Wednesday, September 1, 2010

Patent Impeachment

Wednesday, September 01, 2010
Any interested person can seek to invalidate an issued patent under S. 60 of the Canadian Patent Act. The threshold for standing is relatively easy to meet, but the would-be impeacher must pay security for legal costs into Court. (An estimate of the Patentee’s recoverable legal costs should they successfully defend the patent).

Impeachment is usually sought in one of two situations:

  1. To Stop Threats: The Patentee is threatening to sue the impeacher, or their customers, but does not do so, perhaps out of fear of having the validity of the patent tested in Court.
  1. To Clear the Way: The impeacher has not yet launched the infringing product or service, but would like to, and seeks to clear the patent out of the way.
In the first case, the Patentee will generally assert a counterclaim for infringement.
In the second case, the Patentee would like to assert a counterclaim, but as the product has not yet been launched, it is traditionally considered premature to do so. This will likely change following the decision of Apotex v. H. Lundbeck A/S 2010 FC 807. (Decision can be found here).

In this case Apotex unsuccessfully applied for permission to sell a generic drug subject to patent protection under the Patented Medicines (Notice of Compliance) Regulations and was consequently prohibited from selling the drug until the expiration or invalidation of the patent.
Previous case law held that the Patentee could not launch an infringement suit against Apotex in this situation, as the mere application for an NOC approval was not infringement nor sufficient to ground an infringement claim. [Unlike the comparable situation in the United States under the Hatch Waxman Legislation].

Apotex then proceeded to file an impeachment action against the patent. In response, the Patentee filed a counterclaim for infringement.

On a motion to strike counsel for the Patentee admitted that there was no evidence that Apotex was infringing to date, and that the action was brought on a qui timet basis premised on Apotex’s desire to invalidate the patent and previous NOC application.
Prothonotary Tabib allowed the Counterclaim to proceed, on the basis that while infringement might be somewhat speculative at that time, the interest of judicial economy suggested a strong benefit to have infringement of the future product considered at the same time as the impeachment.

This decision can be distinguished somewhat on its facts. Here the future product which Apotex would sell is easily defined and known to the parties based on the prior NOC submissions. In some impeachment cases the would-be infringer’s products may not be finalized to a stage capable of a proper infringement analysis. Overall though, this decision is likely to lead to more counterclaims by the Patentee in impeachment actions, increasing their potential cost and complexity.