Apotex Inc. v. Wellcome Foundation Ltd. (C.A.) [2001] 1 F.C. 495
Date: 20001026
Docket: A-211-98
A-213-98
A-214-98
CORAM: ROTHSTEIN J.A.
SEXTON J.A.
MALONE J.A.
BETWEEN:
NOVOPHARM LTD.
-and-
APOTEX INC.
Co-Appellants
- and -
THE WELLCOME FOUNDATION LIMITED,
GLAXO WELLCOME INC.,
INTERPHARM INC. and
ALLEN BARRY SHECHTMAN
Respondents
REASONS FOR JUDGMENT OF THE COURT
BY THE COURT
[1] These are appeals and cross-appeals from a judgment of Wetston J. of the Federal Court Trial Division of March 25, 1998, in which he found: that Canadian patent number 1238277 owned by the Wellcome Foundation Limited was valid; that certain of its claims were valid and others invalid; that Apotex Inc. and Novopharm Limited (A & N) had infringed the claims founds to be valid; that A & N and Interpharm Inc. be enjoined from importing, manufacturing, using, advertising, promoting, offering for sale and selling the medicine Zidovudine (AZT) in a pharmaceutical dosage form; and, that the Wellcome Foundation Limited and Glaxo Wellcome Inc. (Glaxo) be awarded damages against A & N.
Issues raised by the Appeal
[2] A & N say that the patent is invalid because:
| Issue 1 two inventors were not named in the patent application and the patent is therefore void for material misrepresentation; |
| Issue 2 the invention was not complete by March 16, 1985, the filing date of the patent application in the United Kingdom; |
| Issue 3 Glaxo formally admitted that the invention date was February 6, 1985 and Wetston J. therefore erred in finding March 16, 1985 as the invention date or accepting evidence relating to the invention arising subsequent to February 6, 1985; |
| Issue 4 the claimed invention is obvious and lacks novelty; |
| Issue 5 the technical terms used in the patent cover more than one compound and are therefore ambiguous; |
| Issue 6 the disclosure in the patent does not adequately describe the claimed invention, how it operates and how it is to be used; |
| Issue 7 the claimed invention is a medical treatment and is therefore not patentable. |
[3] If the patent is found to be valid, A & N say certain claims are invalid because:
| Issue 8 AZT is not a new compound and claims not restricted to the use of the compound do not represent an invention; |
| Issue 9 claims for the use of AZT as a prophylaxis are ambiguous and are not described in the disclosure. |
[4] Finally, A & N say that Glaxo Wellcome Inc. has no standing to sue for infringement because:
| Issue 10 it is not a licensee of the patentee, the Wellcome Foundation Limited. |
Issues raised by the Cross-Appeal
[5] Glaxo says that Wetston J. erred in ruling invalid:
| Issue 1 claims for the use of AZT in the treatment or prophylaxis of all human retroviral infections as being overbroad because he wrongly did not accept cogent evidence that supported the usefulness of AZT for all retroviral infections; |
| Issue 2 claims for the treatment or prophylaxis of "an AIDS infection" that he incorrectly found were ambiguous. |
[6] Glaxo also says that Wetston J.erred:
| Issue 3 in denying to Glaxo the election of damages or an accounting of profits and imposing damages as the required remedy for infringement because he based his decision upon an irrelevant consideration. |
[7] Finally, Glaxo submits that
| Issue 4 Wetston J. did not address the question of interest and it should be entitled to pre and post-judgment interest. |
THE APPEAL
SEXTON J.A.
Issue 1 - Co-inventors and Material Misrepresentation
A & N say that the patent is invalid because:
| 1. two inventors were not named in the patent application and the patent is therefore void for material misrepresentation; |
Facts Relating to the Invention and Inventorship
[8] In the early 1980's, Glaxo sought to discover a treatment for Acquired Immune Deficiency Syndrome (AIDS).1 To determine whether a compound might be successful in the treatment of AIDS, Glaxo initially tested compounds against mouse cell viruses that are similar to the Human Immunodeficiency Virus (HIV) that causes AIDS.2
[9] By July 1984, four Glaxo scientists began to test chemical candidates using a "murine retrovirus screen." Murine viruses are viruses that occur in mice. Retroviruses are a distinct virus family, of which the HIV is a member.
[10] The Glaxo scientists concentrated their search within a class of chemical compounds known as nucleoside analogues, in the belief that those compounds would inhibit the activity of retroviruses. Some time prior to November 16, 1984, Glaxo decided to test one of those nucleoside analogues against the mouse retroviruses. This particular chemical compound had been synthesized in 1964 as a potential cancer treatment3 It is called 3'-azido-3'-deoxythymidine and is now more commonly known as AZT. Patent protection for AZT was never sought.
[11] On November 16, 1984, the Glaxo scientists discovered that AZT had "completely eradicated" the murine retroviruses tested.4 On November 19, Dr. Rideout, a Glaxo scientist listed on the patent, formed the idea that AZT could be used to treat HIV. During the trial, in response to a question that asked her to think back to the time when she first became aware of the results from the November 16 tests, Dr. Rideout testified:
| It was on a Monday morning, November 19th, and I was going into the work place through the main entry way across the lobby towards the main elevator and Sandy Lehrman [a co-inventor of AZT] was coming to that same elevator and she said, "Guess what, I want you to know that Marty [Martha St. Clair, a co-inventor of AZT] ran a test on Friday and one of the compounds you sent cleared the virus at 1 micromolar." And she started to tell me what it was and I said, "Don't tell me, let me tell you." And I said, "509U81?" [the term used within Glaxo to denote AZT] and she said, "You're right." We kind of celebrated, we slapped hands [...]. The elevator came, you know, we kind of laughed and giggled and got on and she got off at her floor, I got off at my floor and proceeded to the laboratory [...]. Andy Freeman was there and I told him that the test existed, that 509U81 was submitted, that Sandy told me it had cleared the plate -- although it had to be redone, and so I just said to him, "We've got our human use for the compound."5 |
[12] Beginning in December 1984, Glaxo started to work on the development of AZT for clinical trials. Following a meeting where the five Glaxo scientists who would be named as inventors of the patent that is the subject of this appeal discussed on-going research with AZT, Dr. Rideout wrote a memorandum in which she noted that "Ethically the MD's [sic] at [Glaxo] cannot suppress the activity of such a compound for very long."6 She obviously thought that AZT was going to be effective against HIV.
[13] In January 1985, Glaxo began to prepare its patent application. A Glaxo scientist contacted Glaxo's patent agent, "and advised that a patent application may be needed immediately."7 Dr. David Barry, a co-inventor of AZT, testified that he "was pushing for the urgency of [the] patenting process" and that he "would keep pushing [the patent agents] as to the timing and speed with which [the application] would be filed."8
[14] A draft patent application was completed on February 6, 1985.9 It contained a complete description of a new use for the old AZT compound, including dosage details. The draft application was virtually identical to the final patent application filed on March 16, 1985.
[15] On February 4, 1985, while the draft patent application was being prepared, Glaxo sent what it knew to be AZT to Dr. Broder and Dr. Mitsuya, two doctors employed by the National Institute of Health (the NIH), to test AZT's effectiveness against HIV. At the time the compound was sent, however, Glaxo did not tell the doctors the name or chemical structure of the compound they were testing.
[16] Glaxo asked the doctors to test the compound identified only as compound "S" against HIV using a laboratory human cell line Drs. Broder and Mitsuya had developed. 10 Glaxo did so because it wanted to determine whether AZT was effective against HIV, as they suspected, and because it did not have the facilities required to test compounds against the actual HIV virus.11 At the time the sample was sent, neither Drs. Broder or Mitsuya knew the name of the compound, its chemical structure, or that it was a nucleoside analogue. As previously mentioned, compound "S", was in fact, AZT.
[17] On February 21, 1985, Dr. Broder advised Glaxo that the as-then unidentified compound exhibited activity against HIV in vitro (i.e. against cells contained in a test tube, as opposed to against cells contained in a living human being).12 It was not until March 1, 1985 that Glaxo advised Dr. Broder that the compound he and Dr. Mitsuya had been testing was AZT. Glaxo argued that no evidence was introduced to demonstrate that it was waiting for Drs. Broder and Mitsuya's results before it applied for a patent.
[18] Following the positive results reported by Dr. Broder, Glaxo submitted its patent application to the United Kingdom Patent Office, claiming a priority date of March 16, 1985. On March 14, 1986, Glaxo filed a Canadian patent application, claiming a priority date of March 16, 1985, based on its earlier U.K. filing.13 On June 21, 1988, Glaxo was granted Canadian Patent No. 1,238,277 (the `277 patent).14 In both patents, only the five Glaxo scientists were named as inventors. The two NIH scientists, Drs. Broder and Mitsuya, were not named as co-inventors.
[19] These relatively straightforward facts spawned close to ten years of litigation, both in Canada and in the United States. The germ was first seeded on December 5, 1990, when A & N instituted an action in Canada for a declaration that Glaxo's `277 patent was invalid and that their proposed generic AZT products would not infringe the patent.15
[20] On October 16, 1991, Glaxo commenced an action against Apotex, alleging (among other things) that Apotex's proposed products infringed various claims contained in the `277 patent.16 On December 20, 1993, Glaxo commenced an action for infringement against Novopharm.17 The three actions were consolidated, and ordered to be heard together.
[21] At trial, A & N raised a number of arguments in an attempt to demonstrate that the `277 patent was invalid. These are outlined in paragraph 2 of these reasons.
[22] The trial judge accepted A & N's argument that Glaxo ought to have named Drs. Broder and Mitsuya as co-inventors of AZT. He concluded, however, that the failure to mention Drs. Broder and Mitsuya as co-inventors did not constitute a material untrue allegation sufficient to invalidate the patent in accordance with section 53 of the Patent Act.18
[23] Having found that many claims contained in the patent were valid, the trial judge concluded that A & N had infringed those claims.
The Law of Inventorship
[24] The patent system provides an owner/inventor with the exclusive right to make, use, and sell an invention. The practical effect of the monopoly granted to the patentee is to exclude all others from trading in the invention. This monopoly, of course, depends on the patent actually disclosing an invention, as defined in section 2 of the Patent Act.
[25] Perhaps the most forceful way to challenge a patent, is to assert that the patent itself reveals no invention. The consequence of this is that much of the conflict that arises within patent law centres around controversies about whether something is an invention or not.
[26] Not surprisingly, the issue of invention has been the subject of sustained judicial and scholarly attention over the past century. Indeed, the issue of invention arises in this case.
[27] In contrast, the issue of inventorship, i.e. who is an inventor, has been the subject of much less deliberation. In our system of patent law, the identity of the inventor is, for the most part, overshadowed by the issue of invention. In this case, however, the issue of inventorship cannot be overlooked.
[28] The issue of inventorship arises here for two reasons: first, the trial judge found that Drs. Broder and Mitsuya were co-inventors; and, second, A & N argue that failure to name Drs. Broder and Mitsuya as co-inventors in the patent is a material misrepresentation that should invalidate the patent. As such, we must turn our attention to the issue of inventorship.
[29] In order to deal with this part of the appeal, I have chosen to divide the inquiry into two stages. First, I will examine the law of inventorship to determine whether Drs. Broder and Mitsuya are co-inventors. Second, I will consider whether the failure to name co-inventors is a material misrepresentation that invalidates the patent. Embarking on this line of inquiry provides this court with an opportunity to review and comment on the existing law of inventorship.
[30] An invention is defined in section 2 of the Patent Act as:
| "invention" means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter; |
« invention » Toute réalisation, tout procédé, toute machine, fabrication ou composition de matières, ainsi que tout perfectionnement de l'un d'eux, présentant le caractère de la nouveauté et de l'utilité. |
An inventor of an invention must be two things: i) the person who first conceives of a new idea or discovers a new thing that is the invention; and ii) the person that sets the conception or discovery into a practical shape.
[31] Mere conception is thus not invention unless combined with the second element of setting the idea into practical shape which acts as proof that the mental act of invention occurred by a certain date. But, for the purposes of dating an invention, setting the idea into practical shape need not rise to the formality of a patent application. Instead, the date on which an invention is conceived or discovered is "the date at which the inventor can prove he has first formulated, either in writing or verbally, a description which affords the means of making that which is invented."19 In other words, the invention must be "reduced to a definite and practical shape."20
[32] It is clear from all of this that, for a person to be considered an inventor, the invention for which patent protection is sought must have originated in the inventor's own mind. As Mr. Robert B. Frost's textbook Letters Patent for Inventions21 explains, "a person will not be considered the true and first inventor if he himself did not make the invention, or if the idea of it did not originate in his own mind [...]."22 Likewise, as Maclean P. stated in Gerrard Wire Tying Machines Co. of Canada v. Cary Manufacturing Co.,23 a true inventor "must not have borrowed the idea from anyone else."24 Similarly, Dr. Fox notes that,
| [i]n order to be the inventor, the applicant for a patent must have invented the thing himself, and not as a result of suggestion by another or as a result of reading. If it had been in previous use or available to the public, or if the applicant himself did not make the invention, or if it did not originate in his own mind, the applicant cannot be considered to be in law the inventor.25 |
Finally, in Hughes and Woodley on Patents,26 the authors explain that "presenting a problem to another for solution is not an act of invention."27 In law, then, an inventor is that person (or those persons) whose conception or discovery gives rise to the invention for which a patent is sought. It should thus be equally clear that a person who does not conceive the idea or discover the thing is not an inventor.
[33] Where a person is directed to engage in a purely mechanical act for the purpose of testing whether an invention will work, in circumstances where "the whole train of ideas put into motion [...]_were those of others,"28 the person is not to be treated as an inventor. If a person merely verifies another's previous predictions, the person is not an inventor.29 To hold otherwise, would either discourage the inventor from obtaining assistance in realizing the invention or force the inventor to share the fruits of the invention with those retained to assist. The first premise would cause undue delay in bringing important inventions to the public. The second premise would diminish the economic incentive to invent built into the patent system. Neither premise, from the standpoint of the public, is desirable.
Were Broder and Mitsuya Co-inventors?
[34] I do not think that the facts demonstrate that Drs. Broder and Mitsuya satisfy the legal definition of inventorship.
[35] Drs. Broder and Mitsuya did not think to use AZT to treat AIDS. In Mr. Frost's words quoted above, the "idea of it did not originate in [their] own minds." The idea originated in the Glaxo scientists' minds. Put another way, "the whole train of ideas put into motion [...] were those of others,"30 namely the five Glaxo scientists listed as co-inventors of AZT. Indeed, in a non-disclosure agreement that Dr. Broder executed, in which he undertook to conduct the testing, he agreed to perform the services on Glaxo's behalf.31 Thus, Drs. Broder and Mitsuya did not conceive of the idea to use AZT against HIV, but acted to assist those Glaxo scientists who did conceive the idea.
[36] It should be noted that in parallel litigation to the instant appeal in the United States, in which Barr Laboratories, Inc. (an affiliate of Apotex), Novopharm, Inc. and Novopharm Ltd. challenged similar U.S. patents on the grounds that Drs. Broder and Mitsuya were co-inventors of AZT, the United States Court of Appeals for the Federal Circuit concluded that "the NIH scientists were not joint inventors of these inventions".32 That is, the subject matter of the invention was conceived without the assistance of Drs. Broder and Mitsuya.
[37] The trial judge found that Drs. Broder and Mitsuya did not know the compound's identity until March 1, 1985, after they reported positive results from the in vitro tests they performed. Had Glaxo not told them that the compound they had tested was AZT, Drs. Broder and Mitsuya might never have known that the patent that is the subject of this litigation related to the compound which they had tested.
[38] Dr. Mitsuya himself testified that in 1984 and 1985, he thought that dideoxynucleosides, of which AZT is a member, "was likely to be harmful to human cells."33 The trial judge noted this aspect of Dr. Mitsuya's testimony at paragraph 261 of his reasons, when he stated that "it would appear that Dr. Mitsuya believed [...] that dideoxynucleosides would be too toxic in the treatment of human diseases."
[39] In 1985, Drs. Broder and Mitsuya were sufficiently sophisticated in patent-related matters that they applied for a patent for a drug called suramin to treat HIV.34 Indeed, following their work with AZT, Drs. Broder and Mitsuya obtained patents for two drugs called ddC and ddI, drugs that the trial judge concluded "they discovered in the course of their work in relation to AZT."35 Despite their knowledge of the importance of patent rights evidenced by their suramin, ddC and ddI patents, neither doctor claimed an interest in Glaxo's patent.
[40] In a letter written by Dr. Broder, he confirmed that the NIH did "not have a patent position on AZT-related inventions and, therefore, it cannot express an ownership interest on which to base a production or marketing agreement with [Glaxo] for AZT development."36 At no time have Drs. Broder or Mitsuya ever asserted that they were co-inventors of the use of AZT against HIV.
[41] In summary, I do not think the facts support the conclusion that Drs. Broder and Mitsuya were co-inventors of the use of AZT against HIV. They played no part in coming up with the idea of using AZT against HIV. Both doctors agreed to test a substance that was unknown to them on behalf of Glaxo. Any contribution they may have made did not make Drs. Broder and Mitsuya inventors, nor did it affect or diminish the Glaxo scientists status as the inventors of the use of AZT against HIV.
[42] The trial judge concluded that Drs. Broder and Mitsuya were co-inventors of AZT on the basis that Glaxo's invention was not proven to be useful until March 16, 1985, after the doctors reported the successful in vitro tests to Glaxo.
[43] In light of the Supreme Court of Canada's decision Christiani & Nielsen v. Rice, in which the Court concluded that the date on which an invention is discovered is "the date at which the inventor can prove he has first formulated, either in writing or verbally, a description which affords the means of making that which is invented,"37 and in light of the fact that a draft patent application that afforded the means of using AZT against HIV was complete by February 6, 1985, before Drs. Broder and Mitsuya's results were complete, the invention date may indeed be February 6, 1985, as Glaxo argues.
[44] However, in my view, because I have concluded that Drs. Broder and Mitsuya did not co-invent AZT for use in treatment or prophylaxis of HIV, it is unnecessary to determine whether the date on which the invention was complete was February 6, 1985, or March 16, 1985. Regardless of the date of invention, the inventorship aspect of A & N's appeal must fail on the basis that Drs. Broder and Mitsuya were not co-inventors.
[45] To summarize, when the trial judge concluded that Drs. Broder and Mitsuya were co-inventors of AZT, I think he confused the concept relating to the identity of the inventors with the concept relating to the date on which an invention is created. Merely because people other than the inventors perform testing to demonstrate an invention's utility does not make them inventors.
| Section 53 of the Patent Act: Does the Failure to Mention a Co-inventor Constitute an Untrue "Material Allegation" That Results in the Patent's Invalidity? |
[46] In the event that I am wrong in concluding that Drs. Broder and Mitsuya did not co-invent AZT, I will consider 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. Section 53 states:
| 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. |
53 (1) Le brevet est nul si la pétition du demandeur, relative à ce brevet, contient quelque allégation importante qui n'est pas conforme à la vérité, ou si le mémoire descriptif et les dessins contiennent plus ou moins qu'il n'est nécessaire pour démontrer ce qu'ils sont censés démontrer, et si l'omission ou l'addition est volontairement faite pour induire en erreur. |
| 53 (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. |
53 (2) S'il apparaît au tribunal que pareille omission ou addition est le résultat d'une erreur involontaire, et s'il est prouvé que le breveté a droit au reste de son brevet, le tribunal rend jugement selon les faits et statue sur les frais. Le brevet est réputé valide quant à la partie de l'invention décrite à laquelle le breveté est reconnu avoir droit. |
[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 Can. Ltd.,38 "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."39 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.
[48] Examination of A & N's contention that failure to name a co-inventor is a material misrepresentation leading to invalidity demonstrates that this is an illogical proposition. If such was a material misrepresentation, a true inventor who went unnamed in a patent would have no remedy to share in the monopoly of his or her invention. If the A & N argument were correct, any action by an unnamed inventor would cause the patent to be invalidated and cost the inventor a share in the monopoly of the invention. It must be correct, contrary to A & N, that such an unnamed inventor would instead wish to be named as a co-inventor to reap the benefits flowing from a valid patent. Thus, failure to name an inventor is not a violation of section 53 and this part of A & N's appeal fails.
Issue 2 - Completion of Invention
A & N say that the patent is invalid because:
| 2. the invention was not complete by March 16, 1985, the filing date of the patent application in the United Kingdom |
[49] I now turn to A & N's submission that Glaxo's invention was not complete by March 16, 1985. The submission was, that because by the filing date of March 16, 1985, the testing that demonstrated the utility of the invention was not complete, the patent was invalid. To support that proposition, A & N rely heavily on a sentence contained in CIBA-Geigy AG v. Commissioner of Patents,40 in which Thurlow C.J. held that "the predictability of chemical reactions should not [...] be confused with the predictability of the pharmacological effects and thus of the pharmacological utility of new substances."41 They then build on that statement by citing various decisions like May & Baker Limited et al. v. Boots Pure Drug Company Limited,42 Société Rhône-Poulenc v. Jules R. Gilbert Ltd.,43 Hoechst Pharmaceuticals of Canada Ltd. et al. v. Gilbert & Co. et al.44 and Centre Hospitalier Boeringer Sohn v. Bell Craig45 for the proposition that a pharmaceutical compound cannot constitute an invention until it is tested on living human beings. They submit that these decisions stand for the proposition that absent such testing, there can be no "sound prediction" sufficient to establish invention. Because AZT was not tested on living human beings by the patent's priority date of March 16, 1985, A & N submit that Glaxo could not have known that AZT would be effective in the treatment or prophylaxis of HIV, and therefore that the `277 patent is invalid.
[50] In my view, this Court's decision in CIBA-Geigy stands for the proposition that even where an invention constitutes a speculation as of the priority date claimed in the patent, the patent will not be invalid if it turns out that the speculation is valid at the time the patent is attacked. In CIBA-Geigy, this Court held that "if indeed what is in the patent specification was mere speculation or prediction, the speculation or prediction having turned out to be true, ought to be considered to have been well founded at the time it was made."46 Similarly, in CIBA-Geigy, this Court rejected the proposition that a patent applicant "should not be permitted to retain claims on the basis of something done after the filing of the application and not part of the original disclosure."47
[51] In other words, so long as an inventor can demonstrate utility or a sound prediction at the time a patent is attacked, the patent will not fail for lack of utility. The time at which usefulness is to be established is when required by the Commissioner of Patents or in court proceedings when the validity of the patent is challenged on that ground. The Commissioner may require a patent's utility to be demonstrated pursuant to section 38 of the Act, which permits the Commissioner to require an applicant to "furnish specimens of the ingredients [of a composition of matter], and of the composition, sufficient in quantity for the purpose of experiment."
[52] To conclude that evidence of actual utility subsequent to a patent's priority date may not be introduced to demonstrate that an invention meets the requirements of the Patent Act would produce illogical results. For instance, suppose that on December 10, 1903, Wilbur and Orville Wright obtained a patent for an airplane, and that by that date, neither brother had successfully flown the plane or could be said to have a "sound prediction" that a machine heavier than air could fly. Suppose further that one week later, the Wright brothers managed to successfully fly their plane. If the Wright brothers' patent was later attacked, and if uncontradicted expert testimony was provided by the attackers to demonstrate that by December 10, 1903, machines heavier than air could not fly, would their patent be invalid even though all would concede that by the time the attack was brought, such machines could fly? In my view, to so conclude would require a Court to close its eyes to continuing scientific advancements, and would disentitle patentees to rely on the instinctive sparks that so often engender great discoveries. In Dr.
Rideout's words, one of the co-inventors of AZT, combinations of "instinct and intuition [and] gut reaction",48 supported by actual evidence of utility at the time the patent is attacked, would not be sufficient to support a patent.
[53] The decisions cited by A & N in support of the proposition that all pharmaceuticals must invariably be tested on living human beings prior to the priority date claimed in a patent are not applicable to the instant appeal. Firstly, as the trial judge held, the decisions deal with the notion of "sound prediction," a doctrine that applies only to cases in which a few claimed compounds are tested but many are untested even at the time when the patent is attacked. Such testing requirements simply do not apply where, at the time the patent is attacked, there is evidence of actual utility (i.e. that the pharmaceutical does what the patent promises). Where such utility is demonstrated, there is no need to fall back on the "sound prediction" doctrine and the experiments that are required to make such predictions. Since A & N do not dispute that AZT is indeed useful to treat HIV, the `277 patent meets the "actual utility" test.
[54] Finally, if the Court in CIBA-Geigy intended to hold that a higher standard of utility is required for pharmaceutical inventions, as opposed to other inventions, this may be explained by
the fact that the decision in Ciba-Geigy preceded the establishment of Canada's international treaty obligations under the North American Free Trade Agreement and the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights. Both of these agreements, which have been incorporated into domestic law,49 prohibit discrimination based on field of technology.50 Thus, this Court may not hold pharmaceutical inventions to a higher standard of utility than it does other classes of inventions.
Issue 3 - Formal Admission
A & N say that the patent is invalid because:
| 3. Glaxo formally admitted that the invention date was February 6, 1985 and Wetston J. therefore erred in finding March 16, 1985 as the invention date or accepting evidence relating to the invention arising subsequent to February 6, 1985; |
[1] On appeal, Apotex argued that the trial judge erred by disregarding a so-called "formal admission" made by Glaxo that the date on which the invention was created was no later than February 6, 1985. Apotex argued that the trial judge was not permitted to go outside Glaxo's pleadings so as to conclude that the `277 patent evidenced utility by March 16, 1985.
[2] In my view, merely by pleading that the invention was created no later than February 6, 1985, Glaxo did not make a formal admission. Firstly, formal admissions are made "for the purpose of dispensing with proof at trial."51 That a major portion of the trial was devoted to the date of invention demonstrates that Glaxo's pleading did not constitute a formal admission. Secondly, the date of invention is a matter solely for the trial judge to determine. In Corning Glass Works v. Canada Wire and Cable,52 Strayer J. (as he then was) rejected a similar argument now advanced by Apotex, holding:
| There was no such formal admission on the record and counsel for the plaintiff insisted that any such admission had been made only for the purpose of determining the relevant prior art. It appears to me to be open to the court to reach its own conclusion on the date of invention and in any event I think I should interpret the words of the Patent Act to identify the time of invention in a manner consistent with the language of that enactment.53 |
[3] I think Strayer J.'s comments are equally applicable in the instant appeal.
MALONE J.A.
Issue 4 - Obviousness and Novelty
A & N says the patent is invalid because
| 4. the claimed invention is obvious and lacks novelty; |
[4] Novopharm argued that the use of AZT as a treatment or prophylaxis for AIDS was obvious in light of articles published in 1974 and 1978 by Drs. Ostertag and Krieg respectively. Apotex made no submission on this point. Apotex did argue, however that the patent should not have issued due to a lack of novelty.
[5] The words "obviousness" and "novelty" have been described by this Court in the following manner:
| ". . . obviousness is an attack on a patent based on its lack of inventiveness. The attacker says, in effect, "any fool could have done that". Anticipation, or lack of novelty, on the other hand, in effect assumes that there has been an invention but asserts that it has been disclosed to the public prior to the application for a patent. The charge is "Your invention, though clever, was already known".54 |
Obviousness
[6] The test for obviousness is whether the notional technician, devoid of inventiveness, but skilled in the art would, in light of the state of the art and of common general knowledge at the date of the invention, have come directly and without difficulty to the solution taught by the patent. This is a difficult onus to discharge.55
[7] Obviousness is a question of fact and this Court cannot interfere with the Trial Judge on this issue unless he committed a manifest error in weighing the evidence or committed an error of law.56 Care must be taken to guard against the danger inherent in hindsight analysis that an invention may appear obvious after the fact which was not obvious at the time of the invention.
[8] At trial, four experts were called to testify on the issue of obviousness: two for Glaxo and two for A & N. The care with which expert evidence on the issue of obviousness must be treated, was discussed by Mr. Justice Hugessen in Beloit Canada Ltd. et al. v. Valmet OY 57 referred to earlier:
| While the evidence of experts is, in my view, properly admissible even on a "ultimate issue" question such as obviousness, it seems to me that it must be treated with extreme care. |
| Every invention is obvious after it has been made, and to no one more so than an expert in the field. Where the expert has been hired for the purpose of testifying, his infallible hindsight is even more suspect. It is so easy, once the teaching of a patent is known, to say, "I could have done that"; before the assertion can be given any weight, one must have a satisfactory answer to the question, "Why didn't you?". |
[9] It is clear from the Reasons for Judgment that the Trial Judge in examining the prior art considered the evidence of each of the virology witnesses on the issue of obviousness and applied the proper tests before concluding that the prior art, individually or taken together, would not have led an unimaginative skilled technician to the invention without undue experimentation. The Trial Judge's assessment of the expert testimony was not "manifestly wrong". His conclusions were reasonably drawn on the evidence presented at trial. I find no legal errors on which to disturb any of his findings on the issue of obviousness.
Novelty
[10] Apotex urged that there was no novelty involved in combining AZT with a known carrier. The argument seems to be based on the assumption that the patent claims exclusivity with
respect to the AZT compound. However, the valid patent claims are use claims, that is, a new use of an old compound.
[11] In Shell Oil Co. v. Commissioner of Patents58 the Supreme Court of Canada held that the discovery of a new use for a known compound is patentable. The invention in this case lies in the discovery that AZT is useful in the treatment or prophylaxis of HIV. The Trial Judge was correct in finding that the claims did not lack novelty.
Issue 5 - Ambiguity
A & N says the patent is invalid because
| 5. the technical terms used in the patent cover more than one compound and are therefore ambiguous; |
[12] Both at trial and on appeal, A & N have argued that the term 3'-azido-3'-deoxythymidine in the specification of the Patent is either over broad or ambiguous, submitting that a person skilled in the art reading the specification as a whole could not know the structure of the compound described as 3'-azido-3'deoxythymidine. A corollary argument is that the term used in the patent could apply to two specific compounds.
[13] Having heard the expert witnesses, the Trial Judge concluded that someone skilled in the art, with a mind willing to understand and following the disclosure in the Patent, would be able to synthesize AZT.59 Further, the evidence clearly indicated that the term applied to only one compound. In my analysis, this reasoning was fully supported by the evidence and I can only conclude that the Trial Judge made no palpable and overriding error that would permit interference with his decision on appeal.
Issue 6 - Sufficiency of Disclosure
A & N says the patent is invalid because
| 6. the disclosure in the patent does not adequately describe the claimed invention, how it operates and how it is to be used; |
[14] Apotex submitted that the disclosure in the Patent did not provide enough information for a medical practitioner to treat patients with AZT. Both A & N submitted that the disclosure of the mechanism of action of AZT was insufficient to support a claim for its use as a prophylaxis.
[15] Paragraph 34(1)(b) of the Patent Act provides that the applicant shall, in the specification of the invention, set out clearly the method of making a composition of matter "in such full, clear, concise and exact terms as to enable any person skilled in the art or science to which it pertains to make, construct, compound or use it". I am of the view that the Trial Judge was correct that the Patent in issue gives persons skilled in the art all of the information necessary to work the invention claimed.
[16] The treating physicians called by all parties agreed that in prescribing drugs they do not refer to drug patents. Rather, they rely on product monographs, medical literature and experience.60 It follows, therefore, that the Trial Judge was correct in finding that the disclosure was not directed to physicians prescribing AZT and that the specification did not have to contain detailed prescribing information.
[17] The Patent discloses the use of AZT in the prophylaxis of HIV. The specification sets out the method to make formulations which can be used to administer AZT as a prophylaxis. Some eighteen formulation examples are given in the Patent. Accordingly, I can only conclude that there is no basis for the arguments that the Patent specification is insufficient or that the Trial Judge failed to fully consider the issue. Accordingly, the Trial Judge was not in error in finding that the disclosure was not insufficient under paragraph 34(1)(b) of the Patent Act.
ROTHSTEIN J.A.
Issue 7 - Medical Treatment
A & N says the patent is invalid because
| 7. the claimed invention is a medical treatment and is therefore not patentable. |
[18] In Tennessee Eastman Co. et al v. Commissioner of Patents61 methods of medical and surgical treatments were held not to be patentable. A & N argue that patent claims for the use of a
pharmaceutical product constitute methods of medical treatment and are therefore not patentable. Wetston J. rejected this argument.
[19] In Shell Oil62 the Supreme Court of Canada had occasion to revisit Tennessee Eastman and to provide some guidance on this issue. At page 55 of Shell Oil, Wilson J., commenting on Lawson v. Commissioner of Patents,63 observed that the distinction between what is and what is not patentable is based on whether the subject matter is related to professional skills on the one hand or trade, industry, or commerce on the other.
[20] What is at issue in this case is the use of a pharmaceutical formulation -- a vendible product, clearly related to trade, industry and commerce. Wetston J. found, and I agree, that what was invented was a new use for a known compound and not a method of medical treatment.
[21] Novopharm suggests that Wetston J. erred in not following Imperial Chemical Industries Ltd. v. The Commissioner of Patents.64 In Imperial Chemical, this Court, in applying Tennessee, upheld the Commissioner's decision to refuse a patent application that described its invention as
"a method of cleaning teeth."65 There, this court agreed with the Commissioner that one of the main purposes of the patent was a method of medical treatment. However, since Wetston J., following Shell Oil, found that the subject of the patent here is the use of an old compound as a vendible product and not a method of medical treatment, Imperial Chemical does not apply to the facts of this case. I would also observe that Imperial Chemical was decided without reference to the Supreme Court of Canada decision in Shell Oil.
Issue 8 - Claims Unrelated to Use
If the patent is found to be valid, A & N say certain claims are invalid because:
| 8. AZT is not a new compound and claims not restricted to the use of the compound do not represent an invention; |
[22] A number of claims do not expressly make reference to the use of the AZT compound. Wetston J. found such claims to be patentable. At paragraph 284 he stated:
| The claims and disclosure must be read as a whole. The entire disclosure relates to the use of AZT as a pharmaceutical in the treatment or prophylaxis of human retro viral infections. In this regard, I disagree that a pharmaceutical formulation comprising AZT with a carrier does not provide a means of administering the drug for therapeutic purposes and thus claim 1 is not overbroad. |
[23] Claim 1 provides:
| A pharmaceutical formulation comprising as active ingredient (AZT) and a pharmaceutically acceptable carrier therefore. |
[24] A & N argue that claims for the AZT compound not restricted to a use are not patentable because AZT, as a compound, is not new, as it was first developed in 1964.
[25] At paragraph 283 Wetston J. acknowledged that if claims are:
| broad enough to cover an invention for antibacterial or anti-cancer medicines, then upholding the claim would involve an inappropriate variation or modification. |
[26] As I read claim 1, it is unrelated to a use. By its terms it is a claim for a product, a pharmaceutical formulation. However, the evidence here is that AZT was a known compound, previously synthesized and tested in 1964. At paragraph 20, Wetston J. stated:
| It is agreed that AZT was a known compound, previously synthesized and tested by Jerome Horwitz at the Detroit Institute of Cancer Research in 1964 as part of an effort to find treatments for cancer in humans. The use of AZT in cancer patients was ultimately not pursued. Glaxo had also been researching the drug for use as an antibacterial treatment. While some initial testing had been performed, it was decided not to pursue the drug for that purpose. |
[27] When a new compound is invented, the inventor is entitled to a patent over that compound for all uses. However, where the compound is not new, the patent will be limited to the new use invented for the compound. To allow claim 1 and claims dependant upon it to stand would be tantamount to granting Glaxo a patent for a compound that was not new, i.e. not an invention.
[28] Glaxo relies on Shell Oil66 as authority that a patent may be granted for a compound that is not new even though the use of the compound is not set forth in the claim. However, it is clear from reading the claim at issue in Shell Oil "a plant growth regulant..." that it describes a specific use. The use is implicit in the words of the claim. Shell Oil is of no assistance to Glaxo.
[29] However, even if it could be said that the words "pharmaceutical formulation" imply a pharmaceutical use, such undefined and unapplied pharmaceutical "use" has been known since 1964. What is new is the specific use of AZT against HIV. That is what was invented in 1985. It is only that use of the pharmaceutical formulation that is patentable.
[30] Wetston J. seems to have been of the opinion that reading the patent as a whole would limit Glaxo to exclusivity only in respect of the use of AZT for human retroviral infections. However, claim 1 is not ambiguous and in such circumstances it is improper to have regard to the patent disclosure to limit the ambit of the claim and thereby save an otherwise invalid claim.67
[31] In the result, I am of the respectful view that Wetston J. erred in finding claim 1 and claims dependant on claim 1 valid. These claims are invalid.
Issue 9 - Prophylaxis Claims
If the patent is found to be valid, A & N say certain claims are invalid because:
| 9. claims for the use of AZT as a prophylaxis are ambiguous and are not described in the disclosure. |
[32] Wetston J. found that claims for the prophylaxis use of AZT are not broader than the invention claimed or disclosed and are not ambiguous and that such claims are therefore valid. I think he is correct.
[33] There is no ambiguity as to the meaning of the word "prophylaxis" as argued by A & N. Prophylaxis means "a preventative measure against disease" (Shorter Oxford Dictionary, 9th ed.) - HIV infection in this case. By contrast, treatment, in the way the term is used in the patent, means a measure against disease after an individual is infected, i.e. with the HIV virus.
[34] Wetston J. observed that there was some disagreement between the experts as to the meaning of prophylaxis. However, as I read his findings with respect to the evidence of the experts, they did not disagree as to the meaning of prophylaxis but rather, only as to the circumstances in which the administration of AZT would be considered as a prophylaxis or treatment measure. The disagreement appears to have been whether the use of AZT to prevent the transmission of HIV from mother to foetus or to prevent a health care worker from becoming infected with HIV from a needle stick constituted prophylaxis use or treatment use.
[35] In circumstances in which a foetus is not infected although the mother is, the use of AZT in respect of the foetus is clearly a prophylaxis use. If the foetus is infected, the use is treatment, as it is with the infected mother. In the case of the needle stick, again, if the health care worker has not been infected, AZT is used as a prophylaxis; if already infected, as a treatment.
[36] A & N argue that AZT is not effective as a prophylaxis to prevent transmission of the infection from the infected individual to the uninfected individual in the case of unprotected sex. Even if this is the case, it does not mean that prophylaxis is an ambiguous term. It simply means that AZT will not be effective to prevent the transmission of the HIV infection in every circumstance.
[37] In either case, prevention or treatment, AZT acts as a "chain terminator", intended to prevent transmission of HIV to the individual (or the foetus) or, if already infected, intended to reduce the viral load to undetectable levels. A & N's ambiguity argument therefore is rejected.
[38] A & N point to the words in the specification:
| It will be appreciated that the preferred route will vary with the condition and age of the recipient, the nature of the infection and the chosen active ingredient. |
A & N submit that an existing infection is presumed in these words and therefore the prophylaxis use of AZT goes beyond the patent disclosure and could not have been contemplated by the inventors. However, in the very same paragraph the specification states that AZT may be administered to humans for prophylaxis or treatment of retroviral infections. The context in which the word "infection" is used is the treatment or prevention of the infection, i.e. treatment or prophylaxis use of AZT.
[39] A & N argue that the use of AZT for prophylaxis purposes was not known by the inventors when the patent application was filed and that such use is therefore not patentable . However, as indicated by Sexton J.A. in paragraph 52 above, the time at which usefulness is to be established is when required by the Commissioner of Patents or in court proceedings when the validity of the patent is challenged on that ground. There was such evidence before Wetston J. with regard to preventing HIV from mother to foetus and in health care workers in respect of needle sticks.
[40] Wetston J. was therefore correct in concluding that claims for the use of AZT as a prophylaxis are valid.
Issue 10 - Standing to Sue
A & N say that Glaxo Wellcome Inc. has no standing to sue for infringement because:
| 10. it is not a licensee of the patentee, the Wellcome Foundation Limited. |
[41] A & N question the right of Glaxo Wellcome Inc. (GWI) to sue for infringement alleging that there is no proof that GWI is a person claiming under the patentee, Wellcome Foundation Ltd., as required by subsection 55(1) of the Act. Section 55(1) reads:
| 55. (1) A person who infringes a patent is liable to the patentee and to all persons claiming under the patentee for all damage sustained by the patentee or by any such person, after the grant of the patent, by reason of the infringement. |
55. (1) Quiconque contrefait un brevet est responsable envers le breveté et toute personne se réclamant de celui-ci du dommage que cette contrefaçon leur a fait subir après l'octroi du brevet. |
[42] GWI produced no written licence at trial but maintained that the licence was implied. It argued that its rights in respect of the patent can be traced to the patentee in three ways: as a subsidiary of the patentee, as a member of a group of companies including the patentee all under the control of Glaxo Wellcome Inc. of the United Kingdom and, alternatively, as a sales agent of the patentee.
[43] The learned Trial Judge heard and accepted extensive oral evidence from the Wellcome and Glaxo organizations regarding their corporate histories and practices over the years leading up to the merger of those organizations in December of 1995. Regarding licences, evidence was led that both the Glaxo and Wellcome organizations had policies of granting unwritten licences to subsidiary companies, a written document being necessary only in the case of a non-wholly-owned subsidiary. Generally, exclusive licences were granted to subsidiaries by implication, a practice that remains to the present.
[44] Wetston J. found that GWI was able to trace an interest under the patent by virtue of the licensing practices of the Glaxo Wellcome Inc. group of companies and that GWI was a "person claiming under the patentee" under subsection 55(1) of the Patent Act and therefore had status to sue. I find no error in this analysis of the learned Trial Judge.
[45] It is perhaps not uncalled for to observe that this is not a case in which the alleged licensee is alone in advancing its claim for patent infringement. Here, the patentee is also before the Court as a co-plaintiff supporting the claim of GWI. It is difficult to conceive of what more is necessary to prove the existence of a licence than to have the licensor and licensee both attesting to the validity of the licence. Where both the patentee and the person claiming under the patentee are before the Court, are affiliated as being owned by the same parent and have an identity of interest in the litigation -- with the patentee supporting the person claiming under the patentee -- it is, to say the least, surprising that technical questions of status to sue would be advanced as a defence to infringement.
[46] One further argument was also raised in connection with the right to sue. A & N suggested that the failure to register a licence at the Canadian Patent Office renders GWI's infringement claim a nullity. Subsection 50(2) of the Act reads:
| (2) Registration.--An assignment, and every grant and conveyance of any exclusive right to make and use and to grant to others the right to make and use the invention patented in Canada or any part thereof, shall be registered in the Patent Office in the manner prescribed by the Commissioner. |
(2) Toute cession de brevet et tout acte de concession ou translatif du droit exclusif d'exécuter et d'exploiter l'invention brevetée partout au Canada et de concéder un tel droit à des tiers sont enregistrés au Bureau des brevets selon ce que le commissaire établit. |
The mandate to register a licence as prescribed in subsection 50(2) must be read in conjunction with section 51, which states:
| 51. Every assignment affecting a patent for invention, whether it is one referred to in section 49 or 50, is void against any subsequent assignee, unless the assignment is registered as prescribed by those sections, before the registration of the instrument under which the subsequent assignee claims. |
51. Toute cession en vertu des articles 49 ou 50 est nulle et de nul effet à l'égard d'un cessionnaire subséquent, à moins que l'acte de cession n'ait été enregistré, aux termes de ces articles, avant l'enregistrement de l'acte sur lequel ce cessionnaire subséquent fonde sa réclamation. |
Having regard to both sections, it is clear that a purpose of registration under subsection 50(2) is to secure an assignee's priority as against subsequent assignees. Failure to register will deprive an assignee of priority against subsequent assignees and, as between them, an unregistered assignment is "void". However, there is no indication that failure to register renders the assignment void for any other purpose.
[47] The maxim expressio unius est exclusio alterius instructs that to express or include one thing implies the exclusion of the other. Here, this suggests that since Parliament has expressed that an unregistered assignment is void as between competing assignees, it is not void generally or for other purposes. It is, therefore, incorrect to interpret subsection 50(2) as being a general provision having the effect of rendering all non-registered licences presumptively void. This conclusion is consistent with a comment of the Supreme Court of Canada in Electric Chain Co. of Canada v. Art Metal Works Inc.,68 that it is not evident that subsection 50(2) renders an assignment void for failure to register.
[48] More specific to this case, there is no basis in the Patent Act for an alleged infringer being able to rely on non-registration of a licence as a defence against the licensee's patent infringement claim. Thus, where an assignee is the beneficiary of a valid licence, as I have found here, failure to register that licence will not negate the assignee's right to sue for infringement of the patent. Accordingly, I see no basis upon which to disturb the Trial Judge's decision in connection with GWI's right to sue and its entitlement to relief for patent infringement.
CROSS-APPEAL
Issue 1 - Claims Related to All Retroviral Infections
| Glaxo says that Wetston J. erred in ruling invalid: |
| 1. claims for the use of AZT in the treatment or prophylaxis of all human retroviral infections as being overbroad because he wrongly did not accept cogent evidence that supported the usefulness of AZT for all retroviral infections |
[49] The patent contains claims for the use of AZT for the treatment or prophylaxis of human retroviral infections. Wetston J. found as a fact that such claims were overbroad, not co-extensive with the invention and speculative. He accepted that the work of the inventors was overwhelmingly directed towards searching for a treatment for HIV and not other human retroviruses. In its cross-appeal, Glaxo argues that in drawing this conclusion the learned Trial Judge made a palpable and overriding error.
[50] Glaxo points to the testimony of A & N's witness Dr. Hiroaki Mitsuya -- one of the researchers at the National Institute of Health who, at Glaxo's request, tested AZT on human retroviruses in vitro. On cross-examination, Dr. Mitsuya acknowledged that he had co-authored a paper that stated that AZT had the potential to function as an antiviral agent against human retroviruses in addition to HIV.69 Glaxo now contends that as an expert practicing in the field of the subject invention, the paper Mitsuya co-authored should be conclusive evidence of the validity of the human retrovirus claims.
[51] For this, Glaxo relies on Windsurfing International Inc. et al v. Triatlantic Corporation70 Referring specifically to a "Newman Darby principle" Glaxo submits that as a person skilled in the art and working in the area of the subject patent, Dr. Mitsuya's testimony should stand as proof that Glaxo's claims for the use of AZT to act as treatment or prophylaxis for human retroviruses were sound predictions and therefore valid. However, the Newman Darby principle, such that one exists, merely speaks to the question of evidence of obviousness and not, as Glaxo claims, the preferred status of a skilled practitioner's evidence. As such, the Newman Darby principle does not assist Glaxo.
[52] I am satisfied that Wetston J. did not ignore any of the evidence upon which Glaxo now relies. I am also satisfied that there was evidence before Wetston J. that justified his finding that human retroviruses, other than HIV, were not good candidates for treatment using AZT. I cannot see that Wetston J. made any palpable and overriding error in arriving at this conclusion.
Issue 2 - "an AIDS infection"
Glaxo says that Wetston J. erred in ruling invalid:
| 2. claims for the treatment or prophylaxis of "an AIDS infection" which he incorrectly found were ambiguous. |
[53] Claim 23 of the patent provides:
| A pharmaceutical formulation comprising an amount of (AZT) effective for the treatment or prophylaxis of an AIDS infection, in association with a pharmaceutically acceptable carrier. |
[54] Wetston J. found the claim ambiguous. At paragraph 316, he stated:
| The evidence of behalf of A & N, which was not contradicted by Glaxo, is that a person skilled in the art would have interpreted AIDS infection as having two possible meanings: either those opportunistic infections associated with HIV infection or simply HIV infection. It is not in dispute that the inventors did not invent a treatment for AIDS related infections. The drug AZT directly treats the HIV infection, and there is nothing in the disclosure or the claims that suggest the drug will assist in treating those opportunistic infections associated with the disease. |
[55] Glaxo has not argued that the facts set out by Wetston J. are incorrect. Further, other claims, e.g. claim 22, refer to AZT "for use in the treatment or prophylaxis of AIDS". Glaxo argues that claims 22 and 23 refer to the same infection, i.e. that claim 23 is redundant and redundancy is not a reason to rule a claim invalid.
[56] I agree with Wetston J. that claims for "an AIDS infection" are ambiguous. They might refer to the HIV infection itself or to an opportunistic infection occurring as a result of weakness in the immune system caused by the HIV infection. Nothing in the patent disclosure suggests a broader interpretation than the use of AZT for the treatment or prophylaxis of AIDS contained in claim 22. Wetston J. therefore correctly found claim 23 and claims dependant on claim 23 to be invalid.
Issue 3 - Accounting Versus Damages
Glaxo says that Wetston J. erred in:
| 3. denying to Glaxo the election of damages or an accounting of profits and imposing damages as the required remedy for infringement because he based his decision upon an irrelevant consideration. |
[57] In argument before this Court, Glaxo submitted that if the Court was of the opinion that it was entitled to claim pre and post judgment interest, its request that it be granted an election as between an accounting of A & N's profits and its own damages could be considered withdrawn. In view of our ruling respecting interest, it is not necessary to address this issue and accordingly, as determined by Wetston J., the remedy to which Glaxo is entitled shall be damages.
Issue 4 - Interest
Glaxo submits that:
| 4. Wetston J. did not address the question of interest and it should be entitled to pre- and postjudgment interest. |
[58] In awarding damages to Glaxo, Wetston J. made no reference to Glaxo's entitlement to interest. Glaxo now asks that it be awarded pre- and postjudgment interest in accordance with sections 36 and 37 of the Federal Court Act.71
[59] A & N argue that because Glaxo neglected to claim interest in its statement of claim or at trial, Wetston J. cannot be said to have erred in failing to deal with the question of interest and, therefore, Glaxo should be denied an award of interest. I do not agree.
[60] Under subsection 36(1) of the Federal Court Act prejudgment interest is determined in accordance with the law of the province in which the cause of action arises. Under subsection 36(2) of the Federal Court Act, however, when a cause of action arises in more than one province or outside a province, prejudgment interest is determined in accordance with subsections 36(2) to (5) of that Act. A parallel rule in subsections 37(1) and (2) exists with respect to postjudgment interest. On the evidence, it appears that the cause of action may have arisen in Ontario or more than one province.
[61] The question thus arises, which statutory provision will govern, sections 128 to 130 of the Ontario Courts of Justice Act,72 or subsections 36(2) to (5) and subsection 37(2) of the Federal Court Act? When I search the record I find no evidence submitted at trial that clearly indicates whether the cause of action arose solely in Ontario or in more than one province, i.e. A & N manufacture their products in Ontario but may sell them in more than one province. Therefore, at this juncture, which provision is applicable cannot be determined.
[62] In either case, A & N argue that a request for prejudgment interest must be made in the statement of claim. Subsection 36(2) of the Federal Court Act states:
| 36. (2) A person who is entitled to an order for the payment of money in respect of a cause of action arising outside any province or in respect of causes of action in more than one province is entitled to claim and have included in the order an award of interest thereon at such rate as the Court considers reasonable in the circumstances, calculated . . . (b) where the order is made on an unliquidated claim, from the date the person entitled gave notice in writing of the claim to the person liable therefor to the date of the order. [emphasis added] |
36. (2) Dans toute instance devant la Cour et dont le fait générateur n'est pas survenu dans une province ou dont les faits générateurs sont survenus dans plusieurs provinces, les intérêts avant jugement sont calculés au taux que la Cour estime raisonnable dans les circonstances et : . . . b) si la somme n'est pas déterminée, depuis la date à laquelle le créancier a avisé par écrit le débiteur de sa demande jusqu'à la date de l'ordonnance de paiement. |
Similarly, subsection 128(1) of the Ontario Courts of Justice Act states:
| (1) A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order. [emphasis added] |
[63] A & N submit that the word "claim" in each of the above provisions requires that a party who seeks prejudgment interest must specifically request it in its statement of claim. Since Glaxo did not include a claim for interest in its statement of claim, A & N contend they are now precluded from claiming interest. With respect, this is an incorrect statement of the law.
[64] In Marshall v. Canada73 Heald J.A. referred with approval to Ontario jurisprudence that held "that the entitlement to claim interest arises upon the person becoming entitled to a judgment for the principal amount and the actual claim for interest may be made at that time and need not be made at any earlier time."74 Since the words of subsection 36(2) of the Federal Court Act parallel the words of the equivalent section in the Ontario Courts of Justice Act, they must obviously be interpreted in the same manner. In this case, the process was bifurcated and damages are to be assessed at a second stage of the proceedings. It was as a result of the first stage that Glaxo became entitled to damages. The claim for interest therefore may be raised at any time before damages are finally determined.
[65] Thus, despite not having made a specific claim for interest in its pleadings or at trial, and whether the cause of action arose in Ontario or in more than one province, Glaxo is entitled to claim pre and postjudgment interest as part of its damages award. The requirement to give notice in writing of the claim for interest under subsection 128(1) of the Courts of Justice Act and paragraph 36(2)(b) of the Federal Court Act is satisfied by the issuance of the statement of claim.75
[66] The rationale for not requiring an express claim for interest in the statement of claim is that prejudgment interest is not a separate head of damages but is implicitly part of the whole damages claimed; that is, the interest claimed flows from the principal loss.76 It therefore follows that prejudgment interest must be viewed as part of the compensatory package provided to the person wronged.77
[67] As a leading scholar on the law of interest states: "The overwhelming opinion today of Law Reform Commissions and the academic community is that interest on a claim prior to judgment is properly part of the compensatory process."78 Thus, the integration of an award of interest into a damages award merely reflects the underlying rationale of the law of damages to restore the innocent party to the position he or she would have been in had the injury not occurred.79
[68] More precisely, prejudgment and postjudgment interest serve a two-fold purpose: it compensates the plaintiff for the cost of the money claimed; and, it "deprives the wrongdoer of a windfall benefit he would otherwise receive."80 Or, as Finlayson J.A. observed in Irvington Holdings Ltd. v. Black et al.: "interest is the cost of money to the borrower just as it is the return to the lender or investor."81
[69] That said, whether the cause of action arose in Ontario or in more than one province, Glaxo is entitled to pre- and postjudgment interest subject to the discretion provided to the Trial Division Judge under the governing statute. In either case, however, I would adopt the longstanding principle in the Anglo-Canadian jurisprudence that interest should be used neither as penalty nor reward, but should stand as part of an award to make the aggrieved party whole.82 In that, I endorse Denning M.R.'s statement in Panchaud Freres v. Pagnon and Fratelli83 that the exercise of discretion in awarding interest "must be related to the task of putting the plaintiff in the same position, so far as money is concerned, as he would have been if he had not suffered the loss."84
[70] One of the considerations that the Trial Judge will have to turn his or her mind to in calculating the interest award is the manner in which the proceedings were conducted. Federal Court Act, subsection 36(5); Courts of Justice Act, subsection 130(2)(f). The Ontario provision specifically makes reference to conduct "that tended to shorten or to lengthen unnecessarily the duration of the proceeding". Judicial discretion as to the appropriate rate and period at which interest will run is thought to assist the court in controlling the litigation process and to avoid inappropriate compensation.85 Specifically, such discretion is thought to persuade plaintiffs to commence actions without undue delay so that their entitlement to interest is not slowed.86 Conversely, discretion as to an award of interest in light of the conduct of the proceedings should compel guilty defendants toward settlement.87 Considerations as to conduct of proceedings should, nonetheless, only be used to assist the trier of fact in selecting the date at which interest will commence or cease, or the appropriate rate at which interest will accrue. That is, the maxim that an award of interest is compensatory rather than punitive is not displaced by the discretion reserved for the court.88
[71] Having regard to the Court's discretionary power in respect of pre- and postjudgment interest under either the federal or Ontario statutory provisions, the parties will have the opportunity, to the extent they consider it relevant and necessary, of adducing evidence respecting interest in the assessment of damages stage of these proceedings in the Trial Division.
DISPOSITION
[72] The appeal with respect claims not restricted to the use of AZT is allowed and all such claims are declared invalid. In all other respects the appeals are dismissed. In view of substantial success by the Wellcome Foundation Limited and Glaxo Wellcome Inc., they shall be entitled to one set of costs of the appeal, payable equally by Apotex Inc. and Novopharm Limited.
[73] The cross-appeals in respect of pre- and postjudgment interest are allowed and the Wellcome Foundation Limited and Glaxo Wellcome Inc. shall be entitled to claim pre and post-judgment interest on the damages assessed in their favour against Apotex Inc. and Novopharm Limited. The determination of pre and post-judgment interest shall take place in conjunction with the assessment of damages in the Trial Division. The parties may adduce such evidence as may be relevant to the appropriate calculation of interest. The cross-appeal in respect of an accounting of profits is withdrawn and is therefore dismissed. In all other respect the cross-appeal is dismissed. There shall be no award of costs in respect of the cross-appeal.
[74] The original signed copies of the judgment and reasons shall be placed on Court file A-211-98. True copies of the judgment and reasons shall be placed on Court files A-213-98 and A-214-98.
"Marshall Rothstein"
J.A.
"J. Edgar Sexton"
J.A.
"Brian Malone"
J.A.
__________________1 Reasons for judgment at trial, para. 17.
2 Ibid., para. 18. The mouse cell viruses are referred to by the trial judge as the "Friend Leukemia Virus" and the "Harvey Sarcoma Virus." The testing methods that Glaxo used are described at paras. 113-114 of the trial judge's reasons.
5 Trial Transcripts, Volume VI, Tab 52, p. 40 (emphasis added).
6 Reasons for judgment, para. 123.
8 Trial Transcripts, Volume IV, Tab 33, pp. 155-156.
10 The trial judge described the specialized test developed by Drs. Broder and Mitsuya as the "ATH8 cell line," a test the doctors eventually patented (Reasons for judgment, para. 126).
15 Ibid., para. 4. In a related action, on May 14, 1991, Burroughs Wellcome Co. filed suit against Barr Laboratories Inc. for infringement of its U.S. patents. Burroughs Wellcome Co. subsequently filed similar suits against Novopharm and the National Institute of Health. These were consolidated in Burroughs Wellcome v. Barr Laboratories Inc. 828 F. Supp. 1208 (E.D.N.C.1993), which found that the Burroughs Wellcome patents had been infringed. The decision was appealed and largely affirmed 40 F.3d 1233 (C.A.F.C. 1994).
18 R.S.C. 1985, c. P-4, section 2.
19 Christiani & Nielsen v. Rice, [1930] S.C.R. 443, at 456.
20 Ernest Scragg & Sons Ltd. v. Leesona Corp., [1964] Ex.C.R. 649, at 651.
21 R. Frost, Treatise on the Law and Practice Relating to Letters Patent for Inventions, vol. 1, 4th ed. (London: Stevens and Haynes, 1912).
25 H.G. Fox, The Canadian Law and Practice Relating to Letters Patent for Inventions, 4th ed. (Toronto: Carswell, 1969) at p. 225.
26 R.T. Hughes & J.H. Woodley, Hughes and Woodley on Patents (Release 9, April 2000).
28 Kellogg Co. v. Kellogg, [1942] Ex.C.R. 87, at 97.
29 Re May & Baker Ltd. and Ciba Ltd. (1948), 65 R.P.C. 255, at 281 ("[...] their useful qualities must be the inventor's own discovery as opposed to mere verification by him of previous predictions.")
30 Kellogg Co. v. Kellogg, supra, at 97.
31 Letter agreement between Burroughs Wellcome Co. and Samuel Broder, M.D. dated Oct 17, 1984. ("Due to the nature of the disclosures and the services you will potentially perform on our behalf [i.e. Burroughs Wellcome Co.], all such information must be considered confidential.") (emphasis added).
32 Burroughs Wellcome Co. v. Barr Laboratories Inc., supra, at para. 40.
33 Trial transcripts, Volume III, Tab 19, pp. 154-156.
34 International Patent Application WO 86/02266 dated April 24, 1986.
35 Reasons for judgment, para. 106.
36 Letter from Samuel Broder, M.D. to the Honorable Ted Weiss dated November 29, 1989.
37 Christiani & Nielsen v. Rice, supra, at 456.
38 (1978), 39 C.P.R. (2d) 145 (F.C.T.D.), aff'd (1979), 42 C.P.R. (2d) 33 (F.C.A.).
40 (1982), 65 C.P.R. (2d) 73 (F.C.A.).
42 (1950), 67 R.P.C. 23 (H.L.).
43 (1968), 55 C.P.R. 207 (Ex. Ct.), aff'd [1968] S.C.R. 950.
44 [1965] 1 Ex.C.R. 710, aff'd [1966] S.C.R. 189.
45 [1962] Ex.C.R. 201, aff'd [1963] S.C.R. 410.
48 Trial Transcripts, Vol. VI, Tab 52, p. 41.
49 North American Free Trade Implementation Act, S.C. 1993, c. 44, s. 10. World Trade Organization Agreement Implementation Act, S.C. 1994, c. 47, s. 8.
50 Article 27 of the Trade-Related Aspects of Intellectual Property Rights Agreement states that "[...] patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology [...]" (emphasis added). Article 1709(7) of North American Free Trade Agreement uses a virtually identical wording.
51 J. Sopinka, S.N. Lederman & A.W. Bryant, The Law of Evidence in Canada, 2nd ed. (Toronto: Butterworths, 1999).
52 (1984), 81 C.P.R. (2d) 39 (F.C.T.D.).
54 Beloit Canada Ltd. et al. v. Valmet OY (1986), 8 C.P.R. (3d) 289, at 273.
56 Creations 2000 Inc. v. Canpar Industrial Products Ltd. (1990), 34 C.P.R. (3d) 178, at 183 (F.C.A.).
59 Reasons for judgment, paras. 330-357.
67 See Beecham Canada Inc. v. Procter and Gamble Co. (1982), 61 C.P.R. (2d) 1, at 11 (F.C.A).
69 Wetston J. considered this paper at para. 299 of his judgment.
71 R.S.C. 1985, c.F-7, as amended.
72 R.S.O. 1990 c C. 43, as amended.
74 Walker v. Murray, [1978] O.J. No. 2307 (H.C.J.).
75 Sedgewick v. Metropolitan Toronto Zoological Society (1978), 22 O.R. (2d) 254 (H.C.J.) aff'd (1980), 28 O.R. (2d) 222 (C.A.).
76 Royal Bank of Canada v. Roland Home Improvement Ltd., [1994] O.J. No. 2149 at para. 18.
77 Graham v. Rourke (1990), 75 O.R. (2d) 622, at 629.
78 M.A. Waldron, The Law of Interest in Canada (Scarborough: Carswell, 1992) at p. 128.
79 S.M. Waddams, The Law of Damages 3rd Ed. (Toronto: Canada Law Book, 1997) at p. 436.
80 Waldron, The Law of Interest in Canada , supra, at p. 129-130.
81 (1987), 58 O.R. (2d) 449 (C.A.).
82 Stelco Inc. v. Royal Insurance Company of Canada et al. (1997), 34 O.R. (3d) 263 (C.A.); John Maryon Int'l Ltd. et al v. New Brunswick Telephone Co. Ltd. (1982), 141 D.L.R. (3d) 193 (N.B.C.A.); Pickett v. British Rail Engineering Ltd., [1979] 1 All E.R. 774 (H.L.).
85 Waldron, The Law of Interest in Canada , supra, p. 128-154.
86 Baud Corp., N.V. v. Thomas Brook, [1979] 1 S.C.R. 677, at 679-680.
87 Spencer v. Rosati (1985), 50 O.R. (2d) 661 (C.A.).
88 Armak Chemicals Ltd. v. Canadian National Railway Co. (1991), 5 O.R. (3d) 1 (C.A.).