permeated by St-Louis J s holding in [132]?Applying the third requirement without a statutory basis is particularly problematic, given thatthe EWCA in Dr Reddy s [2009] EWCA Civ 1362 [39] has rejected it as being unsound inprinciple.In Sanofiat [11] the SCC remarked that Maugham J.'s analysis [inIG Farbenindustrie] is consistently referred to and iswell accepted. This was no longer true: just a year after Sanofi was decided, the EWCA inDrReddy s rejected reliance on theIG Farbenindustrierequirements, in part because they had no statutory basis [36]-[38], and in part because of substantive criticisms [39]. Jacob LJ stated that thebest thing to do is to regard them as part of legal history, not as part of the living law [37]. In myview, we should do the same in Canada. The SCC in Sanofi did not require the use of the IGFarbenindustrie factors, but only said it is a useful starting point for the analysis to beconducted in this case [11]. In practice, the IG Farbenindustrie requirements have turned outnot to be helpful at all; on the contrary, they have added confusion and complexity to the law, with aconcomitant likelihood of error. Moreover, while the SCC endorsed theIG Farbenindustrierequirements, it did not actually apply them in its analysis on the facts; the SCC relied onIG Farbenindustrieonly for the propositionthat A system of genus and selection patents is acceptable in principle [19]. Otherwise the SCCrelied entirely on universally applicable principles of anticipation and obviousness. I suggest thatthe the Federal Courts should take the same approach: a system of genus and selection patents isacceptable in principle, but whether any particular patent is valid depends on the standardprinciples of anticipation and obviousness, and not on whether the patent at issue can becharacterized as a selection patent. Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC 2020 FC 816 St-Louis J 2,371,684 / tadalafil / CIALIS ADCIRCA Lilly markets 2.5mg, 5mg, 10mg and 20mg strengths of tadalafil for the treatment of erectiledysfunction [11]. The defendants in this action are various generics that want to sell tadalfil inthose dosage forms [13] The asserted claims of the 684 patent were to dosage forms of tadalafilfor treating ED, namely doses from 1 to about 20 mg, as well as specific doses within that range,including 2.5, 5, 10 and 20 mg doses [197-213]. The question in this case was whether the 684 patent is valid over the prior art 2,226,784application, which claims tadalafil for the treatment of ED, and discloses unit doses of tadalafilfrom 0.2 to 400 mg. St-Louis J held on the facts, that starting from the knowledge that dosesfrom .02 to 400 mg were useful, it would be routine for the skilled team to carry out the trialsnecessary to narrow that down to the range providing the best balance between efficacy, andsafety and tolerability, and they would be motivated to do so [325-28]. The claimedinvention was therefore obvious to try [323, 330].So far, so good, and I wish I could stop the post here. However, St-Louis J also held that the 784application anticipated the 684 patent, which, with due respect, is clearly wrong. I ll address thatissue in this post. There is also some problematic discussion of selection patents, which I willdiscuss in the next post. And there are some difficulties with the discussion of the role of theinventive concept in the obviousness analysis, which I won t address, as it did not seem to impactthe obvious-to-try conclusion. St-Louis J, and the parties, appear to have been guided by thedecision of de Montigny J in NOC proceedings involving the same patent, Lilly v Mylan 2015 FC125, which has similar problems, though again the basic obvious-to-try analysis was not affected. Choueifaty v Canada (Attorney General) 2020 FC 837 Zinn J rev g and remanding CD 1478 Application 2,635,393The vexed issue of patentable subject matter has reared its head once again. Choueifaty appliedfor a patent for a computer-implemented method for selecting an investment portfolio with thelowest level of risk for a given return [CD 25]; in brief, a computer-implemented businessmethod. CIPO, applying its problem-solution approach to claim construction set out in MOPOP12.02.02e [13], determined that the essential elements of the invention are directed to ascheme or rules involving mere calculations used to construct the anti-benchmark portfolio andthus not directed to patentable subject matter [CD 52], [16]. In CIPO s view, the computer itselfwas not an essential element; had it been, the claim would have been allowed [17]: PN 2013-03. In a brief decision, Zinn J reversed on the basis that the problem-solution approach is not thecorrect way to determine the essential elements of the claim; rather, the approach set out by theSCC in Whirlpool 2000 SCC 67 and Free World 2000 SCC 66, must be used [40]. CIPO reliedon Genencor 2008 FC 608 for the proposition that the Whirlpool test is not applicable to patentexaminers [34]. In light of the subsequent FCA decision in Amazon 2011 FCA 328, [43] whichexpressly held that CIPO must use the Whirlpool approach, Zinn J held that Genencor is nolonger good law [35]. Zinn J therefore remitted the application to the Commissioner forreassessment in accordance with his reasons. In my view, Zinn J s decision is entirely correct so far as it goes, but in this post I want to stepback and take a brief look at the bigger picture.Tatuyou, LLC v H2Ocean Inc2020 FC 865Little J2,739,837In this decision, Little J dismissed a motion for default judgment on the basis of insufficient evidence to meet the burden of proof on the balance of probabilities.It is well established that On a motion for default judgment in [the Federal] Court, all of the allegations in the statement of claim are to be taken as denied [9]; Little J noted that This standard is different from the requirements for default judgment under the rules in some provincial superior courts in Canada [10], several of which provide that a defendant noted in default is deemed to have admitted the facts alleged in the statement of claim.Consequently, even if the defendant has not filed a statement of defence, the plaintiff must provide evidence sufficient to establish infringement on the balance of probabilities [12]: bald assertions are not sufficient [14]. Little J indicated that the evidence must go to both validity and infringement [16], [17], [19], but presumably in the absence of evidence to the contrary, validity would be adequately established by the presumption of validity unders 43(2). In any event, the reference to validity was merely in passing, as the specific deficiencies noted by Little J went to infringement. In particular, there was no evidence from a skilled person on claim construction [19], but only statements by the plaintiff s CEO that the defendant s product is substantially similar to the plaintiff s product and that it includes all of the elements of the asserted claims [20]. These statements amounted to little more than bald assertions, particularly given that the CEO does not profess to be a person ordinarily skilled in the art and there was no explanation as to how she arrived at these conclusions.The evidence was also insufficient to establish that the defendant, an American company, had been selling the product in Canada [22]. There was an assertion to that effect, but again, no explanation of the basis for that assertion. A reference on the defendants .com website to where customers in Canada can purchase [the allegedly infringing product], unsupported by other evidence of actual sales, was not sufficient establish that anyone has actually purchased or attempted to purchase the product from the defendants website using a computer in Canada.The bottom line is that because allegations in the statement of claim are taken to be denied, the mere fact that the defendant did not file a statement of defence after being served is not sufficient to obtain a default judgment in the Federal Court. Bald assertions of infringement are not sufficient to support a default judgment; at the very least, the plaintiff must provide an explanation for the basis for those assertions.To search for all posts relating to a particular case, you must use the full citation within quotes, eg " "2011 FC 1485" " not " 1485 ".

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