Bayer Inc. v. Cobalt Pharmaceuticals Co, 2015 FCA 116
The Federal Court of Appeal (“FCA”) acknowledged that correctness might not always be the best standard of review for claim construction. The FCA advised that where expert evidence plays a significant role, claim construction might involve subsidiary factual disputes reviewed on a palpable and overriding error standard, which is equivalent to the United States clear error standard. This case may also impact the future treatment of methods of medical treatment as it calls for the FCA or the Supreme Court to reconsider the law as it stands on prohibiting the patentability of methods of medical treatment in a future case where the issue is squarely raised on the facts.
YAZ was the brand name of birth control pills that Bayer distributed, consisting of a combination of the active ingredients drospirenone and ethinylestradiol. Cobalt attempted to market a generic version of the pills and applied for a Notice of Compliance (“NOC”). In response, Bayer applied for a prohibition of issuance of the NOC until the expiration of two existing patents: Canadian Patents No. 2,382,426 (the ‘426 Patent) and No. 2,179,728 (the ‘728 Patent). Cobalt then alleged invalidity of both patents on the basis of obviousness, lack of utility, overbreadth, insufficiency, ambiguity, lack of sound prediction, double-patenting, and non-patentable subject matter.
The application to prohibit the issuance of the NOC until the ‘426 Patent expired was granted, as the Federal Court accepted Bayer’s construction of the patent and maintained its validity. Cobalt appealed this decision.
In respect of the ‘728 Patent, the Federal Court found it to be invalid for ambiguity in relation to dosage and/or invalid due to non-patentable subject matter. The Federal Court consequently refused Bayer’s application for a prohibition of issuance of the NOC until the expiration the ‘728 Patent. Bayer appeal this decision.
The FCA ultimately dismissed both appeals and upheld Federal Court’s issuance of an Order of prohibition against Cobalt for its proposed generic version of Bayer’s YAZ until the expiry of the ‘426 Patent.
Claim Construction of the ‘426 Patent
The FCA confirmed that claim construction is to be reviewed on the basis of correctness, as established in Whirlpool Corp. v. Camco Inc. (2000 SCC 67). The FCA agreed with the lower court’s construction of ‘426 Patent and finding that the claim 31, the challenged claim was not invalid.
- A pharmaceutical composition comprising:
from about 2 mg to about 4 mg of drospirenone particles, wherein the drospirenone is in a form, which when provided in a tablet containing 3 mg of drospirenone, has a dissolution such that at least 70% of said drospirenone is dissolved in 900 ml of water at 37 degrees C. ([tilde] 0.5 degrees C) within 30 minutes, as determined by USP XXIII Paddle Method using a USP dissolution test apparatus 2 at a stirring rate of 50 rpm, including 6 covered glass vessels and 6 paddles;
about 0.01 mg to about 0.05 mg of 17.alpha.-ethinylestradiol; and one or more pharmaceutically acceptable carriers;
the composition being in an oral dose form, and the composition being effective for oral contraception in a human female.
Cobalt’s allegation of non-infringement argued that claim 31 of the ‘426 Patent was limited to pharmaceutical compositions containing micronized hormone.  However, the FCA agreed with the lower court that a reading of the whole of the patent revealed that the particles of the active ingredient were not limited to micronized form, and that claim 31 instead embraced all rapidly dissolving drospirenone particles. 
The FCA also confirmed that the allegations of obviousness and lack of utility were not justified. Cobalt attempted to make the FCA re-weigh the evidence in regard to obviousness, which is not the standard of review. The standard of review is palpable and overriding error. The allegation of lack of utility was rejected because Cobalt strayed from its notice of allegation, which it was not permitted to do. 
The FCA held that although the lower court erred by failing to consider Cobalt’s allegations of insufficiency of disclosure and overbreadth, this nevertheless did not affect the resulting decision of finding the disclosure sufficient and the claim not overbroad. [70,77]
Future Developments of the Review Standard of Patent Construction
Despite confirming that the standard of review for patent construction is correctness and using it when constructing the ‘426 Patent, the FCA noted that correctness might not always be the best approach. The FCA offered certain observations in regard to the standard of patent construction for the Supreme Court to consider in future cases to promote the sound development of the law.  A court’s construction of a patent is done through the eyes of a skilled person in the art, and the weighing of expert evidence and a court’s conclusions on that evidence are questions of fact. As a result, a deferential approach to the construction of patents using a palpable and overriding error standard of review might be advisable in situations where expert evidence plays a significant role. 
The FCA also noted that based on the doctrine of comity, a correctness review may not be required for consistency and certainty in the interpretation of patents.  Comity among judges will ensure sufficient consistency and certainty in the interpretation of patents.
The FCA referenced Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., No. 13-854, 574 U.S. __ (2015) wherein the US Supreme Court implemented a “clear error” test in regard to patent construction.  The FCA suggested that Canada should, as a practical matter, also consider moving towards providing more deference “to the interpretations of patents reached by those who have seen the experts and have evaluated them.” 
Of some importance is that while concurring with the rest of the reasons and conclusions of the majority, one judge on this three judge panel did not find the majority’s comments on the future developments of the standard of patent construction [16-24], discussed above, necessary.
The FCA denied Bayer’s appeal of the lower court’s finding that the ‘728 Patent was invalid on the basis of claim 8 being ambiguous.
- Use according to claim 1, whereby the estrogen is present in a dose of 20 [MICRO]g of ethinylestradiol or an equivalent dose of 17?-estradiol and the gestagen is present in a dose of 75 [MICRO]g of gestodene or an equivalent dose of levonorgestrel, cyproterone acetate or drospirenone.
The FCA found no error with the lower court’s construction of claim 8.  The FCA further held that there were no reviewable errors in the lower court’s finding that the allegation of non-infringement was justified.  As the FCA concluded that Cobalt’s allegation of non-infringement was justified, it did not address Bayer’s submission that claim 8 of the ‘728 Patent was invalid because it impermissibly claimed a method of medical treatment.
While recognizing that the current law holds that methods of medical treatment are not patentable, the FCA referenced Professor Norman Siebrasse’s blog, “Sufficient Description,” that forcefully advances arguments of policy and logic against the current position.  The FCA “calls for full consideration by this Court or the Supreme Court in a case where the issue is squarely raised on the facts.” 
While the FCA’s provision of observations to the Supreme Court does not alter the current law holding correctness as the standard of patent construction, it does suggest that the standard of patent construction may be reconsidered in the future. The FCA recommends that where expert evidence plays a significant role, claim construction may involve reviewing subsidiary factual findings on a palpable and overriding error standard. The palpable and overriding error standard of review is equivalent to the United States’ clear error standard. Attention must be paid to future Supreme Court cases that may accept the FCA’s observations.
Additionally, the FCA also asks the FCA in other cases and the Supreme Court to reconsider the law as it stands on prohibiting the patentability of methods of medical treatment. Future FCA and Supreme Courts may expand their interpretations and approaches to the patentability of methods of medical treatment. This could lead to courts to providing more clarity as to when dosage forms and dosage regimens are eligible subject matter for patenting. The Canadian Intellectual Property Office may also catalyze change in this area. In May 2015 it released a notice regarding examination of medical use patent claims that took a more liberal position in respect of patentability than it had before.