Digests

Halford v. Seed Hawk Inc.

T-2406-93

2004 FC 88, Pelletier J.

23/1/04

191 pp.

AB Hassle, AstraZeneca filed notice of application under Patented Medicines (Notice of Compliance) Regulations seeking declaratory relief re: Genpharm's notice of allegation (NOA) or order prohibiting Minister from issuing notice of compliance (NOC) to Genpharm re: nine Canadian patents for omeprazole, inherently unstable inhibitor of gastric acid secretion--At hearing, four patents remained in controversy-- Genpharm alleges invalidity re: 693, 377, non-infringement re: 668, 762--Invention claimed by 377 is addition of inorganic salts for stabilization--688 claims new use for omeprazole as antimicrobial agent--762 concerns combina-tion of substance inhibiting gastric acid secretion and acid-degradable antibacterial compound-- Three previous proceedings involving same parties, drug were withdrawn-- One discontinued after F.C.A. held second person could not rely on further evidence not in NOA--Others discontinued when Minister advised Genpharm omeprazole approval submission was considered withdrawn--But Genpharm's appeal within Department, succeeded and it delivered new NOA-- Generic drug producer Genpharm (second person) wishes to distribute omeprazole drug by comparison with Astra's, which has ministerial approval--S. 6 proceedings unlike validity, infringement actions-- Purpose: determine whether Minister free to issue NOC--Issue: whether allegations by second person sufficient to support conclusion for administrative purposes that applicant's patent not infringed if second person's product marketed-- Applicant, in effect, gets interlocutory injunction just by commencing proceeding--S. 6 proceedings not treated as res judicata-- Open to patentee to enforce rights by infringement action-- Genpharm's complete NOA attached to reasons as Schedule "A"--693 patent has 19 claims (attached to reasons as Schedule "B")--Genpharm's allegation: claimed invention obvious, not inventive--Invalidity also alleged for anticipation, lack of novelty--Order to go prohibiting Minister from issuing Genpharm NOC until patents expire-- Party moving under s. 6 bears initial burden of proof-- Difficult burden to discharge as must disprove some or all allegations in notice of allegation--First step in analysis: construe patent claims --Reference to F.C.T.D. decision in Canamould Extrusions Ltd. v. Driangle Inc. (2003), 25 C.P.R. (4th) 343 (F.C.T.D.)--Reference to F.C.A. decision in AB Hassle v. Apotex Inc. (2003), 312 N.R. 288 (F.C.A.), which involved 693 patent--As for claim 1, F.C.A. concluded patent claim clear, inappropriate to look at disclosure for construction purposes: Dableh v. Ontario Hydro, [1996] 3 F.C. 751 (C.A.)--F.C.A.'s construction of claim binding-- F.C.A. decision in Beloit Canada Ltd. v. Valmet Oy (1986), 8 C.P.R. (3d) 289 (F.C.A.) cornerstone authority as to anticipation, obviousness tests--Person skilled in art is skilled formulator lacking imagination, but reasonably diligent in keeping up with advances in field--Difference between anticipation, obviousness: former requires exact prior description in single source while latter can be based on single disclosure, "mosaic" of prior art--Expert opinion as to obviousness treated with extreme care--Court, in end, must decide--Court not satisfied, on balance of probabilities, person skilled in art would, directly and without difficulty, arrive at invention--Astra has discharged burden of establishing Genpharm's NOA as to invalidity for obviousness not justified--While Court's conclusions regarding obviousness, anticipation foreclosed Genpharm's hopes for success, submissions as to insufficiency, ambiguity of certain claims carefully considered--No legal, factual basis for these submissions found in Genpharm's NOA--Nothing turns on this submission--Insufficiency of disclosure attack based on Patent Act, s. 34--Technical attack not defeating patent for meritorious invention--But attack will succeed if invention not disclosed such that person skilled in art could put it into practice--Question whether (1) claim can be construed in meaningful way, (2) there is sufficient description to enable invention's utilization--As to anticipation, Genpharm argued EP 495 (published November, 1984) anticipated 693 patent by disclosing 3 elements of claim 1--495 failing to teach application of inert subcoating or separating layer when confronted with degradation of enteric coating--Allegation of invalidity on basis of anticipa-tion not justified--377 Takeda patent--377 patent application claimed priority from Japanese application filed February, 1986--Formulation patent consisting of active ingredient, inorganic salt stabilizing agent, enteric coating--Claims of 397 patent are Schedule "D" to reasons herein--Prior art regarding Takeda patent appears as Schedule "E"--Disclosures of Takeda patent, degradation problems explained-- Invention's object to solve two stability problems: that of omeprazole itself and its stability when in contact with ingredients used in oral solid dosage form, including enteric coatings-- Essence of Takeda patent: addition of basic stabilizing inorganic salt to stabilize omeprazole--Allegation of obviousness not justified-- 668 is new use patent--Omeprazole as antimicrobial agent for treating infection caused by bacterium colonizing in gastric mucosa--Patent 668 claims found in Schedule "F"-- Genpharm submits its drug to be used for "old" purposes, not as antimicrobial agent so will not infringe--But Astra relied on affidavits that even if Genpharm's drug was labelled only for "old" use, doctors would prescribe it for "new" use-- Pharmacists dispense cheapest brand available and that of Genpharm will likely be less costly--Question whether various provincial formularies permit substitution--As to Genpharm's intentions, Astra relies on Genpharm's product monograph but latter suggests excerpts referred to by Astra were taken out of context--Under Regulations, infringement of use patent not limited to generic drug producer, extends to infringement by patients even if not induced by producer-- Mere selling not establishing infringement but is made out if evidence second person's actions inevitably leading to new use of first person's product where second person granted NOC--For prohibition order, first person must prove if NOC issued, second person sells generic drug, patients or other third parties will infringe use patent--Requirements for expert evidence--Importance of product monograph (PM)-- Provided to manufacturer granted NOC--Limits indications, is available on Compendium of Pharmaceu-tical Specialties, reference work listing dosages, ingredients, directions for drugs--Widely used by physicians, pharmacists--Court concludes: Minister does not promulgate indications for drug when NOC issued--Most doctors don't know whether generic had same approval--Some pharmacists will assume generic approved for same uses as brand name drug--No mechanism (except formulary) alerts pharmacists generic approved for fewer uses--Certain passages in Genpharm's PM evidence of intent product for new use--If NOC issued, patients would infringe Astra's new use patent--That Genpharm's NOA re: 668 patent states its capsules to be labelled, marketed for inhibiting gastric acid secretions not enough--Would be otherwise if label or PM specifically stated not approved for H. pylori treatment--Genpharm's non-infringement allegation not justified--762 patent--New use patent-- Combination of substance which inhibits gastric acid secretion and acid-degradable antibacterial compound--By combining components of this invention, synergism of antibacterial effect of antibiotic compounds is achieved resulting in improved therapeutic efficacy-- 762 has 77 claims, attached as Schedule "G"-- Combination of substance with inhibiting effect on gastric acid secretion--Astra's argument, NOA not addressing claims where omeprazole taken in combination with antibiotic other than as single composition, well taken--Not open to generic producer to ignore patent claims describing basic invention--If it does so, fails to demonstrate no claim for use of medicine infringed and Regulations, s. 5 not complied with--NOA cannot be found to be justified-- Unnecessary to deal with Astra's abuse of process argument re: Genpharm's NOA--In conclusion, Genpharm's various allegations of invalidity, infringe-ment not justified and Astra entitled to order prohibiting Minister from issuing NOC--Astra, Takeda awarded costs taxed on ordinary scale as against Genpharm-- Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, ss. 5 (as am. by SOR/98-166, s. 4; SOR/99-379 , s. 2), 6 (as am. by SOR/99-379, s. 3)--Patent Act, R.S.C., 1985, c. P-4, s. 34 (rep. by S.C. 1993, c. 15, s. 36). (T-2005-01, 2003 FC 1443, Layden-Stevenson J., order dated 22/12/03, 86 pp. + Schedules "A" to "G") Infringement action with invalidity raised as defence, counterclaim--Judge having to understand invention, embark upon purposive construction of patent to identify essential elements of claims--Method employed that set out by S.C.C. in Free World Trust v. Électro Santé Inc., [2000] 2 S.C.R. 1024--Issue: whether essential elements of invention as articulated in claims can be found in defendants' device-- Issues of obviousness, anticipation, sufficiency of disclosure raised--Whether specific claims lack essential element of invention--Plaintiffs having claimed against corporations, individuals in personal capacities--Plaintiffs say corporate defendant, Simplot, procured infringement by Seed Hawk Inc.--Plaintiff, Halford, university-trained farmer interested in soil conservation (minimum till practices)--New crop planted in stubble of old--Invented one pass, side banding device--Secured patent, assigned it to plaintiff Vale Farms Ltd.--Defendant, Norbert Beaujot, engineer, part-time farmer who had invented seeder serving same purpose--Beaujot incorporated Seed Hawk to exploit his device--Norbert's brother, Pat, is Seed Hawk principal while defendant, Kent, was once involved with company--When Seek Hawk's device was in development, Pat worked for Simplot which was asked by Norbert for funding in return for promise to design machine to apply liquid fertilizer, Simplot's line of business--Simplot provided funding, marketing assistance --Claims to be construed in light of specification of patent-- Information to be understood as by one skilled in art, possessed of common knowledge of such persons at material time--Object of invention: to provide planting apparatus for placing seed and fertilizer in a single action in simple, inexpensive, effective manner--Depth of placement accomplished without reliance on mass alone to achieve penetration and with an eye to least possible soil surface disturbance--Invention, how it works, described--Use of tube for seed placement results in less soil disturbance--Purposive construction of patent claims--While all expert witnesses intelligent, well-qualified, they approached trial as if function to persuade Judge of their point of view--Persuasion is job of counsel--Role of expert to furnish information outside layman's common experience--Difficulties with expert witnesses' evidence analyzed--Claim 1 and dependent claims --Specifications cannot be used to enlarge, reduce scope of claims, properly understood--Absent specific limitation re: zero, minimum till application in claims, Court unable to use references to those practices in specification to read in such limitation--But can take references into account in considering meaning to be given specific terms, concepts in claims--While permissible to refer to terms of specification to resolve ambiguities in claims, little advantage in so doing if specification itself ambiguous--Court having defined terms, relationships, had then to identify essential elements of invention--This is done without regard to infringement, invalidity issues--Temptation to characterize as essential every discrete element of claim on theory invention could not function without all of them--Problem with this approach: does not account for variants--May be substitution of elements--Substitution may be merely cosmetic or have material effect on operation of invention described in patent--Treating both cases as absence of essential element is unreliable guide to infringement--One way of dealing with problem of variants: employ broad descriptions of elements to encompass possible variants--But this does not respect language of patent as amounts to re-characterization of claim elements using language not used by inventor in drafting claims--Essential elements must relate to inventiveness of invention--While difference that validated a patent over prior art is essential element of invention, not the only essential element for reason that invention designed to effect useful result--Essential elements must be those necessary to achieve new, useful result or accomplishment of useful result by novel means--Essential elements of invention as set out in Claim 1 listed--Claims against Seed Hawk defendants dependent upon Claim 1 listed--Under Patent Rules, s. 24 as stood when patent issued, claims must be complete independently of any reference to any document referred to in disclosure and a broader claim should precede narrower--A "broader" claim is an independent claim relative to "narrower" claim which is dependent upon it--S. 87 of current Patent Rules make explicit what was implicit in former rules--Dependent claim includes all features, limitations of claim incorporated by reference--Independent claim cannot be given construction inconsistent with claims dependent upon it--In U.S.A., concept known as principle of claim differentiation, which requires that limitations of one claim not be "read into" general claim: D.M.I., Inc. v. Deere & Co., 755 F. 2d 1570 (1985)--While taking comfort from American authorities, Court's conclusion on this point based on wording of our Patent Rules--Turning to infringement, Court first describing Seed Hawk device by reference to sketch in its promotional literature--Reference to test in Improver Corporation v. Remington Consumer Products Limited, [1990] F.S.R. 181 (Pat. Ct.), which incorporates elements of essentiality, timeliness, inventor's intention--Whether mounting fertilizer knife on placement arm rather than on frame having material effect on operation of invention--Answer depends on level of generality at which one describes how invention works-- Material difference between operation of Seed Hawk device and that contemplated by Claim 1--Other variants considered --As to obviousness, Court would have difficulty concluding it would occur to person skilled in art that seed tube could be secured to second knife--Final question in Improver analysis: would reader skilled in art have understood from language of claim patentee intended strict compliance with language of patent--Use of word "solely" in patent indicating clear intention to exclude additions, modifications --No reason not to give "solely" usual meaning absent credible evidence some other meaning intended or had technical meaning--Seed Hawk device does not infringe Claim 1 since certain essential elements of claim not found in Seed Hawk device--Claims 2, 3 dependent on Claim 1 and had not been infringed--Unlike 2 and 3, Claim 6 does add elements lacking in Claim 1 but literal compliance with Claim 1 requirements for engagement of soil by second tube still absent, but Seed Hawk device varies from invention described in Claim 6 in two ways-- Claim 10, dependent on Claim 1, did not infringe--Seed Hawk device outside Claim 12 for same reasons as outside Claims 1, 6--Even so, three variants raised by Claim 12 considered--Nor were Claims 19 or 20 infringed --Seed Hawk defendants raised numerous grounds of invalidity including: anticipation, obviousness, overclaiming, insufficiency and lack of utility--Obviousness argument based on review of prior art--Overclaiming argument based on absence of critical element i.e. spacing between fertilizer, seed tubes, in claims--Lack of utility alleged re: Claim 19 as not including packer wheel, said to be necessary to operation of invention--Insufficiency of disclosure raised re: Claims 12, 20 claiming steering function for packer wheel, function not disclosed in patent specification--As to lack of utility, overclaiming, defendants argue element critical to functionality of invention, necessity for 6- to 12-inch spacing between second tube means from first knife means, claimed-- Claims said invalid as not reciting operable device--True that spacing of mouths of two material dispensing tubes was critical--But Seed Hawk defendants failed to plead this deficiency, did not seek amendment so pleadings would conform to evidence--Defendants also argue patent claims more than disclosed but this was not pleaded--Did plead Claim 19 invalid in not claiming essential part of invention: packer wheel--Plaintiffs' experts testified, while wheel was critical element, absence did not render invention inoperable --Defendants failing to lead evidence on this point--Court unable to conclude invention unworkable absent packer wheel, single mounting member--Conclusion: packer wheel, single mounting member not essential elements of invention--Question arising therefrom: what constitutes inventive step over prior art?--Obviousness--Hard-pressed to identify what is claimed as invention--While patent lays out 21 perceived advantages of invention, few indicate what might constitute invention--Former Patent Act, s. 34(2) requiring claim describe "in explicit terms the things or combinations that the applicant regards as new and in which he claims an exclusive property or privilege"--Upon review, specification, claims contain no explicit statement of things inventor regards as new--Yet, expert examiners at Patent Office must have discovered inventive element not apparent to Court since patent was granted--Court unable to conclude unimaginative skilled technician would have been led directly and without difficulty to invention by mosaic of prior art-- Inventive step needed to conceive of seed tool adjustable from side to side as means of side banding--Patent not invalid for obviousness--Anticipation by publication was best described by Hugessen J.A. in Beloit Canada Ltd. et al. v. Valmet Oy (1986), 8 C.P.R. (3d) 289 (F.C.A.)--Can also result from prior use or sale--As to type of disclosure sufficient to constitute anticipation, see: Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd., [2003] 1 F.C. 49 (C.A.)--Argument devices developed by Swedish university team anticipated Halford invention is based on premise Halford patent can be read into Seed Hawk device--Court having rejected broad interpretation of Halford patent which underlies this argument, issue need not be considered--Swedish devices did not anticipate Halford invention--As to insufficiency of disclosure, no defect in disclosure with respect to element of steering--Sufficient disclosure to support steering effect claimed in Claims 12, 20--In conclusion, Seed Hawk defendants failed to establish invalidity and to plead grounds of invalidity they could prove--While infringement not found, Court considering issue of personal liability of individual defendants in case of appeal--Credibility of parties commented upon--In general, Halford's evidence preferred to that of Norbert, Pat Beaujot--Infringement not matter of intention, can occur even where infringer ignorant of patent, any embodiment of invention described thereby--On other hand, intention to infringe does not establish infringement-- What matters is what defendant does--Still, intention may be relevant on remedies issue if infringement established-- Question of directors' personal liability for infringement not seen as aspect of patent law but as particular instance of broader issue of directors' liability for their acts in conducting business of corporation--As to applicable general principles, see: O.C.A. decision in Scotia MacLeod Inc. v. Peoples Jewellers Ltd. (1995), 26 O.R. (3d) 481 (C.A.)--Directors personally liable if conduct itself tortious or serves interest other than corporation's--Everyone should answer for his tortious acts--Opinion of Le Dain J.A. in Mentmore Manufacturing Co., Ltd. et al. v. National Merchandise Manufacturing Co. Inc. et al. (1978), 40 C.P.R. (2d) 164 (F.C.A.), considered--Courts will not allow corporation to be used as instrument of fraud: Carson Restaurants International Ltd. v. A-1 United Restaurant Supply Ltd., [1989] 1 W.W.R. 266 (Sask. Q.B.)--Liability attaches when actions of director, officer are such that director's own behaviour is tortious or corporation is used as cloak for director's personal activities --This is consistent with general principles, avoids creating type of directors' personal liability peculiar to patent infringement--Personal liability not dependent upon moral quality of directors' behaviour: while not commendable, dishonesty is not infringement--No fact supports allegation others induced to infringe plaintiffs' rights--No fact alleged, proven to support allegation conduct tortious in and of itself--Not proven corporation set up for sole purpose of infringement--No conclusion drawn from sequence of events--Nothing inherently suspicious in using corporate structure, which has various legitimate advantages, to launch new business--Plaintiffs stress point individual defendants had warning infringement possible but went ahead anyway-- But would stifle all innovation to hold possible infringement warning sufficient to establish personal liability on part of corporate employees, directors, officers--No bright line test for infringement save in case of shameless copy--Important to avoid situation where existing rights holders could seek to intimidate new entrants into market by personal liability threats, legal advisors careful to warn clients of personal liability risk for fear of themselves being sued--Advice received by individual defendants from own lawyer more nuanced than suggested by plaintiffs--While striking cautionary note, no unequivocal assertion of infringement-- Professional advisers tend to be conservative in giving advice --Not open to criticism for identifying too many risks--Seed Hawk device not simply copy, modification of Halford invention--Concept is distinct from, superior to that of plaintiffs'--Individual defendants decided to take chance they were correct as to infringement--Did not embark on scheme to appropriate plaintiffs' invention--Accordingly, not liable to plaintiffs--Court considered question whether corporate defendant, Simplot, induced, abetted infringement in event decision on infringement overturned on appeal--As to tort of inducing infringement, see: Dableh v. Ontario Hydro, [1996] 3 F.C. 751 (C.A.)--Consideration of claim against Simplot limited to inducing infringement--Claim fails for want of proof that without Simplot's assistance, infringement would not have occurred--No proof Seed Hawk project would have been abandoned but for Simplot's help--Norbert testified was committed to construction of prototype before Simplot committed to funding--Claims against Simplot must fail-- Defendants entitled to order dismissing claim; plaintiffs to declaration of validity of asserted claims--Counterclaim dismissed--Patent Act, R.S.C., 1985, c. P-4, s. 34 (as am. by S.C. 1992, c. 1, ss. 113; rep. by 1993, c. 15, s. 36)--Patent Rules, C.R.C., c. 1250, s. 24--Patent Rules, SOR/96-423, s. 87--Patent Act, 35 U.S.C., s. 112 (1988).