Proposed Changes to Canadian Patent Examination Seek to Motivate Focussed Prosecution
Stemming mainly from its obligations under the Canada-United States-Mexico Agreement (CUSMA) the Canadian federal government has notified amendments to the Patent Rules that it seeks to implement.
The gazetted notification notes that CUSMA requires each party to avoid unreasonable or unnecessary delays in the granting of patents. It then states that the efficient processing of an application is a shared responsibility between the CIPO and the applicant and that there must be sufficient motivation for all parties to conclude examination in a timely manner. This rationale has led to several notable proposed changes:
Excess Claim Fees
Currently the request for examination fee and the final fee are independent of the number of claims. It is proposed that both of these fees would be subject to excess claim fees for each fee in excess of 20. In the case of the final fee, the number of excess claims will be the greater of (i) the number of excess claims at acceptance or (ii) the number of excess claims when examination was requested. The proposed fee for each excess claim is CAD $100 for large entities or CAD $50 for small entities. Most major patenting jurisdictions have some form of excess claims fee (and/or excess page fee) as a way of encouraging fewer claims and more uniform patent application sizes. By having excess claim fees due at both the request for examination and acceptance stages the addition of claims during the examination process will also be discouraged.
Request for Continued Examination
Currently there is no limit on the number of Office Actions that can issue and applicants have four months from each Office Action either to remedy the matter objected to or raise arguments for why the application is in compliance with the Act and Rules. It is proposed to replace that system with an examination system whereby standard examination would be limited to three Office Actions, with applicants having to request continued examination (RCE) beyond that. The proposed fee for RCE is CAD $816 for large entities or CAD $408 for small entities and would allow up to two further Office Actions, after which a further RCE would be required to maintain the application if there are outstanding objections. The proposed RCE system is similar to the USPTO’s RCE system and from an applicant’s point of view has advantages over the examination systems in jurisdictions such as the United Kingdom, Australia and New Zealand, which have strict deadlines in which applications need to be in order for acceptance.
Conditional Notice of Allowance
With a view to reducing the number of Office Actions required it is proposed to introduce a Conditional Notice of Allowance (CNOA) as an Office Action. The issuance of a CNOA would be at the discretion of the Commissioner and would be limited to situations where only minor formalities type defects stand between an application being ready for acceptance. The proposed CNOA will effectively be a two-for-one Office Action that enables applicants to address such minor defects without having to make a RCE and pay the associated fee.
Given the underlying rationale and closer alignment with practices of other IPO’s the proposed amendments are likely to be implemented, although it is not yet clear when that will occur or if different commencement dates will apply. However, one of the other amendments relates to the standard for the presentation of sequence listings and is required to be implemented for PCT compliance by 1st January 2022.
Clarification that Divisional Double Patenting Objection Resolvable by Surrender of Parent Patent
In Ganymed Pharmaceuticals GmbH (and Anor) 2021 NZIPOPAT 6 the Assistant Commissioner has clarified that Regulation 82(b) does not prevent an applicant from avoiding a double patenting objection on a divisional application by surrendering the patent granted from the parent.
The applicants sought to have divisional application 738493 accepted for claims that they acknowledge are the same or substantially the same as those in their granted patent 718280. They sought to avoid a double patenting objection by surrendering their granted patent. However, IPONZ considered that the surrendering of the granted patent would not remove the basis for the double patenting objection on account of the wording of the relevant legislation.
Regulation 82(b) of the Patents Regulations 2014 states:
(b) in the case of a divisional application, if the Commissioner has accepted the complete specification relating to a parent application, that the divisional application must not include a claim or claims for substantially the same matter as accepted in the parent application; and …
IPONZ interpreted the ‘as accepted in the parent application’ provision of regulation 82(b) to mean the claims of the parent application must be considered as they stood at the time the parent application was accepted. A consequence of that interpretation being that the subsequent surrendering (or amendment) of the parent’s accepted claims would not allow a divisional application to include a claim or claims for substantially the same matter. The form of the parent patent claims at the time of acceptance of the divisional application was not considered relevant by IPONZ.
While the Assistant Commissioner considered that IPONZ’s interpretation of the legislation was not without merit, the applicants’ challenge to IPONZ interpretation was allowed on two counts. Firstly the Assistant Commissioner noted when the divisional application was filed regulation 82 was significantly different and had no equivalent of current regulation 82(b). Rather, the prohibition on double patenting was in now revoked regulation 52(3)(a), which provided that:
the divisional application must not include a claim or claims for substantially the same matter as claimed in the parent application;
The divisional was filed while regulation 52(3)(a) was still in force and the parent was filed while the Patents Act 1953 was still in force. Regulation 23(2) of the Patents Regulations 1954 provides that:
(2) The Commissioner may require such amendment of the complete specification filed in pursuance of either of the said applications as may be necessary to ensure that neither of the said complete specifications includes a claim for matter claimed in the other;
The Assistant Commissioner noted that under both of these prior provisions prohibiting double patenting that the double patenting objection could be resolved by surrendering the parent. The simultaneous revocation of regulation 52(3)(a) and substitution of regulation 82 by the Patents Amendment Regulations 2018 involved no transitional regulations. Consequently, the Assistant Commissioner applied principles from the Interpretation Act 1999 to the effect that new legislation does not have retrospective effect and held that surrendering of the parent application removes the double patenting objection.
In case wrong in holding that and also to clarify the scope of regulation 82(b) the second count on which the Assistant Commissioner allowed the applicant’s challenge was that IPONZ’s interpretation is too narrow on account of reading ‘accepted’ in isolation. The Assistant Commissioner noted from the general scheme of the Act that post-acceptance changes to the claims and status of the parent patent is provided for and considered that regulation 82(b) should be interpreted in line with that. The explanatory note to the changes to regulation 82 was considered to count against IPONZ’s narrow interpretation. It provided that:
Regulation 52(3) is revoked and regulation 82 amended to apply requirements regarding the respective content of divisional and parent patent applications at the acceptance of specification stage, rather than the application stage.
The Assistant Commissioner considered the possibility for re-litigation, whereby an infringement defendant might be subject to litigation under an essentially equivalent divisional after the parent is surrendered. However, in the context of the legislative amendments the Assistant Commissioner was not satisfied there was a problem regarding the status of surrendered, or amended or revoked patents that was needed to be and was addressed in the amendments. Taking into account the policy intent behind the regulations as a whole the Assistant Commissioner held that regulation 82 does not exclude consideration of post-acceptance changes to the parent application by way of surrender of the patent.
Can the Dimensions of a Patented Device be a Trade Secret?
The recent Court of Appeals for the Seventh Circuit (CA7C) decision Life Spine Inc v Aegis Spine Inc 21-1649 held that Life Spine’s patent for spinal implant technology did not undermine a District Court’s preliminary injunction that included a finding of trade secret misappropriation in relation to the spinal implant technology.
In March 2016 Life Spine obtained FDA approval to market its ProLift expandable spacer spinal implants and in October 2017 its patent application in relation to those spinal implant devices was granted. Around the time of grant Aegis Spine, a seller of medical devices to treat spinal conditions, enquired about being a distributor and, subject to confidentiality undertakings, obtained one of the ProLift devices. In January 2018 Aegis Spine entered into a formal distribution agreement which included undertakings to act in a fiduciary capacity and not to copy, reverse engineer or create derivatives of the ProLift or to share it without authorisation. However, evidence showed that Aegis Spine breached these terms when it shared the device and details about it with its majority owner, L&K, a South Korean company that manufactures spinal devices. L&K used that information to manufacture a competing device, which was launched by Aegis and L&K in September 2019 when FDA approval was given for L&K’s AccelFix‐XT device.
In the District Court Life Science’s expert witness testified that the ProLift and AccelFix‐XT devices share the same essential features and are so close that they are compatible, which was considered unprecedented. The speed of design for the AccelFix XT and omissions in the design history file led the expert witness to conclude that it was a derivative of the ProLift. The Judge allowed the preliminary injunction finding there to be a strong likelihood that Aegis Spine breached the contract and misappropriated three distinct trade secrets: (1) the combination, dimensions, and interconnectivity of the ProLift’s components and subcomponents; (2) static shear compression testing data; and (3) pricing information.
On appeal Aegis Spine argued that none of the asserted trade secrets qualified as such on account of information that Life Spine publicly disclosed through patents, displays, and sales. Despite the disclosures in its patent and the use of the devices by third parties (surgeons) Life Spine considers the precise dimensions and measurements of the ProLift components and subcomponents and their interconnectivity to be confidential trade secrets. On the face of it this would seem an implausible contention. It would be hard to find an example of a patent application with more drawings for a comparably sized device. Of the granted patent’s 89 pages, 66 pages are for drawings consisting of 123 figures. Life Spine, though, did not give any dimensions in the patent and asserts that some of the measurements are extremely precise — down to fractions of a millimetre. As such, third parties can only learn such information if they have unfettered access to the device and specialized measuring equipment, and Life Spine does not allow third parties such access unless they first sign confidentiality agreements. The evidence also showed that Life Spine takes many precautions to safeguard the device prior to surgery, including having them remain in sealed boxes until surgery and requiring distributors to be present in the operating theatre.
Aegis Spine sought to counter the confidentiality claims with the expert witnesses concession that some measurements of the ProLift are standard in the industry and that an engineer reading Life Spine’s patent would have a good starting point for ascertaining some of the other measurements. However, the CA7C considered that the patent would only be helpful for a company to produce a competing product and provided insufficient basis for disclosing the exact dimensions and measurements of every ProLift component.
However, while exact dimensions and measurements were not readily obtainable, can such things constitute trade secrets in the context of the wider disclosure? As with the District Court the CA7C considered that the statutory definition of trade secret had been satisfied. Under US federal law (18 USC § 1839(3)), information qualifies as a trade secret if (1) the owner thereof has taken reasonable measures to keep such information secret and (2) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information. A corollary of this definition is that a trade secret does not need to be at the level of an inventive step over the prior art.
Yet, while there was basis, particularly within the context of a preliminary injunction proceeding, to find that (1) and (2) are satisfied, I think the CA7C did not consider all the relevant ways in which patent law interacts with the ability to claim trade secrets. The CA7C noted the general principle that publication in a patent destroys a trade secret, but then referred to cases where it was held that a limited disclosure does not destroy all trade secret protection in a product. It was emphasised that trade secret law focuses on the “concrete secrets” and that a company can maintain trade secret protection in the undisclosed aspects of a product, even if it has publicly disclosed other aspects of the same product, meaning that on the facts of some cases trade secret and patent protection can overlap.
However, I think that enquiry needs to be subject to the quid pro quo that is the foundation of patent law, as specified in the requirements of 35 USC 112(a), which states:
The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.
If the preciseness of the measurements is what is needed to be known in order to make the invention work and if this cannot be reasonably inferred or obtained from the disclosure without undue effort or experimentation, then the disclosure is insufficient for failure to satisfy 35 USC 112(a). In its decision the CA7C noted that Life Spine’s expandable cages are intricate devices with many small component parts, requiring precise engineering and that the design and development took more than three years and involved an exhaustive trial‐and‐error process, sometimes adjusting component sizes by fractions of a millimeter. This provides strong support for Life Spine’s disclosure being insufficient as it appears to require undue effort or experimentation to make what is disclosed in the patent work.
If, on the other hand, the disclosure is sufficient for allowing the invention to be worked without needing to know the precise measurements that Life Spine uses, then Life Spine still fails to satisfy 35 USC 112(a) as they have not set forth the best mode known to them. Namely, if they claim that the measurement information satisfies the independent economic value criterion for being a trade secret and if that information was known to them before filing their patent application, then they have withheld ‘best mode’ information from their patent application.
If this analysis is correct, by claiming that the precise dimensions and measurements of the ProLift components and subcomponents and their interconnectivity are trade secrets, Life Spine undermines the validity of its patent. It may have been better to concede that the patent undermined the claim that component dimensions and measurements are trade secrets, and instead sought to obtain the preliminary injunction either solely on breach of contract or along with a claim that Aegis Spine was a joint tortfeasor in patent infringement. Given the unprecedented compatibility of the two devices it would appear that an arguable case of patent infringement could be made.
2. Trade Marks
It’s a Long Way to the Top Shelf if You Want Your Mimic to Roll
In William Grant & Sons Irish Brands Limited v Lidl Stiftung & Co KG 2021 CSIH 38 the Scottish Court of Session for the Inner House (CSIH) upheld the Outer House interim interdict finding that Lidl’s rebranded gin bottle takes unfair advantage of the reputation William Grant has in its HENDRICK’S gin bottle.
William Grant sought an interim interdict (interim injunction) in relation to Lidl’s HAMPSTEAD gin after Lidl rebranded their gin bottle bringing it closer in appearance to William Grant’s HENDRICK’s bottle.
HENDRICK’s as used --- HENDRICK’S 2013 Registration --- Lidls’ HAMPSTEAD before Rebrand --- Lidls’ HAMPSTEAD as Rebranded --- HENDRICK’S 2021 Registration
William Grant began marketing its HENDRICK’S gin in 2000 in a dark brown/black, opaque, Victorian apothecary-style bottle and suggests it be served with cucumber rather than lemon or lime. They obtained registration for the above depiction in 2013. Although the registration mentions colours in the Description/Limitation field, the interdict Judge held these to refer to the label rather than the bottle. In late 2020 Lidl changed to a dark brown/black, opaque, Victorian apothecary-style bottle and also changed the label which now has cucumber images, and like the HENDRICK’S bottle also has images of juniper and scroll designs in the same areas of the label. William Grant considered the changes amounted to passing off and infringe its trade mark in two ways: (i) being deceptively similar; and (ii) by tarnishing or taking advantage of the considerable reputation in the HENDRICK’S get-up.
While noting the significant visual and conceptual similarities, on the available evidence the interdict Judge rejected the deceptively similar pleading on the basis that the relevant consumer would not be confused as to there being a common commercial origin, particularly on account of the differences in the names and prices. Those differences, along with a finding that Lidl was living dangerously rather than deliberately intending to deceive, also factored in the interdict Judge rejecting the passing off pleading.
However, the Judge found there was sufficient basis at the interdict stage for an arguable case that Lidl was taking advantage of the considerable reputation in the HENDRICK’S get-up. The similarities were sufficient to call the HENDRICK’S bottle to mind, even if the differences counted against an arguable case of confusing similarity. While there was little in the way of evidence of change in economic behaviour of relevant consumers, the Judge was nonetheless satisfied that Lidl intended to benefit from the reputation in the HENDRICK’S get-up. The similarities following the rebrand were considered not to be accidental or coincidental, but rather were an attempt to change the economic behaviour of consumers by closely mimicking the well-known brand with there being no evidence of a separate justification.
The Judge went on to find the balance of convenience favours the issuing of an interim interdict preventing Lidl from marketing its HAMPSTEAD gin in the dark, apothecary-style bottle, although held that the pleadings did not justify extending it beyond Scotland. Lidl appealed the unfair advantage finding, while William Grant appealed the interim interdict being restricted to Scotland.
In response to Lidl’s appeal pleadings that the 2013 registration does not cover a dark bottle William Grant amended their pleadings to include their May 2021 registration of a photo of their labelled bottle, and the CSIH allowed that amendment. However, the CSIH did not take the 2021 registration into account as they held the interdict Judge correctly applied the law in finding that there was a prima facie case of infringement by way of taking advantage of the reputation of another trader’s product. They agreed that the 2013 registration depicts a bottle of a particular shape and bearing a coloured label, and that it does not show a white bottle, nor does it expressly limit itself to a clear bottle. They also agreed that Lidl’s rebranding of its HAMPSTEAD gin at least called to mind the HENDRICK’S get-up and intended to benefit from closely mimicking the well-known brand.
Regarding the geographical scope of the interim interdict the CSIH noted that on account of Lidl being domiciled in England, Scotland and Wales there was the option of initiating proceedings in any of those jurisdictions and that there is no need for separate proceedings given that the Trade Marks Act applies across the UK. The CSIH held that the interim interdict should not have been restricted to Scotland and ordered such.