Canadian Lawyer InHouse

INDUSTRY SPOTLIGHT The Saccharin doctrine — which does, in fact, deal with the well- known sugar substitute — is an old U.K. law dating back to 1900, however it has implications in today's world and is often cited in drug manufacturing cases. And in Canada, the Supreme Court has expanded the interpretation of the original law to include product claims, not just process claims. Basically, manufacturers importing components made abroad using a process patented in Canada could infringe upon a Canadian patent. However, the bounds of what could infringe make it difficult — and potentially expensive — for a manu- facturer to assess its liability. While the Saccharin doctrine is par- ticularly applicable to pharmaceutical and high-tech firms, it can apply to any manufacturer — and in today's world of outsourcing and offshoring, it's perhaps more important than ever. But many small and mid-size man- ufacturers don't have in-house patent expertise, so what can in-house counsel do to ensure they don't infringe upon a Canadian patent? Why an old law is important today About a century ago, a company outside the U.K. made saccharin and imported it into the U.K., and as part of the process they had to make an intermediate (a chlo- ride). The final product brought into the U.K. was saccharin, not the intermediary. However, the court ruled this was still an infringement of a U.K. process; the result was the Saccharin doctrine. In Canada, the Saccharin doctrine has been extended to cover product claims, not just process claims, says Philip Mendes da Costa, managing partner with Bereskin & Parr LLP. This can be prob- lematic, he says, because as an importer, you might not know how the various components of your product were made. An "intermediate" could infringe upon a Canadian patent to a process and be considered, by a court, to be depriving the inventor, even in part or indirectly, of the BITTER TASTE OF INFRINGEMENT LITIGATION HOW TO AVOID THE Why you should know the modern-day implications of an old law. By Vawn Himmelsbach full enjoyment of the investment. What exactly is an intermediate? If someone takes A, B, and C, reacts them to create D, and then mixes D with E, F, and G to create a completely different product, D would be considered an intermediate. In a landmark case involving Pfizer Canada Inc. and Warner-Lambert Co. against the Minister of Health in 2007, a drug was made in India using an interme- diate and the final product was imported and sold in Canada. While the process wasn't patented, the intermediate was, and the court ruled it was appropriate in this case to extend the Saccharin doctrine. "It leaves it open for another court to further extend it, so it's a very relevant issue," says Mendes da Costa. "This is a problem for any manufac- turer," he says. "Most Canadian manu- facturers to one degree or another are assemblers — nobody is fully integrated and makes everything." An automobile manufacturer, for example, may need rub- ber for wiper blades, but doesn't necessar- ily know how that rubber was made. Typically manufacturers buy a num- ber of components, assemble parts, and manufacture products. These compo- nents are often made offshore (in a lap- top, for example, the components would include everything from circuit boards to display screens). A local manufacturer might work with several suppliers and innocently buy something that is pro- tected by a patent. This issue often comes up with phar- maceutical and high-tech companies. "In the high-tech field the propensity for litigation to occur is substantially higher [than many other manufacturing fields] because of the number of components that can go into one single device," says Mendes da Costa. The Saccharin doctrine is rooted in the principle that the patentee shouldn't be deprived from the full benefit of a patent monopoly, even if it's in some other juris- diction or some other country, says Susan Beaubien, lawyer, patent agent, and trade- mark agent with Macera & Jarzyna LLP. While the Patent Act doesn't have a definition of infringement per se, it has traditionally been viewed as interference with monopoly, with the exclusive use to make, use, or sell. "What does it mean to use an invention?" says Beaubien, adding "use" is an ambiguous term. The Monsanto case Take the Monsanto case: During 2004 and 2005, Monsanto Co., a multinational agricultural biotech company, filed several lawsuits against farmers in Canada and INHOUSE APRIL 2012 • 31

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