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Intellectual Property Weekly Abstracts Bulletin — Week Of October 3

Patent Decisions

NOA found to be deficient for failing to plead the facts and law relating to the manufacture and importation of the drug product
Bayer Inc. v. Fresenius Kabi Canada Ltd., 2016 FC 581
Drug: moxifloxacin hydrochloride

Bayer has obtained an order of prohibition against the Minister of Health from issuing a NOC to Fresenius for its proposed moxifloxacin hydrochloride product. 

Bayer had alleged that Fresenius infringed their patent during the manufacturing process, at an intermediate step.  Fresenius did not challenge the validity of the patent, instead claiming it did not infringe the patent. However, the Federal Court found that the Notice of Allegation (NOA) was defective because it does not contain the "detailed statement of legal and factual basis" for the alleged non-infringement.

The NOA alleged that it did not infringe because Fresenius' solution for injection will not contain moxifloxacin in crystalline form. Moreover, Fresenius alleged it would not use the monohydrate moxifloxacin specified by the patent in its manufacturing of Fresenius-moxifloxacin or in the manufacture of the active pharmaceutical ingredient used in the manufacture of Fresenius-moxifloxacin.  Fresenius did not disclose in its NOA the fact that its proposed new drug is to be manufactured, processed and packaged offshore and imported into Canada.

Bayer conceded that the imported drug for which the NOC is sought does not contain Bayer's patented product.  However, the Court noted that Fresenius did not directly plead non-infringement through exportation and the Saccharin Doctrine in its NOA, instead relying on what was termed "code words" such as "trivial and merely incidental use". Thus, the NOA was found to be defective.

Had the Court not found the NOA defective, the Court would have dismissed this application because Bayer failed to establish on a balance of probabilities that the allegations of non-infringement are not justified.

Bayer Inc. v. Fresenius Kabi Canada Ltd., 2016 FC 970

Fresenius has unsuccessfully sought to have the Court reconsider its judgment in 2016 FC 581, summarized above. Fresenius argued that the remedy of a prohibition order is inconsistent with the reasons, and the reasons overlook specific concessions made by Bayer in its argument.

The Court held that this motion was an attempt to reargue the application, and if the decision was made in error then it is for the Federal Court of Appeal to make such a determination on appeal.

Court holds claims not infringed, and if a claim was infringed on the basis of a different construction, the claim would be invalid by reason of obviousness
Arctic Cat Inc. v. Bombardier Recreational Products Inc., 2016 FC 1047

This action for infringement concerned Arctic Cat's (AC) '738 Patent, which addressed two-stroke engines where the exhaust gas temperature is used for a particular purpose. After a fulsome review of the issues in this case, the Court held that the asserted claims, once properly construed, were not infringed by Bombardier Recreational Products (BRP). The Court also noted that even if one of the claims was found to have been infringed because of a different construction put on that claim, that claim thus constructed would have been invalid on the basis of obviousness.

Prior to its findings on infringement and invalidity, the Court addressed AC's challenge regarding the credibility of BRP's experts. AC argued that one of the experts lacked impartiality and acted as an advocate for BRP. In dismissing this challenge, the Court referred to the SCC's recent decision in White Burgess Langille Inman v Abbott and Haliburton Co., 2015 SCC 23, which found that the fact that an expert is retained, instructed and paid by one of the adversaries does not undermine the expert's independence, impartiality and freedom from bias.

The Court also found the fact that the expert did not conduct further research for prior art was not to be decried. BRP had provided the main pieces of prior art, which it had identified over ten years ago, when it was attempting to avoid being in violation of the 738 Patent. The Court noted that BRP should not be faulted for having conducted research that it found to be diligent. Further, the Court was not particularly impressed that one of AC's expert's construction was independent of the asserted prior art.

With respect to the fact that the expert expressed a different view about the qualifications of the person of skill some 13 years ago, the Court was of the view that the definition of the person of skill offered in this case did not render the expert less qualified, less objective or less independent. The Court noted that revising one's view is not to be held against the expert unless there is a nefarious purpose that can be inferred, which was not shown in this case.

After concluding that the ‘738 patent was not infringed, the Court also considered the patent's validity on the basis of anticipation, obviousness and overbreadth for completeness. The Court concluded that BRP was successful in respect of their obviousness challenge. Further on in the judgment, the Court dismissed AC's argument that part of the BRP's defence to infringement constituted an improper split of its case in chief on validity. The Court noted that it is a valid defence to an allegation of infringement that the alleged infringing product is based on the teachings of prior art, such as the two prior art pieces identified in this case, as stated in the House of Lords decision in Gillette Safety Razor Co v Anglo-American Trading Co (1913), 30 RPC 465. The Court concluded that BRP was not splitting its case, rather, it was putting forth its case that if its products infringe, then there is a full defence in showing that it practices the teachings of the prior art.

Given the Court's conclusion on infringement and validity, there was no need to reach a firm conclusion on inventorship. However, the Court, upon reviewing the evidence, or perhaps lack thereof, noted that it would have been inclined to find on a balance of probabilities that Mr. Spaulding was not the inventor on the record presented to the Court. There was no documentary evidence to support a contribution from Mr. Spaulding other than a general idea. Further, Mr. Spaulding was not able to express clearly what his contribution was.

Finally, while it was not necessary to address the issue of damages, the Court offered some observations on the evidence presented to the Court. AC had chosen to seek damages by way of the establishment of a reasonable royalty for the use of the invention, and therefore, they had the burden of showing what that royalty rate should be. Following the description of AC's expert's three methodologies, the Court found that AC did not discharge this burden. The Court also found that BRP's expert's evidence was flawed and would have been of limited assistance. However, the Court noted that these findings did not suggest that no royalty would be payable had the patent been found valid and infringed.

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