Recently, in Cobalt Pharmaceuticals Company v Bayer Inc, 2015 FCA 116, the Federal Court of Appeal heard an appeal relating to Cobalt’s attempt to gain market entry with its generic version of drospirenone, a birth control tablet distributed in Canada by Bayer under the brand name YAZ. The decision involved a common dispute between the owner of a patent for a pharmaceutical product (often described as an “innovator”) and a generic pharmaceutical company. In the decision, Justice Stratas issued a challenge to the Supreme Court of Canada to examine the current standard of review for claim construction. While he did not need to address the issue of the patentability of methods of medical treatment in view of his finding that Cobalt did not infringe the patent, Justice Stratas also stated that that issue should be fully considered by the Federal Court of Appeal or the Supreme Court of Canada when it is squarely raised on the facts. 

Interestingly, Justice Pelletier wrote concurring reasons simply adding that the comments made by Justice Stratas, which Justice Stratas referred to as “certain observations for the Supreme Court of Canada to consider in a future case” relating to claim construction, were not necessary for the disposition of the appeal. 

In 1972, in Tennessee Eastman Co v Commissioner of Patents, [1974] SCR 111, the Supreme Court of Canada determined that a new use for surgical purposes of a known substance (an adhesive) could not be a patentable invention. This led to the overarching prohibition on the patentability of methods of medical treatment in Canada, a holding of prime importance to the pharmaceutical industry. It should be noted that an aspect of the decision regarded the interpretation of a section of the Patent Act that has since been repealed; however, Courts have continued to uphold the prohibition while acknowledging that the statute had changed (see Imperial Chemical Industries Ltd v Canada (Commissioner of Patents), [1986] 3 FC 40 (CA)). 

There is no question that Justice Stratas’ comments comprise a direct request for judicial oversight and clarification of two contentious aspects of patent law. His comments, albeit in obiter, were not phrased to simply elucidate some dark corner of patent law and thereby attempt to develop it; instead, they were a call to action, originating from a seasoned judge of an appellate court and targeted at the highest court in the land. 

A broader issue may also be gleaned from the drospirenone decision, one which goes beyond just the two aspects of law highlighted therein; namely, that there has recently been a dearth of precedent of any sort originating from the Supreme Court on any issue relating to patent law.

Since its decision granting leave from Apotex Inc v Sanofi-Synthelabo Canada Inc, 2006 FCA 421, concerning the drug Plavix, by our review, the Supreme Court of Canada has received 91 requests for leave to appeal in intellectual property matters. Pharmaceutical cases made up the majority of all intellectual property matters for which leave was sought; roughly 60%. Beyond Plavix, judgment was rendered in a single case, instituted by application under the Patented Medicines (Notice of Compliance) Regulations and relating to Pfizer’s lucrative patent over Viagra. The Supreme Court recently also dismissed, orally from the bench, an application dealing with the quantification of damages stemming from a statutory injunction under the same regulations “substantially for the reasons of the majority of the [Federal] Court of Appeal.”

A few stats may be in order:

In 1994, the Supreme Court received 496 applications for leave to appeal and granted 77, or 16%. In 1999, 458 applications were submitted and 60 were granted, or 13%. In 2004, of 559 applications, 83 were granted, or 15%. In the timeframe from 1994 to 2004, the Supreme Court sat an average of 65 days per year. 

To contrast this, in 2009, 518 applications were submitted while 59 were granted leave, or 11%. By 2013, the number of applications increased slightly to 529, while those granted dwindled to 52, or only 10%. From 2004 to 2014, the Supreme court sat an average of 58 days per year – a decline of more than 10% from the decade prior.

The significance of the Supreme Court’s decisions for Canadian society is well recognized: the Court assures uniformity, consistency and correctness in the articulation, development and interpretation of legal principles throughout the Canadian judicial system. However, few patent cases reach the Supreme Court as leave to appeal is regularly denied. 

Developments in intellectual property law or more specifically in patent law need not originate from the Supreme Court of Canada. Many signatories to the World Trade Organization’s Agreement on Trade Related Aspects of Intellectual Property Rights (of which Canada is one) have established some form of court or tribunal to specifically adjudicate on intellectual property issues: for example, United Kingdom’s Patent Court, Malaysia’s Specialized Intellectual Property Court or Russia’s Court for Intellectual Property Disputes. Specialized courts often produce quicker and more effective decisions as their judges necessarily have more exposure to intellectual property laws and usually have backgrounds in the requisite area. Greater efficiency in adjudication may lead to more cases being heard, thereby creating a more robust body of law. 

For its part, the United States has not adopted a specialized court to deal with intellectual property matters; however, its courts of appeals are empowered to sit en banc. The en banc procedure allows for the sitting of an entire bench of the court and provides for more effective judicial administration by promoting finality in decisions and aiding in resolving “intra-circuit conflicts”. An en banc mechanism would present an avenue in Canada for adjudication of intellectual property matters without further burdening the Supreme Court and without requiring a specialized tribunal. 

Section 16(1) of the Federal Courts Act provides that “… every appeal … to the Federal Court of Appeal … shall be heard in that court before not fewer than three judges sitting together and always before an uneven number of judges. Otherwise, the business of the Federal Court of Appeal shall be dealt with by such judge or judges as the Chief Justice of that court may arrange.” This language provides broad discretion to the Chief Justice to establish an appeals bench as necessary for the issue at hand. Perhaps, in view of the comments from Justice Stratas, the Chief Justice will consider an appeal option comprising a bench of more than the standard three judges (though not necessarily a full en banc hearing) in order to address contentious legal issues or precedents that lack uniformity. 

Many studies have demonstrated how important intellectual property rights are: they promote innovation, creativity and are an essential element of a free-enterprise, market-based economy.  Without a non-ambiguous legal framework for patent law along with certainty in its interpretation, inventors run the risk of losing the economic fruits of their labour, thereby undermining the incentives put in place to spur the development of their ideas. An inference from the leave statistics that can be drawn is that the public import of patent law may not be fully appreciated by the Supreme Court. Currently missing in Canada is a review process comprising judges willing to iron out patent law’s various wrinkles. Without such a process in place, innovation is sure to be stymied in the long term. 

A version of this article was published by LexisNexis in The Lawyers Weekly, 4 Sept. 2015