Patents — Year in Review
January 28, 2016
By Stephen Beney and Nicholas Aitken
In 2015, Canadian courts and the Patent Appeal Board issued decisions which deemed non-infringing alternatives to affect damages for patent infringement, assessed a license agreement by reference to U.S. patent law, and addressed invalidity for obviousness.
These are our selections for the most influential Canadian patent cases of 2015, outside of life sciences:
In Apotex Inc. v. Merck & Co., Inc., [2015 FCA 171], the Federal Court of Appeal made a landmark decision which declared that damages for patent infringement may be assessed with a view to the availability of a non-infringing alternative. The FCA held that “[perfect compensation] requires consideration of: (i) what, if any, non-infringing product the defendant or any other competitors could and would have sold ‘but for’ the infringement; and (ii) the extent lawful competition would have reduced the patentee’s sales.” Although the decision was made in the context of pharmaceuticals, it is expected to be widely applicable to patents in other technical fields such as mechanical, electrical and computer technology.
Patent License Agreements
In Orthoarm Incorporated v. GAC International, LLC, [2015 ONSC 5097], at issue was whether an accused product developed by the Defendant was covered by a license agreement with the Plaintiff, which granted the Defendant rights to make, use and sell all products covered by the Plaintiff’s U.S. patent. As this was a U.S. patent, the Ontario Superior Court of Justice relied upon expert evidence to determine the relevant provisions of U.S. patent law in assessing infringement. The Court applied a principle of “common sense” patent construction from the U.S. patent law and decided that the locking shutter of the accused product, which slides slightly, was not a “slidable locking shutter” as required by the claims. Therefore, the Court concluded that the accused product did not infringe the patent, and was not covered by the license.
Anticipation and Obviousness
In Zero Spill Systems (Int’l) Inc. v. Heide, [2015 FCA 115], the Federal Court of Appeal confirmed that analyzing claims for anticipation and obviousness requires a claim-by-claim review. The Federal Court of Appeal found that, in determining anticipation and obviousness against two of the Appellant’s patents, the trial court erred in law by considering only the meaning and scope of the independent claims but not the dependent claims. As a result, both patents were remitted to the trial judge for redetermination.
In E. Mishan & Sons, Inc. v. Supertek Canada Inc., [2015 FCA 163], the Federal Court of Appeal considered whether the trial judge erred in determining obvious by identifying differences between the prior art and the inventive concept of the claims without actually specifying the inventive concept. The FCA held the trial judge did not err because a fair reading of the reasons indicated that the judge had the inventive concept in mind when determining obviousness, even though the judge did not explicitly identify the inventive concept.
In Decision 1376 of the Commissioner of Patents, the Patent Appeal Board considered the patentability of claims directed to a power generation system, which used part of the generated power to fuel its own energy generation processes, against prior art which fed the generated energy directly to the grid. With a recommendation to refuse the application, the Board decided that the claims were obvious over the prior art because the difference between the claims and the prior art of looping the generated power back into the system was one of a finite number of obvious alternatives to feeding the energy into the grid.
Obviousness and Statutory Subject Matter
In Decision 1380 of the Commissioner of Patents, the Patent Appeal Board dealt with a computer implemented invention for automating the “essentially manual conventional process” of calculating national phase costs for PCT patent applications. In its decision to refuse the application, the Board found the claimed subject matter obvious for automating a conventional process and thus involving no degree of invention.
The Board also commented that the case could have been decided on the matter of statutory subject matter had this defect been formally raised in the Final Action. The Board commented that, while the claimed computer components provide a convenient supporting architecture or technical environment to automate the calculations, these components do not have a material effect on the calculations and processes performed. Therefore, the tangible computer components would be inessential elements, the remaining essential elements would be intangible, and the claim would be directed to an intangible abstract principle or mental process. This is consistent with the latest CIPO Practice Notices on patentable subject matter for computer implemented inventions.
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