Reprocessing/Refurbishing Regulated. Responsibilities of Manufacturers, Users and the Regulator. Emily Larose, Stuart English &
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1 Reprocessing/Refurbishing Regulated Products: Responsibilities of Manufacturers, Users and the Regulator Emily Larose, Stuart English & Stephen Selznick MEDEC 2011 MedTech Conference November 1, 2011
2 Key Questions: Who is responsible for what happens to a device after it is sold? By what means can reprocessing and refurbishment be monitored and managed? slide 2
3 Some Important Definitions Reprocessing - after use the device is cleaned, sterilized, repackaged for subsequent use Refurbishing replacing or fixing parts on a device to allow it to be reused slide 3
4 The Technologies Reusable, including: Simple, easily cleaned devices with few components High cost, high complexity technology with intricate components Limited use devices Single-Use slide 4
5 The Risks Infection Transfer of bodily substances Bacterial growth Contamination by cleaning chemicals Reduced Efficacy Deterioration Degradation Mechanical failure slide 5
6 Who is responsible for what happens after a device is sold? Purchasers (institutions)? Healthcare professionals? Manufacturers? Third party service providers? Regulators? slide 6
7 By What Means Can/Should Reprocessing and Refurbishment be Monitored and Managed? Regulation Litigation Contracts t Intellectual Property Protection slide 7
8 Monitoring/Managing Reprocessing and Refurbishment Regulation Litigation Contracts Intellectual Property Protection slide 8
9 Regulation & The Division of Powers Federal Regulation Spending and criminal power s Sale and labelling of health products Provincial Regulation Hospitals and property p and civil rights powers Delivery of health care slide 9
10 Federal Regulation Addresses: Labelling and directions for use (which includes reprocessing) Sale Off-label promotion Does Not Address: Use (of single use or reusable devices) slide 10
11 Provincial Regulation Addresses: Licensing and standards for healthcare professionals and hospitals Does Not Address: Third party reprocessing Sale slide 11
12 Monitoring/Managing Reprocessing and Refurbishment Regulation Litigation Contracts t Intellectual Property Protection slide 12
13 Basis For A Claim Negligence: Breach of a duty to exercise reasonable care in respect of persons affected by your actions Requires: Duty of care Breach of standard of care Causation Damages slide 13
14 Healthcare Facilities Hospitals clearly owe a duty to their patients Hospitals must provide safe systems: appropriate systems to assess patients t proper and functioning equipment and facilities slide 14
15 Healthcare Professional A clear duty owed In providing care must: Obtain informed consent Meet industry standards slide 15
16 Manufacturer Duty is clearly owed to first patient Reusable: duty to provide appropriate cleaning instructions Single Use: duty to communicate single-use status? What is the standard of care? If injury results from reuse, was that injury caused by the manufacturer s conduct? slide 16
17 Third Party Service Providers Duty is owed not just to customer, but to the patient What is the applicable standard? Note: this would apply to in-house reprocessing by hospitals slide 17
18 Regulators An up-hill battle Duty of Care must establish that there is a duty to the individual, not just the public as a whole Public Policy difference between policy decisions and operational decisions slide 18
19 Monitoring/Managing Reprocessing and Refurbishment Regulation Litigation Contracts t Intellectual Property Protection slide 19
20 Role of Contract Allocate risk liability to hospital liability to patients Shortcomings no contract nexus (or privity ) with patients typical provisions inadequate slide 20
21 Manufacturer s Liability Only if instructions followed no liability if reprocessed no liability if reprocessing causes harm slide 21
22 Standard Contract Provisions Under standard representations, warranties and indemnities, manufacture may avoid liability for failure to use as instructed an exception to representation, warranty and indemnity (avoiding liability to hospital under contract) damage caused by hospital, or third-party processor (avoiding liability to patients) Interpretation issue (if exception is not explicit) Problem of causation (proving harm caused by reprocessing) slide 22
23 Tailored Contract Provisions Clear exception to representation/warranty/indemnity expressly limit liability if reprocessing occurs separate liability limitation No liability if reprocessing caused harm to patient problem of proving causation No liability if reprocessing occurs (regardless of harm caused) slide 23
24 Liability to Patient No privity Impractical to warn or get waivers slide 24
25 Limiting Liability to Patient (Preventing Reprocessing) Prohibition against reprocessing may shield from liability (defence or claim against reprocessor) May not be enforceable Refusal to sell Termination for breach slide 25
26 Limiting Liability to Patient (Preventing Reprocessing) Indemnity from hospital if any reprocessing causes harm if any harm caused by reprocessed device (regardless of whether reprocessing caused) slide 26
27 BPS Procurement Directive Mandatory requirement to use form of contract provided with RFP Breach of law by hospital/purchasing agent may expose them to liability to unsuccessful bidders limits ability to negotiate favourable contract terms slide 27
28 Monitoring/Managing Reprocessing and Refurbishment Regulation Litigation Contracts t Intellectual Property Protection slide 28
29 The IP Landscape Integrated Circuit Topography Copyright Medical Device Trade-Mark Industrial Patent Design Confidential Information Ideas
30 The BIG Picture A Patent t The protection afforded a new and useful unobvious invention that is not anticipated by prior art A utility patent A process, composition of matter, method or means patent slide 30
31 The BIG Picture A Design Patent or Industrial Design The protection afforded the novel non-functional ornamentation applied to a physical object slide 31
32 The BIG Picture A Copyright The protection afforded an original expression reduced to a tangible form slide 32
33 The BIG Picture A Trade-Mark (Trade Mark, Trademark etc.) The protection afforded to a word, logo, slogan, shape of packaging and the like that serve as a demarcation of the source of origin of your products or services slide 33
34 The BIG Picture A Trade Secret or Confidential Information An element of your business or its processes that you do not disclose except in a circumstance of confidence slide 34
35 The BIG Picture Integrated Circuit Topography or Masked Works Rights The protection afforded to the architectural design of an integrated circuit slide 35
36 The BIG Picture Intellectual Property Law as an Instrument of Trade Economics Euro-Excellence Inc. v. Kraft Canada Inc. [2007 SCC 37] Fish, J, in obiter states: Without so deciding, I express grave doubt whether the law governing the protection of intellectual property rights in Canada can be transformed in this way into an instrument of trade control not contemplated by the Copyright Act. slide 36
37 The BIG Picture The most effective intellectual property protection programs contemplate the layering of intellectual property rights slide 37
38 Repair versus Reconstruction Enforcing patent rights to address reprocessing and refurbishing medical devices depends upon whether: the reprocessed/refurbished device is the subject itself of an enforceable patent; or The reprocessed/refurbished device is a component of a larger combination that is patented slide 38
39 Repair versus Reconstruction Patent rights are infringed in Canada when a person interferes with the full enjoyment of the monopoly granted to the patentee Monsanto Canada Inc. v. Schmeiser [2004] 1 S.C.R. 902 The owner of a valid Canadian patent t has the exclusive right to make, manufacture, construct and sell the invention S.42 of the Patent Act (Canada) This has been interpreted to include the right to import the patented invention into Canada see Wellcome Foundation Ltd. V. Apotex Inc. (1990) 32 C.P.R. (3 rd ) 350 slide 39
40 Repair versus Reconstruction No element of a claimed combination that is not separately patented is entitled to a patent monopoly A purchaser of patented articles possess an implied license to have those articles repaired, and may procure replacement parts Rucker C. v. Gavel s Vulcanizing i Ltd. (1985), 7 C.P.R. (3d) 294 slide 40
41 Repair versus Reconstruction There is no bright line between permissible repair and infringing g reconstruction Is the existing product being maintained or is the end result a new article A case by case determination to assess whether the essence of the invention is being remade as opposed to maintained MacLennan v. Produits Gilbert Inc. (2008), 67 C.P.R. (4 th ) 161 F.C.A. slide 41
42 Repair versus Reconstruction Underlying the determination is the competition law concept of exhaustion of patent rights An unrestricted sale of a patented article by or with the authority of the patent owner, exhausts the patent owner s right to control further sale and use of the patented invention, by enforcing the patent under which it was first sold In order to call the monopoly conferred by the patent grant into play for a second time, it must be a second creation of the patented item slide 42
43 Repair versus Reconstruction Permissible repair may encompass replacement of a spent unpatented components, in order to maintain or preserve the utility for which the patented item was originally intended Thus, for patent infringement purposes, product notifications like SINGLE USE ONLY are helpful but not determinative slide 43
44 The Liability of the Reprocessor Unlike the U.K. and the U.S., Canada has no statutory provision defining the scope of indirect infringement - so-called inducing patent infringement or contributory patent infringement Sometimes in Canada the reprocessor can be considered a direct infringer with its customer Perhaps if the parties are in an agent principal relationship see for example National Electric Products Corp. v. Industrial Electric Products Ltd. [1940] S.C.R. 406 slide 44
45 The Liability of the Reprocessor In Canada, case law has defined the scope of indirect infringement as comprising three elements First, there must be a direct patent infringement somewhere in the chain Dableh v. Ontario Hydro (1996), 68 C.P.R. (3 rd ) 129 (F.C.A.) slide 45
46 The Liability of the Reprocessor Second, the indirect infringer must induce or exercise influence over the direct infringer such that the infringement would not have taken place without t that t influence this is more than simply making the infringing component Dableh v. Ontario Hydro (1996), 68 C.P.R. (3 rd ) 129 (F.C.A.) Third, there must be a degree of knowledge residing with the inducer (the act must be committed knowingly) knowledge that the inducer is exercising influence is a companion to the second element However, knowledge of the actual patent infringed does not appear to be required - see, for example, Bauer Hockey Corp. v. Easton Sports Canada Inc. (2010), 83 C.P.R. (4 th ) 315, aff d 2011 FCA 83 slide 46
47 Strategies for Enforcement Consider a conscientious patent program, that includes, where possible, the unique design and patenting of key components, and not just their combination While not determinative, it is helpful to mark the patent reference and the non-reusable status of the item, on the product and its packaging May assist with knowledge component when seeking to enforce against an indirect infringer slide 47
48 Strategies for Enforcement Consider including claims in patents that specify different embodiments, such reusable and non-reusable versions of the invention and key components Where practicable, embed other IP rights such as embossed trade-marks, unique product industrial design and shaping, and copyrights to embedded instructions and interface software slide 48
49 Strategies for Enforcement While aggressive, in appropriate circumstances consider licensing a device for single use only, as opposed to the outright sale of the item Where the business model contemplates substantial revenue from the supply of wasting components, consider the lease/license, as opposed to sale, of the device and the patenting of the replacement component Perhaps coupled with favourable lease terms based upon volume purchase of the patented replaceable component slide 49
50 Thank You 2011 CASSELS BROCK & BLACKWELL LLP. CASSELS BROCK AND THE CB LOGO ARE REGISTERED TRADE-MARKS OF CASSELS BROCK & BLACKWELL LLP. ALL RIGHTS RESERVED.
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