Canadian Lawyer InHouse

By David Heller Supreme Court surprises with Viagra decision Did Canada's top court go beyond its jurisdiction by invalidating patent? T he Supreme Court of Canada's recent "Viagra" decision has made waves through the patent bar, and continues to generate both activity and uncertainty at the SCC and Federal Court. In Teva Canada Ltd. v. Pfizer Canada Inc., the court invalidated Pfizer's patent for Viagra (sildenafil), Patent 2,163,446, on the basis that Pfizer failed to satisfy the disclosure requirements provided for in the Patent Act. It has long been accepted that a patent is a bargain between the public and the patent holder. In exchange for teaching the public its invention, the patent holder is granted a limited monopoly on the invention. Therefore, adequate disclosure of the invention is a precondition for the granting of a patent. If the invention is not fully disclosed, the bargain is broken. While testing sildenafil for cardiac effects, Pfizer unexpectedly found that it could be used to treat erectile dysfunction. Based on this information, Pfizer filed an application for the patent, claiming a group of 260 quintillion compounds related to sildenafil, nine of which were "especially preferred" and two of which were specifically claimed. One of those two was sildenafil (Viagra). The patent never stated that it was sildenafil, and only sildenafil, that Pfizer had tested and knew to be effective. Instead, it merely stated "one of the especially preferred compounds induces penile erection in impotent males." The SCC found that in failing to disclose which compound worked, Pfizer was gaming the system, requiring others reading the patent to undertake a minor research project to determine the true invention. This was contrary to the requirement to fully disclose the invention. That goes to the heart of the patent bargain, and the court concluded the appropriate remedy for inadequate disclosure was that the patent was invalid. While the decision of the top Court follows both the Patent Act and the underlying rationale for patent rights, the remedy of voiding the patent took the patent bar by surprise given the issues under appeal. The proceeding arose under the Notice of Compliance Regulations. The issue was whether the Minister of Health might issue a Notice of Compliance to Teva for sildenafil. The validity of the patent was not in issue, nor could it be under the regulations. This distinction is important since the Federal Court and Federal Court of Appeal has repeatedly affirmed that NOC proceedings cannot be used to invalidate a patent. Thus finding the patent is invalid was contrary to settled jurisprudence. In response to the ruling the patent is "void," Pfizer asked the SCC to amend the judgment or have a rehearing on remedy. The request is solely to change the ruling that the patent is "invalid" to a ruling that the NOC application is dismissed. Given the ability of the court to invalidate patents under the regulations was not argued during the appeal, and the SCC was never asked to invalidate the patent, some believe the ruling was an error. Others point out the SCC explicitly stated this was a decision under the NOC proceedings, and still invalidated the patent. This decision clearly reinforces the importance of sufficient disclosure and the patent "bargain." However, its most significant effects may be on the law concerning proof of usefulness of an invention, and the nature of NOC proceedings. On the question of proving utility, the Canadian Patent Office and some court decisions have held that utility must be proven as of the filing date. In this decision, the SCC stated there is no requirement to establish the utility of the invention in the patent. Post filing evidence of utility is good evidence. The decision may change the character and volume of pharmaceutical litigation. Generic manufacturers may argue the Federal Court now has jurisdiction to invalidate patents in proceedings under the regulations. Patentees may have little choice but to initiate actions for declarations of validity in order to benefit from the safeguards provided by an action, including appeal rights. Even if the Federal Court cannot invalidate in an NOC proceeding, any such proceeding might be finally adjudicated by the SCC. The first lesson in how the Federal Court will interpret the SCC's decision has been given in a recent ruling (Apotex Inc. v. Pfizer Ireland Pharmaceuticals). Justice Russel W. Zinn granted summary judgment, affirming the patent is invalid. He found the SCC's decision was a legal determination binding on the Federal Court even if Pfizer succeeds on their request to amend the SCC's judgment. Has the SCC established patents can be declared invalid in NOC proceedings, or only in NOC proceedings before the SCC, or only in NOC proceedings that turn on uncontested facts? NOC proceedings are meant to establish a balance between the rights and interests of innovator and generic pharmaceutical companies. Has the SCC's decision unhinged this balance? IH David Heller is a partner with Ridout & Maybee LLP in Toronto. w w w. c a n a d i a n law y er m a g . c o m / i n h o u s E February 2013 • 11

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