2.2 Patents. Chapter 2: Patents. Mouse cartoon. I. Conditions for Patentability. Ownership, Duration, and Assignment. Enforcing the Patent

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1 2.2 Patents Autumn Mark Perry Margaret Ann Wilkinson Samuel E. Trosow Chapter 2: Patents I. Conditions for Patentability II. III. Ownership, Duration, and Assignment I. The Dableh case is discussed on both the ownership issues and the enforcement issues Enforcing the Patent IV. Limitations on Patent: Compulsory Licenses Mouse cartoon 1

2 Ownership 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 transfer of ownership to the employer. The inventing employee will own the patent -- subject to 2 exceptions where the invention will be owned by the employer: (1) there is a contract granting inventions to the employer, or (2) the employee is hired for the express purpose of inventing or innovating (the so-called "hired to invent" doctrine). Duration of Patents October 1, 1989 old act patents filing date before Oct 1, years from the issuance date s. 45(1) new exception under s. 45(2) to comply with TRIPS new act patents filing date on or after Oct 1, years from the filing date - s. 44 For old act patents which had not expired by July 12, 2001: 17 years from issuance OR twenty years from the filing, whichever term expires later. continuation of patent for statutory term is always subject to payment of maintenance fees (s. 46) Duration Pfizer Inc. v. Canada Date: Court: F.C.T.D Facts: Pfizer holds an unexpired old act patent set to expire Aug 99. Under the TRIPS standard of it wouldn t expire until Oct Pfizer seeks a declaration extending its patent until the later date which is opposed by the AG Date of Application: OCTOBER 1980 Date of Issuance: AUGUST 1982 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 old term rules stand 2

3 Duration Government of Canada Brings Patent Act into Conformity with Obligations Under the WTO Canadian Intellectual Property Office News Release, July 12, 2002 Effect of Pfizer case became moot due to subsequent legislation Bill 17: As of July 12, 2002, non-expired old-act patents with terms less than 20 years are automatically extended to the minimum 20 years standard of TRIPS There were estimated to be 25 commercially significant drugs that benefited from the term extension Assignability 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 and use 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 the inventor has assigned in writing s. 49(1) an assignment is void against any subsequent assignee, unless the assignment is registered BEFORE the registration of the subsequent assignment s. 51 Chapter 2: Patents I. Conditions for Patentability II. Ownership, Duration, and Assignment III. Enforcing the Patent A. Criminal Enforcement Infringement B. Civil Remedies C. Inducement to Infringe D. Impeaching the Patent E. Administrative Remedies IV. Limitations on Patent: Compulsory Licenses? 3

4 Chapter 2: Patents I. Conditions for Patentability II. Ownership, Duration, and Assignment III. Enforcing the Patent A. Criminal Enforcement B. Civil Infringement C. Inducement to Infringe D. Impeaching the Patent E. Administrative Remedies 4. Limitations on Patent: Compulsory Licenses Chapter 2: Patents I. Conditions for Patentability II. Ownership, Duration, and Assignment III. Enforcing the Patent A. Criminal Enforcement B. Civil Infringement C. Inducement to Infringe D. Impeaching the Patent E. Administrative Remedies 4. Limitations on Patent: Compulsory Licenses Criminal 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 making or selling of which he is not the patentee, the name or any imitation of the name of any patentee for the 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 word or 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 to believe that the thing in question was made or sold by or with the consent of the patentee, or (c) with intent to deceive the public offers for sale as patented in Canada any article not patented in Canada, is guilty of an indictable offence and liable to a fine not exceeding two hundred dollars or to imprisonment for a term not exceeding three months or to both. 4

5 Chapter 2: Patents I. Conditions for Patentability II. Ownership, Duration, and Assignment III. Enforcing the Patent A. Criminal Enforcement B. Civil Infringement C. Inducement to Infringe D. Impeaching the Patent E. Administrative Remedies 4. Limitations on Patent: Compulsory Licenses Owners Rights Section 42. Every patent granted under this Act shall... grant to the patentee and the patentee's legal representatives for the term of the patent, from the granting of the patent, the exclusive right, privilege and liberty of making, constructing and using the invention and selling it to others to be used... Substantial Infringement Frame of reference is the claims in the patent May be clear in case of LITERAL infringement But there is usually some difference between the defendants activities and the literal claims of the patent Plaintiff will point to essence of patent: Pith and Marrow 5

6 Questions of Law/Fact Claim interpretation is a question of law Whether defendant substantially infringed patent is then a question of fact Is alleged infringing activity in the nature of an equivalent to a claim in the patent? Does difference materially affect how the invention works? Determining materiality Is the lack/existence of a material difference OBVIOUS to someone skilled in the art? If not no infringement If yes may be infringement Then ask did patentee intend exact compliance with the claim to be an essential part of the invention? Weigh benefits of substantial infringement doctrine. Too expansive? Review of Patent Proceedings: s.41- appeal to the Federal Court from Commissioner for refusal to grant patent 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) void because defective formalities of registration s creation of indictable offences (CRIMINAL SANCTIONS) 6

7 Canola is a major crop Crops What s been happening (in N.A.) Roundup Ready Canola How distribution works What happened with Schmieser Enforcing the Patent Civil Infringement Monsanto v. Schmeiser Date: Court: F.C.T.D. 7

8 Enforcing the Patent Civil Infringement canola/pd_1round.htm Monsanto s Patent: Claims based on genes and cells from Monsanto s website < Monsanto Canada Inc. v. Schmeiser Schmeiser growing canola since the 1950s but never purchased Roundup Ready Canola and never signed the TUA. In 1996 a neighbour grew RR Canola on a field diagonally adjacent to Schmeiser's field. In 1997 Schmeiser noticed that a large number of canola plants from seeds saved from the field survived his normal spraying with Roundup for weed control along road allowances. He tested a section of the field by spraying it with Roundup, and 60% of the plants survived. Seed from that crop was used to plant all of his fields in Note that a farmer who wishes to grow Roundup Ready Canola must enter into a licensing agreement called a Technology Use Agreement (TUA) and must pay a licensing fee for each acre planted with Roundup Ready Canola Enforcing the Patent Civil Infringement Monsanto v. Schmeiser Issues on Appeal to FCA: 1. Is the patent infringed if Schmeiser did not use Roundup in the 1998 crop? 2. Does it matter how the Monsanto gene came to be in the 1998 Schmeiser crop? 3. Did the Trial Judge misapprehend the evidence or consider inadmissible evidence? 2002 FCA Uncontradicted evidence is that D did not spray Roundup on his 1998 canola crop. Trial Judge did not say whether he believed him on that point or not, because he concluded that spraying with Roundup was not an essential element of the alleged infringement. 2. Trial Judge did not reach any conclusion as to how glyphosate resistant canola came to be there in 1997, because in his view it did not matter. 3. Evidence of crop sampling and testing? Was evidence taken on behalf of Monsanto in breach of a court order? If there was illegally obtained evidence, should it have been excluded? 4. Did the Trial Judge err in the relief granted? 4. Is injunction overly broad? Are damages excessive? Cross-Appeal: too low? 8

9 Enforcing the Patent Civil Infringement Monsanto v. Schmeiser Issues on Appeal to FCA: 1. Is the patent infringed if Schmeiser did not use Roundup in the 1998 crop? 2. Does it matter how Monsanto s gene came to be in the 1998 crop? 3. Did the Trial Judge consider inadmissible evidence? 4. Did The Trial Judge err in the relief granted? 2002 FCA 309 FCA Holding: 1. Trial Judge correctly applied the principles applicable to the construction of patent claims. 2. The source of the Roundup resistant canola in the defendants' 1997 crop is really not significant for the resolution of the issue of infringement which relates to the 1998 crop. D planted canola seed saved from 1997, which seed he knew or ought to have known was Roundup tolerant, and that seed was the primary source for seeding all nine fields of canola in No error by the Trial Judge that warrants the intervention of this Court 4. No errors in remedies Bull analogy Schmeiser argues analogy to common law liability rules for stray animals: defendant s bull strays on plaintiff s land and impregnates plaintiff s cow calf belongs to plaintiff landowner not defendant bull-owner bull-owner further liable for damages in trespass Part of larger common-law of admixture (if a first party allows inter-mingling of property with property of second party, property belongs to second party Court rejects this argument as inapplicable to patent law -- no authority for the proposition that ownership of a plant must necessarily supercede the rights of the patent holder for a gene found in the plant. Enforcing the Patent Civil Infringement Monsanto v. Schmeiser Sept 4, 2002: FCA dismisses appeal FCA decision at 09.html Schmeiser files leave to appeal to SC on November 4, 2002 more info at November 2002 : appeal to SCC Percy & Louise Schmeiser 9

10 Schmeiser Ask yourself: Is this the tale of a poor innocent canola farmer polluted by RR seed or tale of a poor multi-national robbed of its IP, or a court troubled by a new scenario? Monsanto Patent Monsanto claims +44 more 10

11 Schmeiser Note that there is no patent on the canola plant per se Monsanto sued Schmeiser for patent infringement, as he was growing unlicensed RR canola in his fields The appeal court, whilst on the facts affirming Schmeiser s infringement, introduced the possibility of innocent infringer defense in this type of situation. Schmeiser in SCC Patent infringement shown: Possession, at least in commercial circumstances, raises a rebuttable presumption of "use Saving and planting seed, then harvesting and selling plants that contained the patented cells and genes appears, constitutes "utilization" By cultivating a plant containing the patented gene and composed of the patented cells without license, the appellants deprived the respondents of the full enjoyment of the monopoly. The appellants' involvement with the disputed canola was also clearly commercial in nature. Upholds patent, but A shadow reflection of CBAC recommendation for innocent infringer defense: While intention is generally irrelevant to determining whether there has been use and hence infringement, the absence of intention to employ or gain any advantage from the invention may be relevant to rebutting the presumption of use raised by possession. (Schmeiser at para. 58) 11

12 Schmeiser 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 SCC Schmeiser Also, possession of an object incorporating a patented feature may constitute "use" of the object's stand-by or insurance utility and thus infringe the patent Courts or parliament Should there be a general innocent infringer defense to patent infringement claims? Biotech issues In short, the canola has poisoned the mouse 12

13 Or higher lifeform patents A can of worms Chapter 2: Patents I. Conditions for Patentability II. Ownership, Duration, and Assignment III. Enforcing the Patent A. Criminal Enforcement B. Civil Infringement C. Inducement to Infringe D. Impeaching the Patent E. Administrative Remedies 4. Limitations on Patent: Compulsory Licenses Enforcing the Patent Inducement to Infringe The American patent statute has a statutory action for inducement to infringe. The Canadian Patent Act does not 13

14 Enforcing the Patent Inducement to Infringe v. Date: 1968 Court: 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 utilities to use as per their patent Payer is a competitor supplying rods to B.C.Hydro. Enforcing the Patent Inducement to Infringe Slater Steel v. Payer Date: Court: Exc. Ct. Importance: Court recognizes tort of inducement to infringe Inducement to infringe action requires a showing of actual infringement. No infringement- no inducement to infringe. Also requires a showing that such infringement was knowlingly induced by defendant Court finds it improbable that the power entities were induced to do anything by the defendant (compare Copeland, where there was an actually an indemnification agreement) THE RESULT - NO INFRINGEMENT (or inducement to infringe) on the facts - but possible in law on this reasoning. Case illustrates potential liability for inducing infringement (just not applied to the particulars here) Did the court give undue importance to the large size and presumptively lawful behavior of the power entities? Ownership Dableh v. Ontario Hydro Date: Court: F.C.A. 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-effective method for realigning misplaced spacers electromagnetically -- powered by DC current. Later Ontario Hydro developed a similar electromagnetic process using AC current (SLAR) 14

15 Ownership Dableh v. Ontario Hydro Case is about inducing others to infringe, not direct infringement (since defendant Ontario Hydro had license) Date: Court: F.C.A. 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 as well as inducement to infringe Trial judge uses disclosure to narrow scope of Dableh s claim (to cover only DC but not AC implementation) and finds no infringement Appeal follows Ownership Dableh v. Ontario Hydro Date: 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 the defendant arguably did not resemble the more primitive invention described in the patent. FCA finds trial court erred in narrowing claims. Says not necessary to resort to disclosures where claims unambiguous. FCA holds Dableh s claim WAS broad enough to encompass AC as well as DC embodiments Trial judge reversed by the F.C.A. because there was no conflict among the expert witnesses as to meaning of Dableh s claim so trial decision was made without regard to the evidence Having determined that the trial court erred with respect to the construction of claims, the FCA gives the claims a broader construction. Issue then turns to the factual question of whether Hydro s process infringes the claim... Ownership Dableh v. Ontario Hydro Date: Court: F.C.A. FCA finds infringement: given the proper construction of claim 1, it is self-evident that the LIM part of the SLAR technology falls squarely within its ambit. However, Hydro can t be liable for infringement because of the license by virtue of the employment agreement (use in its business and undertakings. But this license does not extend to transferring the technology to other utilities. Therefore, Hydro s license is not a defense to the inducement action. No liability for direct infringement because of license No liability for past inducement to infringe since the use by the other utilities remained in the experimental stage But FCA issues injunction in anticipation of wrongful conduct against Hydro ordering they are not to induce infringement by supplying the technology to the other utilities 15

16 Enforcing the Patent Inducement to Infringe Dableh v. Ontario Hydro Date: Court: F.C.A. Does Hydro s process infringe the claim? FCA finds infringement: Given the proper construction of claim 1, it is self-evident that the LIM part of the SLAR technology falls squarely within its ambit. However, Hydro cannot be liable for infringement b/c of the license by virtue of the employment agreement (use in its business and undertakings ). But this 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 infringement action can be extended to include inducement to infringe (without using the test from Slater Steel). No liability for direct infringement because of license No liability for past inducement to infringe since the use by the other utilities remained in the experimental stage But FCA issues injunction in anticipation of wrongful conduct against Hydro ordering they are not to induce infringement by supplying the technology to the other utilities Chapter 2: Patents I. Conditions for Patentability II. Ownership, Duration, and Assignment III. Enforcing the Patent A. Criminal Enforcement B. Civil Infringement C. Inducement to Infringe D. Impeaching the Patent E. Administrative Remedies 4. Limitations on Patent: Compulsory Licenses Enforcing the Patent Impeaching the Patent The Patent Act, R.S.C c. P-4, S. 60 Impeachment of patents or claims (1) A patent or any claim in a patent may be declared invalid or void by the Federal Court at the instance of the Attorney General of Canada or at the instance of any interested person. (2) Where any person has reasonable cause to believe that any process used or proposed to be used or any article made, used or sold or proposed to be made, used or sold by him might be alleged by any patentee to constitute an infringement of an exclusive property or privilege granted thereby, he may bring an action in the Federal Court against the patentee for a declaration that the process or article does not or would not constitute an infringement of the exclusive property or privilege... 16

17 Enforcing the Patent Impeaching the Patent Patent invalidity Section 59: The defendant, in any action for infringement of a patent may plead as matter of defence any fact or default which by this Act or by law renders the patent void, and the court shall take cognizance of that pleading and of the relevant facts and decide accordingly. Enforcing the Patent Impeaching the Patent Patent invalidity Patent may be invalid if invention patented earlier (double patenting) Patent may be invalid if misrepresentations made during application process Insufficiency of disclosure may be grounds Showing prior art can invalidate patent Chapter 2: Patents I. Conditions for Patentability II. Ownership, Duration, and Assignment III. Enforcing the Patent A. Criminal Enforcement B. Civil Infringement C. Inducement to Infringe D. Impeaching the Patent E. Administrative Remedies 4. Limitations on Patent: Compulsory Licenses 17

18 Enforcing the Patent Administrative Remedies The Patent Act, R.S.C c. P-4, S. 66(1)(a) Powers of Commissioner in cases of abuse (1) On being satisfied that a case of abuse of the exclusive rights under a patent has been established, the Commissioner may exercise any of the following powers as he may deem expedient in the circumstances: (a) he may order the grant to the applicant of a licence on such terms as the Commissioner may think expedient, including a term precluding the licensee from importing into Canada any goods the importation of which, if made by persons other than the patentee or persons claiming under him, would be an infringement of the patent, and in that case the patentee and all licensees for the time being shall be deemed to have mutually covenanted against that importation Patents 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 stop illegal importation of infringing goods S.66(1) (a) gives the Commissioner certain powers in respect of 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 if application process takes too long (in U.S. a Patent Extension Act helps with anomaly, not in Canada) IV.Limitations on Patent 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, the Commissioner may give the government a non-exclusive license to use an invention S.55.2(1) some experimental use allowed for development Though there used to be a compulsory license scheme in Canada, now, after TRIPS, there is NOT 18

19 Limitations on Patent: Compulsory Licenses Bayer Atkiengesellschaft v. Apotex Inc. 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. OLD ACT case Facts: Bayer the patent owner in respect of the Nifedipine capsule (introduced in Canada in 1982). Since 1985, Apotex had held a nonexclusive compulsory licence under some of Bayer s patents including the one for Nifedipine Apotex sold Apo-Nifed capsules stopped paying Bayer roylaties (after 2 payments), and said not under Bayer license as capsules swallowed whole, not instant 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 now gone and, in Patents course, will be discussed because of unusual twist for all licensees in Canada (SCC leave denied): you can t put patent validity in issue if you are in breach of your license (compulsory or otherwise) unless sued by a 3 rd party (different from US and elsewhere). Also, if experimentation in process, the claimed technology is ipso facto not obvious a very high standard in Canada. 19