1. American University Washington College of Law Webinar Current Issues in Canadian Patent Law & Practice August 2008

2. Overview I. Hot Topics in Canadian Patent Law a) Good faith in prosecution b) Double patenting c) Competition law and patent assignments d) Scope of claims/sufficiency of description/selection inventions e) Scope of infringing activity II. Prosecution Tips for Canada III. Recent changes to the Canadian Patent Rules

3. Hot Topics in Canadian Patent Law: Good faith in prosecution

4. G.D. Searle v. Novopharm During prosecution Searle argues its patent claims are non-obvious over cited prior art, allegedly inconsistent with its own earlier public disclosure regarding the same prior art Federal Court Judge finds Searle should have disclosed to CIPO what it disclosed to public and thus finds the patent application was deemed abandoned for failure to make a “good faith” response to an Examiner’s requisition under para. 73(1)(a)

5. Patent Act, Para. 73(1)(a) 73 (1)—An application for a patent in Canada shall be deemed to be abandoned if the applicant does not (a) reply in good faith to any requisition made by an examiner in connection with an examination, within six months after the requisition is made or within any shorter period established by the Commissioner

6. Broader duty? Judge in Searle seems to suggest a broader duty of disclosure, commenting: “ … Since at least sixty years ago there has been a doctrine of good faith in respect of patents … ” “ … An obligation arises on those seeking to gain a patent to act in good faith when dealing with the Patent Office … It is to be expected that there will be full, frank and fair disclosure … ”

7. On Appeal… Federal Court of Appeal finds that Searle’s “public disclosure” was not prior art and so there was no bad faith in not disclosing it to the patent office But, FCA is silent on the lower Court Judge’s comments on or suggestion of a duty of good faith

8. In practice: Statements made to Patent Office may affect patent validity in Canada—file “saving responses” with caution Fully address all of the Examiner’s requisitions, including any requisition under Rule 29 to identify prior art cited in foreign prosecution Until further clarification, consider voluntarily making of record relevant prior art cited that was not cited in the International Search Report

9. Hot Topics in Canadian Patent Law: Double patenting

10. Camco v. Whirlpool Inventor entitled to “a” patent for each invention Test for double patenting: i. “same invention” - claims are identical or conterminous ii. “obviousness” - claims not patentably distinct over earlier patent

11. Double patenting and prosecution CIPO applies double patenting prohibition to co ‑owned applications, irrespective of inventorship Objection usually arises where co-owned applications not otherwise citable for novelty or obviousness No cure for double patenting once both applications issue to patent No terminal disclaimer Law applied to invalidate later issued patent Even if the Examiner withdraws the objection, consider managing the pace of prosecution to ensure that the more important application issues first

12. Double patenting and divisionals Only type of continuation application permitted in Canada is a divisional application Divisional applications are permitted where: 1. Unity objection by CIPO and divisional application filed to non-unified, non-elected subject matter; or 2. “Voluntary” restriction by applicant Potential double patenting problem for voluntary divisionals de jure protection for divisionals filed where unity of invention objection: Consolboard v. MacMillan Bloedel

13. Other issues with divisionals If a voluntary divisional application is filed, and CIPO does not consider the original application as having described more than one invention, then CIPO might allege that the divisional application is not entitled to the filing date of the parent application A divisional application has the same 20-year term as the parent Exception, parent applications filed pre-Oct. 1, 1989 Consider expediting prosecution of fixed term divisional applications

14. Hot Topics in Canadian Patent Law: Competition law and patent assignments

15. Patent Act No limitation in Patent Act on assignment of patents Subsection 50(1): Every patent issued for an invention is assignable in law, either as to the whole interest or as to any part thereof, by an instrument in writing.

16. Competition Act Subsection 45(1) of the Competition Act prohibits “undue” competition S. 36 of the Competition Act permits a civil action for damages for conduct contrary to certain provisions of the Competition Act, including Section 45

17. Competition law and patent assignments Molnlycke v. Kimberly-Clark (1991): “… In my opinion, as a matter of law, it is not arguable that the impairment of competition inherent in the exercise of rights expressly provided by…[the Patent]…Act—the obtaining of a patent or reissue of a patent, its assignment and action by the assignee to enforce its monopoly—can be undue. It follows that undue impairment of competition cannot be inferred from evidence of the exercise of those rights alone.” Issue therefore seemed settled: assignment of patent rights does not result in “undue” competition

18. But: Eli Lilly v. Apotex Action for patent infringement Lilly alleging that Apotex infringed eight patents, four of which were assigned to Lilly from Shionogi Apotex counterclaims that the assignment resulted in Lilly controlling all of the commercially viable processes for making a drug resulting in an undue lessening in competition Lilly seeks summary dismissal of Apotex’ counterclaim Federal Court of Appeal reverses motion judge’s decision to grant motion Counterclaim to proceed to trial

19. Molnlycke distinguished FCA distinguishes Molnlycke: in Molnlycke there was no change in the number of patent holders following the assignment. The only change was who could sue. FCA concludes: “…section 50 of the Patent Act does not immunize an agreement to assign a patent from section 45 of the Competition Act when the assignment increases the assignees' market power in excess of that inherent in the patent rights assigned.”

20. What is “undue” lessening of competition? Open question. The motions judge in Lilly found as a fact that the assignment did lessen competition. This finding was not disturbed by the FCA. The question for trial will be whether the assignment resulted in an “undue” lessening of competition.

21. Hot Topics in Canadian Patent Law: Scope of claims/sufficiency of description/selection inventions

22. Scope of claims: Apotex v. Wellcome Supreme Court of Canada articulates a three part test for extending claim scope beyond the examples in the description, requiring: i. A factual basis for the prediction ii. An articulable and sound line of reasoning from which the desired result can be inferred from the factual basis iii. Proper disclosure (e.g., a full, clear and exact description of the nature of the invention and the manner in which it can be practised) Relevant date = CA filing date (Aventis v. Apotex)

23. Sufficiency of description: S. 27(3) (3) The specification of an invention must (a) correctly and fully describe the invention and its operation or use as contemplated by the inventor; (b) set out clearly the various steps in a process, or the method of constructing, making, compounding or using a machine, manufacture or composition of matter, in such full, clear, concise and exact terms as to enable any person skilled in the art or science to which it pertains, or with which it is most closely connected, to make, construct, compound or use it…

24. First principles Consolboard, SCC (1981) “…the inventor…must…give to the public an adequate description of the invention with sufficiently complete and accurate details as will enable a workman, skilled in the art to which the invention relates, to construct or use that invention when the period of the monopoly has expired…” Pioneer Hi-Bred, SCC (1989) “…To be complete, it must meet two conditions: it must describe the invention and define the way it is produced or built…”

25. Selection inventions, a higher level of disclosure? Eli Lilly (2007) “Thus, in considering the law as to sufficiency in regard to selection patents, the following may be concluded: 1. A valid selection patent may be obtained where the invention lies in selecting a member or members from a previously disclosed group where the member or members selected possess a particular advantage not previously to be found or predicted in a large number of members of the class by a person skilled in the art. 2. The advantage may also be a disadvantage to be avoided.

26. And 3. The advantage must be clearly set out in the specification. A statement that the selected group possesses advantages or lack of disadvantages is not in itself sufficient; the advantage must be plainly and fully set out in sufficient detail so as to enable a person skilled in the art to know and appreciate what they are.” Eli Lilly FC (2007)

27. Return to first principles: Pfizer FCA (2008) “…Only two questions are relevant for the purpose of subsection 27(3) of the Act. What is the invention? How does it work…In the case of selection patents, answering the question “What is the invention?” involves disclosing the advantages conferred by the selection. If the patent specification (disclosure and claims) answers these questions, the inventor has held his part of the bargain...”

28. First principles revisited? Supreme Court of Canada hearing in Apotex v. sanofi-synthelabo on April 16, 2008 Selection patent case An issue: is a disclosure that is sufficient to sustain a patent also sufficient to anticipate? Decision expected later in 2008 Other issues: double patenting, novelty and obviousness. Court might opine more broadly than on “selection inventions”.

29. Hot Topics in Canadian Patent Law: Scope of infringing activity

30. Section 42 of the Patent Act 42. Every patent granted under this Act…shall, subject to this Act, grant to the patentee and the patentee’s legal representatives for the term of the patent, from the granting of the patent, the exclusive right, privilege and liberty of making, constructing and using the invention and selling it to others to be used, subject to adjudication in respect thereof before any court of competent jurisdiction. Includes direct and indirect infringement

31. Infringing use: saccharin doctrine There is infringement of a patented process in Canada where the process is used outside Canada and the product of the process is imported into Canada whether or not the product is itself patented in Canada: Monsanto v. Schmeiser This doctrine has been recently extended to the use of a patented product off-shore as an intermediate in the production of a final product imported into Canada where the final product does not contain the intermediate: Pfizer v. Ranbaxy

32. Prosecution Tips for Canada

33. Managing prosecution timelines Deferred examination Up to five years from filing date Currently about a 2-3 year examination backlog Special Order Currently easily obtained at any stage in prosecution If prompt applicant response, can usually obtain a patent within 12-14 months Abandonment/reinstatement 12-month period to reinstate an abandoned application as of right No patent term extensions

34. Amending patent applications No excess fees based on number of claims or multiple claim dependencies High threshold for new matter Test: “reasonably inferable” from specification as originally filed Unity of invention standard usually easily met Effectively the PCT standard But, no rejoinder of non-elected subject matter: cancelled subject matter optionally safely pursued in a divisional application (no double patenting)

35. Recent Amendments to the Canadian Patent Rules

36. Establishing entitlement before CIPO Until June 2, 2007, entitlement established before CIPO by filing title documents New rules effective June 2, 2007 require a declaration of entitlement from inventors to the original applicant to be filed for applications filed on or after June 2, 2007 Includes PCT applications filed on or after June 2, 2007 CIPO will still record title documents from inventors to original applicant Entitlement in successors in title is established by filing title documents

37. Declarations of entitlement A declaration of entitlement is not required to obtain a filing date, but it is best filed on filing to avoid a requisition and completion fee A declaration of entitlement filed under PCT Rule 4.17 can be relied upon to meet the Canadian requirement Transitional provisions An assignment or declaration of entitlement can be filed for applications filed prior to June 2, 2007

38. New small entity rules: IP due diligence Maintenance fees due annually on Canadian patent properties with special rate for small entities Under the former rules, no discretion in Commissioner of Patents to accept corrective payments once period for payment (including 12-month reinstatement/late payment period) had expired Thus, failure to correctly pay maintenance fees at large entity level could result in irrevocable loss of patent rights: Dutch Industries

39. Corrective payments under new rules New rules permitting corrective payments in force June 2, 2007 Commissioner of Patents may grant an extension of time to pay the proper fee if the applicant or patentee states that, to the best of its knowledge, the small entity fee was paid in good faith and the request for the extension is being filed without undue delay

40. New definition imprecise … "small entity", in respect of an invention, means an entity that employs 50 or fewer employees or that is a university, but does not include an entity that (a) is controlled directly or indirectly by an entity, other than a university, that employs more than 50 employees; or (b) has transferred or licensed or has an obligation, other than a contingent obligation, to transfer or license any right in the invention to an entity, other than a university, that employs more than 50 employees.

41. When assessment made Under the amended rules, entitlement to small entity status is determined once for the life of the patent based on the status of the original applicant as at the date of filing of a regular application (i.e., a non-PCT application) or the date of national phase entry of a PCT application

42. Due diligence considerations Problems can arise in cases of acquired or licensed in technology Small entity fees paid under old rules Check for corrective payments under Bill C-29 or during late payment/reinstatement period Small entity fees paid under new rules Request extension and correct?

43. Thank You David E. Schwartz deschwartz@smart-biggar.ca www.smart-biggar.ca