Canada’s Data Protection Upheld by the Federal Court of Appeal - Apotex Inc. v. Canada (Health)

Canada’s Data Protection regime was upheld by the Federal Court of Appeal on December 9, 2010 (see Apotex Inc. v. Canada (Health), 2010 FCA 334 here). In a unanimous decision penned by Justice Nadon, the Court found the regime was a proper delegation by the Canadian Parliament to the Governor in Council and intra vires pursuant to subsection 30(3) of the Food and Drugs Act. Moreovoer, the Court also found the regime intra vires the Federal government’s jurisdiction under the criminal law head of the Canadian Constitution.

The case involved two challenges filed by the appellants, Apotex Inc. and Canada’s Generic Pharmaceutical Association, seeking a declaration that subsection 30(3) of the Food and Drugs Act[1]  and section C.08.004.1 of the Food and Drug Regulations[2] (the provision in the Food and Drugs Regulations providing for Data Protection), were ultra vires and without legal force and effect. The challenge was dismissed by the Federal Court of Canada at first instance on July 17, 2009[3] .

Since October 2006[4] , Canada’s Data Protection regime provides innovative drug companies with a marketing exclusivity period of 8 years from the date of approval of their “innovative drugs” (with a possibility of 8.5 years, under certain circumstances, if pediatric studies are filed with Health Canada). Within this market exclusivity period, there is a 6 year “no file” period during which generic manufacturers are prohibited from filing a drug submission directly or indirectly comparing their drug with an innovative drug. This new regulatory regime was adopted by Health Canada pursuant to its regulatory authority under subsection 30(3) of the Food and Drugs Act to “make such regulations as the Governor in Council deems necessary” so as to implement Article 1711 of the North America Free Trade Agreement (NAFTA) or Article 39(3) of the Trade-Related Aspects of Intellectual Property Rights (TRIPS).

In finding that the new Data Protection regime was in line with the Canadian Constitution and a proper delegation of the Canadian government’s authority under the Food and Drugs Act, Justice Nadon noted that the test for application of the regime is not reliance on the innovator’s data, either by the Minister of Health or by the generic manufacturer, but rather whether there has been a direct or indirect comparison between the generic manufacturer’s drug and the innovative drug. Although Justice Nadon found in the instant case that reliance was not the test, in his view, in filing an Abbreviated New Drug Submission (“ANDS”), generic manufacturers “at the very least” indirectly rely on the safety and efficacy information filed in the innovators’ NDSs:

While it is true that the Minister does not usually examine the information provided by innovators in granting a NOC to a generic manufacturer following the filing of an ANDS on the basis of bio-equivalence, there cannot be much doubt that the ANDS process involves, at the very least, indirect reliance on the safety and efficacy information derived from innovators’ NDS. In other words, a generic manufacturer relies on the information found in an innovator’s NDS in that: (i) that information provides the actual knowledge about the safety and efficacy of the drug and its conditions of use; (ii) without that knowledge, it would not be possible for a generic manufacturer to produce its new drug without conducting extensive non-clinical and clinical studies […]. It is in that sense that a generic manufacturer relies upon the data provided by an innovator in its NDS[5].

With regard to the constitutional challenge specifically, Justice Nadon rejected the appellants’ argument that the pith and substance of the regime concerned commercial considerations, not public safety, and that the protection of trade secrets and confidential information is a matter of property and civil rights, thereby failing under the provincial jurisdiction of the Constitution. In the view of Justice Nadon, the Data Protection regime is a mechanism deemed necessary to balance the effects of the ANDS regulatory scheme which may provide a disincentive for innovative manufacturers to develop new and innovative drugs. By granting innovators a period of market protection for eight years, the Canadian government sought to put in place a regime which provides incentives for innovators to continue their search for “innovative drugs”. Ultimately, according to Justice Nadon, Data Protection “exists to encourage the development of new drugs which constitutes a valid public health and safety purpose”, a matter clearly falling within the federal government’s legislative criminal law power.

This decision will provide comfort to innovative manufacturers which expend heavy investment in pre-clinical development and clinical trials on new drugs. Given the importance of this matter to the generic industry, however, it may well be anticipated that an application for leave to appeal the Federal Court of Appeal’s decision to the Supreme Court of Canada will be forthcoming.

By Catherine Lemay

[1]  R.S., 1985, c. F-27.

[2]  C.R.C., c. 870.

[3]  2009 FC 725.

[4]  See Regulations Amending the Food and Drug Regulations (Data Protection), SOR/2006-241.

[5]  Para. 91.

Avon Products, Inc. v. Farleyco Marketing Inc. – Successful Trademark Opposition

Congratulations to Susan Chao of MBM on a successful Trademark Opposition on behalf of Avon Products, Inc.

The Trademarks Opposition Board recently released its decision in Avon Products, Inc. v. Farleyco Marketing Inc. 2010 TMOB 186. This matter concerned Avon’s opposition to the registration of the trademark "MesmorEyes" in association with various types of eye beauty products by Farleyco Marketing Inc.

Avon, represented by MBM Intellectual Property Law, was primarily relying on its prior registration and/or use of the trademarks MESMERIZE (Reg. No. TMA442,464) with women’s fragrance products, MESMERIZE FOR MEN (Reg. No. TMA635,139) with soap, cologne, hair and body wash, etc. and MESMERIZE FOR HER.

An interesting issue arose when the Opponent’s affiant became unavailable for cross-examination. The Opponent filed the affidavit of Ms. Lebel of Avon Canada, Inc. in support of the opposition. After an order for her cross-examination had been issued, the Opponent informed the Registrar that Ms. Lebel was unavailable for her cross-examination. Rather than filing a new affidavit by another witness to replace the evidence of Ms. Lebel, the Opponent presented a new affiant, Colleen Leithman, also of Avon Canada Inc., who "adopted" the affidavit of Ms. Lebel as her own and was cross-examined on her behalf.

In light of this somewhat unusual scenario, the parties were invited to make supplemental written arguments on the issue of whether the affidavit of Ms. Lebel and the transcript of the cross-examination of Ms. Leithman could be accepted as part of the record.

MBM drew the Board’s attention to the Federal Court decision Nedship Bank N.V. v. "Zoodotis" (The) (2000), 2000 CarswellNat 1238 which concerned a similar situation relating to ship sale priorities determination. In light of this decision, as well as a Practice Notice stating that "If the parties are in agreement that a particular form of evidence should be accepted, the Registrar will generally accept it", the Board decided to accept both forms of evidence.

The Opposition Board found in favour of the Opponent on the issue of confusion between MesmorEyes and MESMERIZE, highlighting the similarities in the marks in appearance, sound, and in the ideas suggested by them, as well as the overlap in the nature of the wares (women’s beauty products) and channels of trade.

With respect to the channels of trade, the Board noted that Avon’s registration was not limited to any particular channels of trade. Thus, although evidence showed that the parties’ respective goods were sold through different channels (drugs stores vs. through catalogues to sales representatives or online), it is the "normal" channels of trade for such products that are considered.

The Board also found in favour of the Opponent on the issue of distinctiveness.

By Jennifer Dove

Improved Tools for IP Practitioners and Inventors

One of the more daunting tasks for any patent practitioner is to conduct a thorough search of the prior art. There are databases available that can help; some are available at no charge, while others are fee based. One of the more useful data services is that provided by the World Intellectual Property Organization (WIPO) located in Geneva, Switzerland. WIPO is a specialized agency of the United Nations and is charged with administering many of the international IP treaties, including the Paris Convention, the Patent Cooperation Treaty, the Hague Treaty on Designs, the Madrid Protocol on trademarks, the Berne Convention on copyrights, the Budapest Treaty on deposits of microorganisms, etc. Visiting the WIPO website one will find an expanding array of information that is very helpful.

The recently inaugurated WIPO Gold service provides a one-stop site where interested parties can link to information on patents, trademarks, domain names, designs, WIPO statistics relating to patents, trademarks, utility models, designs, plant varieties and microorganisms. Additionally, there are links to the individual IP laws in most countries of the world. WIPO Gold should be the first stop for anyone searching IP issues around the world.

One link is particularly useful for patent practitioners and inventors, PATENTSCOPE®. PATENTSCOPE® has been in existence for some time and has traditionally been the search engine for the PCT publication database. Through PATENTSCOPE® someone searching for information on published PCT applications had the ability to quickly find the publications of interest through the logical search engine. Additionally, searchers had the ability to browse through the PCT publications on a weekly basis just to see "what's new." As useful as PATENTSCOPE® was, until recently it was limited to searching PCT publications. Over the past months, WIPO has completely revamped the PATENTSCOPE® site and added some very useful new features.

The older PATENTSCOPE® search page is still available, although it is being phased out. Searchers looking for the traditional PCT database search can still go to www.wipo.int/pctdb/ and find the familiar site. However, by "clicking" the link at the top of the traditional page or by going through WIPO Gold or directly to www.wipo.int/patentscope/search/en/search.jsf, the new (and soon to be only) PATENTSCOPE® search page will open. The first thing a visitor will note is that the search service now goes way beyond published PCT applications. A growing list of national patent collections can now be searched via PATENTSCOPE®, including ARIPO, Cuba, Argentina, Republic of Korea, Mexico, Singapore, Vietnam, South Africa, Israel, Morocco, Spain and Brazil. The searcher can select one or all of these countries and have the search engine look at all these relevant databases.

The new search facility can search these collections for a wide range of bibliographic information as well as a full text search for key words of interest. If you have used or are familiar with the old version of PATENTSCOPE®, please be aware that the field identifiers for the new version are different from the old identifiers. Be sure to review the "HELP" tab for instruction on how to use the new system and formulate your search.

The newest feature of PATENTSCOPE® is multi-language searching. If one goes to the SEARCH tab and clicks on "Cross Lingual Expansion" in the drop-down menu, the system gives the searcher the option of entering the search query in one language (currently only available for queries in English, French, German, Spanish and Japanese) and having the system do a machine translation of the query and search the available national databases in the appropriate language. The cross-lingual feature is new and continues to be tested and expanded. The announcement of this feature and helpful links can be found in the PCT Newsletters for May, 2010.Further announcements on expansion of WIPO's search services can be found on the WIPO website as well as in future issues of the PCT Newsletter.

The information and searching needs of the IP community continue to grow and WIPO is responding to those needs with new services such as WIPO Gold and expanded and enhanced services such as PATENTSCOPE®. Any inventor or IP practitioner not familiar with the information available on the WIPO website, including those discussed above, would do themselves a favor by exploring the website and learning of all the valuable information available and all free of charge.

By David Reed

Highlights from the Amazon 1-click Decision in Canada

On October 14, 2010, Justice Phelan of the Federal Court of Canada, released his decision ("the decision") in the case of Amazon.com v. The Attorney General of Canada and the Commissioner of Patents. This decision addresses Amazon.com's appeal of the Commissioner's previous decision that Amazon's "1-click" patent application pertained to a business method and was therefore unpatentable. Justice Phelan reversed the Commissioner's decision, stating that "a business method can be patented in appropriate circumstances."

The current decision is highly significant to the prosecution of a variety of types of patents at the Canadian Intellectual Property Office (CIPO), including but not limited to so-called "business method" patents. Some highlights are listed below:

Form and Substance Examination: This refers to the Commissioner's proposed test that a claimed invention should be deemed unpatentable subject-matter if what makes it new and unobvious comprises non-statutory subject matter. However, Justice Phelan found that the Commissioner stepped outside of her jurisdiction in adopting this test. The test was held to be "confusing and unnecessary," and a departure from both recent jurisprudence and the Canadian Patent Act. Instead, Justice Phelan stated that the claims are to be interpreted in a purposive manner, as previously established, for example, in Free World Trust v. Electro Sante Inc., [2000], 2 S.C.R. 1024, a landmark Supreme Court of Canada decision on the issue of claim construction.

From the Federal Court Decision:

"A return to 'form and substance' language… is confusing and unnecessary. Further, it represents a departure from the clear direction of the Supreme Court to apply purposive construction universally."

"It is problematic to suggest that "what has been discovered" stands apart from the claims as a whole." and "It is contrary to settled law to purport to look at 'what has been invented' and 'substance' by failing to look at the invention as a whole."

"The Commissioner has simply adopted a novel legal test by which to assess patentable subject-matter. It is not supported by recent Canadian jurisprudence or the Patent Act. This is an error of law and far outside the Commissioner’s jurisdiction."

Change of Character or Condition: The decision further attempts to clarify the definition of a patentable "art," stating that, although a claim must have practical application, this requirement should be widely interpreted in light of today's "electronic age" technology. The Commissioner's heretofore interpretation of the practical application requirement was thus held to be too restrictive, since it failed to "take into account a wider definition of physical, "change in character or condition," or the concrete embodiment of an idea."

From the Federal Court Decision:

"It is important to remain focused on the requirement for practical application rather than merely the physicality of the invention."

"It is not necessary for the material objects in question to physically change into another thing."

The Commissioner’s "application of the test suggests that [a physical object] must be changed in some way. Further, her interpretation of practical application does not take into account a wider definition of physical, "change in character or condition" or the concrete embodiment of an idea."

"The Patent Act is not static; it must be applied in ways that recognize changes in technology such as a move from the industrial age to the electronic one of today."

Business Method Exclusion: Since December 2009, the CIPO's policy has been to automatically exclude business methods from patentability on the basis that business is not a field of technology. However, the current decision states that this position is without basis and again outside of the Commissioner's jurisdiction. Rather, Justice Phelan stated that it "makes an eminent amount of sense" to instead adopt the approach in the USA and Australia. That is, business methods should not be unpatentable per se, although they must still be meet the definition of "invention" in the Patent Act, typically as an art, process or machine.

From the Federal Court Decision:

"The Court concludes that a "business method" can be patented in appropriate circumstances."

"Contrary to what the Commissioner suggests, to implement a business method exception would be a "radical departure" from the current regime requiring parliamentary intervention."

"There is no basis for the Commissioner's assumption that there is a "tradition" of excluding business methods from patentability in Canada."

"There is not, nor had there ever been, a statutory exclusion for business methods in Canada as there is in the UK."

J. Phelan also hinted at what would constitute statutory subject-matter, stating:

"A mere business scheme will have no practical embodiment and, like any other abstract idea or theorem, will of course not be patentable. This is not the case with the business method claimed in the present case."

In this regard, The Federal Court appears to at least partly agree with the CIPO’s position. Chapter 12.04.02 of the Manual of Patent Office Practice (MOPOP) states that "Fields of human endeavour such as economics, commerce, accounting, record-keeping, marketing, and law are not themselves fields of technology… advances in the concepts of their practice are beyond the scope of section 2 of the Patent Act." MOPOP 12.06.02 defines a business method as "a scheme or plan for conducting commercial interactions." However, the Federal Court found that Amazon’s patent had practical application, and was therefore patentable.

Technological Requirement: The Commissioner's and the CIPO's position that a claimed invention must be "scientific or technological" in order to be a patentable art was also addressed. For example, since December 2009, the CIPO has required that the practical form of a statutory invention must be a technological solution to a practical problem (Manual of Patent Office Practice 12.04). However, once again the current decision holds that there is no reference to such a test in the Canadian jurisprudence, nor was it within the Commissioner's jurisdiction to introduce one. Furthermore, such a test, if it were introduced, was deemed to be overly restrictive, inflexible and confusing, as well as highly subjective and unpredictable.

From the Federal Court Decision:

"Technology is in such a state of flux that to attempt to define it would serve to defeat the flexibility which is so crucial to the Act."

"There is no reference to such a test in the Canadian jurisprudence… It was not within the Commissioner's jurisdiction to introduce one."

In summary, it appears that "business method" patents are once again generally considered patentable in Canada. However, a claim must still meet novelty and nonobviousness requirements, as well as being directed, in some sense, to a practical application or form. Mere business schemes, having no practical embodiment, remain unpatentable like any other abstract idea or theorem. More generally, the current decision appears to have wider implications to patent applications in other fields, such as biotechnology. For example, the "Form and Substance" test outlined in Section 13.05 of MOPOP may no longer hold as much sway during examination. Likewise, the requirement that "inventions must relate to fields of technology" as outlined in Section 12.04 of MOPOP may be clarified, relaxed, or even discarded entirely. Indeed, we expect that MOPOP Chapters 12 and 13 may eventually be rewritten in light of the current decision.

On November 15, 2010, the Department of Justice appealed the Federal Court decision to the Canadian Federal Court of Appeal. However, we believe that the current Federal Court decision should be interpreted as the "law of the land" until the Federal Court of Appeal renders its own decision on this matter. For patent applications currently undergoing prosecution at the CIPO, we therefore believe it may be prudent to review any objections raised by Patent Examiners to determine whether parts of these objections are based on practices which the Federal Court has rejected. In such cases a response to the Examiner may include an assertion that the Examiner’s position is wrong in law, citing appropriate passages in the Federal Court decision.

Although the Federal Court decision appears to favour a wider definition of the practical application requirement than was proposed by the Commissioner, we believe that it may still be prudent, when drafting a patent application for prosecution in Canada, to explicitly specify physical characteristics of the claimed invention, such as its physical nature or the physical changes in character or condition of a physical object effected by the claimed invention.

By Michael Maskery