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15 December 2008
The Federal Court has declined to introduce a general US-style duty of candour into Canadian law. In Janssen-Ortho Inc v Apotex Inc, a Patented Medicines (Notice of Compliance) Regulations proceeding, the applicant sought an order prohibiting the minister of health from issuing a notice of compliance for a generic version of levoflaxin to Apotex until after the expiry of Canadian Patent Number 1,304,080.(1)
Due to the filing date of the patent, its validity and infringement are governed by the Patent Act that was in effect immediately prior to October 1 1989 and its accompanying Patent Rules.
Apotex’s response included three separate validity attacks relating to the applicant’s conduct in prosecuting the application before the Canadian Intellectual Property Office. These attacks related to an office action in which the examiner had imposed two requirements, pursuant to Patent Rules 40(1)(a) and (c), requiring the applicant to furnish: (i) prior art cited against the corresponding US and European Patent Office applications; and (ii) particulars of any interference proceeding in which the corresponding US application may have been involved.
The applicant’s response addressed seven of the eight requirements contained in the office action, including the prior art requirement, although the applicant furnished only citations rather than copies of the prior art references. The applicant’s response may have also omitted a reference cited in the US application - the Gerster 1987 article - which was not citable prior art in Canada.
More significantly, the applicant’s patent agent inadvertently overlooked the interference proceeding requirement and the applicant’s response was silent on this point. In fact, an interference proceeding involving the corresponding US application had been declared. The patent agent subsequently discovered this omission and notified the examiner of the interference by telephone, before the application was allowed. Apotex alleged that the deficiencies in the applicant’s response rendered the patent void under Rules 40(1)(a) and (c). Apotex also argued that the patent was void for breach of the applicant’s duty of candour.
The court rejected all three attacks. With respect to the prior art requirement under Rule 40(1)(a), the rules did not automatically require copies of the prior art references; citations were adequate. The Gerster 1987 reference was not citable prior art and was therefore not within the scope of the requirement.
The interference requirement under Rule 40(1)(c) posed a greater risk. Under the existing Patent Act, a complete failure to respond to any single requisition contained in an office action will result in a deemed abandonment of the application, regardless of whether the omission was in good faith. However, the pre-1989 act and rules are different and merely require the applicant’s response to constitute “a bona fide attempt to advance the application to allowance”. The court held that unlike the existing act, the pre-1989 act did not require a reply to each and every requirement contained in the office action to prevent abandonment. Rather, all that was needed was a good-faith response to the office action as a whole. The court held that the applicant’s response was sufficiently in good faith, as demonstrated by the patent agent’s subsequent telephone call to notify the examiner of the interference upon discovering the deficiency in the response. Of greater interest was Apotex’s separate allegation that the same deficiencies rendered the patent void for breach of the applicant’s duty of candour. The court held that no such duty of candour exists in Canada, stating at paragraph 201 that:
“It is clear that there is no express duty of candour contained in the Patent Act or the Patent Rules and that the word ‘candour’ does not even appear in this legislation. While a duty of candour and good faith exists during the prosecution of patent applications in the US patent office, a similar duty does not exist in Canada…There is no basis in Canadian law for the separate allegation of breach of candour put forth by Apotex. As the Federal Court of Appeal stated in Flexi-Coil Ltd v Bourgault Industries Ltd, the disclosure required ‘can only be...that which the statute, the rules and the jurisprudence already require. Furthermore, even if the duty of disclosure had been extended as suggested by counsel, the impact of the extension would be felt not at the level of the validity of the patent, but at the level of the remedies where equitable considerations might come into play.’ ”
Historically, prior to 2007 Canadian courts confined an applicant’s duty of disclosure to the express requirements of the Patent Act and rules. Thus, in Bourgault Industries Ltd v Flexi-Coil Ltd the Federal Court of Appeal held that an applicant has no general duty to disclose prior art, unless and until the examiner expressly requests the applicant to furnish prior art from corresponding foreign applications under Rule 40 (now Rule 29).(2)
However, in 2007 these principles were cast into doubt by a lower court decision in GD Searle & Co v Novopharm Limited.(3) In Searle the patent applicant had responded to an obviousness objection contained in an office action by arguing that a prior art patent to Matsuo did not, on its face, state that any of the compounds it disclosed had a certain combination of properties. However, as it turned out, another researcher at Searle, who was not among the named inventors, had concluded that one of the compounds disclosed by Matsuo did in fact have those properties. This researcher had publicly disclosed her findings at a conference several months before the Canadian filing date, but subsequent to the priority dates of the patent application. The applications judge, who had appeared as counsel for the defendant in the Bourgault Case, referred to the US doctrine of inequitable conduct with apparent approval and distinguished Bourgault on the grounds that Section 73 of the Patent Act, which requires a “reply in good faith” to each requisition from an examiner, did not exist at the time of the Bourgault decision. The applications judge broadly held that all “communications with the examiner must be made in good faith” and must provide “full, frank and fair disclosure”. The applications judge ultimately found that Searle’s response to the obviousness objection was not a reply in good faith, resulting in a deemed abandonment of the application.
The Searle decision was reversed on appeal.(4) Unfortunately, the reasons for the Federal Court of Appeal’s judgment were unusually terse, as the court had been urgently asked to render a decision within a week of the conclusion of a two-day hearing. The court concluded that the public disclosure by the other Searle researcher regarding the Matsuo compounds was not citable prior art because it was a disclosure by the applicant within the one-year grace period preceding the Canadian filing date. As a result, the court reasoned that Searle had no duty to discuss the other researcher’s findings with the examiner and that Searle’s failure to do so did not result in a deemed abandonment for failure to reply in good faith to the requisition.
Owing to the unusually urgent and terse nature of the decision, the court of appeal in Searle did not comment upon any of the broader statements or views of the applications judge relating to inequitable conduct or duty of candour. However, it is implicitly clear that the duty to “reply in good faith” to a requisition is narrower than any corresponding duty that may exist in the United States. For example, patent applicants are obliged to inform the US patent office of any information that refutes or is inconsistent with a patentability argument advanced by the applicant during prosecution, regardless of whether the information itself is citable prior art.(5) In contrast, it is clear from Searle that a Canadian patent applicant has no duty to disclose or discuss information that is not citable prior art.
As a result, a degree of uncertainty remains in Canadian patent law. On the one hand, from Janssen-Ortho and Bourgault it is clear that the applicant has no duty of disclosure other than those that are expressly set forth in the Patent Act, the Patent Rules and the jurisprudence interpreting them. On the other hand, as Searle illustrates, under the existing act an express statutory duty arises whenever an office action issues, requiring the applicant to “reply in good faith” to any requisition from an examiner. Although the extent of this statutory duty is necessarily narrower than the duty of candour in US law, its precise scope remains to be ascertained in future cases. It is hoped that this duty will be narrowly confined to cases involving either a complete absence of a reply or an intentionally fraudulent reply, to prevent the proliferation of baseless inequitable conduct allegations that have historically plagued US litigation. Meanwhile, caution should be exercised in any office action response.
For further information on this topic please contact Stephen J Ferance at Smart & Biggar/Fetherstonhaugh by telephone (+1 604 682 7780) or by fax (+1 604 682 0274) or by email (email@example.com).
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