In recent years the question of whether there exists in Canada some form of a general duty of candour in respect of the prosecution of patent applications, and if so the scope of that duty, has been the subject of significant judicial scrutiny. Historically, there has been no such general duty of candour in patent prosecution in Canada in contrast to the United States. Recent case law from the Federal Court of Canada, however, had arguably imposed such a duty on patentees by holding that an issued patent could be held invalid on the basis of a lack of "good faith" during prosecution pursuant to section 73(1)(a) of Canada's Patent Act ("Act")(RS, 1985, c P-4). These decisions have resulted in significant uncertainty on the part of patent agents and applicants seeking patent protection in Canada.
However, the Federal Court of Appeal (Corlac Inc v. Weatherford Canada Ltd, 2011 FCA 228) has now had occasion to examine the issue and has significantly limited the scope of the duty of good faith. Most notably, the Court has stated that the operation of the "good faith" requirement in section 73(1)(a) applies solely to the patent application process and cannot be used to invalidate a patent post-grant.
Background. Section 73(1)(a) of the Act states:
An application for a patent in Canada shall be deemed to be abandoned if the applicant does not ... reply in good faith to any requisition made by an examiner in connection with an examination (emphasis added).
The language of this section defines both who owes the duty of good faith (the applicant) and under what specific circumstance the duty is owed (when responding to any requisition made by an examiner in connection with an application). Where an applicant fails to reply in good faith to an examiner's requisition, the application is deemed abandoned, subject to the applicant's opportunity to reinstate the application as provided for in the Act and Patent Rules ("Rules").
Section 73 came into force in 1996 as part of a "housekeeping" bill intended to clarify or update existing provisions in a number of Canada's intellectual property statutes, including the Act. The section comprises a number of provisions relating to abandonment of patent applications, united by a single mechanism for reinstating an abandoned application within one year of abandonment. Roughly equivalent provisions existed prior to these amendments, but were spread throughout the Act and Rules and varied in their reinstatement mechanisms. As such, it appears that current section 73 was primarily intended to consolidate and harmonize the then existing abandonment-type provisions under one section.
Section 73(1)(a) is also similar to old Rule 45(3), which was revoked upon the introduction of section 73, and which read:
(3) An application shall be deemed to be prosecuted after an action thereon by an examiner only when in answer to the action, the applicant makes a bona fide attempt to advance the application to allowance.
There are two notable differences between old Rule 45(3) and current section 73(1)(a). First, the old rule used the term "in answer to the action" while section 73(1)(a) refers to a "reply...to any requisition." It would be understood that an "action" under Rule 45 would include an "Office Action" or examiner's report, and would therefore be considered generally analogous with the term "requisition" referred to in current section 73(1)(a). Second, Rule 45 required a "bona fide attempt to advance the application to allowance," while section 73(1)(a) requires a "reply in good faith to any requisition." Neither term is defined in the legislation, although "bona fide" is Latin for "in good faith."
The above suggests that the current section 73(1)(a) and the previous Rule 45 are directed to similar types of expected conduct by the applicant, and in particular were both designed to prevent an applicant from delaying the prosecution of the application by not making a good faith response to an examiner's report or Office Action.
Until recently, the courts in Canada had rejected the notion of a general duty of candour. However, two decisions of the Federal Court of Canada appeared to support a view that the introduction of section 73(1)(a) created a broad U.S.-style duty of candour on patent applicants, the breach of which could result in an issued patent being held invalid.
The first of these was G D Searle & Co v. Novopharm Inc, 2007 FC 81 ("Searle"), a 2007 decision of the Federal Court addressing the validity of a patent covering the drug celecoxib (CELEBREX). One of the grounds of invalidity advanced by Novopharm was that the patent had been abandoned during prosecution pursuant to section 73(1)(a). In response to a requisition from the Examiner during prosecution holding that the invention was obvious in view of certain prior art, the applicant distinguished the claimed compounds from the cited art by making statements that, according to Novopharm, it knew to be "incorrect and misleading." Ultimately, the court concluded that the response did not constitute a "reply in good faith."
As a result, the patent was held to be void as the application had been abandoned pursuant to section 73 during prosecution, and the 12-month reinstatement period had expired. The Court also concluded that by its nature, the patent prosecution process should be regarded as a procedure akin to an ex parte court proceeding. As a result, applicants had a duty of "full, frank and fair disclosure" to the Patent Office. Where an applicant failed in that duty and did not correct that failure, this would constitute a lack of "good faith," and would result in the application being abandoned.
On appeal, the Searle decision was overturned on other, unrelated grounds, and without any substantive comment by the Federal Court of Appeal on the issue of section 73(1)(a) and its scope and application. However, in 2009, the Federal Court revisited the issue of good faith prosecution in Lundbeck Canada Inc v. Ratiopharm Inc, 2009 FC 1102 ("Lundbeck"). This case addressed the validity of two patents covering the drug memantine (EBIXA) for use in treating Alzheimer's. Again, one of the alleged grounds of invalidity was abandonment under section 73(1)(a).
In Lundbeck, the Court accepted the decision in Searle as an accurate overview of the obligations owed by a patent applicant. In respect of the duty of good faith under section 73(1)(a), the Court stated that "it is clear that at this point there is a duty of candour on the part of applicants in the prosecution of a patent application in Canada." This appears to be the first time where the "good faith" requirement pursuant to section 73(1)(a) was equated with a "duty of candour."
The Court also agreed with the view expressed by the Court in Searle that the patent prosecution process should be treated as akin to an ex parte court proceeding, implying perhaps that the duty of candour was a general duty going beyond the specific requirements of section 73. The Court went on to conclude that a response by the applicant to an obviousness objection raised by the Examiner during prosecution was not a "good faith" response as it did not, in the Court's view, fairly describe the state of the prior art. As such, the Court held that the patent was invalid. There was no appeal from this decision.
The Searle and Lundbeck decisions created a significant state of concern and uncertainty in Canada amongst both patent agents and applicants. Both cases held, in essence, that patent applicants had a duty of candour during prosecution arising from section 73(1)(a) and that a court could, during litigation many years later, review the conduct of the applicant before the Patent Office, determine that the conduct was in violation of that duty, and conclude that as a result, the issued patent was invalid. However, it was not clear what the full extent of any such duty owed by applicants was, or how broadly it applied.
Federal Court decision. In Weatherford Canada Ltd v. Corlac Inc, 2010 FC 602 ("Weatherford"), the Federal Court of Canada again had occasion to examine the duty of candour, but this time it reached a much narrower interpretation of the scope of that duty under section 73(1)(a) as compared to the Searle or Lundbeck decisions.
Weatherford was a patent infringement action involving a patent pertaining to down-hole oil pumps. The defendants alleged, inter alia, that the patent was invalid, having been abandoned during prosecution pursuant to section 73(1)(a) as a result of, inter alia, the plaintiff failing to tell the Examiner about a prior disclosure it had made that arguably anticipated or rendered the patent obvious. However, the Examiner never made a requisition for information about any prior art or prior disclosure. The defendants also alleged that the patentee, through the filing of an amended petition and supporting affidavit, had breached its duty of good faith by knowingly and falsely claiming that the named inventor was the sole inventor and/or sole owner of the patent.
In the decision of the Court, Mr. Justice Phelan declined to find the patent invalid for lack of good faith, holding that any duty of candour must be read in the context of the provisions of the Act. Because there had been no requisition by the Examiner, all the necessary conditions of a section 73(1)(a) abandonment had not been met and therefore the section did not apply. Justice Phelan also commented on the role of section 73(1)(a) more broadly, suggesting that it is not intended as a basis for post-issuance invalidity, but rather is narrow in scope, involving the obligation of a patentee to respond in good faith to an examiner's requisition during prosecution.
Federal Court of Appeal decision. The matter was appealed by the defendants to the Federal Court of Appeal. The Intellectual Property Institute of Canada ("IPIC") successfully sought leave to intervene on the issue of the scope and application of section 73(1)(a), submitting that the appellants' interpretation of that section would amount to imposing a general duty of good faith on patent applicants, analogous to the U.S. doctrine of inequitable conduct, and that the Canadian Parliament did not intend the section to have such an effect.
The Court of Appeal noted that the appellants "put much stock" in the distinction between the old Rule 45 and new Section 73 in an attempt to distinguish their case from previous cases in which the Court held that the duties owed by patentees were limited to those specified by the Act, Rules and jurisprudence. However, in response, the Court pointed out the similarities between the old Rule 45(3) and section 73(1)(a), noting that "[i]t cannot seriously be suggested that the phrases bona fide and good faith are anything other than interchangeable."
The Court went on to emphasize the distinction found in the Act in respect of issued patents as compared to patent applications. In particular, the Court found that section 73(1)(a) applies only to patent applications and not issued patents. The Court emphasized:
To be clear, the concept of abandonment in paragraph 73(1)(a) operates during the prosecution of the application for a patent. Its operation is extinguished once the patent issues.
The Court held further that "to conclude otherwise would result in absurdity," as an issued patent would otherwise be subject to a retroactive scrutiny by the courts in relation to submissions made by an applicant to the Patent Office many years prior, judged against "unknown criteria." Overall, the Court emphasized that it is the Commissioner of Patents who is to make this determination during the prosecution of an application as to whether section 73(1)(a) has been breached, and not the courts.
Most significantly, the Court was clear in rejecting the notion that section 73(1)(a) could serve as a basis for invalidating an issued patent. With regard to the holdings in Lundbeck and Searle, the Court held:
To the extent that the Federal Court decisions in G D Searle and Lundbeck can be interpreted as standing for the proposition that paragraph 73(1)(a) can be relied upon for the purpose of attacking the validity of a patent, they should not be followed.
Conclusion. The Weatherford decision has, for now at least, addressed concerns that section 73(1)(a) could be used to invalidate an issued Canadian patent on the basis of the combination of a broad, undefined duty of candour and a post-grant, subjective review by a court of an applicant's conduct while before the Patent Office. There is still a possibility that the Supreme Court may have cause to consider the issue as the defendant, Corlac Inc., filed an application seeking leave to appeal to the Supreme Court on September 28, 2011. Nevertheless, considering the legislative history of the abandonment provisions in the Act, it is the author's view that the Federal Court of Appeal's interpretation of section 73(1)(a) is consistent with the intent of Parliament.
Cameron P. Weir, Ottawa
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