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Court of Appeal upholds Order prohibiting Cobalt NOC for generic of Bayer’s YAZ, comments on standard of review for construction

Authored byUrszula Wojtyra

As reported previously, the Federal Court issued an Order of prohibition against Cobalt for its proposed generic version of Bayer’s YAZ (drospirenone and ethinyl estradiol) until the expiry of one of two patents. Cobalt appealed the Order of prohibition, while Bayer appealed the Order dismissing Bayer’s application in respect of the second patent. On May 4, 2015, the Federal Court of Appeal dismissed both appeals: Bayer Inc v Cobalt Pharmaceuticals, 2015 FCA 116, aff’g 2013 FC 1061.

In considering the construction of the first patent (2,382,426), the Court of Appeal confirmed that the current standard of review is correctness, while the Federal Court’s assessment of the expert evidence, for example, concerning the state of scientific knowledge at the relevant time or how a reasonable person skilled in the art would understand the patent, is reviewable for palpable and overriding error. The majority of Court proceeded to “offer certain observations for the Supreme Court of Canada to consider in a future case” regarding the relevant standard of review, including referencing the US Supreme Court decision, Teva Pharmaceuticals USA, Inc v Sandoz, Inc No. 13-854,574 US __. The majority offered rationales for a deferential approach to the construction of patents where expert evidence has played a significant role.

Notwithstanding the majority's comments, the Court applied the current standard and agreed with the construction below that the claims at issue were not limited to a micronized form of drospirenone. Therefore, Cobalt’s allegation of non-infringement, which hinged on the limited construction, was upheld as not justified. The Court of Appeal further upheld the decision that the allegations of obviousness and lack of utility were not justified. With regards to Cobalt’s allegations of insufficiency of disclosure and claim overbreadth, the Court of Appeal held that the lower Court had incorrectly understood these as dependent on Cobalt’s limited construction. Considering these allegations anew, the Court of Appeal found that both were not justified as the inventor of the patent had both described the invention and taught the skilled person how to practice it, and that the claim at issue claimed “exactly what was invented – the particular solution to a particular problem.”

On the second patent (2,179,728), the Court of Appeal disagreed with Bayer that the lower Court had erred in its construction, and therefore upheld the finding that Cobalt’s allegation of non-infringement was justified. In response to Cobalt’s assertion that the patent was in any event invalid for claiming a method of medical treatment, the Court of Appeal “offered an observation for future consideration”: that criticisms of the current law, which stems from repealed subsection 41(1) of the Patent Act, call for “full consideration by this Court or the Supreme Court in a case where the issue is squarely raised on the facts.”

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