Wednesday, August 25, 2010

AbitibiBowater gets $130 Million fof NAFTA claim

Remember the fuss back when Newfoundland  took away water and timber rights and expropriated hydroelectric assets from AbitibiBowater?  Newfoundland said that under the terms of the 1905 lease, these rights were all contingent on Abitibi operating a mill in the province.  Since Abitibi closed the mill (itself a long drawn out affair), all of these assets reverted to the provincial government.

Abitibi, which is a Delaware company, threatened to launch an investor-state complaint under Chapter 11 of NAFTA.

Today, the Canadian federal government settled with Abitibi for $130 million - which must be one of the largest, if not the largest, NAFTA Chapter 11 payouts.

Note that since this is a NAFTA issue, its the Federal government that is settling the matter, not NL.


Thursday, August 19, 2010

Swiss Claims in Canada

Here's an article by summer student Shaughnessy Hawkins, on Swiss claims, which she published recently on lexology

Swiss Claims in Canada

Swiss claims arose to circumvent restrictions on the patentability of a medicinal use of an already-patented compound.  Canadian courts are faced with the difficulty of determining how to interpret such claims, particularly in light of their inherent discrepancy between form and substance. Both European and Canadian courts have recently considered such claims and their legal grounding.  A review of these decisions reveals strategic implications for parties considering Swiss claims in the Canadian context, and raises questions about the future treatment of Swiss claims under Canadian law.

Overview of Swiss Claims

Swiss claims are claims of the form “the use of [compound X] in the manufacture of a medicament for the treatment of [disorder Y]” where compound X is previously known. They are therefore (when construed literally) aimed at the manufacture of the substance, rather than the use, thus circumventing any restrictions against patenting a subsequent use.

Swiss claims highlight an ongoing struggle faced by the courts: whether the language of the claims or the substance of the invention should guide the process of construing the claims. By giving weight to the substance of the invention, the court protects the patentee and her idea. By giving weight to the language of the claims, the court protects the public by providing clear notice as to the scope and contents of the patentee’s monopoly. Particularly in the case of subsequent patents involving the same compounds, courts are attuned to the risk of evergreening by a patentee to protect its monopoly.

Canadian Law

What was once a blanket prohibition in Canada against patents for medical uses has softened into a prohibition against patenting methods of medical treatment. The result of such a shift has been that in recent years, use claims have generally been accepted by Canadian courts, provided they do not amount to methods of medical treatment. Hence there is no particular need to use a Swiss claims structure in Canada.  Still, such claims exist in many Canadian patents, reflecting international claiming practices.

However, there is more at stake in the Canadian context than mere patentability. Canada has a regime for generic manufacturers seeking entry into the market called the Patented Medicine (Notice of Compliance) or PM(NOC) Regulations, similar to the Hatch-Waxman Act in the United States.  Under the PM(NOC) Regulations, a patent containing a claim to the use of a medicinal ingredient is considered eligible for listing under the patent registry, similar to the Orange Book in the US, and the generic company must address the claim prior to gaining entry into the market.  In contrast, methods of manufacturing are not eligible for listing and do not need to be addressed. In light of these regulations, what weight should Canadian courts give to the inclusion of the terms “for the manufacture of a medicament useful for…”?

As a general matter, courts have placed increasing emphasis on the specific language used in a patent claim in the past decade. However, interpreting so-called Swiss claims literally would require judges to deliver a potentially hefty blow to patentees, who might then be forced to restructure their claims solely to adapt to Canadian policies. Courts therefore give careful consideration to the issue of dealing with Swiss claims.

Justice Hughes of the Federal Court of Canada recently considered the development of law dealing with Swiss Claims both in Canada and abroad in Merck Co. v. Pharmascience, 2010 FC 510. In this case, he suggested that the treatment of Swiss claims by Canadian courts has been somewhat inconsistent,[1] and pointed to two such cases in support of this fact. However, I would argue that these cases, as well as Justice Hughes’ own decision, are relatively consistent in their approach. When faced with Swiss claims, the courts seem to give greater weight to the substance of the invention, or what is truly being claimed, as opposed to the language of the claim. While the substance of the invention may have been different in each case, leading to different outcomes, the actual approach taken by the judges seems consistent.

For example, in Abbott Laboratories v. Canada (Minister of Health)[2], the Federal Court of Appeal upheld the trial judge’s finding that a claim for “the use of [clarithromycin] Form 0-ethanolate in the preparation of [clarithromycin] Form II for use as an antibiotic” was not a claim for the use of a medicine eligible for listing under the PM(NOC) regulations because the words “for use as an antibiotic” added nothing to the construction. It was well-established that clarithromycin’s only use was as an antibiotic. Hence what constituted the actual invention, or the substance thereof, was the method of preparation of Form II, and this is what guided the court’s interpretation of the claims in this context.

Similarly, in Pfizer Canada Inc. v. Apotex Inc.,[3] Mosley J. found that a claim of the form “the use of a compound of formula (I) […] for the manufacture of a medicament for the curative or prophylactic treatment of an erectile dysfunction in man”, coupled with other claims to various forms of sildenafil in the treatment of erectile dysfunction in man, was directed to the use of the medicine, the manufacture being secondary. This was influenced by the fact that all of the claims described the use of the medicine, while only some referenced the manufacture, leading the judge to read in that the use was the key element of the invention.

In the recent Merck decision, Justice Hughes held that a claim of the form “the use of finasteride for the preparation of a medicament adapted for oral administration useful for the treatment of male pattern baldness in a person and wherein the dosage amount is about 1 mg” was directed to the use of a medicament for treatment of a human condition at a particular fixed dosage, given that the manufacture of the medicament and its use in the treatment of male pattern baldness generally was already well-known. Once again, the judge considered what the inventive concept, or substance of the invention was, and construed the claim in that light.

The Canadian jurisprudence suggests that courts have not considered the Swiss-style structure of a claim to be determinative in the analysis, regardless of the context. Rather, courts have instead considered what has in fact been allegedly invented.

Swiss Claims under European Law

Both the UK Court of Appeal and the Enlarged Board of Appeal of the European Patent Office (the “EBA”) have recently considered the status of Swiss claims under European law. In Britain, the Court of Appeal considered the issue in Actavis UK Ltd. V. Merck  Co. Inc.[4] The decision held that Swiss claims are acceptable claims for both new uses as well as new dosage forms of an old compound. The court pointed out that the patent generally does not really teach the manufacture, and may in fact teach how to actually treat a patient. In line with previous jurisprudence on the subject, they held that while a Swiss claim is necessary for the purpose of avoiding the prohibition on claims to the use of medicines, the structure will be ignored when considering issues such as novelty.

Shortly after Actavis was decided, the EBA considered the same issue in Kos Life Sciences.[5] In Kos, the EBA altered their longstanding approach to Swiss claims. Previously, the construction of Swiss claims was considered a necessary and acceptable mechanism to circumvent the prohibition on claims to the use of medicines, though their structure was ignored when considering issues such as novelty. However, the prohibition that gave rise to a need for Swiss claims had since been removed.[6] Given that Swiss claims also lack a connection between what is being claimed and what is in fact novel, the EBA held that, prospectively, such claims will not be read in, i.e., will be construed literally.

Strategic Considerations for Patentees

Canada’s most recent decision on Swiss claims, Merck, considered developments in European patent law, yet gave no suggestion that Canadian law would or should move in a similar direction. However, it may be the case that as Swiss claims come before courts in both Europe and Canada, the Canadian approach may also shift away from reading in the substance of the invention to create more cohesive and predictable treatment internationally. Canadian courts and the Canadian Intellectual Property Office often draw from international treatment of claims in issue.  Such a move would also increase predictability in the interpretation of claims in the Canadian courts.  Ultimately, it may be the case that as a result of the Kos decision, fewer Swiss claims will be filed abroad, and subsequently in Canada.

          Parties filing (or responding to) a Notice of Allegation against a patent containing a Swiss claim should also be attuned to the various characterizations that are possible of such claims and may want to consider addressing multiple such characterizations in the alternative. In Merck, for example, Justice Hughes dismissed Pharmascience’s arguments that the claim was for the manufacture, because the Notice of Allegation had characterized the claims as being for the dosage.


          Swiss claims are difficult to construe because their structure often does not reflect the underlying substance of the invention.  Canadian courts have tended to emphasize the inventive concept rather than the language of the claim; however, European courts have recently shifted towards a literal interpretation. This may eventually result in Canadian practice conforming with the new European approach.  In the meantime, parties considering Swiss claims should bear in mind the possibilities for alternative interpretations under Canadian law.

Shaughnessy Hawkins
Summer Student
Gilbert’s LLP

[1] Merck Co. v. Pharmascience Inc., 2010 FC 510.
[2] (2007), 59 C.P.R. (4th) 1 (F.C.A.).
[3] (2007), 61 C.P.R.(4th) 305 (F.C.).
[4] [2008] EWCA Civ 444, [2009] 1 All E.R. 196 (21st May 2008) [Actavis].
[5] Case No. G 0002/08, 19 February 2010
[6] Article 54(5) of the European Patent Convention now permits purpose-related protection for any further specific use of a known medicament in a method of therapy.

Wednesday, August 11, 2010

Trade-driven changes coming to Canadian patent and data-protection laws?

I have published an article on the Canada - European Union trade negotiations - the Comprehensive Economic and Trade Agreement - in the latest issue of the Food and Drug Law Institute's Update magazine.

Here is a link to the article.  Please note that this is distributed with the permission of Update magazine of the FDLI.

Monday, August 9, 2010

Unpredictable but not surprising: enantiomer patents and obviousness

There was some big news last Wednesday in a case I was involved in - a decision by the Federal Court regarding a patent for repaglinide. We (Gilbert's) argued successfully in a PM(NOC)application for Cobalt that Canadian patent no. 2,111,851 (owned by Novo Nordisk) should be invalid - although see the footnote.*  This is a big deal because the '851 is an enantiomer patent.  There were significant findings of fact and law that should be widely applicable to patents covering enantiomers.

Here's an article by Sana Halwani on the decision.

Unpredictable but Not Surprising
The Federal Court clarifies the application of the obvious-to-try test

On August 3, 2010, the Federal Court released reasons in Novo Nordisk Canada Inc. et al. v. Cobalt Pharmaceuticals Inc. et al. (2010 FC 746; “Novo Nordisk”)) finding Cobalt’s allegation of obviousness justified with respect to Canadian Patent No. 2,111,851. The patent covers repaglinide (an (S) enantiomer), its use for the treatment of Type 2 Diabetes, and processes to make it.

Novo Nordisk
is an important case both from legal development and commercial perspectives. The Federal Court has made clear that scientific knowledge evolved after 1987, the date considered by the Supreme Court of Canada (“SCC”) in Sanofi, and that by 1991 it was the state of the art to separate and test enantiomers of racemic potential drugs. This decision refines the obvious-to-try test set out by the SCC and suggests a review of all enantiomer patents applied for in or after 1991.

The decision in a nutshell

The patent involved in this proceeding (the “851 Patent”) essentially covers the enantiomer repaglinide. Repaglinide is sold under the brand name GLUCONORM™.

Enantiomers are mirror image molecules that cannot be superimposed on each other (think of right and left hands). They are normally synthesized together, as a “racemate”, and one cannot know how each of the two enantiomers comprising the racemate (denoted (S) and (R)) will act in the body until it has actually been made and tested. Activity and toxicity can be different as between the racemate, the (S) enantiomer and the (R) enantiomer.

Unlike other recent cases, the racemate comprising repaglinide was never approved or marketed as a drug product, although the racemate had been identified in a previous “genus” patent covering numerous compounds, as well as a patent covering new solid forms of the racemate.

Nonetheless, Cobalt alleged repaglinide to be obvious, and the 851 Patent to be invalid on this and other grounds. The Court agreed and found the 851 Patent obvious to try.

This is only the second decision known to the author in which the Court found allegations of invalidity of an enantiomer patent justified.

Refining the obvious-to-try test

In the Sanofi case, the SCC dealt with an enantiomer patent and in that context, set out the obvious to try analysis applied by the Court to repaglinide in this case. The obvious to try factors include asking whether it is more or less self-evident that what is being tried (i.e. the invention) ought to work.
In answering this question, the SCC stated:

As I have observed earlier, Shore J. found that the skilled person would not know, before separating this particular racemate into its isomers and then testing the separated isomers, that the properties of the dextro-rotatory isomer [(R) enantiomer] would be different from the properties of the racemate or the levo-rotatory [(S) enantiomer] isomer (para. 81). Similarly, he found that the person skilled in the art would not know before trying the different salts in combination with the dextro-rotatory isomer what the bisulfate salt’s beneficial properties would be (para. 82).

Just because there are known methods of separating a racemate into its isomers does not mean that a person skilled in the art would necessarily apply them. The fact that there are such known methods of separation will be of no account if the evidence does not prove that it was more or less self-evident to try them. It is true that at the relevant time there was evidence that a skilled person would know that the properties of a racemate and its isomers might be different. However, a possibility of finding the invention is not enough. The invention must be self-evident from the prior art and common general knowledge in order to satisfy the “obvious to try” test. That is not the evidence in this case. [emphasis added]

At its broadest, this holding would mean that – in the case of an enantiomer or other selection patent – the discovery of advantageous properties could be the foundation of a valid patent, as long as the properties were not predictable in the particular selection of compounds. Given that routinely-identified properties (such as toxicity, solubility, pharmacokinetic profile, etc.) are often unpredictable, it was unclear how this holding would be reconciled with previous jurisprudence suggesting that routine testing may not qualify as an inventive step.

Novo Nordisk addresses this seeming tension by clarifying that unpredictable but unsurprising properties are not necessarily a bar to a finding of obviousness.

The Court found that an enantiomer claim can be obvious even if the enantiomer’s advantages were unknown. In addition, the Court held that it was impossible to predict what the differences in the pharmacokinetic profiles of enantiomers would be before actually separating and testing them. Nevertheless, as of 1991, it was known that these differences could well exist, and that it was, therefore, important to test for them.

The Court held Cobalt’s allegation of obviousness justified even though the Court found that there was no clear preference for one enantiomer or the other expressed in the prior art, and that the advantages of the (S) enantiomer were not previously identified. The basis of this finding was that pharmacokinetic properties that differ between enantiomers would inevitably have been discovered as a result of testing that was a routine part of the state of the art in 1991.

The evolution of enantiomer science

In addition to refining the obvious to try test, this decision should make all patentees ask the question: “Are enantiomers patentable after 1991?”

In Sanofi, the SCC found that as of 1987 there was little motivation to pursue enantiomers. The relevant date in Novo Nordisk is in 1991. The Federal Court found it clear on the evidence that by 1991:

- the world had evolved and it was now the state of the art to separate and test enantiomers;

- techniques for separating racemates into their isomers were generally known; and

- testing enantiomers for differences in pharmacokinetic properties was a routine matter.

The evidence in this case included the fact of an enantiomer policy approved in 1989 by Dr. Karl Thomae GmbH – the patent owner – which confirmed that “A forced move towards the development of enantiomer-pure active substances results out of the necessity to minimize development time and costs, as well as in order to comply with the current state of the art. The development of racemates will thus only still be justifiable in exceptional circumstances” [emphasis added].

This decision also highlights the importance of strong evidence of how drug development was actually undertaken at the relevant time.

The Court specifically contrasted the evidence presented by Cobalt in this case to that presented in the recent Lundbeck case, where the evidence was found to be “appallingly thin”. In Novo Nordisk, Cobalt’s experts all had significant drug development experience – none was simply an academic talking head.

* * *

Moving forward it will interesting to see how other Federal Court decisions grapple with the issue of unpredictable but not surprising properties of compounds claimed in selection patents.

Sana Halwani
August 4, 2010

* Technically, as it was a PM(NOC) application, we argued that the plaintiff had not rebutted our assertion that the patent was obvious, which is not the same as the court declaring the patent invalid. The '851 patent still exists in Canada and can be asserted against anyone, including Cobalt. The valuable part of the win in purely Canadian terms is that Cobalt now has permission from Health Canada to market generic repaglinide in Canada - it has received a Notice of Compliance.

Canadian provinces team up on drug purchases

Interesting though perhaps not surprising development on the drug purchasing front: the Canadian provinces have "teamed up" to purchase drugs for their respective provincial drug plans.

Globe and Mail article

"The premiers unveiled plans on Friday to set up a national agency that would be responsible for purchasing $10-billion in prescription drugs a year as well as medical supplies and equipment.

Having one entity responsible for drug purchases for all 13 provinces and territories would lower costs on a major contributor to the growing tab for health care.

Rising health-care costs dominated the premiers’ two-day annual meeting in Winnipeg. For the first time as a group, the premiers tackled the question of whether the country can sustain a system many Canadians appear to take for granted."

Easier said than done, I suppose - but its maybe inevitable. A) if purchasing power lowers drug prices, presumably more purchasing power can lower them further, and B) this can eliminate two problems: beggar-thy-neighbour provincial drug policies, and changes in one province's policies having unintended negative results in other provinces (i.e. negative externalities, for the economically-inclined ;) ).

A long term concern, however, is whether this will stifle policy and regulatory innovation. With parallel provincial programs comes the opportunity for one province to take the initiative and try something new - maybe it works, maybe it doesn't but at least something new was tried. And if it worked, then all the other provinces could copy it. With a national program, however, there is less scope for experimentation (i.e. Canada can only run one "experiment" at a time), and an innovation might need to gain wider acceptance before actually ever being implemented. This may not make any difference in a 2-3 year timeframe, but over a 20 year timeframe? This may end up not being a good idea in the long run.