T‑213‑04
2005 FC 1585
Zambon Group S.P.A. (Plaintiff)
v.
Teva Pharmaceutical Industries Ltd. (Defendant)
and between
Teva Pharmaceutical Industries Ltd. (Plaintiff by Counterclaim)
v.
Zambon Group S.P.A., Zambon Corporation, Apotex Inc., and Torpharm Inc. (Defendants by Counterclaim)
Indexed as: Zambon Group S.P.A. v. Teva Pharmaceutical Industries Ltd. (F.C.)
Federal Court, Hansen J.—Toronto, September 19; Ottawa, November 23, 2005.
Patents — Practice — Appeal from Prothonotary’s decision dismissing Teva Pharmaceutical Industries Ltd.’s motion to strike paragraphs of Apotex Inc.’s amended defence to counterclaim alleging Teva’s patent void pursuant to Patent Act, s. 53(1) because containing untrue material allegation — Teva arguing impugned paragraphs incapable of success as not disclosing essential element of wilfulness required under Act, s. 53(1) — Case law re: untrue material allegations reviewed — Although Binnie J. in Apotex Inc. v. Wellcome Foundation Ltd. (S.C.C.) and Stone J.A. in 671905 Alberta Inc. v. Q’Max Solutions Inc. (F.C.A.) commenting necessary material misstatement be wilfully made for patent to be void, these comments obiter, not dealing with materiality — Thus arguable whether wilfulness essential element — Not settled law wilfulness essential element under first ground of invalidity under Act, s. 53(1) — Appeal dismissed.
This was an appeal from the decision of a Prothonotary dismissing Teva Pharmaceutical Industries Ltd.’s (Teva) motion to strike out paragraphs of Apotex Inc.’s (Apotex) amended defence to counterclaim, in which it was alleged that Teva’s Canadian Patent No. 2410867 (′867 patent) is void pursuant to subsection 53(1) of the Patent Act because the petition contains a material allegation that is untrue, i.e. that the persons named in the petition were the inventors and that there was an invention. Teva argued that the paragraphs in question were incapable of success because they failed to disclose the essential element of wilfulness required under subsection 53(1) of the Act. Subsection 53(1) provides that a patent is void if there is an untrue material allegation in the petition or if the specification and drawings contain more or less than is necessary and such omission or addition is wilfully made with the intent to mislead. The Prothonotary concluded that an argument could be made that the wording of subsection 53(1) does not require wilfulness where validity of a patent is challenged on the basis of an untrue material allegation, and dismissed the motion.
At issue was whether it was “plain and obvious” that the allegation of invalidity claimed in the impugned paragraphs was incapable of success and in particular, whether wilfulness is an essential element under subsection 53(1).
Held, the appeal should be dismissed.
The case law pertaining to untrue material allegations was reviewed. Of particular note were Justice Binnie’s comments in Apotex Inc. v. Wellcome Foundation Ltd. that for the failure to name co‑inventors to void a patent pursuant to subsection 53(1) of the Act, it had to be established that this omission was a “material” misstatement that was “wilfully made for the purpose of misleading.” The Prothonotary was wrong to distinguish that case as well as 671905 Alberta Inc. v. Q’Max Solutions Inc. (a Federal Court of Appeal decision wherein Justice Stone quoted and followed Justice Binnie’s comments) from the present case on the basis that they dealt with “omissions” rather than “material allegations.” However, given that Justices Binnie and Stone’s statements regarding “wilfulness” in that circumstance were obiter and Justice Binnie did not deal with the issue of materiality, it was arguable whether wilfulness is an essential element or whether these kinds of cases will be resolved in the future on the basis of materiality. Finally, taking into account (1) that Q’Max Solutions Inc. and Wellcome Foundation Ltd. did not deal with the kinds of allegations raised in the present case, (2) the courts’ reluctance to invalidate a patent based on an innocent error in the naming of inventors, and (3) the fact the working of subsection 53(1) had not been specifically addressed since Beloit Canada Ltd. v. Valmet Oy (a 1984 Federal Court Trial Division decision) it is not settled law that “wilfulness” is an essential element under the first ground of invalidity under subsection 53(1). It was therefore not “plain and obvious” that the impugned paragraphs were incapable of success.
statutes and regulations judicially
considered
Patent Act, R.S.C., 1985, c. P‑4, s. 53.
cases judicially considered
considered:
671905 Alberta Inc. v. Q’Max Solutions Inc., [2003] 4 F.C. 713; (2003), 27 C.P.R. (4th) 385; 241 F.T.R. 160; 305 N.R. 137; 2003 FCA 241; Apotex Inc. v. Wellcome Foundation Ltd., [2002] 4 S.C.R. 153; (2002), 219 D.L.R. (4th) 660; 21 C.P.R. (4th) 499; 296 N.R. 130; 2002 SCC 77; Rothmans, Benson & Hedges Inc. v. Imperial Tobacco Ltd. (1991), 35 C.P.R. (3d) 417; 42 F.T.R. 68 (F.C.T.D.); affd (1993), 47 C.P.R. (3d) 188; 152 N.R. 292 (F.C.A.); Bayer AG v. Apotex Inc. (1998), 84 C.P.R. (3d) 23; 156 F.T.R. 303 (F.C.T.D.); Jules R. Gilbert Ltd. v. Sandoz Patents Ltd. (1970), 64 C.P.R. 14 (Ex. Ct.); Apotex Inc. v. Wellcome Foundation Ltd. (1998), 79 C.P.R. (3d) 193; 145 F.T.R. 161 (F.C.T.D.); Beloit Canada Ltd. v. Valmet Oy (1984), 78 C.P.R. (2d) 1 (F.C.T.D.); revd (1986), 8 C.P.R. (3d) 289; 64 N.R. 287 (F.C.A.); Proctor & Gamble Co. v. Bristol Myers Canada Ltd. (1978), 39 C.P.R. (2d) 145 (F.C.T.D.); DEC International, Inc. v. A.L. LaCombe & Associates Ltd. (1989), 26 C.P.R. (3d) 193; 28 F.T.R. 304 (F.C.T.D.); Apotex Inc. v. Wellcome Foundation Ltd., [2001] 1 F.C. 495; (2000), 10 C.P.R. (4th) 65; 262 N.R. 137 (C.A.).
referred to:
Merck & Co., Inc. v. Apotex Inc., [2004] 2 F.C.R. 459; (2003), 30 C.P.R. (4th) 40; 315 N.R. 175; 2003 FCA 488.
APPEAL from a decision of a Prothonotary dismissing Teva Pharmaceutical Industries Ltd.’s motion to strike certain paragraphs of Apotex Inc.’s amended defence to counterclaim in which it was alleged that Teva’s patent was void pursuant to subsection 53(1) of the Patent Act. Appeal dismissed.
appearances:
No one appearing for plaintiff.
Ruth E. Promislow and Paul Taylor for defendant.
David E. Lederman for defendants by counterclaim.
solicitors of record:
Riches, McKenzie & Herbert LLP, Toronto, for plaintiff.
Bennett Jones LLP, Toronto, for defendant.
Goodmans LLP, Toronto, for defendants by counterclaim.
The following are the reasons for order and order rendered in English by
[1]Hansen J.: Teva Pharmaceutical Industries Ltd. (Teva), the defendant/plaintiff by counterclaim, brought a motion to strike paragraphs 13-36 of Apotex Inc.’s (Apotex) amended defence to counterclaim. A Prothonotary dismissed the motion. This is an appeal of that decision.
[2]For the purpose of these reasons, a detailed account of the various pleadings in this action is not necessary. Teva, the owner of Canadian Patent No. 2410867 (′867 patent), alleges that Apotex infringes a number of the claims of the ′867 patent. In the impugned paragraphs of its defence, Apotex alleges that the ′867 patent is void pursuant to subsection 53(1) of the Patent Act, R.S.C., 1985, c. P‑4 (Act) because the “petition . . . contains a material allegation that is untrue.” In general, Apotex claims in the defence that the representation in the ′867 application that the persons named in the petition were the inventors and that there was an invention is misleading because the purported invention was, to the knowledge of the petitioners, disclosed in the prior art and was offered for sale by Teva prior to the relevant date at issue.
[3]On the motion to strike, Teva argued that the paragraphs in question are incapable of success because they fail to disclose the essential element of wilfulness required under subsection 53(1) of the Act.
[4]Subsections 53(1) and (2) of the Act read:
53. (1) A patent is void if any material allegation in the petition of the applicant in respect of the patent is untrue, or if the specification and drawings contain more or less than is necessary for obtaining the end for which they purport to be made, and the omission or addition is wilfully made for the purpose of misleading.
(2) Where it appears to a court that the omission or addition referred to in subsection (1) was an involuntary error and it is proved that the patentee is entitled to the remainder of his patent, the court shall render a judgment in accordance with the facts, and shall determine the costs, and the patent shall be held valid for that part of the invention described to which the patentee is so found to be entitled.
[5]The Prothonotary concluded that an argument can be made that the wording of subsection 53(1) does not require wilfulness where the validity of a patent is challenged on the basis of an untrue material allegation in the petition. In reaching this conclusion, the Prothonotary observed:
The decision of the Federal Court of Appeal in 671905 Alberta Inc. v. Q’Max Solutions Inc. (2003), 27 C.P.R. (4th) 385 and the obiter statement of Mr. Justice Binnie in Apotex Inc. v. Wellcome Foundation Ltd. (2002), 21 C.P.R. (4th) 499 at par. 94 (S.C.C.) appear to impose wilfulness as a fourth factor that is required to establish the invalidity of a patent where an untrue material allegation in the petition is alleged. However, the two decisions can be distinguished on the grounds that they involved omissions, as opposed to material allegations. In the absence of any decision specifically interpreting the wording of subsection 53(1) in the Patent Act as imposing wilfulness as an essential element to succeed under the first ground of invalidity, I would simply endorse the decision of this Court in Bayer AG v. Apotex, [1998] F.C.J. No. 1593 at par. 22 and the unambiguous statement in Hughes and Woodleys on Patents, section 17(b), at page 383:
This provision of the Act provides that a patent can be void simply if any material allegation in the petition is untrue; no proof of wilfulness is required.
[6]Teva submits that the Prothonotary misinterpreted the decisions in 671905 Alberta Inc. v. Q’Max Solutions Inc., [2003] 4 F.C. 713 (C.A.); and Apotex Inc. v. Wellcome Foundation Ltd., [2002] 4 S.C.R. 153 when he distinguished these cases on the basis that they dealt with “omissions” as opposed to “allegations.” Teva argues that this distinction is not tenable because the “omissions” in both cases were construed by the courts to be “allegations” within the meaning of subsection 53(1).
[7]Teva argues that the Federal Court of Appeal in Q’Max Solutions, applying the Supreme Court of Canada decision in Wellcome Foundation, explicitly rejected the Trial Judge’s narrow interpretation of subsection 53(1) that would require wilfulness for additions and omissions within the specifications or drawings but not for material allegations. Accordingly, having regard to the principle of stare decisis, Teva submits that no weight should be given to the earlier lower court decision relied on by the Prothonotary nor should any weight be given to the referenced doctrinal source.
[8]Although not specifically addressed by the Prothonotary, Teva also argues that the paragraphs at issue are incapable of success because they disclose what is essentially an anticipation argument and an allegation of anticipation cannot give rise to a reasonable defence under subsection 53(1).
[9]Apotex takes the position, based on the wording of subsection 53(1), that wilfulness is not a required element where an untrue material allegation is being advanced. In support of this assertion, Apotex relies on the decisions in Rothmans, Benson & Hedges Inc. v. Imperial Tobacco Ltd. (1991), 35 C.P.R. (3d) 417 (F.C.T.D.); affd (1993), 47 C.P.R. (3d) 188 (F.C.A.) and Bayer AG v. Apotex Inc. (1998), 84 C.P.R. (3d) 23 (F.C.T.D.). Apotex submits that the Federal Court of Appeal’s decision in Q’Max Solutions is distinguishable on its facts and does not extend to the type of untrue material allegation at issue in the present case. With respect to Teva’s submission that an anticipation argument does not give rise to a defence under subsection 53(1), Apotex argues that the same facts may support different legal arguments and it is entitled to advance all legal arguments open to it.
[10]As the issues raised in Teva’s motion are vital to the final issue of the case, this appeal will be determined on the basis of the exercise of my discretion de novo (Merck & Co., Inc. v. Apotex Inc., [2004] 2 F.C.R. 459 (F.C.A.)).
[11]The issue on this appeal is whether it is “plain and obvious” that the allegation of invalidity claimed in the impugned paragraphs is incapable of success. In particular, is wilfulness an essential element under subsection 53(1).
[12]Subsection 53(1) provides two grounds on which a patent may be found to be invalid: first, an untrue material allegation in the petition and second, the specification and drawings contain more or less than is necessary and such omission or addition is wilfully made with the intent to mislead (Rothmans, at page 428).
[13]Regarding the question of what is a “material” allegation, in Rothmans, Justice Rouleau referred to the decision of Justice Thurlow in [as he then was] Jules R. Gilbert Ltd. v. Sandoz Patents Ltd. (1970), 64 C.P.R. 14 (Ex. Ct.) where it was held that the “material” allegations of a petition are the allegation that the applicant has made the invention and the allegation of facts that bring the applicant within the statutory prescriptions.
[14]Later, in Bayer AG v. Apotex Inc., at paragraph 22, Justice Gibson considered subsection 53(1) (then subsection 55(1) of the Act) in the context of a failure to disclose foreign applications and patents. Regarding the requirements of the first ground of invalidity, he identified the following three elements: (1) the allegation is made in the petition; (2) the allegation is untrue; and (3) the allegation is material.
[15]In Apotex Inc. v. Wellcome Foundation Ltd. (1998), 79 C.P.R. (3d) 193 (F.C.T.D.), one of the issues centered on inventorship. The plaintiffs alleged that the failure to name two co‑inventors constituted an untrue material allegation that rendered the patent invalid on the basis of the first ground in subsection 53(1). The defendants argued that for the plaintiffs to succeed on this ground they had to establish that the untrue allegation was wilfully made for the purpose of misleading. As well, the defendants argued that an inadvertent good faith failure to name the correct inventors will not invalidate a patent.
[16]The Trial Judge, Justice Wetston, found on the evidence that the two individuals were co‑inventors. He noted that the case before him was analogous to the circumstances in Beloit Canada Ltd. v. Valmet Oy (1984), 78 C.P.R. (2d) 1 (F.C.T.D.) (reversed on other grounds at (1986), 8 C.P.R. (3d) 289 (F.C.A.)) where Justice Walsh stated at pages 28‑29:
Even without the jurisprudence a careful reading of section 55(1) [now 53(1)] of the Patent Act, (supra) indicates that a patent can be void if any material allegation in the petition of the applicant is untrue. Since this phrase is followed by the word “or”, and the concluding phrase “and any such omission or addition is wilfully made for the purpose of misleading” this clearly applies only to the second phrase as the first phrase does not deal with omissions or additions. Subsection (2) allows the Court to find that the omission or addition was an involuntary error and to find that the patentee is entitled to the remainder of his patent. It, however, is only applicable to the second and third phrases of subsection (1). What the court is required to find in the present case, which does not concern omissions or additions to the specifications or drawings, is whether the erroneous allegations in the petition are “material”, no evidence of fraud or intent to mislead being necessary.
[17]As there was no evidence that the failure to name the two co‑inventors was wilfully made with the intent to mislead, Justice Wetston framed the issue as whether the failure to name all of the true inventors was material and sufficient to render the patent invalid.
[18]Justice Wetston concluded that the failure to name the co‑inventors was not a material allegation. In arriving at this conclusion, he relied on the decision in Jules R. Gilbert Ltd. v. Sandoz Patents, regarding what constitutes a material allegation and Justice Addy’s decision in Proctor & Gamble Co. v. Bristol Myers Canada Ltd. (1978), 39 C.P.R. (2d) 145 (F.C.T.D.), at page 157 where he held that it is immaterial to the public that an applicant is the sole inventor or one of two co‑inventors since this does not have a bearing on the term or substance of the invention or entitlement. He also endorsed the statement in DEC International, Inc. v. A.L. LaCombe & Associates Ltd. (1989), 26 C.P.R. (3d) 193 (F.C.T.D) that courts should strive to protect the rights of true inventors and that innocent errors in inventorship should not be allowed to defeat the presumption of validity of a patent.
[19]On appeal, the Federal Court of Appeal in Apotex Inc. v. Wellcome Foundation Ltd., [2000] 1 F.C. 495 found that the two individuals were not co‑inventors. Justice Sexton went on to consider section 53 of the Act in the event that the factual finding was subsequently found to be in error. On the issue of “whether the failure to mention a co‑inventor in the petition for a patent constitutes a ‘material allegation’ within the meaning of section 53 of the Patent Act sufficient to invalidate a patent,” Justice Sexton stated at paragraph 47:
I agree with the Trial Judge’s decision that the failure to mention a co‑inventor in a patent petition does not constitute an untrue “material allegation” sufficient to invalidate a patent in accordance with section 53 of the Patent Act. As Addy J. held in Procter & Gamble Co. v. Bristol‑Myers Canada Ltd. ((1978), 39 C.P.R. (2d) 145 (F.C.T.D.); affd (1979), 42 C.P.R. (2d) 33 (F.C.A.)) “it is really immaterial to the public whether the applicant is the inventor or one of two joint inventors as this does not got [sic] to the term or to the substance of the invention nor even to the entitlement,” (ibid., at p. 157). In my view, the Trial Judge thus correctly concluded that failure to name a co‑inventor in a petition for a patent does not constitute a “material allegation” that results in a patent’s invalidity, pursuant to section 53 of the Patent Act.
[20]Subsequent to the Court of Appeal’s decision in Wellcome Foundation, but before the Supreme Court of Canada rendered its decision in that case, Q’Max Solutions, was decided by the Federal Court Trial Division. In this case, the Court had to determine who was the true inventor of the patent at issue. Justice Gibson found on the evidence that a person other than the two named inventors was the true inventor.
[21]Justice Gibson commented that his case was similar to those in Wellcome Foundation and Beloit Canada Ltd. v. Valmet Oy in that there was no allegation that the error in naming the inventors was wilfully made with the intent to mislead. However, he distinguished Wellcome Foundation from his case on the basis that in the former it was a matter of a failure to name co‑inventors and not the naming of someone who had been found not to be the inventor. He concluded that the patent was void by reason of an untrue material allegation.
[22]At this juncture in the history of the relevant jurisprudence, the Supreme Court of Canada released its decision in Apotex Inc. v. Wellcome Foundation Ltd., [2002] 4 S.C.R. 153. In his consideration of whether the two individuals were wrongly excluded from co‑inventorship as alleged by the appellants, Justice Binnie prefaced his analysis with the following [at paragraph 94]:
For this argument to benefit the appellants (as opposed to Drs. Broder and Mitsuya), they [the appellants] must further establish that this omission was a “material” misstatement that was “wilfully made for the purpose of misleading”. If so, the patent would be void pursuant to s. 53(1) of the Patent Act.
[23]Following a lengthy discussion regarding the roles played by the two individuals, Justice Binnie concluded that they were not co‑inventors of the patent at issue.
[24]Regarding the issue of “materiality of co‑inventorship” and Justice Wetston’s conclusion that the failure to name the co‑inventors in the patent was not a material misrepresentation that would invalidate the patent, Justice Binnie found that there was no need to consider the question of materiality further not only because of the conclusion that the two individuals were not co‑inventors, but also because there was no evidence that the omission was “wilfully made for the purpose of misleading” as required by subsection 53(1).
[25]The most recent decision of relevance to this discussion is the Federal Court of Appeal’s decision in Q’Max Solutions. With respect to the issue of inventorship, Justice Stone upheld Justice Gibson’s finding that the named inventors were not the true inventors. He went on to consider the appellants’ argument that it was not open to the Trial Judge to invalidate the patent pursuant to subsection 53(1) since it was not contended that the misnaming was done “wilfully with the intent to mislead.”
[26]Following a review of the earlier jurisprudence, Justice Stone referred to the Supreme Court of Canada decision in Wellcome Foundation, and Justice Binnie’s statements at paragraphs 94 and 109 and concluded at paragraph 31:
Thus the position today is that an untrue “material allegation” that consists of a failure to name co‑inventors in a petition for a patent will not render the patent void if the allegation was not “wilfully made for the purpose of misleading”.
[27]With respect to the argument advanced that the case was distinguishable from the decision in Wellcome Foundation, because in the latter case the individuals named as inventors were in fact inventors but in the case before the Court the named inventors were found not to be the true inventors, Justice Stone concluded that distinction did not bring the case within subsection 53(1) because the naming of the individuals who were not the inventors was not done [at paragraph 32] “wilfully for the purpose of misleading.”
[28]In light of the decision in DEC International, Inc. v. A.L. LaCombe & Associates Ltd., he also added that if there was no intent to mislead on the part of the individuals who named themselves as inventors, the omission to name the true inventor should not attract the “draconian” measure found in subsection 53(1).
[29]Based on this review of the jurisprudence, I conclude as follows. With respect, I disagree with the Prothonotary’s conclusion that the decisions in Wellcome Foundation, and Q’Max Solutions, can be distinguished on the ground that they dealt with “omissions” and not “material allegations.” It is clear from the various decisions in both cases that with respect to inventorship it was the first ground of invalidity under subsection 53(1) that was being considered. As well, in both cases, a consideration of whether the failure to name co‑inventors or the misnaming of the true inventor constituted a “material” allegation was central to the analysis. Although I agree with the learned Prothonotary that there have been no decisions specifically interpreting the wording of subsection 53(1) as imposing wilfulness as an essential element under the first ground, it is implicit in Justice Stone’s reasons that in those circumstances where the named inventor in the petition is not the inventor and the true inventor is not named, then in order for the patent to be found invalid it must be shown that the misnaming was “wilfully made for the purpose of misleading.”
[30]With respect to the case of a failure to name a co‑inventor, Justice Sexton agreed with Justice Wetston’s analysis that this was not a “material” allegation. Given that Justices Binnie and Stone’s statements regarding “wilfulness” in this circumstance are obiter and Justice Binnie did not deal with the issue of materiality, it is arguable whether wilfulness is an essential element or whether these kinds of cases will be resolved in the future on the basis of materiality.
[31]Finally, taking into account that:
(a) the two cases dealt specifically with inventorship and not with the kinds of allegations raised in the present case;
(b) the reluctance on the part of the courts to invalidate a patent based on an innocent error in the naming of inventors; and
(c) since the decision of Justice Walsh in Beloit Canada Ltd. v.Valmet Oy, the working of subsection 53(1) has not been specifically addressed;
I am not persuaded that in the circumstances of the present case it is settled law that “wilfulness” is an essential element of the first ground of invalidity under subsection 53(1). Accordingly, I am not satisfied that it is “plain and obvious” that the impugned paragraphs are incapable of success. Having reached this conclusion, it is not necessary to consider Teva’s second argument.
[32]For these reasons, the appeal is dismissed with costs to Apotex.
ORDER
THIS COURT ORDERS that the appeal is dismissed with costs to Apotex.