British Columbia gives go-ahead to consumers' class action for patent abuse

Via Toronto law firm Fleck & Chumak LLP's IP Address newsletter comes news of Low v Pfizer Canada Inc., 2014 BCSC 1469, a Supreme Court of British Columbia ruling which certified a class action on behalf of those who purchased Pfizer's erectile dysfunction drug between 2006 and its subsequent invalidation by the Supreme Court of Canada in 2012. The class seeks to pursue a claim bases on the allegation that Pfizer obtained a patent wrongfully, used it to keep generic competition off the market, and thereby inflated prices. The ground of invalidation was that Pfizer failed to disclose the invention adequately. The Viagra sildenafil patent was litigated in many jurisdictions, and with a variety of outcomes. As the newsletter notes:

In deciding the preliminary question of whether the class action against Pfizer could proceed at all, the Court considered three legal theories put forward by lawyers representing the consumers: (1) unlawful interference with economic relations, (2) waiver of tort and (3) unjust enrichment. The court applied the "plain and obvious" test: whether it was plain and obvious each cause of auction could not succeed.

The Court concluded that the causes of action in intentional interference with economic relations and unjust enrichment could proceed. The Court held that if Pfizer obtained the patent fraudulently or via an abuse of the patent procedures, then the elements of the test for unjust enrichment - including an absence of a juristic reason for the enrichment - would be met. As well, the Court held that the consumers would have standing to pursue the interference tort on the theory that Pfizer inflicted actionable injury on the generic competition to the detriment of the consumers.

The Court's decision is ground-breaking as it was previously believed that the federal patent legislation and accompanying regulations made up a "complete code" with respect to patent rights and remedies. With this decision, the court has opened up the possibility of a new, direct remedy available to consumers against patent owners.

It should be stressed that the permission given to the class to bring the action does not give an indication of the likelihood that it will succeed when it gets to trial.  The "plain and obvious" test looks rather like the test of whether there exists a triable issue in British case law.  Given the frequency with which commercially successful patents are subsequently invalidated for one reason or another, patent owners may be watching for the outcome of this action with more than a little interest,

Patent litigation in Canada: standards of review

"What is the standard of review for patent litigation in Canada?" is the title of an article by Professor Emir Aly Crowne (Associate Professor in the Faculty of Law at the University of Windsor; a barrister and solicitor) which has already been published online in the March 2012 issue of Oxford University's Journal of Intellectual Property Law and Practice (JIPLP). According to the abstract:

"In Canada patents are administratively granted by the Commissioner of Patents. Yet administrative law principles have never been applied when determining the validity of a patent during litigation.

Courts have always proceeded on the basis of a trial de novo to determine whether (on a balance of probabilities) the patent was valid and properly granted.

This paper examines the apparent tension between the Patent Act, patent jurisprudence and administrative law principles in litigating the validity of a patent".

This is a topic which appears to have received little attention in most jurisdictions; readers' reflections, both from inside Canada and elsewhere, are welcomed.

Non-subscribers to the online version of JIPLP can purchase short-term access to online articles. To do so for Professor Crowne's article, click here and follow instructions under ' Purchase Short-Term Access'.  The print version will be published at the end of the month.

Canada clarifies applicability of 'good faith' rule to granted patents

A note from Canadian IP law firm Dimock Stratton LLP draws the attention of readers to a recent decision of the Federal Court of Appeal in Corlac Inc. v Weatherford Canada Ltd (2011 FCA 228) which limits the effect of the Patent Act s.73(1)(a) upon the validity of granted patents.  By that provision:

An application for a patent in Canada shall be deemed to be abandoned if the applicant does not 

(a) reply in good faith to any requisition made by an examiner in connection with an examination, within six months after the requisition is made or within any shorter period established by the Commissioner; ...

The Court held that, once granted, patents are not vulnerable to attack under that section -- which deals with obligations of good faith in prosecuting patent applications.  The Court added that patents once granted and applications for patents are governed by different statutory provisions.

Skating on thin ice? Liability for direct and indirect infringement in Canada

A recent Canadian Federal Court decision, Bauer Hockey Corp v Easton Sports Canada Inc (2010 FC 361), gives patent owners an extra option by affirming that a defendant can infringe both directly and, indirectly, through inducing and procuring a third party to manufacture a product in Canada (in this case, hockey skates) that incorporate the patent's invention. The action for inducement or procurement seems to be the product of a sort of reverse inference:

"In reviewing the jurisprudence, the court noted that there were no previous cases in which the court had stated clearly that a defendant could not infringe by inducement or procurement unless it knew of the patent at issue. The court commented that it is important to consider that inducing and procuring another party to make or construct a patented invention is not a tort distinct from that of direct infringement".

But what level of intention and knowledge would a patent owner need to prove?

"The court held that there was no legal rationale for requiring an intention to infringe on the part of an inducer or procurer when there was no such requirement for a direct infringer. By contrast, ...the court agreed that the inducement must be done knowingly or deliberately. In effect, it would be unjust to find a party guilty of infringement by inducement if that party did not know that its actions would induce another to do something that would later be held to constitute infringement.  ... to require infringement by inducement and procurement to be carried out not only deliberately but also with knowledge of the patent at issue would create an unwarranted and unjustifiable distinction between companies that manufacture their own products (direct infringement) and those that choose to have them manufactured by others according to their detailed specifications (inducing infringement).

... This decision establishes ... that the test for establishing infringement by inducement and procurement does not require the inducer to have prior knowledge of the patent at issue".

The decision is under appeal.

Source: "Liability for inducing infringement does not require prior knowledge of patent", article by Daniel M. Anthony (Smart & Biggar/Fetherstonhaugh) for International Law Office, 27 September 2010.

Yangaroo can't jump the border

Vancouver-based company Destiny Media Technologies, Inc. last week obtained summary judgment for non-infringement of a US patent claim brought by its Canadian competitor Yangaroo, Inc. The disputed patent covered technology for the secure transmission of music and media files to authorized computers in the US by way of file servers located in Canada. Destiny Media developed its Play MPE system, which the recording industry uses for the secure internet distribution of pre-releases to trusted computers at radio stations and other media outlets. Yangaroo’s patent claimed a “method of distributing content” performed on a server. According to Yangaroo, Destiny’s servers in Canada perform the patented process to “manufacture” the music files that were then transmitted into the US.

The case was heard in the Federal Court, Eastern District of Wisconsin, where Judge William C. Greisbach gave summary judgment on 7 June, saying: "the claimed method of the ‘712 patent does not embrace the method of manufacturing the content prior to distributing it".

Destiny opted for the court's "Fast Track” summary judgment procedure to dispose of the case speedily on the ground that Yangaroo's single patent claim could not be asserted against the activities of Destiny's server computers located in Canada and the UK. Relying on NTP, Inc. v Research in Motion, Ltd, No. 3:01CV767 (E.D. Va. August 5, 2003) the judge held that a patent claim over a method of distributing data does not establish liability under US patent law since transmitted data is not a “product” manufactured by the claimed process.

Source: MarketWatch here. Thanks, Bruce Berman, for drawing this to PatLit's attention.