Federal Court Questions Disclosure Requirement in Sound Prediction Cases

On July 2, 2014, the Federal Court released its trial decision on the validity of the patent for esomeprazole, a proton pump inhibitor (PPI) sold by AstraZeneca as Nexium® for the treatment of gastric-acid-related diseases.¹ Esomeprazole is a single enantiomer of omeprazole, which was known to be an effective PPI at the time the patent was filed.²

This case was an impeachment action brought by Apotex, which challenged the esomeprazole patent for lack of utility, anticipation and obviousness. The Court ultimately found the patent to be invalid on the basis of lack of utility. The decision is notable because of the Court’s analysis of the law on the disclosure requirement of sound prediction, an issue that has been the subject of substantial discussion in the courts since it was first articulated by the Supreme Court of Canada (SCC) in Apotex v. Wellcome³ and later revisited in Teva v. Pfizer.⁴

Utility, "Promises" and Disclosure in Canadian Patent Law

Since the SCC’s 2002 decision in Wellcome, the Federal Courts have imposed increasingly onerous requirements to satisfy the Patent Act (the Act) obligation that an invention be "useful." Before Wellcome, utility was assessed by determining whether an invention operated as indicated at the time it was challenged. However, in Wellcome, the SCC imposed the requirement that the inventors needed to have demonstrated or predicted its promised utility before the patent was filed. Moreover, based on an interpretation of Wellcome, the Federal Court of Appeal has since held that when that utility is predicted (instead of demonstrated), the factual basis for the prediction needs to be included in the patent specification itself. This additional "disclosure" requirement has led to several patents being invalidated, notwithstanding patentees’ protests that this additional requirement lacks any basis in the Act.

In 2012, the SCC appeared to disavow this additional disclosure requirement, in Teva. However, since the case did not turn on this point, the Court’s statements could fairly be described as obiter dicta. As a result, although Teva was released over a year ago, the Federal Courts had not, until Justice Rennie’s decision, questioned the “sound prediction disclosure” requirement, and at least one decision appeared to affirm it.⁵

Sound Prediction Disclosure Requirement Does Not Apply

On the basis of the SCC's decision in Teva, Justice Rennie noted that the "law on proper disclosure with respect to utility is unsettled."⁶ Based on his review of the Act, as well as the relevant jurisprudence, Justice Rennie suggested that the heightened disclosure requirement referred to in Wellcome should not apply to all sound prediction cases, but only to patents that claim new uses of old compounds (i.e., where the invention is the new use).

Justice Rennie acknowledged that "there is no statutory basis for a requirement to disclose either the factual basis or the sound line of reasoning required to support a sound prediction of utility."⁷ He therefore attempted to reconcile the absence of any statutory requirement of disclosure with the SCC’s decisions in Wellcome and Teva.

Justice Rennie explained that the SCC in Wellcome had carved out an exception to the general rule, distinguishing between the normal case (where there is no disclosure requirement for utility) and "this sort of case" (where there is a disclosure requirement).⁸ Justice Rennie acknowledged the Court of Appeal’s interpretation, which held that the additional disclosure requirement applies to all cases of sound prediction.⁹ However, he suggested that, in light of the Teva decision, Wellcome should be interpreted as only imposing an additional disclosure requirement on patents that claim new uses of old compounds where "utility is the only thing being offered in exchange for the patent monopoly."¹⁰ In other words, when the SCC referred to "this sort of case" it was referring to a case where the patent claims a new use for an old patent.

According to Justice Rennie, this interpretation is consistent with Wellcome, where the SCC emphasized that the new use claimed in the patent at issue is the "gravamen" of the invention,¹¹ and with Teva, where the SCC rejected the notion that utility included a distinct disclosure requirement, since neither section 2 (which requires an invention be "useful") nor section 27(3) (which sets out disclosure requirements) of the Act imposes one.¹² Justice Rennie therefore held that there was no disclosure requirement for sound prediction in AstraZeneca (which claimed a new compound, not a new use for an old compound).

The practical impact of this ruling is that, in considering whether utility was soundly predicted, Justice Rennie did not limit his analysis to the data disclosed in the patent itself (an approach which has been fatal to many previous patents). Rather, he also considered AstraZeneca’s internal data. Although this was not sufficient in his view to base a sound prediction, the departure from the disclosure requirement is notable.

While this case is unlikely to be the last word on the question of "sound prediction disclosure," it is the first sign since Teva that the Federal Courts are reconsidering their position on this hotly contested doctrine.

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¹ AstraZeneca Canada Inc. v. Apotex Inc., 2014 FC 638 [AstraZeneca].

² AstraZeneca at para. 64.

³ Apotex Inc. v. Wellcome Foundation Ltd., 2002 SCC 77 at para. 70 [Wellcome].

⁴ Teva Canada Ltd v Pfizer Canada Inc., 2012 SCC 60 at paras. 36 to 43 [Teva].

⁵ Pfizer Canada Inc. v. Pharmascience Inc., 2013 FC 120.

⁶ AstraZeneca at para. 141.

⁷ AstraZeneca at para. 144.

⁸ AstraZeneca at para. 146-148.

⁹ Eli Lilly Canada Inc. v. Apotex Inc., 2009 FCA 97 [Raloxifene]; Novopharm Ltd. v. Eli Lilly and Co., 2011 FCA 220;

¹⁰ AstraZeneca at para. 152.

¹¹ Apotex Inc. v. Wellcome Foundation Ltd., 2002 SCC 77.

¹² Teva Canada Ltd v Pfizer Canada Inc., 2012 SCC 60 at paras. 37-40 [Sildenafil].