US Supreme Court upholds "clear and convincing" invalidity standard

Hot off the press...  the US Supreme Court has decided i4i v. Microsoft.  At a quick glance: s.282 of the US Patent Act requires a party alleging invalidity to show it by "clear and convincing" evidence.  Also at a quick glance, this applies whether or not a piece of prior art was considered by the patent examiner.

And patentees breathe a big sigh of relief...  ;)  

Sanofi Pasteur to expand in Toronto

Sanofi Pasteur, which makes vaccines, is planning to expand its operations in Toronto.

Federal Court Overrules Supreme Court on Presumption of Validity

Go read the post on this topic at Sufficient Description. It brings up an interesting topic - when courts review the validity of patents, does it have to comply with administrative law principles, or is it its own standard? Professor Siebrasse notes that Gauthier J. in Eli Lilly / cefaclor 2009 FC 991 essentially ruled that Supreme Court musing on this point was wrong, and agrees with Gauthier J.

More on the Light and Warburton article on Drug Costs

I don’t want to be a blogger that leaves negative comments unaddressed in the comments section, so I want to bring up two good comments to my post on the Light and Warburton article.

First – actually, I shouldn’t have said anything about 11% being a high cost of capital. I certainly don’t keep track of what a reasonable cost is. It could be 20%, for all I know ;)

Second – Norman Siebrasse, who keeps an excellent blog SUFFICIENT DESCRIPTION, comments

But it does seem to me that including the cost of capital is appropriate. If the return to a pharma company cannot cover the cost of capital, then it won't raise the capital, and the research won't get done. To my mind, the reason we want to know drug costs is to know whether the need to promote the research justifies the high price. If that is right, then surely the costs that are essential to the research being undertaken must be included. The authors say "Calculating the cost of capital is a widely accepted exercise to determine whether a project
should be undertaken; but as a claim on public money or citizens’ cash, it is unreasonable." The authors seem to agree that if the cost of capital is not covered, the project will not be undertaken. I don't understand why they say incuding these costs is unreasonable. So far as I can see, they do not offer any argument at all on p. 8, where the point is discussed at greatest length - it looks to me like an unsupported assertion.

As is often the case, Norman’s comments stop me in my tracks and cause me to re-assess.

My initial reaction was to agree – but then to express doubt that the pharma industry is making this clear when they recite a big cost of R&D number.

But that strikes me now as too glib. Norman is right – cost of capital is a reasonable thing to include in “drug costs” if one wants to know if we are providing enough protection (as opposed, maybe only in my mind ;) , to “R&D costs”).

I re-read that section in the Light and Warburton article. I think a key part of their position is

In other industries, huge investments to develop new products, like a new chip from Intel,
do not lead firms to make the argument for government-protected prices by claiming that
‘You owe us for all our R&D costs, plus what we would have made had we not undertaken
the project in the first place’.

In other words, Light and Welburton want to know why cost of capital makes a case for supporting more protection for a pharmaceutical company than a computer chip company (or whatever). Presumably, all innovative industry needs to cover the cost of capital.

Analysis of Drug R&D spending hits the popular press

I always think its the beginning of the end of the line for an idea or concept when people start publicly making fun of it. So THIS ARTICLE in Slate Magazine about the Light and Warburton study on drug R&D costs is interesting. The article concludes:

So the drug companies' $1.32 billion estimate was off, according to Light and Warburton, by only $977 million. Let's call it a rounding error.

Are Pharmaceutical R&D Costs Exaggerated?

Here is a link to a recent paper (pdf) by Donald Light and Rebecca Warburton titled "Demythologizing the high costs of pharmaceutical research", (BioSocieties, February 2011) which systematically critiques the estimates of pharmaceutical-related R&D costs routinely promoted by the research-based pharmaceutical companies. As put by Andre Picard in a recent Globe and Mail article, "Drug R&D costs are less than estimated - so why the high prices?",

It costs, on average, $1.3-billion (U.S.) in research and development to bring a new drug to market. That level of investment in R&D by Big Pharma justifies the high cost of prescription drugs.

Those statements are repeated so often that they have come to be accepted as fact.

But are they fact or fiction?

and

So, what do you get when you crunch all those numbers?

According to Dr. Light and Dr. Warburton, the net median R&D cost of developing a prescription drugs varies from $13-million to $204-million, depending on the kind of drug.

Over all, they estimate R&D costs $59.4-million for each new drug.

That is a far cry from $802-million or $1.3-billion.

Its worth it to read both the newspaper article and the original paper - the newspaper article summarizes the arguments quite a bit.

Particularly egregious, IMHO, is the inclusion of a "cost of capital" in the R&D costs. The cost of capital is used to decide whether to embark on a project by seeing whether it will make a return higher than you could get by just investing the money - i.e. by subtracting the cost of capital, or money. That's fine, but I don't think that what most people or policy makers have in mind when they hear about the R&D costs to bring a drug to market - the numbers are misleading if the reader doesn't understand that cost of capital is included.

Furthermore, the $1.3 billion or $802 million estimate includes an assumption that the cost of capital is 11% - which strikes me as high. I wish I could guarantee myself an 11% return on the stock market!

11% a year, over several years... really adds up ;)

Another interesting issue is for which drugs these numbers are being reported. According to Light and Warburton, the numbers commonly referenced by the pharmaceutical industry reflect the most expensive-to-develop 1/5 of all drugs. Again, I don't think this is what most people understand when discussing the average cost to develop pharmaceuticals.

Another interesting aspect of the Light and Warburton article (there are many ;) ) includes a discussion of risk and a comparison of pharmaceutical companies to Intel.

In other industries, huge investments to develop new products, like a new chip from Intel,do not lead firms to make the argument for government-protected prices by claiming that‘You owe us for all our R&D costs, plus what we would have made had we not undertaken the project in the first place’.
...
The corporate risk of R&D for companies like Pfizer or GlaxoSmithKline are thus lower than for companies like Intel that have only a few innovations on which
sales rely.

which raises all sorts of interesting questions about the principle of technology-neutrality in patent law, and whether its effective violation in the pharmaceutical area is really wise policy.

Actually...

One risk of blogging is that I often think of something just after pressing "Publish Post" ;)

Following up on my last post regarding Michael Geist's comments on CETA and copyright - an interesting question is whether there is a difference in the historic linkage between trade and IP between patents and copyright - i.e. is the linkage between trade and patents different from that between trade and copyright?

It might well be different. I've read a lot about the history of international agreements in patents - but a lot less wrt copyright. Historically, "industrial property" (patents and trademarks, mainly) and "intellectual property" (copyrights etc.) were regarded as separate categories by many people - with industrial property being, well, more important to industry, who are also tied heavily into international trade relations. That distinction has blurred a lot, but the international strategies of the copyright-industries were distinct from those of the patent-industries until some time approximately late 70's/early 80's. (apparently, the patent-industries had to persuade the copyright-industries to buy into a multilateral approach that culminated in TRIPs - and at some point the copyright-industries had to get on board or get left behind ;) ).

Meanwhile, over in copyright land...

I have been focused on the effect CETA would have on patents and pharmaceuticals. Of course, there's lots of other stuff in CETA, including copyright. Michael Geist has posted a copy of his comments to the Standing Committee on International Trade HERE.

If I may nitpick, Geist writes:

1. The inclusion of intellectual property policy marks a dramatic shift for Canadian trade negotiations, which conventionally addressed market entry, investment, and tariff issues. As Dan Ciuriak, a former deputy chief economist at the International Trade department, has noted with respect to the CETA intellectual property provisions: "the process is not a sound one. In a hotly contested area, to have fundamental business regulation made in this fashion is not sound."

I think that the shift to including intellectual property policy in trade negotiations happened a while ago, with the FTA, NAFTA and TRIPs. And arguably much earlier - I think trade and IP have been intertwined for a long long time. I guess it depends on your framework or POV.

Whether this is a "sound" way to do IP regulation is a different question. But, it "is" how it is done today.

Some updates on CETA

1)  Rumblings from Ottawa

There have been stories coming out of Ottawa saying the CETA trade deal is in trouble. 

First, there is this from Paul Wells:

http://www2.macleans.ca/2011/02/17/free-trade-with-europe-never-mind/#more-173556

which basically says the following:

-          there has been a lot of bad press for the deal (#1 – adding $2.8 billion to drug costs)

-          there is no federal government champion for the deal

-          the provinces seem to be uninterested (and Europe wants concessions from them)

-          pro-business lobby groups seem to be uninterested

-          Europe has said publicly that it would rather scrap the deal than sign a narrow, watered-down deal (as it would set a bad precedent)

-          An influential lobby group – the automotive sector – has recently come out in favour of scrapping the CETA negotiations

Further to this last point, here’s a CTV News report:

http://www.ctv.ca/generic/generated/static/business/article1912245.html

“A high-powered group of auto executives is pushing Ottawa to halt free-trade talks with South Korea and the European Union and to offer incentives for an industry threatened by the rising dollar and growing competition from lower-cost markets.

The auto executives, including Magna International Inc. chief executive officer Don Walker and the CEOs of the five auto makers with assembly plants in Canada, will meet Friday with Industry Minister Tony Clement to make their case for further government support for upgrades to plants as new automotive investment floods into low-cost Mexico and such emerging markets as China, Brazil and India.

Their concerns form the basis of a 35-page report by a working group of the Canadian Automotive Partnership Council (CAPC), which includes the CEOs of the five vehicle companies that have assembly plants in Canada, Canadian Auto Workers president Ken Lewenza; Sandra Pupatello, Ontario’s Economic Development Minister and her counterpart from Quebec, Clément Gignac. A copy of the report, which will be presented to Mr. Clement, was obtained by The Globe and Mail.”

See also http://www.theglobeandmail.com/report-on-business/clement-to-weigh-auto-sectors-concerns-about-free-trade-deals/article1913673/

Also, there is this article in the Globe and Mail:

http://www.theglobeandmail.com/report-on-business/oil-sands-row-threatening-to-spoil-canada-eu-trade-deal/article1915077/

which says:

“Canada has threatened to scrap a trade deal with the European Union if the EU persists with plans that would block imports of Canada’s highly polluting tar sands, according to EU documents and sources.”

The Oil Sands are a big issue in Alberta, which is the heartland for the Conservative government.

2)  Status of India/EU negotiations.

Apparently, the EU has resumed putting pressure on India in respect of patents, pharmaceuticals and generics, mostly over data protection.    Medecins Sans Frontieres seems to be leading the charge in opposition.  

http://donttradeourlivesaway.wordpress.com/

http://timesofindia.indiatimes.com/home/opinion/edit-page/Dont-swallow-this-pill/articleshow/7312903.cms

http://donttradeourlivesaway.wordpress.com/2011/01/27/press-ipa-concerned-over-pmos-efforts-to-destabilize-indias-ipr-regime-at-the-behest-of-eu/

Also, a UN rapporteur on the right to health also has concerns about the EU/India deal

http://donttradeourlivesaway.wordpress.com/2011/02/07/press-un-eu-india-free-trade-agreement-would-hurt-health-of-millions/

patent applications: Canada pales compared to Switzerland,

An article by Neil Reynolds in the Globe and Mail discussing Canada's relative performance in terms of patent applications filed.  The article questions Canada's performance on a per capita basis:

With a 7.8 million population, Switzerland led the world with 120 patents per million people. Japan finished close behind with 118. Other top-inventor countries: Sweden (80), Germany (68), Netherlands, Finland and Denmark (all 60) – and the United States (40) and Canada (20). Thus the United States beats Canada 10-to-1 in absolute numbers and 2-to-1 in relative (population) numbers.

 and ties it to R&D investment. 

One thing the article doesn't get into: some industries simply are more prone to patenting than others.  Switzerland has a concentration in those industries that Canada doesn't, which accounts for part of the difference.  Of course, maybe that's also an identification of the "problem."  Why this exists probably gets into the realm of historical/economic path dependence - but also leaves open the question of what Canada can do about it (or even if it should want to try to do something about it - something which these sorts of newspaper columns often leave out ;)  ).

Something unamusing: Joseph Weiler on trial

Joseph Weiler - who, long time ago, was one of my favourite professors at NYU - has stood trial in France for criminal libel "because, as editor-in-chief of the European Jouranl of International Law (EJIL), he refused to remove a book review from an EJIL-affiliated website that the book's author claimed is defamatory."

The offensive (to the author) book review is HERE.

More on this HERE, HERE and HERE.  

Frankly, while the book review is certainly negative in tone, I am shaking my head at the publisher of the Journal being sued for criminal libel.  I suppose Joseph Weiler did commission the review, but there doesn't seem to be any reason to believe it is anything other than an honestly negative review. 

This case is cast as a challenge to academic freedom, but I'm not sure that's exactly right.   This seems to be more of an attack on public criticism, period.  I'm not sure what the "academic" aspect adds: what if this was a movie review?  A review of the last Maple Leafs game?  Something is wrong when public criticism is chilled.

In any case, Professor Weiler's editorial in his own defence, linked to above,  goes through his thinking in erudite detail. 

One interesting - or distasteful, depending upon your point of view - aspect is the shadow of forum-shopping and the Internet.  The review is available on-line (my impression is that it is only available online, and wasn't in the printed journal).   As Professor Weiler writes: "The author of the book was an Israeli academic. The book was in English. The publisher was Dutch. The reviewer was a distinguished German professor. The review was published on a New York website."  So why is he in France? 

One answer is that the author of the book is a French national. living in Israel. 

My guess is that its because under the French system, the criminal complaint having been made, it goes to trial - period.  Apparently the first chance to get it dismissed is at the trial itself - and there is no compensation in fees for the defendants' legal expenses.  (there is also the question of whether it is a plaintiff-friendly forum in terms of substantive law, but I really can't comment on that).  

Interestingly, Weiler asked the Court to rule on the substantive issues, even if it finds that it does not have jurisdiction - he'd like a ruling in favour of negative book reviews and their hapless publishers in any case ;) 

Anyway, the verdict is scheduled to be released on March 3.  Hopefully the Court will punt this into the Seine. 

Something amusing: Aidan Butler

Hot off the presses - Aidan Butler of Gilbert's, "a raffish man of mystery" is named one off Canada's 30 most eligible bachelors!

http://www.nationalpost.com/news/worthy/4270001/story.html

http://arts.nationalpost.com/2011/02/11/shinans-worthy-30-canadas-most-eligible-bachelors/

CIPO calls for comments on draft MOPOP revisions on Unity of Invention

The Canadian Intellectual Property Office has released a draft of proposed revisions to Chapter 14 of the Manual of Patent Office Practice (or MOPOP), which deals with Unity of Invention.   See

http://www.cipo.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/wr00758.html

The goals of the revision are to ensure that Canadian standards for unity of invention are equivalent to those under the PCT, clarifying the dispute resolution mechanism in the case of an impasse regarding unity of invention, and providing guidance to ensure a more predictable and consistent application of the standards.

Why the same as the PCT standards?  Well, too be honest that sounds fine to me.  But I hope that some thought has gone into whether the PCT standards are actually good for Canada as opposed to an  assumption that we just "should" adopt PCT standards.    (There also might be a legislative basis for saying they should be the same, but that's a different issue)

CIPO is accepting comments on the draft chapter until April 7.

Norman Siebrasse Canadian patent blog: "Sufficient Description"

Norman Siebrasse of UNB law, whom I've written papers with in the past and I think has all sorts of good things to say about patents, now has his own blog:

SUFFICIENT DESCRIPTION
(www.sufficientdescription.com)

I admit to some jealousy as I read it - I wish that I had written that! 

I urge everyone to go read it!  Hopefully, it will be a great source of Canadian patent caselaw and other information for years to come!

Nathaniel Lipkus named partner at Gilbert's LLP

I am happy to relay the news that Nathaniel Lipkus has been named a partner of Gilbert's LLP!  I cannot put it any better than Tim Gilbert in this email:

It is with great pleasure that the partners of Gilbert’s LLP (G2) wish to advise you that Nathaniel has been asked to join the partnership.  We are also delighted to advise you that he has accepted!

I hope that you will have a moment to congratulate Nathaniel.  He is an exceptional lawyer who represents the highest standards in the profession.

 Congrats!

Hollis and Grootendorst report on cost of proposed CETA patent provisions

Here's an article from the Globe and Mail about a report by Aidan Hollis (U Calgary) and Paul Grootendorst (U Toronto) released today.  The lead of the Globe article:

Provisions in a new trade deal being negotiated between Canada and the European Union could add about $2.8-billion a year in costs to Canadian drug plans if implemented, a new report warns.

The estimate includes $1.3-billion more for public drug plans and $1.5-billion for private drug plans.

The report itself is in pdf HERE.

latest on CETA progress

Last week, Steve Verheul, Canada's chief negotiator for CETA, held a teleconference to update civil society on the progress of the CETA talks.  The sixth negotiating round was held in Brussels, and some good progress was made on market access, regulatory barriers, government procurement, and some progress was made on dispute settlement and geographic indications (!). 

However, less progress was made in the auto trade, agriculture, rules of origin and dealing with commodities ...

and, pharmaceuticals/patents.  Apparently, the EU is pushing hard on these issues, propelled by fierce lobbying in Europe by patent-powerful pharma companies.  Which, actually, means nothing much has changed.  ;) 

The EU/India negotiations, where the EU has backed off its demands for increased pharmaceutical patent protection, doesn't really seem to be getting much play in negotiations.

The exchange of offers has been pushed off till March (although that's not definitive).  The next round of negotiations is scheduled for April in Ottawa. 

Shoppers court decision, can sell private-label generics in Ontario

According to this article in the Globe and Mail

"Shoppers Drug Mart Corp. (SC-T38.771.624.36%) is hailing an Ontario court ruling that will allow it to substitute its own discount brand of prescription drugs for those made by big pharmaceutical companies.


An Ontario court ruled in a decision released Thursday against a provincial regulation that bars the sale of private-label generic drugs on the same basis as other generics."

In other words, Shoppers can make "Shoppers brand drug X" and sell it in Shoppers stores.  (similarly, I presume Loblaws can have Presidents' Choice minocycline, etc. )

Gilbert's helps Mylan be first to market with generic galantamine

Gilbert's LLP represented Mylan Pharmaceutical ULC in overcoming a dosage regimen patent to become first to market with a generic galantamine ER product (used in the treatment of Alzheimers).  On November 10, 2010, the Federal Court found Canadian Patent No. 2,310,950 to be invalid as a method of medical treatment and also made findings of obvoiusness and a lack of a sound prediction.  The Federal Court of Appeal dismissed Janssen Inc.'s appeal for mootness on January 17, 2011.  Click to access the Federal Court trial decision and the Federal Court of Appeal dismissal.

(by Nathaniel Lipkus)

Gilbert's ranked as a leading Canadian "patent contentious" law firm

The 2011 Managing Intellectual Property survey results are out, and Gilbert's LLP has again been listed among the leading Canadian law firms in the "patent contentious" category.  Link HERE (but it requires a subscription). 

International Harmonization of drug approvals - is Health Canada too slow?

Here’s an opinion piece from the National Post

“Speed and Drugs”, by Brett Skinner and Mark Rovere of the Fraser Institute.

An interesting article – which basically says that Health Canada is slower than its European and United States counterparts in approving new drugs, but has no better safety record.  So, Health Canada is imposing a cost (delays in approving new drugs) on Canadians for no compensating benefit.  And, they suggest greater harmonization with Europe and/or the US to fix the problem – basically by establishing mutual recognition for drug approvals (or steps in the drug approval process) with European or US authorities.

Here are some comments, but first I should acknowledge that this is a newspaper article, limited in length, not a full report or academic article.  My quibbles and concerns might well be considered and discussed in the authors’ work.

Health Canada’s regulation in this area rests upon a three-way trade-off: the speed of approvals, the quality of approvals (i.e. addressing safety concerns), and the cost of approvals.  For a given cost, Health Canada can be fast, or it can be careful, but there is a trade-off involved.  And presumably Health Canada can’t just conjure up additional funding to improve either metric by imposing greater fees on drug company applicants or getting more funding from the government purse.  It is difficult to comment on whether Health Canada, considered as an isolated agency, is doing a good job or a comparable job to its global peers without information on its funding compared to the European and US agencies.

Putting that to one side, however, it is still perfectly fine to talk about the results of the system as a whole – which is what Skinner and Rovere are doing – without identifying where the differences in results between Europe, the US and Canada arise.

One question I would have is about the nature of “safety” issues being addressed by Health Canada and its counterpart agencies.  Does the danger – the drawbacks – of lesser quality decisions follow a normal distribution, or is it skewed?  In other words, does the effect of increases and decreases of decision-quality on safety over a large number of drugs converge on some sort of well-behaved curve, or is it the case that one bad decision can be catastrophic (i.e. a skewed distribution)?  Does this follow the law of large numbers to converge on an average, or not?  (I’m probably not expressing this very well L  )       

Skinner and Rovere go on to suggest that mutual recognition is a “solution” to the problem.  Which generally sounds right to me – especially if we are considering mutual recognition of specific steps in the drug approval process rather than mutual recognition of final approvals, period. 

But, if safety dangers are skewed, then I think the mutual recognition argument is weakened. 

Generally, regulatory harmonization is justified if the benefits outweigh the losses of individual preferences for the harmonizing states.  Here, the benefits seem straightforward: if Canada and the EU have mutual recognition, Canada and the EU can reduce their spending (private or public) on drug approvals. 

What about the benefit of faster approvals for Canadians?  (assuming the European process continues unchanged by mutual recognition)  Well, that’s where we get to questions of the trade-off between safety, cost and speed and whether the dangers of poor decisions are skewed. 

If the dangers follow a normal well-behaved distribution, then is there a reason to think that Canada’s preferences for drug safety are different from Europe’s?  Well, maybe- there’s no doubt Europe has a large pharmaceutical industry that wants its drugs approved! 

But, if that doesn’t matter, differences in preferences for drug safety between Canada and Europe are likely to be small.  As Skinner and Rovere write “In economic terms, any incremental improvement in drug safety from more rigorous or frequent testing is subject to diminishing returns.”  And the field might well be ripe for harmonization and mutual recognition.

But what if it is skewed?  Well, then Canada and Europe’s preferences on the level of testing for drug safety might not converge.  Canada might prefer a higher level of safety testing, and it might be a choice with real impact on risk – not subject to the same kind of diminishing returns.  And the scope for harmonization/mutual recognition is lessened.

Another question (while I’m on a roll, posing unfair questions about a newspaper opinion piece ;) )  - is this harmonization/mutual recognition going to have any effect on improvements to the approval system over time?  One positive effect of parallel systems running is a greater scope for experimentation in procedures, testing etc. – experimentation which can lead to improvements that can be implemented widely to everyone’s benefit.  Harmonization necessarily reduces the likelihood of such experience-based learning. 

But, analyzing whether this is a big concern in the drug approval process would require some careful consideration of the international system(s) as a whole.  It may not be a big deal in the drug approval context. 

Bottom line – mutual recognition sounds good to me, especially if we’re talking about mutual recognition of specific steps in the approval process.  But, I’d need more information and analysis before I’m truly convinced.

Pfizer cuts, anticipating Lipitor patent cliff

Pfizer is one of several drug companies facing a "patent cliff" as their blockbuster drugs lose exclusivity.

"Pfizer faces an unprecedented challenge in November, when Lipitor loses U.S. marketing exclusivity. Pfizer bought Wyeth last year for US$67-billion to replace vanishing Lipitor revenue, but has failed to sufficiently bolster its drug portfolio.

More than a half dozen other Pfizer drugs also lose U.S. patent protection in the next few years, including Viagra and Xalatan for glaucoma."

In response, Pfizer is slashing its 2012 R&D budget by $2 billion. 

This is particularly bad news for the UK

"Among the cuts, Pfizer will close its huge research and development centre in Sandwich, southern England, which employs 2,400 people, dealing a major blow to Britain's scientific jobs base."

As part of its strategy, its expected that Pfizer will make greater use of Contract Research Organizations (CROs) rather than doing their research in-house.  Here's two located in Toronto.

 

Bizarre drug shortage story

Guest post by Andrew Moeser:

http://www.theglobeandmail.com/life/health/demise-of-a-death-drug-puts-patients-at-risk/article1885636/

Another story about availability problems for generic medicines, but the case of sodium thiopental is different from the general shortage of drugs.

It’s an interesting example of global linkages in drug markets – concerns of Italian officials (the site of manufacturing) that the drug will be used for executions in the US means that there’s a shortage for use in anesthesia in Canada (and elsewhere).

For patent geeks: are killer patents an urban legend?

Tell me if you've heard this - supposedly, one of the motivations behind disclosure and utility standards are patents from early in the century from the German chemical industry deliberately written so that, if the methods in the disclosure are followed, the hapless copier would blow herself up!  This sort of self-help/IP vigilante-ism is disapproved in polite company ;)  But is it true?   Christopher Wadlow investigates in the latest issue of the Journal of Intellectual Property Law and Practice.

RIM, Apple win a round against Kodak at ITC

The International Trade Commission, which can block the importation of items into the United States if they infringe patent rights, has issued a preliminary opinion that RIM and Apple devices do not infringe Kodak patents.  See
http://us.generation-nt.com/eastman-kodak-apple-rim-apn-patents-itc-request-news-2700921.html

http://www.therecord.com/news/business/article/477712--kodak-loses-ruling-in-case-to-collect-royalty-fees-from-rim-apple

A bit more CETA

From The Parliament .com

"The two sides concluded the latest FTA talks, the sixth round of discussions, in Brussels last week. The next round of negotiations are due to take place in Canada in April.

A Canadian official said that the main remaining obstacles to a deal appeared to be "government procurement, services and intellectual property rights"."

United States "a reclining world power"

according to Bank of Canada Governor Mark Carney.

Not sure what that means, but its a neat turn of phrase, isn't it?  ;)

Canada-EU exchange of offers delayed

From Embassy Magazine: the Canada-EU free trade talks are facing delays.  The negotiators are met last week, but the process is not meeting the benchmarks as fast as desired.  

Most importantly, the exchange of "offers" is being delayed.  Note that this won't necessarily delay the end-point of the process: if the extra time is used to better understand each side's position, resulting in more finely tuned offers, the delay in offers may not delay the date of actual agreement.

No specific mention of patents or pharmaceuticals or IP.  My understanding is that those issues might well be dealt with after the offers - as a political choice by the politicians. 

BTW, the Canada/EU trade negotiations were mentioned during the Intellectual Property Developments conference in London - "At present the EU is negotiating a FTA with Canada, which has attracted criticism in Canada on account of patent linkage." (see IPKat).

Wi-LAN settles with Broadcom

Ottawa-based “technology innovation and licensing company” Wi-LAN settles its ED Texas lawsuit against Broadcom.

http://www.wi-lan.com/company/news-and-events/News-Details/2011/broadcom-and-wilan-reach-agreement-to-end-litigations/default.aspx

Lawsuit continues against lots of companies who use Bluetooth (including Apple, Dell, HP, Intel. Motorola, Sony, Texas Instruments, etc.)

http://www.theglobeandmail.com/news/technology/business-technology/wi-lan-settles-broadcom-lawsuit-signs-licensing-deal/article1877320/

Financial terms not disclosed.

Canadians obtaining more patents

In 2010, Canadian companies were granted 5,223 U.S. patents - up 20% from 2009.  The Globe and Mail reports HERE, but also notes:

All but one of the five countries that rank ahead of Canada in U.S. patents are churning them out at a more rapid clip, including No. 1, the United States (up 24 per cent); No. 2, Japan (up 26 per cent); No. 3, Germany (up 25 per cent); No. 4, South Korea (up 26 per cent); and No. 5, Taiwan (up 16 per cent), according to the U.S. Patent and Trademark Office’s 2010 annual report. The list of companies winning the most patents includes International Business Machines, Samsung, Microsoft and Canon.

 More broadly, there is concern being voiced that the USPTO is just issuing more patents - 31% more in 2010 than in 2009 - in line with Director David Kappos' goal of reducing pendency (to be simplistic, the amount of time a  patent application sits in the USPTO before being issued).  But is this being accomplished at the cost of issuing lower quality patents?  Dennis Crouch calls for a "quality study" HERE and has further comments HERE.  Some commentators point to "a pick up in R&D after the recession" (but wouldn't that result in patents 2-3 years from now?) and "the increasing importance of patents as companies war with each other over intellectual property" (as a patent lawyer, one can only hope!).

The 2010 USPTO Performance and Accountability Report may be found HERE.

The Globe also has an article about an inventor obtaining CA and US patents for a hockey stick modified to train stick handling.   Note his patent agent doing his job:   "The agent also helped him to ensure the patent applied to other kinds of sticks – such as goalie sticks, lacrosse sticks or field hockey sticks."

Target v. Target

Big recent news was Target (US) 's aquisition of Zellers, a Canadian chain of discount stores, for $1.8 billion from HBC.

HBC sold the bulk of its weakest chain, Zellers Inc., to the U.S. retail giant. Target will assume control of up to 220 Zellers stores and said it will spend more than $1-billion to convert 100 to 150 of them to its own banner within the next two to three years.

Interesting trademark aspect: Another store company in Canada, Fairweather, already owns a registered Canadian trademark for TARGET APPAREL for men's clothing, which dates back to 1981.  According to this article, Fairweather acquired the trademark from Dylex, a failed Canadian retailer, in 2001, and opened its first Target Apparel store in 2005.  Interestingly, there was a s.45 challenge to expunge the mark for non-use around 2005.  Litigation has begun.

Target (US) is hardly unknown in Canada.  It claims that

Target’s research suggests it will have a following when its launches in Canada. It found that 10 per cent of Canadians shop at Target and 70 per cent are familiar with its brand.

This will be an interesting case to watch, assuming its doesn't settle before judgment.

Article re: Drug Shortages

A note from colleague Victor So, who is both a pharmacist and a lawyer: "FYI - this shortage is real.  Every time I step in the pharmacy I see more and more drugs that are out of stock."

Globe & Mail article here.

Intel, NVIDIA settle with a $1.5 billion license

Intel and NVIDIA have settled their patent-plus litigation, with Intel agreeing to license NVIDIA's patents for $1.5 billion (US).  The Intel press release is HERE, and the Globe and Mail's less-than-helpful article is HERE  (hey Globe - might you at least tell us what sort of lawsuit they are settling, or the basis for the suit?). 

Technically, the settlement is a cross-license - Intel can use a set of NVIDIA patents, and NVIDIA can use a set of Intel patents.  Scuttlebutt is that Intel is going to (continue to? ;) ) use technology covered by the NVIDIA patents in their products, but NVIDIA has no plans to get back into computer chipsets - which probably explains the $1.5 billion payment from Intel to NVIDIA.  This also might be bad news for AMD, which is a competitor ot both NVIDIA and Intel but in different markets.    

Patents in the Oil & Gas Sector

There was an interesting article in the Globe and Mail on Saturday about patents in the petroleum sector.  The lead:

Deep beneath the muskeg and forest of northern Alberta lies an untapped treasure. Call it the impossible oil sands, a vast pool of crude that lies beyond the reach of current technology.

Of the 1.7 trillion barrels of crude buried in the oil sands, the industry currently believes it can produce just 170 billion, or one out of 10 barrels.

But the Alberta government believes nearly double that number could some day be liberated if there are enough breakthroughs to figure out how to do it profitably.

Now, the battle to reach those impossible oil sands has opened a new front: the patent office.

The general upshot:

As Canada’s oil and gas companies pour billions into ever more challenging oil and gas reserves, they find themselves in a growing technological arms race that has produced a surge in patent applications from an industry that has historically paid little attention to protection of intellectual property.

 An interesting article to read.  My impression is that oil and gas has always had some small companies who specialize in new technologies to access difficult sources - the article suggests that they are getting more focused on patents as a strategy.  Also of interest to Canadian patent lawyers: the petroleum industry (i.e. reserves and extraction) are based in Canada out-of-proportion to our population, providing a fertile ground for Canadian (and Canadian-focused) litigation.  Of course, that is not new - there has always been a stream of oil & gas patent cases around (Gilbert's recently represented Halliburton), but this article implies an upsurge in activity.

I had no idea I was a criminal lawyer...

Anyone know any good criminal law associations to join?  I've apparently been practicing criminal law for the past few years without knowing it ;)

OK, putting jokes aside,  before Christmas the Federal Court of Appeal in Apotex v. Eli Lilly found that the Data Protection Regulations are valid federal legislation.  What raised a lot of eyebrows is that the regulations were found to be valid federal legislation under the criminal law power.  The trial judge, in contrast, found it was valid under the trade and commerce clause. 

The FCA decision in a nutshell

[117]      I therefore conclude that the pith and substance of the [Data Protection Regulations] is to implement article 1711 of NAFTA and paragraph 3 of article 39 of TRIPS so as to encourage the development of new drugs, a valid public health and safety purpose.

[118]      I now turn to the question of whether the pith and substance of the [Data Protection Regulations] falls within federal legislative authority under the Constitution Act. In my view, the [Data Protection Regulations] constitutes a valid exercise of the federal criminal law power under subsection 91(27) of the Constitution Act.

 In short, and not doing the analysis real justice, the regulations as a whole are about allowing and encouraging safe and effective drugs to be placed on the market on pain of criminal sanctions.  (Background - if you sell a medicine in Canada without a Notice of Compliance from Health Canada, it is a criminal act) 

The FCA quoted the Supreme Court in RJR-MacDonald:

The scope of the federal power to create criminal legislation with respect to health matters is broad, and is circumscribed only by the requirements that the legislation must contain a prohibition accompanied by a penal sanction and must be directed at a legitimate public health evil.

The counterargument is that the Data Protection Regulations themselves are about protecting expensive-to-gather data to encourage its generation.  In the words of the trial judge:

[79]      I conclude that the pith and substance of the Data Protection Regulation is the balancing of commercial considerations between the protection of an innovator drug manufacturer’s investments in preparing the NDS information in order to obtain an NOC for a new drug and the eventual NOC approval of generic drug manufacturer’s ANDS for a lower cost generic version of the new drug.

 One can then argue about whether that pith and substance falls under a head of federal power.  


Anyway, I am not a constitutional lawyer (although if someone paid me, I could probably figure it out pretty quick ;)  ).  However, as Andrew Moeser pointed out, the Supreme Court of Canada about two weeks later released Reference re Assisted Human Reproduction Act, which held that the Act was not a valid exercise of the criminal law power and intruded on provincial jurisdiction - albeit the court badly fractured on the issue.  As Andrew pointed out (not having read the case in detail) the AHR Act deals with human reproductive material and engaging in human/non-human transgenic engineering without a license - and that is not a valid exercise of the criminal law power, but data exclusivity is? 

   
 

 

CAFC rejects 25% Rule for calculating reasonable royalities

Yesterday, the Court of Appeals of the Federal Circuit (the CAFC if you're casual, Fed. Cir. if you're formal ;) ) released a big decision if you're interested in monetary remedies for patent infringement.  Uniloc USA v. Microsoft.

The CAFC (Linn J., writing for a panel that included Justices Rader and Moore) ruled that evidence regarding the "25% Rule" is inadmissible under Daubert "because it fails to tie a reasonable royalty base to the facts of the case at issue."

To quote myself, 

The 25 percent royalty rule recognizes as a benchmark that the licensor should be entitled to 25 percent of the predicted "profits".  However, this 25 percent rule is only a starting point: the profit split should then be adjusted up or down to reflect the exact circumstances of the license, and it is not unreasonable for the ratio to be reversed.

Questions have been raised in the past about whether Courts and/or Juries are biased towards the "benchmark" 25%/75% split, regardless of the evidence presented that the split should be amended in a specific case.  
 
Trial courts in the US often have admitted such evidence, as the CAFC states, "largely in reliance on its widespread acceptance or because its admissibility was uncontested."

The CAFC states that in the past it has "passively tolerated" its use; apparently it will no longer be tolerated ;) .

Notably, the CAFC rules that since the 25%/75% split is "unreliable and irrelevant", the approach cannot be saved by adjusting the split up or down to reflect the exact circumstances of the case, say by applying the Georgia Pacific factors.  Basically, the Court says you cannot start from an unfounded basis and then try to correct yourself.
 
In the Canadian context, the US Court that specializes in patents has rejected the reasoning applied in AlliedSignal, a leading Canadian case on patent damages.  It will be interesting to see if Canadian courts follow the US lead, and if so whether they do so explicitly or implicitly.