IP Litigation 2020 Year In Review

• Published date: 30 January 2021
• Subject Matter: Intellectual Property, Litigation, Mediation & Arbitration, Patent, Trials & Appeals & Compensation
• Law Firm: Bereskin & Parr LLP
• Author: Bruna Kalinoski, Adam Bobker and R. Scott MacKendrick

A flurry of jurisprudential developments marked 2020 as a significant year in Intellectual Property litigation. The Federal Court of Appeal settled the law on some crucial issues that have longed for legal certainty (e.g., the criteria for prior art to be citable for obviousness), and pivoted from established law on other issues (e.g., jurisdiction and accounting of profits assessment). Numerous rulings at the trial level also feature interesting interpretations of legal points which forecast a lively 2021 with important ramifications to be monitored.

Keep on reading our recapitulation of 10 key legal topics that were discussed in the case law during 2020 to stay abreast of the emerging legal trends affecting the IP litigation landscape in 2021 and beyond.

1. Jurisdiction

In SALT Canada, the Federal Court of Appeal held that a determination of patent ownership that hinges upon the application and interpretation of contract law principles was within the Federal Court's jurisdiction.¹ The guiding authority on this issue had been that the Federal Court lacks jurisdiction if the matter relates primarily to contract law, even if the central question is one of patent title. This has now been reversed as the court found that law "not binding on [the] Court" and "incorrectly decided."² Justice Stratas' reasoned that the Federal Court's jurisdiction derives from s. 52 of the Patent Act, which provides that the "Federal Court has jurisdiction...to order that any entry in the records of the Patent Office relating to the title to a patent be varied or expunged." Since the application before the Court in SALT Canada sought just that, he held that the Federal Court ought to have jurisdiction.

Early this year in McCain Foods Limited v. JR Simplot Company,³ the Federal Court of Appeal had another opportunity to comment on the extent to which the Federal Court has the jurisdiction to decide contractual issues arising in the context of a patent matter. In a patent infringement action, the defendant was alleged to have infringed the plaintiff's patent and was not permitted to bring a third-party claim against its supplier for indemnification. The Court held that it had no jurisdiction to adjudicate the indemnity issue. It was not enough that the indemnity claim was connected to a claim for patent infringement. The essential nature of the indemnity claim was held to be a claim in contract. The Patent Act was not directly relevant to the third-party claim.⁴

2. Summary Judgment & Default Judgment Motions

Our 2019 Litigation Year in Review discussed whether summary determination of patent infringement claims following Canmar⁵ was a trend for a day or here to stay. This year, the Federal Court has seen increased attempts by litigants to resolve matters more expeditiously by way of dispositive motions. Summary judgment was granted in three cases⁶ and two motions for default judgment were brought but dismissed based on insufficient evidence.⁷ Notably, in ViiV Healthcare Company v. Gilead Sciences Canada,⁸ the Court held that completion of discoveries is not a precondition to summary trial such that resolution may be sought at very early stages of the proceeding.

We saw the Federal Court grant summary disposition to (a) dispose of claim construction argument,⁹ (b) hold a patent invalid for obviousness,¹⁰ and (c) dispose of a patent infringement action recognizing that the infringing product did not fall within the scope of the asserted claims.¹¹

3. Experts & Claim Construction

1. Experts

In 2020, we also saw more judicial skepticism with respect to blinding of experts, particularly in respect to opinions on who is the hypothetical skilled person of ordinary skill in the art, what her common general knowledge is, and how she would construe the claims in the patent at issue. For example, in Seedlings Life Science Ventures, LLC v. Pfizer Canada ULC., Justice Grammond held that "[w]hatever the merits of blinding in other respects, I must say that it is not particularly helpful with respect to the skilled person, common general knowledge and claims construction".¹²

In another case, the court signaled that this skepticism appears to arise from structural problems that impede effective blinding. A blinded expert would be expected not to have read the patent to avoid hindsight bias, but obviousness is assessed from the perspective of a skilled person and determining who the skilled person is requires reading the patent. However, a potential workaround through the sequential instruction of expert witnesses was approved by the Federal Court of Appeal in Amgen Inc. v. Pfizer Canada ULC.¹³ This means, for instance, having a first expert read the patent and provide an opinion on the skilled person, and having a second expert provided with that definition of the skilled person. The court recognized that this could improve the usefulness of "blinding" the experts, and that "sequential unmasking" may allow for "effective and yet properly blinded opinion".

2. Claim construction

1. Resort to disclosure

On at least two occasions in 2020 the Federal Court was faced with the question of the extent to which the scope of the claims should be affected by the description of the invention and the rest of the specification (i.e., the disclosure). In ViiV Healthcare Company v. Gilead Sciences Canada, Inc.,¹⁴ the court found that recourse to disclosure to construe a claim term was permissible in the circumstances and did have an impact on the scope of the claim. Justice Manson held that "[w]hile 'optionally substituted heterocycle' as used in claim 1 appears on its face to be a clear and unambiguous term, I accept that recourse to the disclosure is necessary to understand the meaning given to these words by the inventors, and the intended scope of this claim language."¹⁵

In a subsequent case that also turned primarily on claim construction, Bauer Hockey Ltd. v. Sport Maska Inc. (CCM Hockey),¹⁶ Justice Grammond also used the specification to interpret (and limit) the claims. His Honour interpreted the law of claim construction as generally allowing recourse to the disclosure in interpreting the claims, and held that this principle of claim construction was made clear in decisions of the Federal Court of Appeal.¹⁷

As 2021 gets further underway, another case has turned on claim construction and the court has once more relied on the disclosure to understand the claim language as intended by the inventors. In Allergan Inc. v. Sandoz Canada Inc.,¹⁸ the Chief Justice decided a case in which the Court was faced with the question of whether "wet granulation" was essential to the claimed invention. The Chief Justice focused his analysis on the two-prong test from paragraph 55 of Free World Trust¹⁹ that allows the patentee to show that a claim element is not essential by demonstrating either (i) that on a purposive construction of the words of the claim it was not intended that a particular element be essential, or (ii) that at the date of publication of the patent, the skilled person would have appreciated that the element in question could be substituted without affecting the working of the invention. The Court noted the uncertainty in the case law over whether the test should be conjunctive, despite the use of the word "or", but the decision did not turn on that issue. On the first prong, the Chief Justice went beyond the objective manifestations in the patent claims and found that the disclosure taught away from the use of a dry process and explicitly towards a wet granulation process.²⁰ On the second prong, the analysis was whether the element could be substituted without affecting the working of the invention. The Court found that, given the manner in which the 002 Patent taught away from the use of dry processes, and the evidence on the skilled person's understanding of the properties and implications of the active ingredient for a dry process, the skilled person would not have understood that a dry process could be substituted for the wet granulation process without materially affecting the working of the invention.²¹

2. Admissibility of Prosecution History

In 2020, we saw the Federal Court interpret the representations made to the Patent Office during prosecution pursuant to section 53.1 of the Patent Act in a case where the representations made by the patentee were held not to rebut the construction urged by the patentee to the court.²² In another case, the Court had recourse to the prosecution history in order to confirm an interpretation that was plain from the patent itself. The court reasoned that:

"When an issue of claims construction arises, the patentee is always making representations to the Court as to the proper construction of the claims and the defendant is always attempting to rebut those representations. Therefore, in my view, as long as the issue is one of claims construction, section 53.1 applies, and the prosecution history is admissible. In other words, there is no need to identify a particular representation and rebuttal every time a reference is made to the prosecution history. It is simply integrated in the interpretive process."²³

With respect to the admissibility of foreign prosecution history, we saw the court interpret that section 53.1 of the Patent Act covers the patentee's communications with the Canadian examiner but the provision does not pivot from the existing rule that foreign prosecution history is inadmissible.²⁴ This finding by Justice Lafrenière contrasted with the court's interpretation in Canmar, where Justice Manson had suggested that foreign prosecution history may be admissible in "extraordinary circumstances."²⁵

The new year ushered in the appeal decision in Canmar. In the trial decision, Justice Manson had opened the door to admitting foreign file wrapper under what he found to be "extraordinary circumstances". In the appeal decision, the Court ruled against the use of US foreign prosecution history based on a finding of...