Wednesday, August 6, 2008

First Appeal from Re-examination Proceedings in Canada

Here's an article I recently submitted to lexology ( One of the interesting things about Canadian intellectual property law is that, compared with the United States, you get a lot more cases that are the first or one of a few to address an issue. In this case, re-examination.

Canada: First Appeal from Re-examination Procedure

The Federal Court of Canada recently handed down a decision in the first-ever appeal from the re-examination procedure introduced into the Patent Act in 1987. Genencor International, Inc. v. Commissioner of Patents and Attorney General of Canada 2008 FC 608 sets a number of important precedents, including determining the role of the initiator of the re-examination and the standard of review, and highlights difficulties with the present re-examination system. The trial judge also made a surprising ruling that it is not necessary for patent examiners to interpret claims by the same methodology as courts, raising the specter of many future complications. We can refine our views on the strategic use of re-examination proceedings in light of this decision.

The Re-examination Procedure

Re-examination provides a relatively inexpensive, summary procedure to have the Patent Office reconsider the claims of an issued patent. Any person may request re-examination by filing a request with written prior art (patents, patent applications or printed publications). Within three months, a Re-examination Board of at least three persons, two of whom must be Patent Office employees, determines whether the prior art presents a substantially new question of patentability of any of the claims in the issued patent compared to the proceedings during the initial prosecution. If the Board finds that the prior art does not raise a substantially new question of patentability, the process ends with no right of appeal on the part of the initiator of the re-examination. If a new question of patentability is found, the Board then has 12 months in which to cancel, accept or amend the claims in the issued patent. The patentee makes submissions during this period, typically making arguments in support of its issued claims, and if desirable submitting amended claims for consideration. The final decision of the Board may be appealed to the Federal Court, as was done in this case.

No Role for the Initiator of the Re-examination

The Genencor proceedings reinforce the limited role of the initiator of the re-examination beyond the initial request. In this case, the re-examination was initiated by Novozymes A/S, who alleged that the Genencor patent was anticipated by prior art that was not considered in the initial examination. The Re-examination Board agreed, and cancelled all of the claims of the Genencor patent.

When Genencor appealed to the Federal Court, Novozymes sought standing as a party. The Federal Court of Appeal affirmed that the initiator has no role after persuading the Board that a re-examination is warranted. Subsequent written submissions by Novozymes were not considered or even read by the Board, and on appeal Novozymes was refused standing as either a party or intervenor. This decision confirms that re-examination is an ex parte proceeding, and that the initiator of the re-examination has only a minor influence on its outcome.

Canada has a liberal patent impeachment process, with wide standing to commence an action to have a patent declared invalid by the court, with rights to discovery and to give expert oral evidence. The exclusion of the initiator of the re-examination from the subsequent process may be justified by noting that if the initiator is dissatisfied with the results of a re-examination, an impeachment action is always available. Indeed, the judicial reasons in the Genencor hearings reveal a concern that the re-examination proceedings not be turned into a second patent impeachment process.

Standard of Review

Gibson J. found that the appropriate standard of review of the Board’s decision is “reasonableness”, or that the decision of the Board should not be interfered with in the absence of “palpable and overriding error”.

In contrast, in typical infringement or impeachment actions, no deference is given to the decisions of the patent examiner. However, in a typical patent action, the parties have placed evidence before the court which was not before the examiner, making the question of deference moot. This raises unanswered questions regarding the standard of review of patent examiners’ decisions in impeachment and infringement actions if no new evidence or arguments are placed before the court, and plays into the strategic use of re-examination procedures, as discussed below.

It may seem odd that the patentee lost its patent without the opportunity to be heard before a court on a standard of correctness, with expert witnesses and an authoritative judicial construction of the claims. However, it should not be forgotten that the patentee was the beneficiary of ex parte hearings before the Board and Court, with no written or oral evidence or arguments presented by parties adverse in interest. As might be expected, this situation is generally perceived to be favourable to the patentee, and this is the first of 47 re-examination decisions under the post-1987 Patent Act to be appealed by a patentee.

Difficulties with the Re-examination System

As emphasized by Gibson J., the re-examination procedure set up by Parliament presents difficulties. Primarily, there was no party to contest the patentee, Genencor, on the substantive merits of the Board decision. As discussed above, the initiator of the re-examination, Novozymes, was denied party or even intervener status.

The Commissioner of Patents declined to participate, citing non-intellectual property case-law holding that it is inappropriate for federal agencies to defend their decisions during appeal proceedings. This left the Attorney General of Canada to be necessarily added as a party under the Federal Court Act, but the Attorney General declined to address the merits of the Board decision, arguing only that the procedures provided by the Patent Act and the principles of natural justice were followed by the Board.

As a result, the proceedings before the Federal Court were ex parte on the merits, which while consistent with the statutory scheme of the Patent Act, placed the trial judge in an uncomfortable position. To some extent, the trial judge’s discomfort was relieved by his finding that the review was on a reasonableness rather than a correctness standard. However, if on appeal the correct standard for review is found to be correctness, Gibson J. described his position as “untenable” on substantive issues.

The Different Roles of Courts and Examiners?

Surprisingly, Gibson J. analyzed the approach patent examiners may take to claim construction and concluded that certain Supreme Court jurisprudence applied to trial and appellate courts, but not to examiners. He quoted Binnie J. of the Supreme Court of Canada, who wrote in the 2000 Whirlpool case that a simple dictionary approach to construing claims must be rejected in favour of a reading of the specification to put claim terms in context. Gibson J. then specifically rejected the applicability of this ruling to patent examiners during the examination of patents, whether as part of a re-examination or during normal patent prosecution. Gibson J. returned to this point a second time in his decision, writing that “[C]ounsel for Genencor is urging that the Court place on the Board a burden mandated for courts by the forgoing quotation from Whirlpool, which is entirely inappropriate to their experience, to their accustomed role and the role that is contemplated for them by the re-examination provisions of the Patent Act.”

It is unclear from reading the decision why Gibson J. felt it was necessary to address this issue in this manner, as the record from the Re-examination Board reveals resort by the Board to the specification of the Genencor patent in construing the claims.

Fundamentally, this ruling suggests that a patent claim may be office-valid, but court-invalid, and vice-versa. The results are pernicious. For example, in an appeal from re-examination – the situation in the Genencor case - it may be that the claims are invalid under the claim construction allowed in the patent office, but valid under the claim construction required of the courts. However, since the only question on appeal is on whether the Board properly performed its duties, the patentee has no route to re-issue the claims or get them before a court for a judicial consideration: if the patent was properly rejected under the claim construction standards that apply to patent examiners, that is the end of the matter. Assuming the Genencor case is appealed, this specific finding is most likely to be overturned.


From a strategic point of view, the re-examination procedure has typically been disfavoured by counsel to potential patent defendants, largely viewed as providing an opportunity for patentees to strengthen their claims in an ex parte process rather than as a simplified procedure to knock out invalid claims. The Genencor hearings reinforce these views, given the rejection of Novozymes’ attempts to influence either the Re-examination Board or the appeal to the Courts. However, it should be noted that if the Genencor decision stands, patentees will find it difficult to overturn unfavourable decisions by the Re-examination Board, suggesting that in limited situations a re-examination reference may be a fruitful move by a potential patent defendant.

For patent holders, this case and recent Canadian jurisprudence on the standard of review of administrative decisions suggests viewing re-examination more favourably. Possibly, where the facts and arguments on claim validity made before a patent examiner are identical to the facts and arguments before the court, the court is legally obliged to review the examiner’s decisions on a reasonableness rather than a correctness standard. If that is the case, it may be advantageous for a patentee anticipating a particular validity attack to submit the argument to a Re-examination Board and argue the matter in an ex parte proceeding rather than risk an impeachment action with full participation by an opponent. However, the application of recent case-law on the standard of review in the patent context is largely unexplored, and this particular advantage of the re-examination process may be illusory.

Finally, one implication of the Genencor position that patent claims may be construed differently by examiners and courts is that the initiator of re-examination may be entitled to two “kicks at the can”. Potential patent defendants can submit an argument to a Re-examination Board, and if it is accepted, under Genencor the patentee is faced with difficulty in overturning the Board’s decision. If the argument is not accepted by the Board, the potential defendant can argue the validity before the courts by noting that the Board’s method of claim construction is not the same as the Court’s. In other words, the initiator of the re-examination gets to attack the patent on the basis of two different claim constructions. However, as noted above, the position that examiners and courts vary in their approaches to claim construction is the aspect of the Genencor decision most vulnerable to appeal.

It is unknown at this time whether the Genencor decision will be appealed to the Federal Court of Appeal. If it is, several interesting issues may well be raised. The adoption of a standard of review of reasonableness rather than correctness depends in part on the identification of patent examiners as being highly skilled in relation to their mandates and as persons skilled in the art, which may be questioned or at least should be further explored. As noted by Gibson J., the very structure of the re-examination process raises questions of whether a review on the standard of correctness is tenable. Finally, the finding that patent examiners can take a different approach to claim interpretation than the courts is of fundamental importance to the patent system, and hopefully will be subject to appellate approval or revision.

Alexander Stack

Gilbert’s LLP

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