Inequitable conduct in patent prosecution in Canada?

Since 1927 Canadian courts have held that a patent is not invalid simply as a result of a misrepresentation made during the prosecution of the application, at least in the absence of fraud (eg, see Fada Radio Ltd v CGE Co [1927] SCR 520; Lovell Manufacturing Co v Beatty Bros Ltd (1962) 41 CPR 18 (Ex Ct); Eli Lilly and Co v Apotex Inc (1998) 80 CPR (3d) 80 (FCTD)). Allegations of such misrepresentation are frequently based on the applicant’s response to a request from the patent examiner under Rule 29 of the Patent Rules. This request can include information concerning prior art cited in prosecution of corresponding applications in other jurisdictions, usually the United States and Europe.

A 2006 decision of the Federal Court of Appeal, Pason Systems Corp v Varco Canada Limited (2006 FCA 100), qualified the basic principle that misrepresentation during prosecution cannot lead to invalidity of the patent. The defendant alleged that the patent in suit was invalid because the patentee’s representative had not replied in good faith to a request by the patent examiner under Rule 29. The plaintiff sought to have this allegation of invalidity struck from the defendant's pleading. The motions judge had granted the motion. On appeal, the court reversed the decision of the motions judge, allowing the action to proceed with the invalidity allegation based on misrepresentation.

In its ruling, the court cited the introduction of Section 73(1)(a) of the Patent Act, which states that:

"An application for a patent in Canada shall be deemed to be abandoned if the applicant does not:

(a) reply in good faith to any requisition made by an examiner in connection with an examination, within six months after the requisition is made or within any shorter period established by the commissioner.”

The appeal court did not rule on the meaning of Section 73(1)(a). Rather, it refused to rule that Section 73(1)(a) could in no circumstances lead to the result suggested by the defendant. The infringement case is ongoing.

On 24th January 2007 Justice Hughes of the Federal Court ruled on the meaning of this section. This effectively introduced a US-style doctrine of inequitable conduct into Canadian patent law. According to this doctrine, a patent can be held invalid as a result of a failure during prosecution of the application to deal in good faith with the Patent Office. In GD Searle & Co v Novopharm Limited (2007 FC 81) Hughes ruled that a patent application had been abandoned because of the patentee’s failure to disclose in good faith all appropriate facts in its patent application. The patentee also failed to respond in good faith to an office action during prosecution. The patent had since issued.

The allegation of abandonment in the Searle Case was directed at the patent that covers celecoxib (marketed in Canada as CELEBREX). The drug treats inflammation without the gastrointestinal side effects commonly caused by other types of anti-inflammatory agent. This is based on the ability of celecoxib to inhibit cyclooxygenase (COX) II selectively. COX II selective inhibition is due to the presence of a particular chemical group in the celecoxib molecule.

Hughes found that a statement in the application - that COX II selectivity was based on the presence of a particular chemical group was “not derivable and nowhere suggested in the art” - was false. He found that Searle had discovered that a prior art compound having a similar chemical group was a selective COX II inhibitor. According to Hughes, Searle should have advised the patent examiner of its discovery of the prior art compound - particularly since Searle had disclosed the discovery to the public before the Canadian filing date. Searle’s failure to provide the Patent Office with this information either in its patent application or in its responses to office actions showed a lack of good faith. The 576 patent was thus deemed abandoned based on a violation of Section 73(1)(a) of the Patent Act.

The Federal Court of Appeal reversed the Federal Court’s decision, although it did so on a preliminary point regarding the judge’s finding that Searle was not the applicant as of November 14 1994 (2007 FCA 173). His conclusion of abandonment was dependent on this finding. Otherwise, Searle would have benefited from a one-year grace period regarding the citability of the prior art compound. Therefore, the appeal court did not reverse Hughes’s ruling that failure to respond in good faith to an office action could lead to a deemed abandonment of an application.

The meaning and effect of Section 73(1)(a) have not yet been definitively determined in Canada. However, patent applicants would be well advised to consider the possible consequences of failing to comply with it.