Catherine Du Pont-Thibodeau is a J.D. candidate at Osgoode Hall Law School and is taking the Patent Law course.

A topic recently caught my attention while surfing the Internet in search of a subject for this blog: the patentability of business methods in Canada and more particularly Amazon.com’s 1-Click technology. Having very little knowledge of patent law at least so far, I decided to explore this topic to understand what the buzz was all about. Through this short post, I will try to provide some insight on the developments of the Canadian patent law and the impact of the recent rejection of Amazon.com’s 1-Click.

In a nutshell, Amazon’s 1-Click online purchasing method allows a customer to purchase an item with a single mouse-click. For example, a first time user enters his/her identification, billing and shipping information, which is then stored on the vendor’s server. On his/her next visit, he/she can proceed quickly by making the purchase and proceeding directly to the virtual checkout with one click.

Patents for this process took off in the U.S. in 1998, when a U.S. Court of Appeal ruled in State Street Bank & Trust Co. v. Signature Financial Group Inc. that patents could be awarded for business methods. In the aftermath of this decision, many companies rushed to file patent claims for a wide range of business practices. Amazon.com became one of the most visible method patentee with its 1-Click patent.

However, in Canada, Amazon.com’s experience was very different. In 2004, Amazon’s application was rejected by the Canadian Patent Office (the “CPO”) based on obviousness and non-statutory subject matter but that decision was overturned on appeal by the Canadian Patent Appeal Board (the “CPAB”) on the basis that all of Amazon’s 75 claims were inventive in comparison to prior art. But, the CPAB also held that all claims were directed to non-statutory subject matter. This decision has signaled a significant shift in the CPO‘s approach to patentable subject matter and, in particular, software and business method patents. Currently, the issue is now before the Federal Court and is being followed closely by software and business method innovators.

The CPAB referred to the traditional judicial test established in Beloit Canada Ltd. v. Valmet Oy but also relied on the newer four-step approach outlined by the Supreme Court of Canada (“SCC”) in Sanofi-Synthelabo Canada Inc. v. Apotex Inc., and concluded that the invention was not obvious because a person skilled in the art would not have been led “directly and without difficulty” to the claimed invention.

The CPAB then considered the issue of subject matter and here innovated holding that it was necessary to consider both the form of the claim(s) (e.g. whether each claim on its face appeared to define statutory subject matter) and its substance (e.g. what has been discovered or added to human knowledge) to determine whether it fell into excluded subject matter. In other words, the CPAB held that it was not sufficient for the form of a claim to fall within one of the categories of statutory subject matter found in the definition of “invention” in S.2 of the Patent Act, R.S., c. P-4, because the substance of the invention must also fall within one of the statutory categories. In short, a claimed invention cannot be considered as statutory if the feature or group of features that make it new and not obvious fall into excluded subject matter.

The CPAB also adopted a new technological subject matter requirement. It held that “subject matter that is not technological is not statutory subject matter, and cannot fit under one of the categories of invention”. In applying that analysis to the Amazon.com 1-Click patent, the CPAB concluded that “what had actually been discovered … is limited to streamlining the traditional online ordering method, and the benefits and advantages that flow from it. In other words, the essence of the claimed invention is the particular rules for carrying out an online order”. It then added that “concepts or rules for the more efficient conduct of online ordering, are methods of doing business. Even if these concepts or rules are novel, ingenious and useful, they are still unpatentable because they are business methods”. The CPAB further held that the substance of these claims were not statutory subject matter because the substance of the invention failed to qualify as an “art” or “process” within the definition of “invention”. The CPAB rejected the possibility of patenting business methods, stating that “since patenting business methods would involve a radical departure from the traditional patent regime, and since the patentability of such methods is a highly contentious matter, clear and unequivocal legislation is required for business methods to be patentable”. The CPAB sided with the dissenting opinion in Monsanto Canada Inc. v. Schmeiser,  and ignored the U.S. decision in State Street Bank & Trust Co. v. Signature Financial Group Inc., and its progeny. Furthermore, although the CPAB acknowledged that the claimed invention did involve some technological aspects, such as the technological capability of a cookie, this was not sufficient for patentability because that technological aspect was known from the prior art. With this new technological requirement, only features that are novel and non-obvious over prior art, constituting the substance of the invention, can be relied upon to qualify as statutory subject matter.

To conclude, this case appears to raise the threshold for obtaining business method patents in Canada. First, this decision seems to indicate that claim form is not determinative and the substance of each claim will be reviewed to determine what has been added to human knowledge. Where that addition is directed to non-statutory subject matter, the claim will be rejected. In particular, the CPAB made it clear that simply adding hardware elements of a “general purpose computer” would not automatically make a system claim patentable. What must be remembered from this decision is that business methods are excluded subject matter and are not patentable under Canadian law. It is however difficult to understand how the CPAB’s new approach to statutory subject matter could be reconciled with existing Canadian law. For example, this decision represents a clear change from the position outline in the 2005 Manual of Patents Office Practice (chapter 12) which provided that “business methods are not automatically excluded from patentability, since there is no authority in the Patent Act or Rules or in the jurisprudence to sanction or preclude patentability”. Not surprisingly, in 2009, the CPO issued a new draft of its chapter to reflect the new changes.

The CPAB’s decision is not necessarily the end of the road for the 1-Click patent since Amazon can still hope that the Federal Court reverses the decision. However, this decision provides a strong signal that the business method patents face a rough ride under the current Canadian law.

Posted in Patentability, Patents
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Virgil Cojocaru is a JD candidate at Osgoode Hall Law School.

These days governments are funding private sector enterprises. The public purse is increasingly used to aid businesses. However, many questions remain about the effectiveness of such a strategy. Josh Lerner, in his book, Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed — and What to Do About It tries to address the issues surrounding this topic. In an interview posted on the Freakonomics – New York Times Blog, Lerner comments on the complexities decision makers face in today’s environment. It is not merely a question of ‘to fund or not to fund’, but rather who, how, and when.

Central to Lerner’s ideas is creating the right environment for business. Handing out money is just the beginning of a very long process, and without the right environment leads to failure. What is the right environment? This can be illustrated through the development of Silicon Valley in the first half of the 20^th century. In those days, the US government ensured the right environment for entrepreneurship through subtle policy decisions. For instance, Stanford University was a source of technology. However, local financiers were the source of capital. What bridged the gap between these two worlds? Generally speaking, it was taxes and contracts. Taxes are meant to stimulate entrepreneurs to start new business. Contracts reinforce the relationship between a source of technology, such as a university and an entrepreneur.

Contracts require consideration. What is consideration in this case? Surely, not just the prototype, but rather the rights associated with it. This is what the entrepreneur buys and markets from a source of technology, such as a university, and what will ultimately be used to gather private funds from financiers. Intellectual property and the effectiveness of patents become crucial. Perhaps in hard times, we should not just think about government money and funding, but rather consider intellectual property law reform. The law and intellectual property play a critical role in the business cycle, and hence are a vital component of creating a fertile environment for public funds.

This is just part of the story. Lerner points out that government funds played an important role. They accelerated the development of the area in the early 20^th century through contracts for specific projects. If a project would fail or develop too slow the funding was cut—this is the nature of contract work. This is part of the understanding that programs that promote entrepreneurship need flexibility; sometimes they need to be terminated. It is important to also note that the government only provided funding once these firms were already in place largely as a result of existing policy, law, and initial private funding. The critical role of intellectual property law, such as patents, cannot be overstated.

The public purse is only meant as a catalyst. It is not a substitute for start-up. This explains why Lerner values venture capitalists. They serve the role of early financiers—funding young or restructuring firms and “providing a layer of insulation” between entrepreneurs and government. This helps tackle two thorny issues: inappropriate/inefficient allocation of funds and agency problems. Venture capitalists provide an indication of what the market thinks is a good investment; government should follow those signs. This assures that funding is not distributed ineffectively and top down, but rather according to the market’s judgment. Venture capitalists can also reduce the agency problem because as investors their judgment is based on performance. This makes it a lot harder to set up an entity that will misuse public funds.

Posted in Commercialization, Contracts, Electronic Processes, General, IP, Innovation, Patentability, Patents, Tech Transfer, Technology
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Nirav Bhatt is an LLM candidate at Osgoode Hall Law School.

The World Health Organization (WHO), last week witnessed tumultuous questions from various nations at the meeting of Executive Board Members of WHO on the outcomes of an Expert Working Group on Research and Development Financing (EWG) which raised concerns about methods of work employed by the EWG to undue pressure wielded by the pharmaceutical industry over the EWG’s outcomes.  The discussion took place under the agenda item on Public Health, Innovation and Intellectual Property: Global Strategy and Plan of Action, at the 126th session of the Executive Board between 18-23 January, 2010.

The highlight of the meeting was that members were determined to arrive at a possible solution to work towards a commonly acceptable framework for influenza, and so they agreed for a complete framework for dealing with influenza, which should be prepared before May 2010, when the Executive Board would meet for the World Health Assembly (WHA). As Spicy IP noted, the main issue discussed was that of development and distribution of vaccines, and the usual North-South divide persisted, with certain developing countries claiming that shared details about a pandemic virus did not always convert into actual benefits.

IP-Watch has vividly accounted about the new intergovernmental intention for sharing virus-related materials, benefits and managing associated IP rights in the WHO strategy for responding to pandemic influenza outbreaks. Amongst the different member nations, Indonesia repeatedly stressed about urgency of lack of access to health resources as a critical issue. Mexico, where the 2009 pandemic of H1N1 originated, expressed discontent that they never received any benefits from the sharing of the vaccines. India wanted assurance that the WHO does not commit to terms and conditions that might set as precedents and upset the balance between virus and benefit-sharing and also stressed the significance of technology transfer. Brazil echoed India’s stance and emphasized that any such agreement should be “binding and enforceable,” as benefit-sharing is the right of member states, while China said that benefit sharing should be based on ability and industrial capacity of the nations. Japan led the path of voluntary and not mandatory benefit-sharing and asserted that it should be left upon the states to decide about how effectively they can contribute both with financial and technical resources and the US associated itself with Japan’s statement and voiced concerns over the number of consultations being held before the WHO while the International Federation of Pharmaceutical Manufacturers and Associations accentuated on the voluntary nature of these actions.  WHO on its website defended against allegations of a fake pandemic created to bring economic benefit to industry as scientifically wrong and historically incorrect.

It is undisputed fact that the WHO has made significant contributions by adopting the Commission on Intellectual Property Rights, Innovation and Public Health and this should send a strong and important signal to WHO member states that the protection of intellectual property rights is only a means to an end, but not an end itself. Such protection therefore needs to be balanced against other important, and often more important, goals, such as the promotion of public health.   The establishment of this Committee in the WHO is vital as at the very least, it shows that intellectual property matters, particularly as they relate to innovation, are not an exclusive preserve of WIPO.  Indeed, allowing WHO to take up more responsibility in the intellectual property area, especially where it intersects with public health would be beneficial.

Taking this into account, some nongovernmental organizations are hoping that the organization will provide greater expertise in the public health area and the development of a new perspective. Therefore this should be the test for the organization and although it remains to be seen how much WHO can contribute to the promotion of a development dimension of intellectual property rights, the importance of such a highly specialized and credentialed agency is not to be ignored.

Posted in General, IP
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Stu Freen is a JD candidate at Osgoode Hall Law School.

As details of Conan O’Brien’s severance deal with NBC leak out, it seems that at least one thing won’t be travelling with Conan to wherever he ends up: His signature characters and comedy bits. NBC has reportedly staked out the IP rights in classic Late Night recurring characters such as Conando, the Masturbating Bear, and Clutch Cargo Arnold as part of Conan’s $40 million deal to leave the Tonight Show.

While lawyers from both sides have been hush on the issue, sources close to the negotiations told the Hollywood Reporter that NBC will retain the rights to all the characters and gags created for Late Night and the Tonight Show. The future of perhaps the most popular Late Night character, Triumph the Insult Comic Dog, is a little less certain since he was actually created prior to his first appearance on the Late Show by writer and comedian Robert Smigel. My personal favourite bit, the Walker Texas Ranger Lever, sadly will almost certainly be gone for good since it was premised entirely on the fact that NBC had access to royalty-free Walker clips.

This aspect of the Conan deal has struck entertainment lawyers as unusual since front-end contracts for comedy shows usually assign IP rights to creators. Although by default copyright goes to employers, TV deals are almost entirely contractual and as such the assignment of IP is governed by the terms. For instance, Law.com points out that David Letterman now owns all of his skits and characters and therefore wouldn’t face this issue if he were to ever leave CBS. However, Letterman too had to change the name of some of his bits when he made a similar move from NBC to CBS in 1993, indicating that he might not have always wielded such bargaining power with network executives.

While it is extremely unlikely that NBC will actually try to use any of Conan’s characters without him, the move is seen as a ploy to keep Conan’s next show from catching on. NBC hopes that without his familiar gags Conan will have a hard time attracting some of his old fans. However, Letterman’s past experience indicates that Conan will probably just be able to tweak the names and content of his skits a little bit in order to recycle them.

Hollywood document-trolling website the Smoking Gun also reported (perhaps prematurely) that the theme music to various Late Night and Tonight Show segments may be safe since the copyright was registered by band members Max Weinberg and Jimmy Vivino. However, mere registration of a copyright does not necessarily imply ownership and as such should be taken with a large grain of salt.

On a related note, the NBC-Conan deal purportedly includes a blackout period where Conan cannot appear on TV during returning host Jay Leno’s first shows back at the Tonight Show. Perhaps wisely, NBC wanted to avoid a late night mud-slinging war like what was going on throughout Conan’s last week on the air. Under the deal Conan will not be able to appear on rival talk shows like the Late Show or the Daily Show with John Stewart to trash Leno and NBC.

Posted in Contracts, Copyright, IP, Ownership
Comments: 0

Peter Waldkirch is a second year LL.B. student at the University of Ottawa.

SciDev.net, a website providing “news, views and information about science, technology and the developing world” recently covered a move by Peru’s National Institute of Culture to declare the techniques for farming a variety of giant white maize, paraqay sara in the Quechua language, a part of Peru’s cultural heritage. Although the practical effects of this declaration are unclear, it is noteworthy as part of the continuing movement to recognize and protect traditional and communal forms of knowledge in a global intellectual property regime that emphasizes rewarding individual innovation.

The maize in question has a long history of cultivation which stretches back to the pre-colonial era. It is produced in a narrow geographic region – the Urubamba Valley or Sacred Valley of the Incas, close to the famed Machu Picchu. However, the variety is already protected through the geographic designation of origin mechanism. One effect of declaring the maize a part of Peru’s cultural heritage may be to grant further protection to the indigenous name – currently, for example, it is listed only under its Spanish name, Maíz Blanco Gigante Cusco, in the WIPO library.  While this move may have significant symbolic value and lay the groundwork for the future promotion of local agriculture, it doesn’t seem to currently add any legal protections. The SciDev.net report, for example, cited Alejandro Argumedo of the Peruvian NGO ANDES, who believes the cultural heritage designation will not have any effect on the intellectual property status of the variety. Rodomiro Ortiz of the International Maize and Wheat Improvement Center approved of the move as recognition of the contribution of traditional farmers and farming techniques to biodiversity.

This isn’t the first time farming techniques have received recognition for important cultural contributions. In 1995, for example, the 2000 year old Ifugao rice terraces in the Philippines were recognized by UNESCO as a World Heritage Site. Probably the most prominent use of such designations, however, are to protect more tangible forms of cultural heritage. Many countries now have legislation aimed at regulating the sale of historical and cultural artifacts. Peru actively uses its cultural heritage legislation and various bilateral agreements in this manner. Last November, for example, the US Immigration and Customs Enforcement agency returned several eighteenth century religious artifacts to the Peruvian government after seizing them from a Miami resident who tried to enter the US with the items in his luggage. Another prominent example is the ongoing decade-long battle between Peru and Yale University. Yale currently holds many (part of the dispute concerns the quantity in question) artifacts brought to the US by Hiram Bingham, the “discoverer” of Macu Picchu. The two parties reached an agreement over the matter, but Peru backed out over claims that Yale was not honouring its obligations or respecting Peru’s heritage. The matter is currently before the courts; recently Yale asked for the action to be dismissed on the grounds that the limitations period had expired.

This sort of dispute illustrates how laden the question of cultural heritage can be with issues of colonialism and national identity. Even if declaring paraqay sara affords little concrete legal status to the historic maize, it certainly makes a statement about the significant cultural importance of the crop and the farmers who developed it.

Posted in General, IP
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Ori Bergman is a J.D. candidate at Osgoode Hall Law School and is taking the Patent Law course.

The Utility requirement for granting a patent obligates the inventor to disclose an invention that works as predicted. Whether it works or not is seen as a question of fact. In submitting a claim, it is known that the specifications must not exceed the invention itself. Meaning, the claims that the examiner consider must have nothing more and nothing less than that which the inventor intended to obtain a patent for.

The doctrine of Sound Prediction, though, serves as the exception to this rule.  It allows one to extrapolate the “utility of a proven invention to the utility of equivalent chemical compounds”(Lecture slides.) In other words, the inventor is claiming something that is yet to be fully tested and demonstrated to work in the way purported.

The Apotex v. Wellcome Case involved using a known drug for a novel purpose. The question arose whether that novel purpose, particularly the treatment of HIV, is patentable despite only being tested on a mouse virus in a Petri dish and HIV infected human cells in vitro, but not on actual humans with HIV. The question posed to the court included whether this novel purpose indeed has proper utility, not through direct demonstration but via the doctrine of Sound Prediction. Specifically, at the date of claim, did the drug, AZT, do what it was supposed to do, namely combat HIV? A negative answer denies that any new invention existed. This might be a difficult test given that what it sets out to do was never fully tested in the manner to which it is meant to be administered, i.e. was never tested on humans with HIV. The court describes 3 requirements that would satisfy them for the purposes of granting a patent based on a sound prediction: a) a factual basis for the prediction, for example, testing on animals or related cells that might hold predictive weight with humans, b) the inventor must, at the date of the patent application, be able to connect the facts to the desired result, i.e. show how this drug would actually treat HIV in humans and c) proper disclosure of all the facts. The court found that Wellcome successfully satisfied these 3 criteria at the date of patent application.

Consider the worst-case scenario in the above case; the patent is granted and as a result Wellcome gains a monopoly to sell the drug for the desired purpose. Naturally, Wellcome can essentially set a higher price than would be appropriate given competition. Further, research into this drug is drastically reduced, as it is essentially unusable for commercial use. Tragically, the drug is found to have toxic effects on humans with HIV.  As the Supreme Court states, “the public should not be expected to pay an elevated price in exchange for speculation” (Apotex v. Wellcome at par 37.) All the more so should they not be exposed to a health hazard. This is what we must be concerned about when discussing sound predictions; that in effect, the patent granted really accomplishes very little of what was promised. The utility should not be left to be determined as a lucky guess or even through adequate research after the fact.

The court mentioned that “to have required Glaxo/Wellcome to demonstrate AZT’s efficacy through the clinical tests required by the Minister of Health for approval of a new drug for medical prescription would have been unfair to Glaxo/Wellcome.” The question is why this should be so? What about the consequences of a mistaken prediction? Do we not want the greatest amount of certainty in the invention’s utility? Consider that first person taking the first AZT pill administered. Wellcome would certainly be watching to see that AZT worked the way they hoped it would, but what if it doesn’t. The courts might reason that within the context of drugs, for it to be approved for sale, it must satisfy the standards of the Minister of Health. The focus of patent law must remain within its limits. Setting up a further hindrance and higher standard for pharmaceutical companies would effectively be performing a job that belongs to the Minister of Health and the FDA. In other words, the law of patents needs not be overly concerned with elements that are outside the realm of patents, such as health standards, but only with the ingenuity of the invention. The policy that does concern them is that the granting of patents does not become speculative as the consequences to the public would be unfair, i.e. no competition, reduced research and patents that do not do what they claim.

As a final point, one must also be attentive to a hindsight bias by the court; the drug in question reached the Supreme Court almost twenty years after it hit the market and displayed tremendous success both in treating HIV and monetarily for Wellcome.

The Doctrine of Sound Prediction represents the outer limit of the utility requirement in patent law. A proper application of this doctrine can facilitate granting a patent in a manner that protects the public while concurrently not setting the bar unreasonably high for inventors.

Posted in Patents
Comment: 1

Nathan Fan is a JD candidate at Osgoode Hall Law School.

The debate on network neutrality between network providers and content providers saw a moment of consolidation when the internet’s big name adversaries, Google and Verizon, submitted a joint submission regarding their views of an “Open Internet” to the Federal Communications Commission on 14 January 2010. In their submission, Google and Verizon expressed the common ground that they had found with respect to network neutrality and an open internet.

Although they still disagree quite strongly over certain policies, they seem to have come to common terms over a number of important “overarching values” that are essential in creating a framework for an “enlightened, sustainable Internet policy for the United States”.

Google and Verizon’s joint submission outlays a platform spanning several overarching values in which both companies can agree upon. One point of agreement is in the understanding that the Internet is unique in that it has flourished out of a framework of minimal government regulation and that this framework should continue into the future of the Internet “ecosystem”. There are also guiding principles that they believe are necessary for maintaining this growth, such as preserving openness, providing users with control and transparency to make informed decision, and encouraging investment and innovation in broadband networks. Google and Verizon are also both in strong agreement that communications laws and regulations should not apply to Internet applications, content or services. In fact, they state that the FCC does not have jurisdiction over the Internet, and if anything, the Internet should be governed by the U.S. Federal Trade Commission.

Another point of agreement is that government intervention should only play a role in situations where industry mechanisms are unable to resolve harmful or anti-competitive behaviour, and such intervention should be “surgical, swift” and on a case-by-case basis. To further self-regulation, the submission proposes Technical Advisory Groups (TAGs) to provide guidance and expeditious conflict resolution. TAGs would be comprised of stakeholders with technical expertise to help guide all parties in the Internet “ecosystem” by developing best practices or principles, providing advisory opinions, acting as a forum for dispute resolution, and coordinating with industry standard-setting bodies to ensure that the guidance provided is in accordance to current standards.

Interestingly, Google and Verizon have also agreed that a non-discrimination rule for ISPs should only be made for the prevention of harm to users or anti-competitive behaviour. Google seems to have accepted the realities that being an efficient and effective network carrier may require discriminatory access to bandwidth. While they do not necessarily agree on which practices should be allowable, they agree that such practices should be evaluated on a case-by-case basis.

Google and Verizon have also each submitted their own separate filings expressing their positions regarding issues that they could not come to agreement in the joint submission.

The submissions were spurred by an announcement from the FCC back in September 2009 of their proposal to protect consumer access to an “open Internet” and impose rules that would preserve network neutrality. The rules would require greater transparency about network management practices and would essentially prevent broadband-based ISPs from discriminating against certain services, applications or viewpoints on the Internet. In his statement, FCC Chairman Julius Genachowski stated that the once free and open internet is now faced with many substantial challenges and is at a crossroads. Genachowski recited the various ways in which broadband providers had constrained consumers’ access to an open internet, including the unilateral blocking of access to VoIP applications, technical measures that degrade performance of peer-to-peer software (including the distribution of lawful content), and the denial of access to certain political content.

He also further outlined three reasons as to why the FCC is concerned about the future of the Internet’s openness. First, there is limited competition among service providers in America. As consumers make the shift from dial-up to broadband, the competition is greatly reduced and it leaves consumers with little choice. Second, the economic incentives that drive broadband providers may run counter to the best interests of consumers. As most carrier companies rely upon revenue from selling phone services and cable TV, their revenue streams are threatened by competing voice (e.g. VoIP) and video products over the Internet. Third, the explosion of traffic on the Internet runs the risk of allowing the growth of sophisticated technologies for managing the broadband networks to outrun the policy concerns that need to be resolved along the way.

At stake for the network carriers is the potential of unintended consequences from an overreaching or over-generalized approach, especially if the new regulations extend to the mobile industry. As the new regulations would prevent the service providers from discriminating against certain Internet services, their wireless carrier services are at significant risk as they make most of their revenue from voice and texting. The FCC proposal would effectively encourage wireless customers to reduce their voice and texting service plans by replacing them with Internet-based services like Skype and Google.

Service providers also fear the potential consequences of the FCC proposal over anti-discrimination rules. With the Internet boom and the increased volume of bandwidth hogging services, the ISPs argue that it would be extremely difficult for them to operate efficient carrier services without active network management. Others argue further that the net neutrality proposals could also stifle innovation in active network management technology.

Whether or not Google and Verizon have other personal business agendas in mind for the joint submission, which wouldn’t be surprising, it nevertheless presents a good faith gesture of a collaborative approach to the future of the Internet. The Internet truly is a unique creature and as our world becomes increasingly dependent on it for daily living, Google and Verizon’s ‘compromise’ shows preparation to move forward beyond the current crossroads.

Posted in General, Internet
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Ankur Bhatt is a J.D. candidate (2011) at Osgoode Hall and is taking the Patent Law course.

On November 23 of last year, the Federal Court of Canada released its decision in the case of Lundbeck v. ratiopharm, 2009 FC 1102 (“Lundbeck”), wherein a drug patent was considered to be invalid on the basis, inter alia, that the claimant had been remiss in its duty of good faith patent prosecution.

The patent at issue “claim[ed] the use of memantine in conjunction with … acetylcholinesterase inhibitors for the treatment of … Alzheimer’s disease.” At the heart of the patent, forming its purported non-obviousness and utility, was the synergistic, as opposed to simply additive, therapeutic effect of this combination of two otherwise known drugs.

The respondent ratiopharm sought to have Lundbeck’s patent invalidated on the grounds of anticipation, non-obviousness, inutility, and lack of good faith prosecution. While rejecting the first two allegations, the Federal Court of Canada accepted the third allegation of inutility, thereby invalidating the patent. However, “[a]lthough not strictly necessary”, the Court went on to “deal with [the] last challenge … in the event that a reviewing court takes a different view of [the finding on] utility.”

The relevant provision of Canada’s Patent Act was the following: “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 …”. ratiopharm asserted that Lundbeck had contravened this good faith duty during the original prosecution by “fail[ing] to make full, frank, and fair disclosure” of a certain scholarly, materially relevant article. In response to the patent examiner’s concern, in the form of a requisition for prior art, that a combination of two known compounds could not be obvious, Lundbeck had (mis)represented that “the prior art clearly teaches away from the [claimed] combination”. The prior art references Lundbeck had fully disclosed demonstrated that when combined, memantine in fact attenuated the therapeutic effect of achetylcholinesterase inhibitors. However, the prior art reference that Lundbeck had not fully disclosed showed that this attenuation really only occurred with a certain class of acetycholinesterase inhibitors; the acetycholinesterase inhibitor in Lundbeck’s combination was of the non-attenuating class.

The Court thus found for ratiopharm that Lundbeck’s conduct – that of identifying the article yet neither significantly discussing the unsupportive article nor providing a copy thereof to the patent examiner, ending with a misrepresentative conclusion on the prior art – was in breach of a duty of candour flowing from s. 73(1)(a) of the Act. In so holding, the Court referenced the only case considering the scope of 73(1)(a), G.D. Searle & Co. v. Novopharm Ltd., 2007 FC 81 (“Searle”). In Searle, the Federal Court held a patent to be invalid due to the applicant’s failure to bring to the attention of the examiner an article it had published that was inconsistent with its prosecution arguments. While Searle was overturned on appeal (2007 FCA 173), the Federal Court here, in Lundbeck, noted that no issue was taken with the original ruling’s “review of the law with respect to the duty of good faith in the prosecution of patent applications”. So, per Searle, “communications with the examiner must be made in good faith. It is to be expected that there will be full, frank and fair disclosure.”; an application for a patent was likened to an ex parte proceeding. The Federal Court in Lundbeck agreed with this analogy, elaborating:

330     [A] party seeking ex parte relief has the duty of ensuring that the Court is apprised of all of the relevant facts.  As … noted in United States of America v. Friedland, [1996] O.J. No. 4399, (Ont. Ct. J. (Gen. Div.)),  both the judge hearing an ex parte motion and the party against whom the order is sought are literally “at the mercy” of the party seeking the relief in issue.

331     [Per] … Friedland[:] … in an ex parte proceeding, “the ordinary checks and balances of the adversary system are not operative”.  It is for this reason that the law requires that when a party goes before a court seeking ex parte relief, it must do more than simply present its own case in the best possible light, as would be the case if the other side were present.  Rather, the applicant must state his or her own case fairly and must inform the Court of any points of fact or law known to it which favour the other side …

As was noted, Searle was “the only case considering the scope of paragraph 73(1)(a)”. Lundbeck then constitutes a formative addition to this scant, essentially fetal jurisprudence on the duty of good faith prosecution, “good faith” being a familiar, almost universal concept permeating throughout the law, almost inextricably in need of judicial investigation and interpretation due to its breadth and indefiniteness. Also worth remembering from Lundbeck is that a finding of a breach of the duty of good faith exists apart from whether or not the benefit derived from a breach ultimately proved determinative, that is, necessary: the Federal Court, reviewing in full the unsupportive article that the applicant had sought to omit from the examiner’s attention, found that the drug satisfied the requirement of obviousness anyway (on the basis of the synergistic aspect).

The following may then be said in conclusion. First, that the Court’s acceptance of and elaboration on the requirement of “full, frank and disclosure” and analogy to an ex parte proceeding is helpful and agreeable, especially in light of the sizable benefit that Canadian patent law confers – a 20-year monopoly on production and sale. Second, however, is that however lucid Searle and Lundbeck may be, due to the meagreness of the case law in this area, the extent of the good faith requirement in Canadian patent prosecution still remains by definition uncertain. Searle, and now Lundbeck, but await the testing of more assertions of bad faith prosecution.

Posted in Patents, Pharmaceutical Drugs
Comment: 1

Brian Chau is a JD Candidate at Osgoode Hall.

Special thanks to the panelists for contributing their perspectives and insight to the Osgoode community, and to Amanda Carpenter who has assisted me in writing this synopsis.

THE EVENT

On Wednesday January 27 2010, the IP club at Osgoode Hall Law School held a career panel with several distinguished guests with a diverse range of backgrounds: in house lawyer, firm lawyer, and the Director of the Trade-marks Branch of the Canadian Intellectual Property Office (CIPO). There was a large amount of interest – the event was well attended with approximately 50 students showing up, and actively participating in the discussion.

During this event, students were given a rare opportunity – they could freely engage experts in the field and ask questions that really mattered to them, whether they were about recent developments in the law or how the guests initially entered the field of IP law.

THE BIOS

Lisa Power

Lisa has been with the CIPO since 1993.   She has held senior positions in several Branches within CIPO, including Director, Copyright and Industrial Design Branch, Chair, Trade-marks Opposition Board and now as Director, Trade-marks Branch.  She is a member of the executive team at CIPO, with responsibilities for corporate as well as Branch priorities since 2003.

Lisa has a computer science degree from the University of New Brunswick, a law degree from the University of Western Ontario and an MBA from the University of Ottawa.  She has extensive experience in the field of intellectual property and has led Canada’s representation on Trade-mark issues at the World Intellectual Property Organization (WIPO) in Geneva for over a decade.  In 2006 she was Canada’s Head-of-Delegation to the revision and adoption of the new Singapore Treaty on the Law of Trademarks.

Scott Beeser

Scott Beeser is a Biopharmaceutical Patent Attorney in the Global Intellectual Property department at Apotex Inc. in Toronto.  He obtained a PhD in Biology from the University of Utah and a LLB from Osgoode Hall in 2002. He is a registered Canadian Patent and Trade-mark Agent.   Prior to joining Apotex, Dr. Beeser was an associate at an IP-boutique in Toronto where his practice was largely directed to pharmaceutical litigation.

Ashlee Froese

Ashlee is a lawyer and trade-mark agent at Keyser Mason Ball whose practice encompasses intellectual property and branding law including trade-mark, copyright, domain name, marketing, advertising, packaging, labelling and licensing law.  She assists her clients from an agency, commercial and litigation standpoint.

Previously, Ashlee articled and was an associate at a Toronto-based IP boutique.  Ashlee graduated from U of T with a degree in international politics and from Osgoode with an LLB in 2006.  Whilst at Osgoode, Ashlee interned with the United Nations in the Middle East.

Ashlee currently leads the IP and branding law practice at her firm and is actively involved in the IP community (executive member of the Toronto Intellectual Property Group, and holds various committee member positions with the Intellectual Property Institute of Canada and with the International Trademarks Association).

THE HIGHLIGHTS

Generally, questions asked by the attendees took several major themes that reflected some of the growing concerns that students have in the practice of law: Getting a job, maintaining the work/life balance, the strength of the IP community. The following is a quick synopsis of the answers provided by the panelists:

Getting the Job: Does a technical background really help?

Lisa Power and Scott Beeser both hold advanced degrees – Lisa has a background in computer science combined with an MBA, and Scott has a PhD in biology. Both panelists described that the advanced degrees were useful to reduce the technical learning curve, but not absolutely necessary for the effective practice of law. Furthermore, Lisa’s MBA helps her in running the daily operations of her branch in the CIPO office – from allocating finances to managing the various department initiatives. Scott’s PhD gave him an edge in quickly understanding and dealing with technical issues at Apotex.

Ashlee took a different approach – while she did not have a technical background, Ashlee worked at a small IP boutique during her time at Osgoode. This experience would prove invaluable as her responsibilities quickly grew, and she developed a strong appreciation for IP that she would carry on to develop a growing trademark and copyright practice at her firm. 

Overall, the panelists agreed that not having a technical background wasn’t a hindrance – and that what mattered more were the soft skills developed over time both as a student and as a lawyer following graduation.

Maintaining the Balance: Simply a myth?

All three of the panelists started their careers at firms, with Lisa and Scott leaving after several years to join CIPO, and Apotex, respectively.

With regards to the work-life balance at the firms, the panelists noted that the hours are often demanding as a function of the type of work. The problems were generally not with the overall workload, but more over the fact that the schedule was difficult to control given the need to align with client and market idiosyncrasies.

Ashlee cautioned students that while the hours may be tough, students should not be so quick to jump into in-house: there are some things that can only be learned in private practice, and it is often difficult to jump back.  Scott noted that it is difficult to land an in-house job without having a background in private practice – his experiences at Smart & Biggar were instrumental in providing a foundation for his current role as in-house counsel for Apotex.

The IP Community: It’s a small world after all.

The importance of building networks and the tight-knit nature of the IP community were key overarching themes evident throughout the discussion. The panelists all noted that there are a small number of IP practitioners in Canada, and therefore it is paramount to treat others with respect. Taking a “zealous advocate” approach may make sense in the short term, but may come back to haunt a lawyer in his/her future endeavours. Scott raised an excellent example: as a lawyer for a company specializing in generics, his natural adversaries are the brand-name drug companies. However, he is highly cognizant of the fact that these adversaries may very well one day become colleagues – and maintains fairness and professionalism in all interactions.

From a global perspective, Lisa and Scott touched upon the cross-border nature of IP related legal issues, especially with the world-wide nature of pharmaceutical patents. Lisa spoke about her involvement representing Canada at the World Intellectual Property Organization, the challenges inherent in obtaining consensus across a very broad spectrum of stakeholders, and ideological differences between Europe and Canada with respect to economic growth.  Given the nature of litigating claims in the pharmaceutical industry, Scott’s department has developed a global IP practice that is able to provide cross-regional legal perspective.

Ashlee mentioned that the relationships extend beyond the practice – she has successfully partnered with several community and advocacy organizations that have helped her develop her client base.

Posted in General, IP, Osgoode Alumnus, events
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Amanda Branch is a J.D. Candidate at Osgoode Hall Law School, and is taking the Patent Law course.

Clashes between large companies are hardly uncommon, particularly when the salient issue concerns valuable intellectual property. Recently, Nokia has filed a lawsuit in the US against Apple claiming 10 alleged patent infringements involving wireless data, speed coding, security and encryption. Nokia is demanding back royalties on all iPhones sold since the launch in 2007, which could mean that Apple would have to pay Nokia anywhere from $200 million to $1 billion.

Nokia has invested approximately EUR 40 billion dollars in research and development over the past two decades and has agreements in place with 40 firms to allow them to use Nokia’s technology. Nokia says Apple has not signed such an agreement. Nokia has recently posted a quarterly loss, their first loss in over a decade, largely due to customers moving from Nokia models to the iPhone and Blackberry.

Some believe this lawsuit may be a desperate move made by Nokia in reaction to its loss of market share, with others going so far as to hypothesize that this lawsuit would not have been launched had Nokia been making better progress in the smartphone market. Conversely, it is argued the claim could have some merit to it as Nokia has many more patents than Apple, so it is possible that Apple, to some extent, has used some of Nokia’s patents. Similarly, others believe Apple may have a hard time defending their case, as they are a late entrant in the mobile phone market and it would be almost impossible to create a mobile phone without using Nokia’s patented technologies.

Although the case has been filed in a US court, for the purpose of this blog, I will consider the Canadian provisions as the Canadian Patent Act is the focus of Professor Mgbeoji’s Patent Law course. According to section 42 of the Act, the patentee is granted the “exclusive right, privilege and liberty of making, constructing and using the invention and selling it to others to be used”. As stated in the case of Whirlpool v. Camco, if any person, without the consent or permission of the patentee, does any of the exclusive rights granted by section 42, they have infringed the patent and are potentially liable to the patentee. Section 55(1) says that the infringer is liable to the patentee for all damage sustained by the patentee. Therefore, if Nokia is successful in proving that Apple has done something that only Nokia has the exclusive right to do, Apple will be liable for damages.

Much of the focus has been on Apple’s position in this lawsuit. Apple may be able to put forth a defence as allowed by section 59 of the Act. So far, Apple seems to be denying that they have infringed Nokia’s patents. This is certainly a defence, one in which Apple would have the burden of proof to show that the acts complained of did not infringe on Nokia’s patent, or that the scope of Nokia’s claims do not capture the alleged infringement. Apple could also argue they had Nokia’s consent to use the patents; however, given Nokia’s denial of such a licence, and Apple’s denial that they had used Nokia’s patents, this approach seems less likely. In Canada and the US, in order for an invention to be patented, it must be novel, non-obvious and useful, so a line a defence for Apple would be to attack the validity of the patents on the grounds that the invention is not “new”, that the invention is not “useful” or that the invention is “obvious” to a person skilled in the art. Attacking a patent on the grounds of novelty was an effective defence in the case of Gibney v. Ford Motor [52 C.P.R. 140 ] where it was held that the defendant did not infringe a patent because the patent was invalid on the grounds that it was not a “new” invention. Lastly, Apple could create a defence on the grounds that Nokia is not the person entitled to the patent, perhaps because they are not the true inventor (as was the case in 671905 Alberta Inc. v. Q’Max Solutions Inc.).

No matter what defence Apple chooses, it is expected that this case could go on for years with Apple putting forth a persistent and tenacious defence, as they take accusations of infringement very seriously. This case could get particularly complicated as the U.S. International Trade Commission has agreed to look into Nokia’s patent-infringement claims. Analysts argue that a licensing deal may be the best and quickest solution for both companies.

Posted in Infringement, Patents, Uncategorized
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