Canadian Patent Law: 2018 Year In Review

There were various developments in Canadian patent law in 2018. Numerous decisions of the Federal Court of Appeal and Federal Court will have a notable impact on patent law in Canada going forward. In addition, both the Patent Act and the Patent Rules were the subject of significant amendments that will impact both prosecution and enforcement of patent rights in Canada for years to come.

Notable cases and decisions

Proper POSITA Definition Crucial for Claim Construction

In Bombardier Recreational Products Inc. v. Arctic Cat, Inc., 2018 FCA 172, the Federal Court of Appeal ("Court of Appeal") addressed, among other things, whether limiting a claim element to an example presented in the preferred embodiment section of the patent at issue was proper.

In concluding that it was not proper in this case to limit the construction of the claim element at issue to the preferred embodiment of the patent, the Court of Appeal confirmed that the only evidence that should be considered in construing the claims is the patent specification and the understanding of the person of ordinary skill in the art (POSITA) with respect to the claim element based on such person's relevant common knowledge. To this end, the Court of Appeal's decision emphasized the importance of an expert with experience in the relevant area of technology, and what the corresponding understanding of a POSITA vis-à-vis such technology area would have been with respect to the claim language at issue. This is particularly important given a patent disclosure is not expected to include a full review of the prior art or the common general knowledge, and the descriptions and drawings in a patent may in many cases be exemplary only.

Accordingly, the Court of Appeal allowed the patentee's appeal, and found that the trial judge had incorrectly found no infringement based on a claim interpretation that was limited to the preferred embodiment of the patent.

POSITA's Common General Knowledge Also Crucial for Obviousness

In AFD Petroleum Ltd. v. Frac Shack Inc., 2018 FCA 140, the Court of Appeal held that "the POSITA's common general knowledge ... is a key component in the obviousness analysis". Based on concerns that the trial judge did not sufficiently consider the impact of the POSITA's knowledge in the relevant technology area, the Court of Appeal remitted the issue of obviousness to the trial judge for redetermination.

Upon redetermination in 2018 FC 1047, the trial judge found that the claims at issue were not obvious in view of his determination of who the POSITA would have been, and the extent of such person's knowledge. In addition, the trial judge provided clarification with respect to the test for obviousness in view of comments made by the Court of Appeal in Ciba Speciality Chemicals Water Treatments Limited v SNF Inc., 2017 FCA 225. In particular, the trial judge clarified that it is not the prior art at large that is relevant for determining obviousness. Rather, it is those elements of the prior art which the POSITA could find by conducting a reasonably diligent search that are relevant.

Infringers Cannot Rely on NIAs that are not Lawful or Economically Viable

The Court of Appeal commented on numerous issues relevant to damages in Apotex Inc. v. Eli Lilly and Company, 2018 FCA 217. In this appeal, Apotex sought to overturn the 2014 decision of the Federal Court that awarded Eli Lilly $31M in damages and $75M in prejudgment interest for Apotex's infringement of eight separate Lilly-owned patents pertaining to Lilly's CEFACLOR® product.

The Court of Appeal rejected Apotex's arguments that the $31M damages quantum should be reduced. In so doing, it found that a "legitimate" non-infringing alternative ("NIA") must be one that is lawful. In particular, the Court of Appeal held that Apotex could not rely on a purported NIA that would have infringed a patent other than the patents at issue in the proceeding.

The Court of Appeal also held that an infringer seeking to rely on a NIA must show that the NIA being relied upon was "objectively an economically viable substitute at the relevant time." In this case, Apotex cited a so-called "Lupin 2 process" as a purported NIA. However, Apotex did not prove that the Lupin 2 process was economically viable; to the contrary, it was "not an attractive substitute".

The Court of Appeal dismissed Apotex's appeal but for the matter of damages in the form of interest, which was remitted to the trial judge for reconsideration.

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