September 21, 2006

1. September 21, 2006 Recent Developments in Intellectual Property Law in Canada By Mitch Charness

2. Recent Developments in Canadian Patent Law: Outline • Legislative Update • Bill C-29: Small Entity Fees • Proposed Amendments to Patented Medicines (Notice of Compliance) Regulations • Jean Chrétien Pledge to Africa Act • (now Canada’s Access to Medicines Regime) • Case Law Update • Non-”Notice of Compliance” Patent Law • Patent Assignment and Competition Law • Doctrine of Sound Prediction • Invention v. Discovery • Claim Construction • Patented Medicines (Notice of Compliance) Law • Listing of Patents for Publicly available compounds • Patents for Medicine Delivery • Interpretation of NOC Regulations

3. Legislative Update

4. Legislative Update – Bill C-29 • When is a payment not a payment? • An incorrect payment is not a payment when it is an underpayment.

5. Legislative Update – Bill C-29 Cont’d Small Entity Definition • Not the same as U.S. • "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; • has transferred or licensed, or is under a contractual or other legal obligation to transfer or license, any right in the invention to an entity, other than a university, that employs more than 50 employees; or • has transferred or licensed, or is under a contractual or other legal obligation to transfer or license, any right in the invention to an entity that employs 50 or fewer employees or that is a university, and has knowledge of any subsequent transfer or license of, or of any subsisting contractual or other legal obligation to transfer or license, any right in the invention to an entity, other than a university, that employs more than 50 employees.

6. Legislative Update – Bill C-29 cont’d • Barton No-till Disk Inc. & Flexi-coil Ltd. • v. Dutch Industries Ltd.(2003 FCA 121) • Federal Court: • Removed Canadian Intellectual Property Office's flexibility to allow patent holders and applicants to top-up fee payments if payments were paid at the wrong level. • If fees were paid incorrectly, the patent application would become irrevocably abandoned or the patent would lapse with no opportunity for correction • Federal Court of Appeal: • The relevant fee scale (entity status) is set when the patent regime is first engaged. • i.e. if a person qualifies as a small entity at the time of first submitting a patent application, all fees for that patent shall be paid on the small entity scale, regardless of subsequent events.

7. Legislative Update – Bill C-29 cont’d • Section 78.6 of the Patent Act (formerly known as Bill C-29) • Government response to Dutch Industries decision. • Enacted February 1, 2006 • Gives patentees or applicants 12 months from the time the Bill came into force to make a retroactive payment to "top-up" an incorrectly paid small entity fee without payment of an additional reinstatement fee. • DEADLINE: February 1, 2007.

8. Legislative Update – NOC Regulations • BACKGROUND: • The Patented Medicines (Notice of Compliance) Regulations and the Food and Drug Regulations allow generic drug manufacturers to develop generic drugs during the innovator's patent term while ensuring that the rights of the patentee are respected • Currently, the Canadian law is modeled on the U.S. Hatch-Waxman Law and is similar in many respects.

9. Legislative Update – NOC Regulations cont’d • PROPOSED AMENDMENTS: • The Canadian Government recently published proposed amendments to the Patented Medicines (Notice of Compliance) Regulations and the Food and Drug Regulations (“Data Protection Regulations”). • These proposed changes replace prior proposed amendments published in December 2004 which never came into force. • The current proposals take into account the results of 18 months of Government consultations following the previous proposed amendments. • Areas affected: Eligibility Requirements, the Patent Register, and Data Exclusivity.

10. Legislative Update – NOC Regulations Cont’d • Eligibility Requirements: • New Drug Submission (NDS): • Previously, only a patent for the medicine itself could be listed. • Proposed amendments change the requirement for listing to include patents for a medicinal ingredient, a formulation, dosage form that contains the medicinal ingredient, or the use of the medicinal ingredient. • i.e. At least some delivery systems may now be submitted. • e.g. patch, pill structure, etc. • Supplementary New Drug Submission (SNDS): • Again, categories of patents eligible for submission expanded to include changes in the formulation, dosage form or use of the medicinal ingredient. • Proposed amendments would require that the patent be relevant to the submission in relation to which it is submitted. • The patent list must be submitted with the specific submission to which the patent list relates or within 30 days after the issuance of the patent if its filing date precedes the filing date of that submission.

11. Legislative Update – NOC Regulations Cont’d • Patent Register: • The current requirement that the generic has to address all patents on the Register prior to the issuance of the generic's NOC will be repealed. • The generic only need address those patents on the Register prior to the filing of the generic's submission – “Frozen Register”. • New rules would apply to a generic which has filed its submission prior to the amendments coming into force, but the “freeze date” would be the date at which the amendments came into force. • If a innovator’s drug is not subject to the new data protection provisions, the freeze would be 6 years from the date of the first NOC of the innovator (e.g. the deemed date of filing of the generic submission).

12. Legislative Update – NOC Regulations Cont’d • Data Exclusivity: • Guaranteed minimum period of data exclusivity: • 8 years for new drugs • an additional 6 monthsfor drugs that have been the subject of clinical trials in children. • 6 year no-filing period for generic submissions. • Would apply where a generic seeks an NOC for a new drug on the basis of any comparison between it and an "innovative drug". • “Innovative drug” :contains a medicinal ingredient not previously approved in a drug by the Minister and that is not a variation of a previously approved medicinal ingredient such as a salt, ester,

13. Legislative Update – NOC Regulations Cont’d • TIMING: • The proposed amendments were published on June 17, 2006 • A 30-day consultation period took place, closing on July 17, 2006. • Uncertainty regarding when the new regulations will come into force, or what form they will take. • TRANSITIONAL PROVISIONS: • New listing requirements will apply retroactively to all Patent Lists filed on or after June 17, 2006.

14. Legislative Update – Jean Chrétien Pledge to Africa Act(now Canada’s Access to Medicines Policy) • Allows the export of pharmaceutical products made under compulsory licenses within the terms set out in the Act. • Implements the Decision of the WTO General Council of August 30, 2003, and paragraph 6 of the Doha Declaration. • Intended “to facilitate access to pharmaceutical products to address public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.” • Permits exports of 56 defined products to all WTO countries plus all non-WTO least-developed countries, except the 23 WTO countries that have opted out.

15. Legislative Update – Jean Chrétien Pledge to Africa Act Cont’d • ADMINISTRATION • Published intention was for process to be easy, straight forward. • If a generic manufacturer meets the requirements set out in regulations, there is no discretion for Commissioner of Patents to refuse a license. • No opportunity for patentees to provide submissions regarding the appropriateness of the grant of a license. • Patentees can apply for termination of compulsory license where there are abuses of the system. • Do adequate safeguards exist? • licenses granted only for humanitarian purposes • potential for diversion minimized

16. Legislative Update – Jean Chrétien Pledge to Africa Act Cont’d • Has the legislation had any effect? • No takers, therefore no drugs have gone out.

17. Case Law Update

18. Case Law Update –Patent Assignment and Competition Law • Eli Lilly and Co. v. Apotex • 44 C.P.R. (4th) 1(F.C.A.). • FACTS: • Infringement action brought against Apotex by Eli Lilly citing 8 different patents • 4 out of 8 patents were assigned to Eli Lilly by Shionogi & Co. Ltd. • Eli Lilly simultaneously granted Shionogi non-exclusive license respecting patents assigned. • Apotex alleged that assignment of patents constituted conspiracy to unduly lessen competition contrary to the Canadian Competition Act.

19. Case Law Update –Patent Assignment and Competition LawCont’d • ISSUE: • What is the relationship between Patent Law and Competition Law? • HELD: • The exercise of Patent rights may be subject to scrutiny under the Competition Act where competition may be unduly lessened. • Can occur where an assignment of a patent increases the assignee’s market share to a greater degree than is inherent in the patent itself. • Potentially an issue in an assignment where the assignee owns other related patents.

20. Case Law Update –Doctrine of Sound Prediction • Aventis v. Apotex • 43 C.P.R. (4th) 161 (F.C.). • FACTS: • Application for an order prohibiting the issuance of a NOC for ramipril, an ACE inhibitor drug,to Apotex until after the expiration of an Aventis patent. • Aventis argued that the manufacture and sale by Apotex would infringe their patent • Apotex asserted that the Aventis patent was invalid for lack of sound prediction. • ISSUES: • What is the relevant date for determining the soundness of a prediction? • Does each element of the 3-Part test for the soundness of a prediction need to be met, or is it an overall evaluation?

21. Case Law Update –Doctrine of Sound Prediction Cont’d • HELD: • Relevant date for determining soundness of prediction is the Canadian filing date, not the priority date. • Each of the 3 parts of test must be met: • There must be a factual basis for the prediction; • The inventor must have an articulable line of reasoning from which the desired result can be inferred from the factual basis; and • There must be proper disclosure, although it is not necessary to provide a theory as to why the invention works. • Application for Leave to Appeal was filed with the Supreme Court of Canada in June 2006.

22. Case Law Update –Invention v. Discovery • Calgon Carbon Corp. v. City of North Bay • 45 C.P.R. (4th) 241 (F.C.A.). • FACTS: • Patent described a method for preventing replication of water-borne pathogenic protozoa (cryptosporidium oocysts) using low levels of ultra violet light to irradiate water. • Low-level UV light to irradiate water had previously been used to treat water by killing or inactivating protozoa to prevent crypto infection. • The level of UV light required to prevent infection by stopping replication was lower than that required to kill or inactivate the protozoa.

23. Case Law Update –Invention v. Discovery Cont’d • ISSUE: • Is the discovery of a previously unknown advantage of an existing inventiona mere discovery, or an invention capable of being patented? • HELD: • The discovery of a new use for an old invention which is capable of practical application is an invention. • The patent claims should be a practical solution to a practical problem. • More than a mere discovery. • Summary Judgment denied. • Trial on the merits continuing.

24. Case Law Update –Invention v. Discovery Cont’dContrast with U.S. • Wedeco UV Technologies, Inc. v. Calgon Carbon Corporation, • 2006 U.S. Dist. LEXIS 48657 (D.N.J.) (Lexis). • In late June 2006, U.S. District Court of New Jersey ruled on Calgon’s U.S. Patent, identical to the Canadian Patent in Calgon Carbon Corporation v. City of North Bay. • Confirmed that newly discovered result of a known process is not patentable. • Held that the patent was invalid due to anticipation. • Calgon has stated its intention to appeal.

25. Case Law Update –Claim Construction • Pfizer Canada Inc. v. Canada (Minister of Health) • 46 C.P.R. (4th) 244 (F.C.). • FACTS: • Pfizer applied for an order preventing the Minister of Health from issuing a NOC to Mayne in respect of its proposed injectable ready-to-use Epirubicin. Hydrochloride solution in a strength of 2mg/mluntil the expiry of Pfizer’s patent. • Mayne alleged that no claim of Pfizer’s patent would be infringed.

26. Case Law Update –Claim Construction Cont’d • ISSUE: • How should patent claims be construed? • HELD: • First patent decision from the bench by Hughes J. • The court set out 7 principles of purposive construction of patent claims:

27. Case Law Update –Claim Construction Cont’d • Who construes the claims? • The Court, not expert witnesses, construes the claims. • When are the claims construed? • Claims are construed by the Court at the outset of its decision before considering issues of validity or infringement. • It is not to be a "results oriented" exercise, rather, it is to be carried out without an eye either to the alleged infringement or the prior art.

28. Case Law Update –Claim Construction Cont’d • As of what date is the claim to be construed? • Application filed in Canada before October 1, 1989: • Date the patent was issued and granted. • Application filed in Canada after October 1, 1989: • Date of publication. • What are the criteria for construction? • Identification by the court, with the assistance of the skilled reader, of what the inventor considered to be the "essential" elements of his invention. • The words chosen by the inventor will be read in the sense the inventor is presumed to have intended. • What a reasonable person to whom the words were addressed would have understood the author to mean.

29. Case Law Update –Claim Construction Cont’d • What resources may be used for purposes of construction? • A claim is to be read in the context of the rest of the specification. • The Court may be assisted by expert witnesses in order to understand the context of the invention described and the particular meaning of terms used in the patent. • The expert is not to displace the Court in the role of the person who is to interpret the claims.

30. Case Law Update –Claim Construction Cont’d • Through whose eyes is construction to be made? • Patent is addressed to the "ordinary person skilled in the art" to which it pertains. This hypothetical person: • Is sufficiently versed in the art to which the patent relates to enable them on a technical level to appreciate the nature and description of the invention • Has a mind willing to understand a specification that is addressed to him • Is reasonably diligent in keeping up with advances in the field to which the patent relates

31. Case Law Update –Claim Construction Cont’d • What is to be made of the resulting construction? • Purposive construction may be capable of expanding or limiting the literal text of the claim. • Claims are read in light of expert evidence on the technical meaning of the terms and concepts used in the claims. • If the inventor has misspoken or otherwise created an unnecessary or troublesome limitation in the claims, it is a self-inflicted wound. • The public is entitled to rely on the words used provided the words used are interpreted fairly and knowledgeably.

32. Case Law Update –Notice of Compliance: Listing of Patents for Publicly Available Compounds • Biolyse Pharma Corp v. Bristol-Myers Squibb Company et al • 39 C.P.R. (4th) 449(S.C.C.). • FACTS: • Bristol-Myers Squibb sought to quash NOC issued to a Biolyse drug containing paclitaxel, a medicine known by scientists in the public realm. • Bristol-Myers Squibb has 3 subsisting patents related to paclitaxel formulation and administration, but no patent on paclitaxel itself. • NOC was issued for Biolyse product based on its own clinical studies, without reliance on Bristol-Myers Squibb's patented drug.

33. Case Law Update – Notice of Compliance: Listing of Patents for Publicly Available Compounds • ISSUE: • Should a NOC be issued for an innovator drug that contains the same public domain medicine (paclitaxel) as a patented drug, but does not rely on bioequivalence? • HELD: • NOC Regulations do not provide a monopoly on drugs containing a public domain medicine. • A provision of the NOC Regulations preventing a NOC from being issued until a patent expires are confined to situations where the drug at issue is a generic copy, not innovative. • May be rendered moot by proposed amendments to NOC Regulations.

34. Case Law Update –Notice of Compliance: Patents for Medicine Delivery • Biovail Corp. v. Canada (Minister of Health) • 42 C.P.R. (4th) 193, aff’d 46 C.P.R. (4th) 321 • FACTS: • Biovail sought to have its patent for a medicine delivery system listed under the NOC Regulations. • Patent did not protect a particular medicine or the use of a medicine • ISSUE: • Are patents for devices or systems that aid the delivery of medicines eligible for listing under the NOC Regulations?

35. Case Law Update –Notice of Compliance: Patents for Medicine Delivery Cont’d • HELD: • Patent that protects the delivery system, not a particular medicine or the use of a medicine, is ineligible for listing under the NOC Regulations. • NOC Regulation require that a patent contain a claim for “a medicine itself or a claim for the use of a medicine” • Listings beyond medicine itself are part of proposed amendments to NOC Regulations.

36. THINGS TO REMEMBER • Intersection between Patent Law and Competition Law: • Don’t get too big! • Sound Prediction: • Make sure it works! • Invention vs. Discovery: • Everything Old is New Again! • …at least in Canada • Claim Construction: • 7-Steps to a Better Claim!

37. THANK YOU! Mitchell B. Charness Ridout & Maybee LLP mcharness@ridoutmaybee.com With thanks to Erica Fraser, Student-at-Law