Federal Court of Appeal Decisions

Date: 20070430

Docket: A-66-07

Citation: 2007 FCA 173

 

CORAM:       NOËL J.A.

                        SEXTON J.A.

                        MALONE J.A.

 

 

BETWEEN:

G.D. SEARLE & CO. and PFIZER CANADA INC.

Appellants

and

NOVOPHARM LIMITED and THE MINISTER OF HEALTH

Respondents

 

 

 

Heard at Toronto, Ontario, on April 23 and 24, 2007.

Judgment delivered at Ottawa, Ontario, on April 30, 2007.

 

REASONS FOR JUDGMENT BY:                                                                             MALONE J.A.

CONCURRED IN BY:                                                                                                      NOËL J.A.

SEXTON J.A.

 

Date: 20070430

Docket: A-66-07

Citation: 2007 FCA 173

 

CORAM:       NOËL J.A.

                        SEXTON J.A.

                        MALONE J.A.

 

 

BETWEEN:

G.D. SEARLE & CO. and PFIZER CANADA INC.

Appellants

and

NOVOPHARM LIMITED and THE MINISTER OF HEALTH

Respondents

 

 

REASONS FOR JUDGMENT

 

MALONE J.A.

I.  Introduction

[1]               The appellants, G.D. Searle and Co. and Pfizer Canada, Inc. (collectively Searle), appeal from a judgment of the Federal Court of Canada, dated January 24, 2007 and reported at
2007 FC 81.  The appellants had sought an order to prohibit the Minister of Health (Minister) from issuing a Notice of Compliance to Novopharm Limited (Novopharm).  If the Notice of Compliance was issued, that order would have permitted Novopharm to sell 100 mg and 200 mg capsules containing a medicine known as celecoxib in Canada before the expiry of Searle’s Canadian Patent No. 22,177,576 (the ‘576 Patent).

 

[2]               The ‘576 Patent is entitled “Substituted Pyrazolyl Benzenesulfonamedes for the Treatment of Inflammation” and names John J. Talley and certain other individuals as inventors.  It discloses and claims the compound celecoxib and its uses, including the treatment of inflammation and inflammation related disorders such as arthritis and pain.  The objective of the patent is to provide a means to treat inflammation while reducing undesirable gastric side effects.

 

II. Time Constraints on Release of Panels Reasons for Judgment and Judgment

[3]               The record on appeal runs to over 10,300 pages in 34 Appeal Books.  The judgment of the learned Applications Judge is 56 pages in length encompassing his reasons arising from a four day hearing.

 

[4]               During the two-day hearing of this appeal on April 22 and 23, counsel for Searle advised this panel of the possibility that the Office of Patented Medicines and Liaison of Health Canada (OPML) could shortly decide to remove from the Patent Register another patent relating to celecoxib.  Further, if that patent was delisted the Minister could then issue a Notice of Compliance to Novopharm to make and sell the medicine celecoxib in Canada thereby rendering the relief sought by the appellants moot.  On April 24, 2007, counsel for the appellants advised the Court that this delisting could take place as early as May 1, 2007.

 

[5]               These reasons are being released now to meet this deadline and should be read with these time constraints in mind.

 

III. Factual Background

The Proceedings

[6]               On May 3, 2005, Novopharm filed an Abbreviated New Drug Submission, seeking approval to make and sell 100 mg and 200 mg capsules containing celecoxib.  They filed a Notice of Allegation (NOA) alleging that the ‘576 Patent was invalid on the basis of abandonment, obviousness, lack of utility and sufficiency.   In response, the present proceedings were commenced by Searle by Notice of Application under the provisions of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (Regulations) for a prohibition order.

 

[7]               The issues before the Applications Judge were as follows:

1.     Was Novopharm’s allegation that Searle had abandoned its application for the ‘576 Patent justified? and

 

2.   Could Novopharm’s allegations that either or both of claims 4 and 8 of the ‘576 Patent were invalid be justified on the basis of obviousness, lack of utility and sufficiency?

 

[8]               In order to be successful, Searle would have to convince the Applications Judge that none of Novopharm’s allegations were justified.

 

Background to the ‘576 Patent

[9]               Commencing in or before 1991, various teams of scientists were employed by Searle to investigate the potential use of compounds to treat inflammation that would selectively inhibit what became known as COX II; the theory being that such a compound would minimize gastrointestinal side effects experienced with other inflammation treating compounds.  Dr. Seibert, employed by Searle, headed up the biological team of those scientists working on this COX II project.  Dr. Peter Isakson, also employed by Searle, was the overall team leader for both the biology and chemistry teams (collectively, the Searle Researchers).

 

[10]           Prior to October 1993, Dr. Seibert’s team was working on celecoxib and other compounds including a compound known as compound SC-58125.  They studied different constituents on the structure of those compounds to understand the structure-to-activity relationship.  By June 1994, Dr. Seibert’s team had determined that the SC-58125 compound treated inflammation while reducing undesirable gastric side effects.  That compound is one of the compounds that comes within the scope of the U.S Patent 5,134,142 that is referenced at page 2 of the ‘576 Patent.

 

[11]           All the inventors were employed by Searle as researchers and the assignment of their rights in the ‘576 Patent to Searle are evidenced by individual assignments executed between May and July 1996.  The stated consideration is $10.

 

[12]           At an International Conference on Prostaglandins and Related Compounds in June 1994 (the June 1994 Conference), Dr. Seibert disclosed that the SC-58125 compound treated inflammation while not causing gastric toxicity.  Further, in August 1994, Dr. Seibert submitted a paper respecting that compound to a peer review scientific publication for publication (the Seibert Article).  That paper disclosed that the SC-58125 compound treated inflammation without exhibiting gastric side effects.  It was published in December 1994.

 

[13]           The Commissioner has the authority to cause an application for a patent to be reviewed by examiners employed in the Canadian Patent Office (Patent Office).  In this case, such an examiner was appointed during the prosecution stage to examine the ‘576 Patent application.  The examiner initially rejected Searle’s ‘576 application on the basis that the claimed invention was obvious on the claim date as a result of prior art.  Accordingly, on October 21, 1998, the examiner requisitioned Searle to respond to a question it had regarding compliance with subparagraph 28.3(a) of the Act.  Searle replied to the requisition and stated that its claimed compounds had the effect of being COX II selective and that such selectivity was not derivable from nor suggested in prior art.

 

[14]           The ‘576 Patent was applied for in Canada on November 14, 1994 and granted to Searle on October 26, 1999.  Unless otherwise held to be invalid, the patent will expire on November 14, 2014.  The ‘576 Patent application claimed priority from two patent applications previously filed in the United States on November 30, 1993 and April 6, 1994 (the Priority Applications).

 

IV. Decision Below

[15]           The Applications Judge found that Novopharm’s allegations relating to utility and sufficiency were not justified.  However, he further found that the allegation of invalidity was justified on the basis of abandonment and obviousness.  On that basis, the application was dismissed.

 

[16]           On the issue of obviousness, the Applications Judge held that the claim date, for the purpose of assessing obviousness, was the Canadian filing date, November 14, 1994.  He further found that the June 1994 Conference relating to the SC-58125 compound constituted a prior art disclosure.  This disclosure, he stated, rendered celecoxib obvious as of the Canadian filing date as an anti-inflammatory compound with reduced side effects (see Reasons for Judgment at para. 95).  Moreover, he determined that the June 1994 Conference was not information that fell within the grace period set out in paragraph 28.3(a) of the Patent Act, R.S.C. 1985, c P-4 (Act), which provides that:

 

[17]           On the basis that a person skilled in the art would be “sufficiently confident as to the result,” the Applications Judge found that the test for obviousness was met given the disclosure of information made by Dr. Seibert in June of 1994.

 

[18]           On the issue of abandonment, the Applications Judge held that in responding to a requisition from the Patent Office during the prosecution of the ‘576 Patent on October 21, 1998, Searle was obliged to advise the Patent Office of the information presented by Dr. Seibert at the June 1994 conference – that Searle had found the SC-58125 compound to have COX II selectivity and that it had disclosed this fact to the public before the application for the ‘576 Patent was filed in Canada.  He found that Searle’s failure to advise the Patent Office of this information constituted a lack of good faith (see Reasons for Judgment at paras. 75 and 77).

 

[19]           In finding that Searle’s application for the ‘576 Patent was abandoned and ultimately, invalid, the Applications Judge relied on paragraph 73(1)(a) of the Act.  That paragraph provides that an application for a patent shall be deemed to be abandoned if the applicant does not reply in good faith to any requisition made by an examiner in connection with the prosecution of a patent.

 

[20]           Finally, on the issues of lack of utility and sufficiency, the Applications Judge held that Searle had successfully demonstrated that Novopharm’s allegations were not justified.

 

V. Legislative Framework

[21]           For ease of reference, the following legislative provisions are relevant to this appeal and are set out below:

 

[22]           This patent application and the ‘576 Patent are to be governed by the Act, incorporating both the post October 1, 1989 and post October 1, 1996 provisions.

 

VI. Analysis

1.  Claim Date

[23]           In order to resolve this appeal, it is first necessary to inquire as to whether the Applications Judge correctly decided that the claim date for the ‘576 Patent was November 14, 1994, the date of filing.  At paragraph 48 he stated:

There is a further complexity since the application for the ‘576 patent was filed in Canada under the provisions of the Patent Co-Operation Treaty (PCT).  That treaty provides that a single application can be filed in an appropriate “receiving office” of one of the countries adhering to that Treaty and obtain a filing date pertinent to all, or a selected group of other of such countries, provided that the applicant enters the “national phase” of such other countries within an appropriate time period.  Here the original “international” application was filed in the United States as a receiving office on November 14, 1994, and entered the national phase in Canada on May 28, 1996, (Applicant’s Record, Vol. 3, pg. 613).  However, in accordance with the Treaty, the application is considered to have been filed in the Canadian Patent Office with an effective date of November 14, 1994.

 

[24]           The ‘576 Patent application claimed priority from two U.S. patent applications previously filed (supra at para.14).  For the purpose of obviousness, the Applications Judge held that Searle could only rely upon the Canadian filing date of November 14, 1994 and that no earlier date could be relied upon since the priority applications do not describe or disclose the same invention as claims 4 or 8 of the ‘576 Patent.

 

[25]           On this record, I am satisfied that the Applications Judge did not err in making this determination.

 

2.  Obviousness and Abandonment

[26]           Pursuant to paragraph 28.3(a), supra at para. 16, patent applicants are afforded a one-year grace period within which they can publicly disclose information before filing a patent application in Canada.  One of the purposes of that provision is to enable patent applicants to announce their success by disclosing their inventions before they file.  Searle attempted to take advantage of this grace period provision by virtue of the conduct of certain of its employees in 1994 (supra at para. 12).

 

[27]           The Applications Judge made several findings with regard to whether Searle was the applicant as of the claim date, November 14, 1994 (see Reasons for Judgment at paras. 49, 57(4), 57(5), 57(6), 57(10) and 58(2)).  In particular, paragraphs 49 and 58(2) read as follows:

… Searle is the Applicant because it is the assignee of Talley et al., the named inventors and not otherwise.

…

 

The knowledge obtained by Dr. Seibert’s group as to the activity of SC-58125 namely as to inflammation and non-gastric was information they developed, not Talley et al.  Thus the disclosure in June 1994 was not disclosure of information of the named inventors Talley, et al.  The fact that Searle is the “applicant” of the ‘576 patent does not mean that it can claim common ownership of Dr. Seibert’s information since section 2 of the Patent Act limits an “applicant” to a legal representative of the named inventors Talley et al.

 

[28]           It is apparent that the Applications Judge found Searle to be the applicant solely as a result of the assignments made in 1996.  Based on this finding, he held that Searle was not the applicant on the claim date (November 14, 1994) with the result that it could not benefit from the one year grace period provided in subparagraph 28.3(a) of the Act.

 

[29]           The ramifications of this finding are critical as the remaining issues that the Applications Judge proceeds to address hinge on his finding that Searle was not the applicant as of November 14, 1994.  Both his conclusion of obviousness and abandonment are dependant on this finding as follows.

 

[30]           First, Dr. Seibert’s disclosure at the June 1994 Conference and in the Seibert Article made the invention obvious and as Searle was not the applicant, these disclosures were not covered by the grace period.

 

[31]           Second, by failing to reveal that this information had been disclosed in responding to the examiner’s requisition relating to obviousness in October 1996, Searle exhibited bad faith and misled the examiner contrary to paragraph 73(1)(a) of the Act.  As a result, he concluded that the ‘576 Patent was deemed abandoned and thus, invalid.

 

[32]           One has to ask how this issue as to whether Searle was the ‘applicant’ arose since it was not raised in the NOA (see Appeal Book, Volume 9 at page 2451) nor was it argued before the Applications Judge.  Counsel for both sides admitted being surprised by the finding of the Applications Judge on this crucial point.

 

[33]           The NOA defines the issues to be determined in proceedings under the Regulations.  Furthermore, deciding a case on a basis not raised by parties gives rise to an issue of procedural fairness (see AB Hassle v. Canada (Minister of National Health and Welfare) (2000), 7 C.P.R. (4th) 272 (F.C.A.) at paras. 16-21; Regulations, ss. 5(1), 5(3)(a); Pfizer Canada Inc. v. Canada (Minister of Health) (2006), 46 C.P.R. (4th) 281 (F.C.A.) at para. 32).  Counsel for Searle made the valid point that if it had been raised before the Applications Judge, evidence could have been called and submissions made accordingly.

 

[34]           In my analysis, reviewed on a correctness standard, in proceeding as he did, the Applications Judge did not afford procedural fairness to Searle, thereby committing an error of law (see McConnell v. Canada (Human Rights Commission), 2005 FCA 389 at para.7).  Furthermore, the determination that Searle is not the applicant under section 2 of the Act is not supported by the record.  It is true that the assignment agreements were only executed in May-July of 1996. However, this does not establish that Searle was not the owner of the invention as of the time of discovery.  Obviously, a person who is the owner of the rights of the invention can be an applicant.  In my view, the Applications Judge erred when he limited the definition of applicant in this case “to a legal representative of the named inventors Talley et al.” (see the passage of the Reasons for Judgment quoted at para. 27 above).

 

[35]           At the hearing, counsel for Searle pointed to numerous key documents, all of which referred to Searle as the applicant from November 14, 1994 onwards.  Among the key documents are the following:

§         The application for Canadian Patent ‘576 lists Searle as the applicant for all designated world states who are signatories to the Patent Cooperation Treaty, except the United States.  The inventors, Talley et al., are also named as applicants, but conversely, only for the United States.  This application was filed on November 14, 1994.

§         A Notification of Election was completed by the International Bureau and sent to the Patent Office on July 10, 1995, and denotes Searle as the applicant.

§         The International Preliminary Examination Report completed on January 30, 1996 lists Searle as the applicant.

§         A notification concerning transmitted documents was completed by the International Bureau and sent to the Patent Office on January 31, 1996, and lists the applicant as Searle.

 

[36]           In addition to this factual evidence, counsel for Searle relies on a decision of Muldoon J. in Comstock Canada v. Elected Ltd. (1991), 45 F.T.R. 241 (F.C.).  At issue in that case was whether a design that was created by an employee during the course of his or her own separate business is the product of his or her employer, where the employee was not hired to invent that particular design.  At paragraph 72, Muldoon J. held:

In relation to employees’ inventions the general principle was established in Bloxam v. Elsee, (1825) 1 Car. & P. 558 at p.564, (1827) 6 B & C 169, where it was held by Lord Tenterdon that if a servant, while in the employ of his master, makes an invention, that invention belongs to the servant, not to the master; though if the master employs a skilful person for the express purpose of inventing, the inventions made by him will belong to the master so as to enable him to obtain the patent for them [Emphasis added].

 

[37]           From the present record, it is clear that Dr. Seibert and her team were employed by Searle to determine the biological activity of a number of compounds, including the SC-58125 compound and celecoxib.  She was employed to perform research particularly to investigate the potential use of compounds to treat inflammation that would minimize gastrointestinal side effects. As a result, celecoxib and other compounds were turned over from the named inventors to Dr. Seibert and her team for biological testing.

 

[38]           During her cross-examination, Dr. Seibert indicated that the Searle Researchers worked in conjunction with the company and that it is all very much a corporate process:

Q. Okay.  But I guess I was trying to ask who or how did you decide or who decided that, hey, this  -- the results that you’ve now obtained in this particular experiment or set of experiments leads to something that may be worth looking at whether it was patentable or not.  Was that a team leader, Dr. Isakson, or  --

 

A. Well, you know, I think that he probably contributed to those discussions, but that was really in partnership with the scientists, let’s say, chemists working to identify novel compounds  --

 

Q. Uh-huh

A. -- with members of our legal department, our patent department, --

 

Q. Right. Okay.

 

A. – who, in fact, would often even attend team meetings and be well-versed in data.

 

…

Q. Okay. And deciding who the inventors would be of a particular invention, because you may have more than one, --

 

A. Uh-huh.

 

Q. -- that was done with the patent attorneys as well?

 

A. Yeah.  … that’s my understanding that the potential inventors and the patent attorneys … would take those decisions.

Q. Now, within Searle, back in the early ‘90s, was there some incentive or some other way of encouraging people, I guess, not only to do their work and do their research, but to be inventive, to try to be  -- come up with new inventions? Was there that kind of incentive within Searle?

 

A. Well, I don’t know what you mean by incentive.  I mean  --

 

Q. Encouraged.

A. We were  -- yeah, we were surely encouraged, you know, to think about how we can apply our science, you know, to the identification in discovering development of new medicines or new uses.  I mean that’s the work we do [Emphasis added] (See Appeal Book, Volume 8 at pages 2039 and 2040).

 

[39]           All documentary evidence on this record shows Searle as the applicant.  In addition, it is evident from Dr. Seibert’s oral evidence that she was hired by Searle as part of the biology team to perform research to investigate the potential use of compounds to treat inflammation that would minimize gastrointestinal toxicity.  Accordingly, it is clear that the Searle Researchers were hired to invent, and that any product they invented, belonged to Searle from the onset.

 

[40]           In my analysis, the assignments by the employees in 1996 simply confirmed Searle’s pre-existing right to the invention and were provided in accordance with the Patent Office’s procedure to have evidence on record as to who owns the patent prior to its grant.  The fact that the assignments were made for a nominal consideration supports that view.

 

[41]           In sum, it was not open to the Applications Judge to hold that Searle was not the applicant as of the claim date, both as a matter of procedural fairness and based on the record before him.

 

[42]           It follows, therefore, that as an applicant, Searle falls within the grace period provided for in subparagraph 28.3(a) of the Act and that any disclosure made by Dr. Seibert in June of 1994 or in her article, is exempt from any consideration as to obviousness.

 

[43]           As a consequence of my determination as to Searle’s status as an applicant, any disclosure of information made within one year of the claim date is not prior art capable of rendering the ‘576 Patent obvious.  It follows that Dr. Seibert’s revelations at the June 1994 Conference and in her Article did not have to be disclosed to the examiner.  As such there was no deemed abandonment.

 

3. Lack of Utility

[44]           As an alternative argument, Novopharm argues that if this Court accepts that the Applications Judge erred in determining that Novopharm’s allegations of invalidity based on obviousness and abandonment were justified, the Court should find that the Applications Judge also erred in finding that the allegation of invalidity based on lack of utility was not justified. 

 

[45]           Once this Court accepts that the Applications Judge made no error in determining the Canadian filing date to be the relevant date for assessing utility, Novopharm’s lack of utility argument falls away.  Since I have already accepted the Applications Judge’s finding that the Canadian filing date is the relevant date in all aspects, there is no need to address this lack of utility issue.  The Applications Judge made a finding of utility as of November 14, 1994, which is a finding of fact that Novopharm does not contest nor allege in its NOA.

 

VII. Conclusion

[46]           The appeal should be allowed, the judgment of the Applications Judge should be set aside and giving the order that the Applications Judge should have given, an order should be issued prohibiting the Minister from issuing a notice of compliance to Novopharm respecting the making, use and/or selling of celecoxib capsules until after the expiry of the ‘576 Patent.

 

[47]           The appellants should have their costs on appeal.  They should also have their costs in the Federal Court but only insofar as they relate to ‘576 Patent.

 

 

“B. Malone”

“I agree,

          Marc Noël J.A.”

 

“I agree,

         J. Edgar Sexton J.A.”

 

 

 

FEDERAL COURT OF APPEAL

                                                                                                                  

NAMES OF COUNSEL AND SOLICITORS OF RECORD

 

 

 

DOCKET:                                                                              A-66-07

 

STYLE OF CAUSE:                                                              G.D. Searle & Co. and Pfizer Canada Inc. v. Novopharm Limited and The Minister of Health

 

PLACE OF HEARING:                                                        Toronto, Ontario

 

DATE OF HEARING:                                                          April 23 and 24, 2007

 

REASONS FOR JUDGMENT BY:                                     MALONE J.A.

 

CONCURRED IN BY:                                                         NOËL J.A.

                                                                                                SEXTON J.A.

 

DATED:                                                                                 April 30, 2007

 

 

APPEARANCES:

 

John B. Laskin Kamleh J. Nicola	FOR THE APPELLANTS
John F. Rook, Q.C. Dino P. Clarizio	FOR THE RESPONDENT NOVOPHARM LIMITED

 

SOLICITORS OF RECORD:

 

Torys LLP, Toronto, Ontario	FOR THE APPELLANTS
Bennett Jones LLP, Toronto, Ontario	FOR THE RESPONDENT NOVOPHARM LIMITED