Canadian Courts Can’t Keep their Patent Promise

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In the last few weeks the Supreme Court of Canada has released three IP and technology law related decisions, each with significant holdings.

In Douez v. Facebook, Inc., 2017 SCC 33, the Court established a framework for deciding the enforceability of forum selection clauses. The analysis will no doubt also be instructive for considering the applicability of other clauses in online agreements. See my summary here.

In Google Inc. v. Equustek Solutions Inc., 2017 SCC 34, a worldwide interlocutory injunction ordering Google to de-index websites of a company called Datalink was upheld. It’s hard to predict whether the case will be broadly applicable given that it had: seemingly egregious behaviour by the party who’s websites would be de-indexed (Datalink); a 3rd party that didn’t present particularly strong arguments against the imposition of the injunction (Google);  and, little consideration by the Court in the short decision for underlying IP rights and their territorial limitations.

In the most recent case, AstraZeneca Canada Inc. v. Apotex Inc., 2017 SCC 36 (“AstraZeneca”), the subject of this post, Canadian courts’ Promise Doctrine has been laid to rest. US and other foreign practitioners will no doubt breathe a sigh of relief; the doctrine was a major differentiator of Canadian patent law. In fact, the doctrine was sufficiently out of step with international standards that it resulted in a NAFTA complaint against Canada by Eli Lilly (Eli Lilly and Company v. Canada (ICSID Case No. UNCT/14/2).

The Promise Doctrine

Under Canada’s Patent Act, all patents have to meet a utility requirement to be valid. Section 2, setting out the requirement, reads:

Invention means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter; [emphasis added]

The Promise Doctrine imported an elevated standard of required utility in circumstances where the patent specification set out a clear promise of a particular result. A summary quoted by the Court reads (See AstraZeneca para. 29):

Where the specification does not promise a specific result, no particular level of utility is required; a “mere scintilla” of utility will suffice. However, where the specification sets out an explicit “promise”, utility will be measured against that promise

By way of example, a promise might relate to a particular quantified improvement in efficacy set out in the specification. According to the doctrine if any identified promise is not fulfilled by the practice of the invention, then the patent, in its entirety, is invalid. The doctrine has been followed in a number of cases to invalidate valuable patents, particularly – though not exclusively – in the pharmaceutical context (See e.g. Bell Helicopter  v. Eurocopter, 2013 FCA 219; Apotex Inc v Pfizer Canada Inc., 2014 FCA 250; Nova Chemicals. V Dow, 2016 FCA 216).

Taking a step back, it certainly seems odd that Courts have gotten this far from the wording of the Patent Act. The language of the Act doesn’t anywhere refer to the elevated utility requirement established by the Promise Doctrine, accordingly the previous interpretation in the case law had been that a ‘mere scintilla’ of utility was required to meet the language of Section 2 (Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd., [1981] 1 S.C.R. 504).

Holding

In striking down the doctrine, the Court held (See AstraZeneca para. 36):

This doctrine … is unsound. It is an interpretation of the utility requirement that is incongruent with both the words and the scheme of the Patent Act.

Instead, utility should be determined essentially according to the conventional test (See AstraZeneca paras. 52-55):

To determine whether a patent discloses an invention with sufficient utility under s. 2 , courts should undertake the following analysis. First, courts must identify the subject-matter of the invention as claimed in the patent. Second, courts must ask whether that subject-matter is useful — is it capable of a practical purpose (i.e. an actual result)?

The Act does not prescribe the degree or quantum of usefulness required, or that every potential use be realized — a scintilla of utility will do. A single use related to the nature of the subject-matter is sufficient, and the utility must be established by either demonstration or sound prediction as of the filing date (AZT, at para. 56).

Even though utility of the subject-matter is a requirement of patent validity, a patentee is not required to disclose the utility of the invention to fulfill the requirements of s. 2

How then can the patent scheme address overpromising or fraud by patentees (See AstraZeneca para. 46)?

A disclosure which is not correct and full, or states an unsubstantiated use or operation of the invention, may be found to fail to fulfill the requirements of s. 27(3) . An overly broad claim may be declared invalid; however, under the operation of s. 58  of the Patent Act , remaining valid claims can be given effect. As well, this mischief may result in a patent being void under s. 53 of the Act, where over-promising in a specification amounts to an omission or addition that is “willfully made for the purpose of misleading”.

In the case at bar, once the Promise Doctrine was defeated, it was trivial to find that the patent should not be void for inutility. At the filing date, it was soundly predicted that the subject pharmaceutical would be useful to reduce production of gastric acid.

Robert Tremblay is an associate lawyer at BHOLE IP LAW. He helps companies resolve their IP concerns.

BHOLE IP LAW is a boutique IP firm located in downtown Toronto, Canada and practices in all areas of IP, including developing business-minded patent strategies for startups, small and medium-sized businesses. BHOLE IP LAW provides competitive fees and, importantly, takes pride in its responsive and advisory approach.

 **The information provided herein is a general background of intellectual property law concepts, does not constitute legal advice, and should not be relied upon as legal advice. Bhole IP Law, and the author, make no express or implied representations or warranties in respect of the information, including but not limited to the accuracy of the information. Note that while Bhole IP Law is a firm of Canadian lawyers authorized to practice before the United States Patent and Trademark Office, we are not U.S. lawyers nor lawyers in any other jurisdiction. As such, other foreign counsel may need to be consulted for U.S. or foreign legal matters.**

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