2.2 Patents

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2.2 Patents2.2 Patents

© 2006 Mark PerryMargaret Ann WilkinsonSamuel E. Trosow

Autumn 2006

I. Conditions for Patentability

II. Ownership, Duration, and Assignment

I. The Dableh case is discussed on both the ownershipissues and the enforcement issues

III. Enforcing the Patent

IV. Limitations on Patent: Compulsory Licenses

Chapter 2: PatentsChapter 2: Patents

Mouse cartoonMouse cartoon

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Ownership of PatentsOwnership of Patents• Act is silent about ownership where a third party pays

the inventor to do the work that leads to the invention --- ownership is then decided per the common law.

• Unlike the Copyright Act, there is no express transferof ownership to the employer.

• The inventing employee will own the patent -- subjectto 2 exceptions where the invention will be owned bythe employer:

(1) there is a contract granting inventions to theemployer, or

(2) the employee is hired for the express purpose ofinventing or innovating (the so-called "hired toinvent" doctrine).

Duration of PatentsDuration of Patents

October 1, 1989

continuation of patent for statutory term is always subject topayment of maintenance fees (s. 46)

• new exception unders. 45(2) to comply withTRIPS

filing date before Oct 1, 1989

•17 years from theissuance date s. 45(1)

“old act” patents

filing date on or after Oct 1, 1989

• 20 years from the filing date- s. 44

“new act” patents

For “old act” patents which hadnot expired by July 12, 2001:17 years from issuance ORtwenty years from the filing,whichever term expires later.

Date: 1999 - Court: F.C.T.D

Facts: Pfizer holds an unexpired “old act”

patent set to expire Aug 99 . Under the TRIPSstandard of it wouldn’t expire until Oct 2000 .Pfizer seeks a declaration extending its patentuntil the later date which is opposed by the AG

Importance:

Recall basic rule of domestic reception of international law

Treaty must be enacted through specific legislation amendments

AG argues this was not done, so extended term inapplicable

Court agrees with AG –Parliament did not explicitly change term so the oldterm rules stand

Duration

Pfizer Inc. v. CanadaPfizer Inc. v. Canada

Date of Application:

OCTOBER 1980

Date of Issuance:

AUGUST 1982

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Effect of Pfizer case became moot due tosubsequent legislation…

Bill 17:

As of July 12, 2002, non-expired old-actpatents with terms less than 20 years areautomatically extended to the minimum 20 yearsstandard of TRIPS

There were estimated to be 25 commerciallysignificant drugs that benefited from the termextension

DurationGovernment of Canada BringsGovernment of Canada BringsPatent Act into Conformity withPatent Act into Conformity withObligations Under the WTOObligations Under the WTO

Canadian Intellectual Property

Office News Release, July 12,

2002

AssignabilityAssignability• patents are assignable, as to the whole interest or as to

any part, by an instrument in writing – s. 50(1)

• assignment (and grants of exclusive rights to make anduse and to grant to others the right to make and use)shall be registered in the Patent Office – s. 50(2)

• patent may be granted to any person to whom theinventor has assigned in writing – s. 49(1)

• an assignment is void against any subsequentassignee, unless the assignment is registeredBEFORE the registration of the subsequentassignment – s. 51



III. Enforcing the PatentA.A. Criminal Enforcement InfringementCriminal Enforcement Infringement

B. Civil Remedies

C. Inducement to Infringe

D. Impeaching the Patent

E. Administrative Remedies

IV. Limitations on Patent: Compulsory Licenses?


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A.A. Criminal EnforcementCriminal Enforcement

B. Civil Infringement




4. Limitations on Patent: Compulsory Licenses












Criminal EnforcementCriminal Enforcement Section 75: Every person who

(a) without the consent of the patentee, writes, paints, prints, moulds, casts,carves, engraves, stamps

or otherwise marks on anything made or sold by him, and for the sole makingor selling of which he

is not the patentee, the name or any imitation of the name of any patentee forthe sole making or selling of that thing,

(b) without the consent of the patentee, writes, paints, prints, moulds, casts,carves, engraves, stamps

or otherwise marks on anything not purchased from the patentee, the words"Patent", "Letters Patent", "Queen's (or King's) Patent", "Patented" or any wordor words of like import, with the intent of counterfeiting or imitating the stamp,mark or device of the patentee, or of deceiving the public and inducing them tobelieve that the thing in question was made or sold by or with the consent of thepatentee, or

(c) with intent to deceive the public offers for sale as patented in Canada anyarticle not patented in Canada,

is guilty of an indictable offence and liable to a fine not exceeding two hundreddollars or to imprisonment for a term not exceeding three months or to both.

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OwnersOwners’’ Rights Rights

Section 42. Every patent granted underthis Act shall . . . grant to the patenteeand the patentee's legal representativesfor the term of the patent, from thegranting of the patent, the exclusiveright, privilege and liberty of making,constructing and using the inventionand selling it to others to be used. . .

SubstantialSubstantialInfringementInfringement

Frame of reference is the claims in the patent

May be clear in case of LITERALinfringement

But there is usually some difference betweenthe defendants activities and the literalclaims of the patent

Plaintiff will point to essence of patent: “Pithand Marrow”

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Questions of Law/FactQuestions of Law/Fact

• Claim interpretation is a question of law

• Whether defendant substantially infringedpatent is then a question of fact

• Is alleged infringing activity in the nature of anequivalent to a claim in the patent?

• Does difference “materially affect” how theinvention works?

Determining materialityDetermining materiality

• Is the lack/existence of a material differenceOBVIOUS to someone skilled in the art?

• If not –no infringement

• If yes – may be infringement

• Then ask – did patentee intend exactcompliance with the claim to be an essentialpart of the invention?

• Weigh benefits of substantial infringementdoctrine. Too expansive?

Review of Patent Proceedings:Review of Patent Proceedings:

• s.41- appeal to the Federal Court from Commissioner for refusal to grantpatent

• s.54 - infringement action - Fed. Ct. or prov.ct.

• s. 60(1)- application to Fed. Ct. attacking the validity of the patent, by“any interested person”

• s.60(2) - application to Fed.Ct. for a declaration that activities, if done,will not impeach the patent

• s.53- application to “a court” to declare the patent (or any part of it) voidbecause defective formalities of registration

• s. 75 - creation of indictable offences (CRIMINAL SANCTIONS)

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Canola is a major cropCanola is a major crop

CropsCrops

• What’s been happening (in N.A.)

• Roundup Ready Canola

• How distribution works

• What happened with Schmieser

Date: 2001 - Court: F.C.T.D.

Enforcing the Patent – Civil Infringement

Monsanto v.Monsanto v. SchmeiserSchmeiser

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http://www.monsanto.com.au/canola/pd_1round.htm

from Monsanto’s website<http://www.biotechknowledge.com/>

Monsanto’s Patent:

Claims based on genes andcells


Monsanto Canada Inc. v. SchmeiserMonsanto Canada Inc. v. Schmeiser

♣ Schmeiser – growing canola since the 1950s but never purchasedRoundup Ready Canola and never signed the TUA. In 1996 aneighbour grew RR Canola on a field diagonally adjacent toSchmeiser's field. In 1997 Schmeiser noticed that a large number ofcanola plants from seeds saved from the field survived his normalspraying with Roundup for weed control along road allowances. Hetested a section of the field by spraying it with Roundup, and 60% of theplants survived. Seed from that crop was used to plant all of his fields in1998.

– Note that a farmer who wishes to grow Roundup Ready Canola must enter into a licensing agreement called a Technology UseAgreement (TUA) and must pay a licensing fee for each acre planted with Roundup Ready Canola

2002 FCA 309Enforcing the Patent – Civil Infringement


1. Is the patent infringed ifSchmeiser did not useRoundup in the 1998 crop?

1. Uncontradicted evidence is that D did notspray Roundup on his 1998 canola crop. TrialJudge did not say whether he believed him onthat point or not, because he concluded thatspraying with Roundup was not an essentialelement of the alleged infringement.

2. Trial Judge did not reach any conclusionas to how glyphosate resistant canolacame to be there in 1997, because in hisview it did not matter.

Issues on Appeal to FCA:

2. Does it matter how theMonsanto gene came to bein the 1998 Schmeiser crop?

3. Did the Trial Judgemisapprehend the evidenceor consider inadmissibleevidence?

3. Evidence of crop sampling and testing?Was evidence taken on behalf of Monsantoin breach of a court order? If there wasillegally obtained evidence, should it havebeen excluded?

4. Did the Trial Judge err in therelief granted?

4. Is injunction overly broad? Are damagesexcessive? Cross-Appeal: too low?

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2002 FCA 309Enforcing the Patent – Civil Infringement


1. Is the patent infringed ifSchmeiser did not useRoundup in the 1998 crop?

1. Trial Judge correctly applied theprinciples applicable tothe construction of patent claims.

2. The source of the Roundup resistantcanola in the defendants' 1997 crop isreally not significant for the resolutionof the issue of infringement whichrelates to the 1998 crop. D plantedcanola seed saved from 1997, whichseed he knew or ought to have knownwas Roundup tolerant, and that seedwas the primary source for seeding allnine fields of canola in 1998.

FCA Holding:Issues on Appeal to FCA:

3. No error by the Trial Judge thatwarrants the intervention of this Court

4. No errors in remedies

4. Did The Trial Judge err in therelief granted?

3. Did the Trial Judge considerinadmissible evidence?

2. Does it matter howMonsanto’s gene came to be inthe 1998 crop?

http://decisions.fct-cf.gc.ca/fct/2002/2002fca309.html

www.cartooncritters.com/bull.htm

• defendant’s bull strays on plaintiff’s landand impregnates plaintiff’s cow

• calf belongs to plaintiff landowner notdefendant bull-owner

• bull-owner further liable for damages intrespass

• Part of larger common-law of admixture(if a first party allows inter-mingling ofproperty with property of second party,property belongs to second party

Schmeiser argues analogy tocommon law liability rules for strayanimals:

Court rejects this argument as inapplicable topatent law -- no authority for the propositionthat ownership of a plant must necessarilysupercede the rights of the patent holder for agene found in the plant.

Bull analogy

November 2002 :

appeal to SCC



• Sept 4, 2002: FCAdismisses appeal

• FCA decision athttp://decisions.fct-cf.gc.ca/fct/2002/2002fca309.html

• Schmeiser files leave toappeal to SC onNovember 4, 2002

• more info atwww.percyschmeiser.com

Percy & Louise Schmeiser

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SchmeiserSchmeiser

• Ask yourself: “Is this the tale of apoor innocent canola farmerpolluted by RR seed or tale of apoor multi-national robbed of its IP,or a court troubled by a newscenario?”

MonsantoMonsantoPatentPatent

MonsantoMonsantoclaimsclaims

+44 more

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SchmeiserSchmeiser

• Note that there is no patent on the canola plant perse

• Monsanto sued Schmeiser for patent infringement, ashe was growing unlicensed RR canola in his fields

• The appeal court, whilst on the facts affirmingSchmeiser’s infringement, introduced the possibilityof innocent infringer defense in this type of situation.

Schmeiser inSchmeiser in SCCSCC

• Patent infringement shown:– Possession, at least in commercial circumstances, raises a

rebuttable presumption of "use”

– Saving and planting seed, then harvesting and selling plantsthat contained the patented cells and genes appears,constitutes "utilization"

– By cultivating a plant containing the patented gene andcomposed of the patented cells without license, theappellants deprived the respondents of the full enjoyment ofthe monopoly.

– The appellants' involvement with the disputed canola wasalso clearly commercial in nature.

• Upholds patent, but

• A shadow reflection of CBAC recommendation forinnocent infringer defense:– “While intention is generally irrelevant to determining

whether there has been “use” and hence infringement, theabsence of intention to employ or gain any advantage fromthe invention may be relevant to rebutting the presumption ofuse raised by possession.” (Schmeiser at para. 58)

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SchmeiserSchmeiser

– A ‘but-for benefit’ approach in damages (or accounting for profits)would mean damages only in proportion to the advantage gained,ie If no advantage, no liability

• This idea was also partially reflected in the SCCSchmeiser

• Also, possession of an object incorporating apatented feature may constitute "use" of the object'sstand-by or insurance utility and thus infringe thepatent

Courts or parliamentCourts or parliament

• Should there be a general‘innocent infringer’ defense topatent infringement claims?

Biotech issuesBiotech issues

• In short, the canola has poisoned themouse

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Or higher Or higher lifeform lifeform patentspatents

• A can of worms











The American patent statuteThe American patent statutehas a statutory action forhas a statutory action forinducement to infringe.inducement to infringe.

Enforcing the Patent – Inducement to Infringe

The Canadian Patent Actdoes not…

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http://tawei.readme.com.tw/new_page_12.htm

v.Date: 1968Court:

Exch. Ct.

Slater’s patent is for the combination of pre-formed armour rods wrapped around high

voltage transmission lines for protection.The rods are not themselves patented

Slater Steel makes the rods and supplies them to utilitiesto use as per their patent Payer is a competitor supplyingrods to B.C.Hydro.


Date: 1968 - Court: Exc. Ct.

Importance: Court recognizes tort of inducement toinfringeInducement to infringe action requires a showing of actual infringement.No infringement- no inducement to infringe.

Also requires a showing that such infringement was knowlingly inducedby defendant

Court finds it improbable that the power entities were induced to doanything by the defendant (compare Copeland, where there was anactually an indemnification agreement)

THE RESULT - NO INFRINGEMENT (or inducement to infringe) on thefacts - but possible in law on this reasoning.

Case illustrates potential liability for inducing infringement (just not appliedto the particulars here)


Slater Steel v. PayerSlater Steel v. Payer

Did the court give undue importance to the large sizeand presumptively lawful behavior of the power entities?

Date: 1996 - Court: F.C.A.Dableh Dableh v. Ontario Hydrov. Ontario Hydro

The Problem:

• Spacers within the

inaccessible portion of a

nuclear reactor may become

misaligned.

• Proper spacer alignment

is critical to the safe

operation of a nuclear

reactor.

Dableh, as an Ontario Hydro employee, developed a cost-effectivemethod for realigning misplaced spacers electromagnetically --powered by DC current. Later Ontario Hydro developed a similarelectromagnetic process using AC current (SLAR)

Ownership

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Case is about inducingothers to infringe, not directinfringement (sincedefendant Ontario Hydrohad license)

Ownership of Dableh’s patent:

• under employment contract, Dableh is the

owner but Ontario Hydro gets royalty free

licence with a right to share in royalties

received by Dableh during the course of

his employment.

• Ontario Hydro, through another

employee, later developed “similar”

technology & shared it with 2 other utilities.

• Dableh sued for patent infringement aswell as inducement to infringe

•Trial judge uses disclosure to narrowscope of Dableh’s claim (to cover only DCbut not AC implementation) and finds noinfringement

• Appeal follows

Ownership

Date: 1996 - Court: F.C.A.

Court of Appeal:

• Dableh admitted that he had been premature in seeking a patent on his

invention, doing so without sufficient research, testing and development.

• As a result, the second device produced and implemented by thedefendant arguably did not resemble the more primitive invention describedin the patent.

• FCA finds trial court erred in narrowing claims. Says not necessary toresort to disclosures where claims unambiguous. FCA holds Dableh’s claimWAS broad enough to encompass AC as well as DC embodiments

• Trial judge reversed by the F.C.A. because there was no conflict amongthe expert witnesses as to meaning of Dableh’s claim – so trial decision wasmade without regard to the evidence

• Having determined that the trial court erred with respect to theconstruction of claims, the FCA gives the claims a broader construction.

• Issue then turns to the factual question of whether Hydro’s processinfringes the claim. . .

Dableh Dableh v. Ontario Hydrov. Ontario HydroOwnership


• FCA finds infringement: “given the proper construction of claim 1, it isself-evident that the LIM part of the SLAR technology falls squarely withinits ambit.”

• However, Hydro can’t be liable for infringement because of the licenseby virtue of the employment agreement (use in its “business andundertakings. ”

• But this license does not extend to transferring the technology to otherutilities. Therefore, Hydro’s license is not a defense to the inducementaction.

No liability for direct infringement because of license

No liability for past inducement to infringe since the use by theother utilities remained in the experimental stage

But FCA issues injunction in anticipation of wrongful conductagainst Hydro ordering they are not to induce infringement bysupplying the technology to the other utilities

Ownership

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Date: 1996 - Court: F.C.A.


Dableh Dableh v. Ontario Hydrov. Ontario Hydro• Does Hydro’s process infringe the claim? FCA finds infringement:“Given the proper construction of claim 1, it is self-evident that the LIMpart of the SLAR technology falls squarely within its ambit.” However,Hydro cannot be liable for infringement b/c of the license by virtue ofthe employment agreement (use in “its business and undertakings”). Butthis license does not extend to transferring technology to other utilities.Therefore, Hydro’s license is not a defence for the inducement action.

• FCA did not refer to Slater Steel case (arguably because of that“knowingly” dispute). But the court tacitly accepted that the infringementaction can be extended to include inducement to infringe (without usingthe test from Slater Steel).

No liability for direct infringement because of license

No liability for past inducement to infringe since the use by theother utilities remained in the experimental stage

But FCA issues injunction in anticipation of wrongful conductagainst Hydro ordering they are not to induce infringement bysupplying the technology to the other utilities











Enforcing the Patent – Impeaching the Patent

The Patent Act, R.S.C. 1985 c. P-4, S. 60The Patent Act, R.S.C. 1985 c. P-4, S. 60

Impeachment of patents or claims (1) A patent or any claim in a patent may be declaredinvalid or void by the Federal Court at the instance of theAttorney General of Canada or at the instance of anyinterested person. (2) Where any person has reasonable cause to believethat any process used or proposed to be used or anyarticle made, used or sold or proposed to be made, usedor sold by him might be alleged by any patentee toconstitute an infringement of an exclusive property orprivilege granted thereby, he may bring an action in theFederal Court against the patentee for a declaration thatthe process or article does not or would not constitute aninfringement of the exclusive property or privilege...

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Patent invalidityPatent invaliditySection 59:

The defendant, in any action forinfringement of a patent may plead asmatter of defence any fact or defaultwhich by this Act or by law rendersthe patent void, and the court shalltake cognizance of that pleading andof the relevant facts and decideaccordingly.


Patent invalidityPatent invalidity• Patent may be invalid if invention patented

earlier (double patenting)

• Patent may be invalid if misrepresentationsmade during application process

• Insufficiency of disclosure may be grounds

• Showing prior art can invalidate patent












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Enforcing the Patent – Administrative Remedies

The Patent Act, R.S.C. 1985 c. P-4, S. 66(1)(a)The Patent Act, R.S.C. 1985 c. P-4, S. 66(1)(a)

Powers of Commissioner in cases of abuse (1) On being satisfied that a case of abuse of theexclusive rights under a patent has been established, theCommissioner may exercise any of the following powersas he may deem expedient in the circumstances: (a) he may order the grant to the applicant of alicence on such terms as the Commissioner may thinkexpedient, including a term precluding the licensee fromimporting into Canada any goods the importation ofwhich, if made by persons other than the patentee orpersons claiming under him, would be an infringement ofthe patent, and in that case the patentee and all licenseesfor the time being shall be deemed to have mutuallycovenanted against that importation…

PatentsPatents

• Administrative enforcement of patents– There is a whole administrative apparatus wrapped around patent

• See the Patent Rules in your consolidation

• Including the apparatus of the customs enforcement to stopillegal importation of infringing goods

• S.66(1) (a) gives the Commissioner certain powers in respectof a situation of abuse of patent

– All else left to follow up in the [Advanced] Patents course

• Period of patent: old Act, 17 years from issuance,new Act, 20 years from application – anomalous ifapplication process takes too long– (in U.S. a Patent Extension Act helps with anomaly, not in Canada)

IV.IV.Limitations on PatenLimitations on Patentt

• There are various, relatively limited,limitations on patent– In certain cases, s.20, the patent must be assigned to the

government for defense purposes

– In certain very limited circumstances, s.19, theCommissioner may give the government a non-exclusivelicense to use an invention

– S.55.2(1) some experimental use allowed for development

• Though there used to be a compulsorylicense scheme in Canada, now, after TRIPS,there is NOT

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Date: 1995

Court: Ont. Ct. Aff’d on Appeal – 1998, O.C.A.

Leave to Appeal to the S.C.C.dismissed (1998)

Cause of Action:An action for a

declaration that

compulsory licence

was terminated, as well

as for damages for

breaches of the terms

of licence and for

accounting for

capsules.

Facts: Bayer – the patent owner in respect of the Nifedipine capsule(introduced in Canada in 1982). Since 1985, Apotex had held a non-

exclusive compulsory licence under some of Bayer’s patents

including the one for Nifedipine. 1988 Apotex sold Apo-Nifed

capsules stopped paying Bayer roylaties (after 2 payments), and

said not under Bayer license as capsules swallowed whole, notinstant oral release and produced differently.Result: Apotex lost – found in breach of compulsory licence;required to account for capsules & pay back royalties.Importance: Demonstrated the compulsory license system nowgone – and, in Patents course, will be discussed because of unusualtwist for all licensees in Canada (SCC leave denied): you can’t putpatent validity in issue if you are in breach of your license(compulsory or otherwise) unless sued by a 3rd party (different fromUS and elsewhere). Also, if experimentation in process, the claimedtechnology is ipso facto not obvious – a very high standard inCanada.

Limitations on Patent: Compulsory Licenses

BayerBayerAtkiengesellschaftAtkiengesellschaft v. v.ApotexApotex Inc. Inc.

OLD ACTcase

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