The Federal Court of Appeal has reaffirmed three very important propositions in Canadian patent law in the recent decision in Teva Canada Limited v. Eli Lilly and Company. While this decision does not establish any new legal principles, it is an important reaffirmation of existing principles which are regularly challenged by patentees. These are (1) the nature of the evidence required to establish the promise of the patent as it relates to a demonstration of utility; (2) the disclosure requirement under the doctrine of sound prediction; and (3) the applicability of the Patent Cooperation Treaty (1970, 28 U.F.T. 7647: “PCT”) to substantive questions of patentability.
In Reasons for Judgment released July 5, 2011 (2011 FCA 220), the Federal Court of Appeal upheld the trial decision of Justice Barnes of the Federal Court (2010 FC 915), invalidating Eli Lilly’s patent (the ‘735 Patent) claiming the use of atomoxetine to treat attention deficit hyperactivity disorder (“ADHD”).
The Federal Court of Appeal found that the appellant, Lilly, had raised three legal issues. Justice Evans, writing for the Court, expressed these as whether Justice Barnes had erred in (i) misconstruing the promise of the ‘735 Patent; (ii) requiring too high a standard of proof to demonstrate utility; and (iii) requiring that the factual foundation for a sound prediction of utility be disclosed in the patent. On each of these issues, the Federal Court of Appeal found against Lilly and in favour of Teva. The appeal was dismissed, Justice Barnes’ decision was upheld in its entirety and the invalidity of the ‘735 patent was confirmed.
Lilly had argued that Justice Barnes had erred in law by importing an “implicit promise” that atomoxetine “will work in the longer term.” The Federal Court of Appeal rejected this argument and found that by using the phrase “implicit in the promise,” Justice Barnes was doing no more than explaining the nature of the promise in the ‘735 Patent - what the patent meant by asserting that atomoxetine is an effective treatment for ADHD. As ADHD is a chronic condition, Justice Barnes found that any effective treatment must work for some period of time. The Federal Court of Appeal accepted this and found no error in Justice Barnes’ articulation of the promise.
With regard to demonstrated utility, the Federal Court of Appeal rejected Lilly’s argument that only a low level of utility was required in order to establish the patentability of the ‘735 patent. The Federal Court of Appeal specifically found that “[t]his argument cannot succeed in this case, because the patent specifically promised that atomoxetine was a clinically effective treatment of ADHD. The utility of the patent is thus determined by examining whether atomoxetine will do what Lilly promised that it would do.” The Federal Court of Appeal approved Justice Barnes’ observation that:
I do not accept the point that utility in this case should be measured against a hypothetical or theoretical standard that is lower than the inventive promise of the patent.
The Federal Court of Appeal went on to find that Justice Barnes had correctly analyzed whether Lilly had demonstrated the promised utility prior to the filing of the Canadian application, and rejected the assertion that the evidence that Lilly possessed at that time was sufficient for this purpose.
Lilly also argued that Justice Barnes’ decision was inconsistent with an earlier decision of the Federal Court of Appeal regarding a different drug (2010 FCA 242, involving the drug sildenafil for use in the treatment of erectile dysfunction), where a similarly sized study had been found sufficient to establish as demonstration of utility. In this regard, the Federal Court of Appeal held that:
[U]tility is largely a question of fact that is decided in each case on the basis of the evidence and the judge’s assessment of it. That a judge in one case concluded that utility was shown on the basis of the evidence before her is of little value in persuading an appellate court that a judge in another case, where the evidence is somewhat similar must have applied too high a standard of proof or committed a palpable and overriding error because he reached the opposite result.
This is an important finding as it affirms the fact-based nature of utility inquiries. Whether or not utility has been either demonstrated or soundly predicted in any given case is a question of fact. That question is to be analyzed and answered on the basis of the evidence in the case being considered, as understood through the eyes of the person skilled in the relevant discipline. The Federal Court of Appeal has affirmed that results in different cases, involving different evidence and different scientific disciplines, will seldom be instructive and certainly cannot form the basis for the annunciation of broad propositions of law or inform the legal test in any meaningful way.
With regard to sound prediction, the Federal Court of Appeal affirmed its prior decision in Eli Lilly Canada Inc. v. Apotex Inc. (2009 FCA 97: “Raloxefine”), where, following the Supreme Court of Canada’s decision in Apotex Inc. v. Wellcome Foundation Ltd. (2002 SCC 77: “AZT”), it had held that in order to rely on the doctrine of sound prediction, the patentee must disclose the first two elements of that doctrine (the factual basis and line of reasoning of its prediction) in the patent. In the trial judgment, Justice Barnes had held that:
In a case involving a claimed sound prediction of utility, it is equally beyond debate that an additional disclosure obligation arises. According to Justice Binnie in AZT, above, this obligation is met by disclosing in the patent both the factual data on which the prediction is based and the line of reasoning followed to enable the prediction to be made. This requirement to disclose the basis of the prediction in the patent specification was said to be “to some extent the quid pro quo” the patentee offers in exchange for the patent monopoly: see [AZT] para. 70. [emphasis in original]
Justice Barnes went on to hold that because “the ’735 Patent is based on a sound prediction from the MGH Study that atomoxetine is useful in the treatment of ADHD, the patent fails for want of disclosure because some reference to those findings was required to be set out in the patent.” The Federal Court of Appeal agreed.
In concluding on sound prediction, the Federal Court of Appeal invoked the “bargain theory” so often cited in Canadian patent law jurisprudence:
If disclosure in the patent of the factual basis of the prediction of utility was not required for sound prediction, it would be difficult to see what Lilly could be said to have given to the public, in exchange for the grant of the monopoly, that it did not already have. When utility is based on sound prediction, disclosure of its factual foundation goes to the essence of the bargain with the public underlying patentability.
Lilly had argued before Justice Barnes (and again on appeal) that there was no such disclosure requirement. Justice Barnes referred to the prevailing jurisprudence and noted that: “The disclosure issue, however, has been determined by earlier decisions that are binding upon me and to the extent that it may be amenable to reconsideration, it must be examined elsewhere.”
The Federal Court of Appeal has now reconsidered the issue and has not changed the law. Accordingly, any doubt as to the disclosure requirements for sound prediction has been put to rest.
Finally, the Federal Court of Appeal has once again ruled that the PCT does not govern or impose conditions on the substantive law of patentability in Canada. Referring again to Raloxefine, the Federal Court of Appeal in this case reiterated that the PCT is not concerned with substantive conditions of patentability, and does not permit patentees to assert that patents are valid even where they do not satisfy the substantive conditions of validity for Canadian patents.