Eli Lilly Canada Inc. et al. v. Novopharm Ltd., (2010) 405 N.R. 1 (FCA)

• Judge: Nadon, Sharlow and Layden-Stevenson, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: July 21, 2010
• Jurisdiction: Canada (Federal)
• Citations: (2010), 405 N.R. 1 (FCA);2010 FCA 197

Eli Lilly Can. Inc. v. Novopharm (2010), 405 N.R. 1 (FCA)

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Temp. Cite: [2010] N.R. TBEd. AU.004

Eli Lilly Canada Inc., Eli Lilly and Company, Eli Lilly and Company Limited and Eli Lilly SA (appellants) v. Novopharm Limited (respondent)

(A-454-09; 2010 FCA 197; 2010 CAF 197)

Indexed As: Eli Lilly Canada Inc. et al. v. Novopharm Ltd.

Federal Court of Appeal

Nadon, Sharlow and Layden-Stevenson, JJ.A.

July 21, 2010.

Summary:

The plaintiffs (Lilly) sued the defendant (Novopharm) for infringement of Lilly's Canadian Letters Patent No. 2,041,113 (the '113 Patent), a selection patent for the compound olanzapine, which was used to treat schizophrenia. Years before, Lilly had obtained Canadian Letters Patent No. 1,075,687 (the '687 patent), a genus patent for approximately 15 trillion compounds predicted to be useful in the treatment of mild anxiety and certain kinds of psychotic conditions, such as schizophrenia and acute mania. Novopharm defended the infringement allegations against it and counterclaimed on the basis that the '113 Patent was invalid, specifically on grounds of anticipation, double patenting, wrong inventorship, obviousness, s. 53 of the Patent Act (misrepresentation), and s. 73 of the Act (deemed abandonment).

The Federal Court, in a decision reported at (2009), 353 F.T.R. 35, dismissed Lilly's action. The trial judge found that there was insufficient evidence of the advantages identified by the '113 Patent and he concluded that the '113 Patent did not meet the requirements for a valid selection patent. In brief reasons, the trial judge also concluded that the '113 Patent was invalid for double patenting, anticipation and insufficiency of disclosure. He also summarily addressed the issue of obviousness. Lilly appealed.

The Federal Court of Appeal allowed the appeal. The court held that the conditions for a valid selection patent did not constitute an independent basis upon which to attack the validity of a patent and the trial judge erred in reaching the opposite conclusion. Since the trial judge approached the matter on that basis, he failed to adequately address the issues of obviousness, double patenting, utility and sufficiency. The court set aside the judgment of the Federal Court and remitted the utility and sufficiency of disclosure grounds of alleged invalidity to the Federal Court for determination in accordance with the court's reasons.

Patents of Invention - Topic 1128

The specification and claims - The description - Sufficiency of disclosure - The plaintiffs (Lilly) sued the defendant (Novopharm) for infringement of Lilly's Canadian Letters Patent No. 2,041,113 (the '113 Patent), a selection patent for the compound olanzapine, which was used to treat schizophrenia - Years before, Lilly had obtained Canadian Letters Patent No. 1,075,687 (the '687 patent), a genus patent for approximately 15 trillion compounds predicted to be useful in the treatment of mild anxiety and certain kinds of psychotic conditions, such as schizophrenia and acute mania - The trial judge dismissed Lilly's action, holding, inter alia, that the '113 Patent's disclosure was insufficient - Lilly appealed - The Federal Court of Appeal allowed the appeal - With respect to the issue of sufficiency of disclosure, the court stated, inter alia, "My first observation is that the trial judge does not refer to and does not appear to have relied upon the evidence Novopharm cited to 'buttress' the sufficiency conclusion. Second, in this case, sufficiency fell to be determined by an analysis of the patent in accordance with the directions contained in the [Patent] Act and in Ranbaxy. The trial judge did not follow this approach" - The court concluded that there were insufficient factual determinations in the trial judge's reasons to enable it to conduct a meaningful review of this issue - Consequently, the issue of sufficiency of disclosure was returned to the Federal Court for determination - See paragraphs 113 to 123.

Patents of Invention - Topic 1514

Grounds of invalidity - General - Selection patents - The Federal Court of Appeal held that a determination that the conditions for a selection patent had not been met did not constitute an independent basis upon which to attack the validity of a patent - A selection patent was the same as any other patent - Its validity was vulnerable to attack on any of the grounds set out in the Patent Act - See paragraphs 24 to 33.

Patents of Invention - Topic 1582

Grounds of invalidity - Lack of "inventive ingenuity" (obviousness) - Test for obviousness - [See first Patents of Invention - Topic 1587 ].

Patents of Invention - Topic 1587

Grounds of invalidity - Lack of "inventive ingenuity" (obviousness) - Selection patents - The plaintiffs (Lilly) sued the defendant (Novopharm) for infringement of Lilly's Canadian Letters Patent No. 2,041,113 (the '113 Patent), a selection patent for the compound olanzapine, which was used to treat schizophrenia - Years before, Lilly had obtained Canadian Letters Patent No. 1,075,687 (the '687 patent), a genus patent for approximately 15 trillion compounds predicted to be useful in the treatment of mild anxiety and certain kinds of psychotic conditions, such as schizophrenia and acute mania - Novopharm argued that the '113 Patent was invalid on grounds of obviousness - The trial judge stated that the test for obviousness assumed an inventive step in arriving at the subject matter of the patent and he could not find an inventive step in Lilly's decision to develop olanzapine - The trial judge also found that the selection of olanzapine as a developmental compound was not an obvious choice - The trial judge concluded that the development of olanzapine was neither obvious nor an invention - Lilly appealed - The Federal Court of Appeal stated that the determinations of non-inventive and non-obvious were inconsistent and could not stand together - Such a finding constituted palpable and overriding error - Further, in concluding that there was no inventive step, the trial judge was misled because of his independent determination that the conditions of a valid selection patent had not been met - In the context of a selection patent, the inventive step was olanzapine, coupled with its advantages, over the compounds of the '687 Patent - Having determined that the inventive concept of the '113 Patent was olanzapine, coupled with its advantages, the remainder of the trial judge's analysis yielded a conclusion of non-obviousness - See paragraphs 54 to 64.

Patents of Invention - Topic 1587

Grounds of invalidity - Lack of "inventive ingenuity" (obviousness) - Selection patents - The Federal Court of Appeal stated that "In the context of a selection patent, the obviousness analysis considers the special properties of the compound, along with its alleged advantages, as described in the selection patent disclosure, for it is there that the inventiveness of the selection lies" - See paragraph 57.

Patents of Invention - Topic 1602

Grounds of invalidity - Anticipation - Test for - The plaintiffs (Lilly) sued the defendant (Novopharm) for infringement of Lilly's Canadian Letters Patent No. 2,041,113 (the '113 Patent), a selection patent for the compound olanzapine, which was used to treat schizophrenia - Years before, Lilly had obtained Canadian Letters Patent No. 1,075,687 (the '687 patent), a genus patent for approximately 15 trillion compounds predicted to be useful in the treatment of mild anxiety and certain kinds of psychotic conditions, such as schizophrenia and acute mania - Novopharm argued that the '113 Patent was invalid on grounds of anticipation - The Federal Court of Appeal stated that a determination with respect to anticipation fell to be conducted in accordance with the elements of the approach set out in Sanofi-Synthelabo Canada Inc. v. Apotex Inc. (2008 SCC 61) - To succeed in invalidating a patent on grounds of anticipation, an alleged infringer had to satisfy the requirements of prior disclosure and enablement, considered separately - With respect to prior disclosure, the court stated that "Olanzapine was not one of the examples described in the '687 Patent. It was one of a large class of most preferred compounds described by reference to several criteria. It was not specifically disclosed in the '687 Patent. Nor had it been made before. Since its advantages (as alleged in the '113 Patent) could not have been ascertained until it was made, it was not disclosed, as defined in Sanofi, by the '687 Patent" - The '113 Patent was not disclosed and therefore was not anticipated by the '687 Patent - Since non-disclosure was sufficient to defeat Novopharm's allegation of invalidity on the basis of anticipation, there was no need to address the requirement of enablement - See paragraphs 43 to 53.

Patents of Invention - Topic 1603

Grounds of invalidity - Anticipation - By previously published article or patent - [See Patents of Invention - Topic 1602 ].

Patents of Invention - Topic 1604

Grounds of invalidity - Anticipation - Selection patents - [See Patents of Invention - Topic 1602 ].

Patents of Invention - Topic 1653

Grounds of invalidity - Anticipation by prior patent - What constitutes anticipation - [See Patents of Invention - Topic 1602 ].

Patents of Invention - Topic 1674

Grounds of invalidity - Lack of novelty - Prior invention (incl. double patenting) - The Federal Court of Appeal stated that "There are two categories of double patenting: same invention patenting (two patents are the same or have an identical or coterminous claim) and obviousness patenting (the claims of the patents are not identical or coterminous but the later patent has claims that are not patentably distinct from the other patent)" - See paragraph 65.

Patents of Invention - Topic 1674

Grounds of invalidity - Lack of novelty - Prior invention (incl. double patenting) - The plaintiffs (Lilly) sued the defendant (Novopharm) for infringement of Lilly's Canadian Letters Patent No. 2,041,113 (the '113 Patent), a selection patent for the compound olanzapine, which was used to treat schizophrenia - Years before, Lilly had obtained Canadian Letters Patent No. 1,075,687 (the '687 patent), a genus patent for approximately 15 trillion compounds predicted to be useful in the treatment of mild anxiety and certain kinds of psychotic conditions, such as schizophrenia and acute mania - Novopharm argued that the '113 Patent was invalid on grounds of double patenting - The trial judge opined that, because there was no invention, there was no need to analyze whether the invention was double patented - He nonetheless concluded that olanzapine was double patented by the '687 and '113 Patents - On appeal, the Federal Court of Appeal stated that "without conducting an analysis of the issue, the trial judge concluded that there was no need to do so. His conclusion resulted from the mistaken view that an examination regarding the conditions for a valid selection patent constitutes an independent basis upon which to attack a patent's validity. His finding regarding the issue with which he was confronted was tainted by his earlier error. The failure to conduct the appropriate analysis is an error of law" - See paragraph 71.

Patents of Invention - Topic 1674

Grounds of invalidity - Lack of novelty - Prior invention (incl. double patenting) - The plaintiffs (Lilly) sued the defendant (Novopharm) for infringement of Lilly's Canadian Letters Patent No. 2,041,113 (the '113 Patent), a selection patent for the compound olanzapine, which was used to treat schizophrenia - Years before, Lilly had obtained Canadian Letters Patent No. 1,075,687 (the '687 patent), a genus patent for approximately 15 trillion compounds predicted to be useful in the treatment of mild anxiety and certain kinds of psychotic conditions, such as schizophrenia and acute mania - Novopharm argued that the '113 Patent was invalid on grounds of double patenting - The Federal Court of Appeal held that the invention claimed in the '687 Patent was not the same as the invention claimed by the '113 Patent because the former was broader than the latter - Additionally, the claims of the '687 and '113 Patents were neither identical nor coterminous - Consequently, the requirements to establish same invention double patenting had not been met - Further, a selection patent that claimed a compound that was patentably distinct from the genus patent would not be invalid for obviousness double patenting - Out of the innumerable compounds predicted to be effective as exhibiting usefulness in the treatment of schizophrenia, it was found that olanzapine had beneficial properties over flumezapine and other compounds coming within the '687 Patent - The claims in the '113 Patent were patentably distinct from the claims in the '687 Patent and the challenge based on obviousness double patenting failed - See paragraphs 65 to 73.

Patents of Invention - Topic 1723

Grounds of invalidity - Lack of utility and operability - Chemical products and substances intended for food and medicine - [See Patents of Invention - Topic 1724 ].

Patents of Invention - Topic 1724

Grounds of invalidity - Lack of utility and operability - Doctrine of sound prediction - The plaintiffs (Lilly) sued the defendant (Novopharm) for infringement of Lilly's Canadian Letters Patent No. 2,041,113 (the '113 Patent), a selection patent for the compound olanzapine, which was used to treat schizophrenia - Years before, Lilly had obtained Canadian Letters Patent No. 1,075,687 (the '687 patent), a genus patent for approximately 15 trillion compounds predicted to be useful in the treatment of mild anxiety and certain kinds of psychotic conditions, such as schizophrenia and acute mania - The trial judge held that the '113 Patent was invalid - Lilly appealed - The Federal Court of Appeal allowed the appeal - With respect to the issue of utility, the court stated that the promise of the patent was to be ascertained at the outset of a utility analysis - The court stated that assuming that the trial judge's reasons constituted a construction of the patent's promise, there were problems with it - The court concluded that "The failure to provide any foundation for the construction of the patent's promise leaves this Court without any basis upon which to conduct a meaningful review. In the absence of an accurate articulation or ascertainment of the promise, review of the analysis of the alleged advantages is not possible because they cannot be viewed in relation to the overarching promise of the patent. Given the deficiency in the record, the issue of utility must be returned to the Federal Court for determination" - The court also observed that the trial judge misdirected himself in relation to the threshold requirement for a sound prediction and it was a palpable and overriding error to conclude there was no factual basis for a sound prediction - See paragraphs 74 to 112.

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1, refd to. [para. 16].

Pfizer Canada Inc. et al. v. Canada (Minister of Health) et al., [2007] F.C.R. 137; 351 N.R. 189; 2006 FCA 214, leave to appeal denied (2007), 364 N.R. 396 (S.C.C.), refd to. [para. 19].

Sanofi-Synthelabo Canada Inc. et al. v. Apotex Inc. et al., [2008] 3 S.C.R. 265; 381 N.R. 125; 2008 SCC 61, appld. [para. 19].

I.G. Farbenindustrie A.G.'s Patents, Re (1930), 47 R.P.C. 289 (Ch. D.), refd to. [para. 22].

Synthon BV v. Smithkline Beecham plc, [2005] N.R. Uned. 180; [2006] 1 All E.R. 685; [2005] UKHL 59, refd to. [para. 29].

E.I. du Pont de Nemours & Co. (Witsiepe's) Application, Re, [1981] F.S.R. 377 (C.A.), affd. [1982] F.S.R. 303 (H.L.), refd to. [para. 32].

Janssen-Ortho Inc. et al. v. Apotex Inc. et al. (2009), 392 N.R. 71; 75 C.P.R.(4th) 411; 2009 FCA 212, refd to. [para. 33].

Windsurfing International Inc. v. Tabur Marine (Great Britain) Ltd., [1985] R.P.C. 59 (C.A.), refd to. [para. 54].

Pozzoli SPA v. BDMO SA, [2007] EWCA Civ. 588, refd to. [para. 54].

Aventis Pharma Inc. et al. v. Pharmascience Inc. et al., [2007] 2 F.C.R. 103; 352 N.R. 99; 2006 FCA 229, refd to. [para. 65].

Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd., [1981] 1 S.C.R. 504; 35 N.R. 390, refd to. [para. 75].

Pfizer Canada Inc. et al. v. Canada (Minister of Health) et al., [2009] 1 F.C.R. 253; 377 N.R. 9; 2008 FCA 108, refd to. [para. 76].

Apotex Inc. v. Bristol-Myers Squibb Co. et al., [2007] N.R. Uned. 171; 2007 FCA 379, refd to. [para. 80].

Apotex Inc. and Novopharm Ltd. v. Wellcome Foundation Ltd., [2002] 4 S.C.R. 153; 296 N.R. 130; 2002 SCC 77, refd to. [para. 82].

Authors and Works Noticed:

Fox, Harold George, The Canadian Law and Practice Relating to Letters Patent for Inventions (4th Ed. 1969), pp. 91 [para. 30]; 149, 150 [para. 77].

Thorley, Simon, Miller, Richard, Burkill, Guy, and Birss, Colin, Terrell on the Law of Patents (16th Ed. 2006), pp. 279, 294 [para. 32].

Counsel:

Anthony G. Creber and Cristin Wagner, for the appellants;

Jonathan Stainsby, Andrew Skodyn, Andy Radhakant and Neil Fineberg, for the respondent.

Solicitors of Record:

Gowling Lafleur Henderson LLP, for the appellants;

Heenan Blaikie LLP, for the respondent.

This appeal was heard on June 21 and 22, 2010, at Ottawa, Ontario, before Nadon, Sharlow and Layden-Stevenson, JJ.A., of the Federal Court of Appeal. The following judgment of the Court of Appeal was delivered by Layden-Stevenson, J.A., on July 21, 2010.