In May 2008, the Federal Court issued its decision in the case of Genencor International Inc. v. Commissioner of Patents and Attorney General of Canada (Genencor). Genencor appears to be the first decided case in the Federal Court in an appeal from the result of a patent re-examination.

Re-examinations have been permitted pursuant to the Patent Act (the Act) since 1987. A re-examination is an administrative procedure to challenge the validity of a patent. Traditionally, challenges to validity were undertaken by impeachment proceedings in court, which can be a costly and time-consuming process. The re-examination process offers a more expeditious way to challenge a patent. Re-examinations are held before a three-person panel: generally the chair of the panel is a member of the Patent Appeal Board, and the other two members are drawn from the examination branch.

In this case, the patent in dispute belonged to Genencor. The patent covered detergent formulations that used cellulase, an enzyme derived from a particular variety of fungus. Cellulases are useful in detergents because they have desirable properties when applied to cotton fabrics, but they also have drawbacks. Cellulases are enzymes that break down cellulose, so cotton fabrics washed in a detergent containing cellulase lose strength. Genencor's patented formulations were constituted to reduce loss of fabric strength.

Novozymes, a competitor of Genencor, requested re-examination of Genencor's patent, citing prior art that allegedly either anticipated, or rendered obvious, the claims in the Genencor patent. After the re-examination process, the Re-examination Board cancelled all the claims in Genecor's patent, with the result that it was deemed never to have been granted in the first place.

Upon appeal by Genencor, the Federal Court declined to intervene. However, the reasons of Gibson J. are important because they address the standard of review for decisions of the Re-examination Board, and raise concerns about difficulties with the appeal process.

Gibson J. found that the standard of review as to the merits of a decision of the Re-examination Board should be reasonableness, so a decision would not be interfered with unless a palpable and overriding error was found. The Court held that the nature of the decision, and the unquestioned expertise of the Re-examination Board, supported deference, in spite of the fact that an express right of appeal was provided for in the legislation, which is a factor which often leads to a more searching standard of review.

The Federal Court took the opportunity to express dissatisfaction with the consequences of the re-examination and appeal procedures. In a re-examination, the party requesting re-examination is not a party to the proceeding, and is not entitled to make representations. Therefore, Novozymes was not entitled to take part in the appeal. The Commissioner of Patents elected not to contest the proceeding. The Attorney General of Canada did contest the appeal, but made submissions only on the issues of standard of review and procedural fairness. Therefore, when it came time to review the substance of the Board's decision, the Court was left with submissions only from the appellant. In the circumstances of this case, and considering the appropriate standard of review, the Court considered itself able to uphold the Board's decision even in the absence of submissions defending it. But the Court emphasized that its position might have been untenable if a more searching review of the reasons were called for. Gibson J. indicated in closing that the resolution of this difficulty is, in his opinion, a matter for Parliament.