Johnson & Johnson Inc. v. Boston Scientific Ltd.

Johnson & Johnson Inc. v. Boston Scientific Ltd.
Court (s) Database
Federal Court Decisions
Date
2004-11-30
Neutral citation
2004 FC 1672
File numbers
T-1822-97
Notes
Reported Decision
Decision Content
Date: 20041130
Docket: T-1822-97
Citation: 2004 FC 1672
OTTAWA, ONTARIO, NOVEMBER 30, 2004
Present: THE HONOURABLE MR. JUSTICE MARTINEAU
BETWEEN:
JOHNSON & JOHNSON INC.,
EXPANDABLE GRAFTS PARTNERSHIP
and CORDIS CORPORATION
Plaintiffs
- and -
BOSTON SCIENTIFIC LTD./
BOSTON SCIENTIFIQUE LTEE
Defendant
REASONS FOR ORDER AND ORDER
[1] This motion arises in the context of an infringement action whereby the plaintiffs allege that the defendant has infringed Canadian Patent No. 1,281,505 (the '505 Patent), Canadian Patent No. 1,338,303 (the '303 Patent) and Canadian Patent No. 1,330,186 (the '186 Patent) (collectively, the patents in suit).
[2] The defendant moves for summary judgment dismissing all claims in this action and declaring that the patents in suit are invalid, void and of no effect. The defendant further requests impeachment of same, and the costs of this motion and of this action.
[3] The defendant alleges, inter alia, in its pleadings that the applicants for the patents in suit did not pay the prescribed filing fees and completion fees. The defendant submits that neither the Patent Act, R.S.C. 1985, c. P-4 (the Patent Act), as amended, nor the Patent Rules, C.R.C. 1978, c. 1250 (the Patent Rules), as amended, grant the Commissioner of Patents (the Commissioner) any discretion to give an application a filing date where the prescribed fee had not been paid nor to waive any portion of the prescribed fee. Therefore, the defendant concludes that the applications for the patents in suit were either never validly filed with the Commissioner, or deemed to be permanently abandoned since the applicants failed to take corrective action within the statutory time limits for doing so after the date of filing.
[4] The plaintiffs oppose the present motion on different grounds which are discussed later on in reasons. But first, it is necessary to give an overview of the applicable legal framework, which will be followed by a short summary of the relevant facts which are not in dispute.
LEGAL FRAMEWORK
[5] Canadian patent law is entirely statutory. A person's right to obtain a patent and the requirements an applicant must satisfy to do so, arise solely from the Patent Act and the Patent Rules promulgated thereunder. In Canada, a patent is granted by the Commissioner when all of the requirements for the issuance of a patent are met. The relevant provisions of the Patent Act and the Patent Rules are reproduced at Appendix A. The patents in suit were issued after October 1, 1989, on the basis that all the applications were filed before that date, most notably the '186 Patent. Accordingly, the patents in suit are to be dealt with in accordance with the provisions of the Patent Act, other than section 46 (the term of patent), as they read immediately before October 1, 1989 (current Patent Act, subsection 78.2(2)).
[6] The Patent Act and Patent Rules specify all aspects of the application process and delineate the role and powers of the Commissioner in receiving and processing patent applications and in issuing patents. To obtain a patent, an inventor, or his legal representatives, must present a petition to the Commissioner and comply with all other requirements of the Patent Act (section 27 of the Patent Act). Among these requirements, every application must be "completed" within twelve months of its initial filing (subsection 30(1) of the Patent Act). The Patent Rules define "completion" to require the applicant to submit certain documents and pay certain "prescribed fees" to the Commissioner (sections 32 and 34 of the Patent Rules).
[7] The fees that may be charged in respect of the filing of applications for patents or the taking of other proceedings under the Patent Act and any rule or regulation thereunder, as well as the payment of any such fees, including the time when and the manner in which those fees shall be paid, are determined by the rules and regulations made by the Governor in Council (subsection 12(1) of the Patent Act). "On filing" an application for a patent, the applicant must pay a prescribed filing fee. The exact fee that must be paid to file and complete an application is specified in Schedule II of the Patent Rules (section 11 of the Patent Rules). The amount of this fee depends upon whether or not the applicant is a "small entity" on filing. A small entity refers to an "independent inventor" or a "small business concern". Those expressions are in turn defined in section 2 of the Patent Rules. In construing these definitions, a small entity is defined to exclude individuals who have transferred any right in the subject invention to an entity who has, in turn, licensed any rights in the invention to a company having more than one hundred employees or a gross annual revenue of more than two million dollars. That being said, Schedule II, Item 8 of the Patent Rules also prescribes an additional fee that must be paid "to complete an application not completed on its filing date". This completion fee is an additional amount the applicant must pay over and above the filing fee if all of the completion requirements listed in sections 32 and 34 of the Patent Rules are not satisfied on the day the application is filed.
[8] Moreover, pursuant to subsection 30(1) of the Patent Act, if the application is not completed within twelve months of its filing, it is "deemed to have been abandoned". In such a case, subsection 30(2) of the Patent Act provides that an abandoned application may be reinstated on petition presented to the Commissioner within twelve months after the date on which it was deemed to have been abandoned, and on payment of the prescribed fee, if the applicant satisfies the Commissioner that the failure to complete or prosecute the application within the time specified was not reasonably avoidable. Section 61 of the Patent Rules states that a petition for the reinstatement of an abandoned application shall be verified by affidavit. Subsection 30(3) of the Patent Act provides that "[a]n application reinstated under subsection (2) shall retain its original filing date".
[9] On October 1, 1989, amendments to the Patent Act came into effect to require, among other things, the payment of maintenance fees. Sections 27.1 and 46 of the amended Patent Act were the result of these amendments with respect to the said requirement. Subsection 27.1(1) of the Patent Act provides that an applicant for a patent shall, to maintain the application in effect, pay to the Commissioner such fees, in respect of such periods, as may be prescribed. Pursuant to subsection 27.1(2) of the Patent Act, an application for a patent shall be deemed to have been abandoned if such fees have not been paid by the applicant before the expiration of that period. Moreover, subsection 27.1(3) of the Patent Act provides that an application deemed to have been abandoned may be reinstated on petition by the applicant presented to the Commissioner within such period as may be prescribed and on payment of a prescribed fee, and an application so reinstated shall retain its original filing date and its priority date, if any.
[10] As will be set out in detail below, the defendant alleges that on the date of filing, the applicants only paid the fees applicable to a small entity. Later on, outside the 12 month period provided in subsection 30(2) of the Patent Act for the reinstatement of an abandoned application, the applicants sought to "top up" the filing fee to that of a large entity, by paying a sum equivalent to the difference between the filing fee for a large entity and the filing fee for a small entity. The Commissioner appears to have accepted this additional amount, without completion fee, to correct the filing fee deficiency and allowed the prosecution of the applications to continue to issuance. Prior to the decisions rendered by this Court and the Federal Court of Appeal in Barton No-till Disk Inc. v. Dutch Industries Ltd., [2002] 1 F.C. 325 and 2003 FCA 121, it was the practice of the Commissioner to permit deficiencies in the payment of the prescribed fees to be cured by "top-up" payments. It apparently did not matter when such top-up payments were made. Top-up payments were received even after the deadline for the payment of the fee and the deadline for any corrective measures permitted by the Patent Act.
[11] However, in Dutch Industries Ltd., supra, this Court and the Federal Court of Appeal both held that the Commissioner did not have jurisdiction to accept the top-up payments received after the deadline set out in the Patent Act. As a consequence, because of the strict interpretation of the statute and limited power of the Commissioner to accept late corrective payments, patent applicants and patent holders can find themselves in the situation of having underpaid a fee and having no recourse to correct these payment errors.
[12] It is apparent that this Court and the Federal Court of Appeal were well aware of the harsh consequences their ruling would have on patent applicants and patent holders who did not pay the prescribed fees. As stated by Sharlow J.A. in Dutch Industries Ltd., "In the context of the administration of the Patent Office, the likely consequence (. . .) is that no patent applicant or patent holder will dare to pay any fee on the "small entity" scale, because any error in the determination of small entity status could lead to the loss of all rights under the patent application and any resulting patent, unless the error is discovered and corrected within the statutory time limits for late fee payments" (para. 4) (My emphasis).
[13] On August 8, 2003, the Government of Canada announced its intention to amend the Patent Act in response to the decisions of this Court and the Federal Court of Appeal in Dutch Industries Ltd., supra. According to the announcement made that day by the Government, "[t]he proposed amendments to the Patent Act will provide a mechanism for the retroactive correction of past fee payments in situations where a fee was incorrectly paid at the lower small entity fee level instead of the higher large entity fee level".
[14] That being said, no such amendments have been adopted by Parliament. At this time, the content of any future legislative amendments which might be retroactive is a matter of pure speculation and not of law. In the case at bar, the defendant has the right to have this proceeding determined on the law which currently governs it. I will now summarize the relevant facts for the disposal of the present motion for summary judgment.
FACTUAL BACKGROUND
[15] The patents in suit generally relate to balloon expandable "stents" or "articulated stents", which are devices used to expand and reinforce blood vessels in the body. A stent is a device which acts like scaffolding to support the walls of a body passageway to keep the lumar of the passageway open.
[16] From the date of issuance or reissuance of the respective patents until February 26, 1999, the plaintiff Expandable Grafts Partnership (EGP), has owned the patents in suit. From February 26, 1999 until July 13, 1999, the plaintiff, Cordis Corporation (Cordis), has owned the patents in suit. On July 13, 1999, Cordis sold, assigned and transferred its whole right, title and interest for Canada in and to the patents in suit to the plaintiff, Johnson & Johnson (J & J).
[17] EGP is a general partnership created by an agreement dated December 30, 1985, between Julio C. Palmaz (Palmaz), Richard Schatz (Schatz) and Philip J. Romano. Its purpose is mainly to develop and market the expandable intraluminal vascular graft (the invention) which is the object of the patents in suit. Palmaz's contribution to the partnership was an assignment of "the entire right, title and interest for the United States and all foreign countries" in the invention. In particular, Palmaz assigned to EGP United States patent application no. 796,009, filed November 7, 1985 (the US '009 application) and all foreign equivalents of that application.
[18] On August 27, 1986, with the full knowledge of Palmaz and Schatz, EGP entered into a licence agreement with Ethicon Inc. (Ethicon), a company having more than one hundred employees and having reserves of over two million dollars, and who manufactures and markets medical and surgical devices such as sutures and ligatures. That licence agreement granted Ethicon (a wholly-owned subsidiary of Johnson & Johnson) a worldwide exclusive licence under certain defined "Patent Rights", which included any foreign equivalents of the US '009 application. On March 15, 1989, EGP's licence to Ethicon was amended to include all world-wide patents relating to any expandable intraluminal graft that named either of Palmaz or Schatz as an inventor. Pursuant to paragraph 4.01(a) of the licence agreement, Ethicon was obligated to pay to EGP the sum of $3,600,000 upon the signing of the agreement, which occurred in August of 1986. Following execution of the licence agreement in favour of Ethicon, the sum of $3,600,000 was credited on September 2, 1986 to a bank account in the name of Expandable Grafts Partnership/Ethicon. That account was closed on October 7, 1986 and the balance of $3,624,320 was deposited into an account in the name of Expandable Grafts Partnership only. Cheques were then drawn on the Expandable Grafts Partnership only account, payable to the principals of EGP.
[19] On November 6, 1986, Palmaz presented to the Commissioner, by his patent agents, two petitions and patent applications for the invention, which were assigned application nos. 522,324 (the '324 application) and 522,325 (the '325 application) (collectively, the 1986 applications). The 1986 applications claimed priority, from the first US '009 application filed on November 7, 1985. The '325 application also claimed priority from a second United States application, filed on November 3, 1986. The '324 application was eventually issued as Canadian Patent No. 1,281,504, which itself was reissued as the Canadian Patent No. 1,338,303 (the '303 Patent). The '325 application was eventually issued as the Canadian Patent No. 1,281,505 (the '505 Patent). Both patents were issued in the name of Palmaz.
[20] In the two cover letters and executed petitions Palmaz submitted to the Commissioner on November 6, 1986 in respect of the 1986 applications, Palmaz, by his agents, stated that Palmaz was a small entity. The fees accompanying the 1986 applications were calculated on the basis that Palmaz was indeed a small entity. As Palmaz, by his agents, later admitted, the fees were deficient because Palmaz was not, in fact, a small entity on November 6, 1986. No action was taken to correct the fees' deficiency within the statutory periods defined in section 30 of the Patent Act.
[21] On June 30, 1989, two letters were sent to the Commissioner wherein the patent agents for Palmaz informed the Commissioner that Palmaz was not entitled to claim small entity status for the 1986 applications. As a result, Palmaz paid the Intellectual Property Office a sum of $150.00 for each application which was equivalent to the difference between the filing fee for a large entity and the filing fee for a small entity. No other fee, such as completion fees, was ever submitted. The Commissioner appears to have accepted this additional amount, without completion fees, to correct the filing fee deficiency and allowed the prosecution of the applications to continue to issuance.
[22] On March 23, 1989, Palmaz and Schatz, by their agents, purported to file another Canadian patent application relating to the invention. The Commissioner later designated this as application No. 594,694 (the 1989 application). The 1989 application was ultimately issued as the Canadian Patent No. 1,330,186 (the '186 Patent). As had been the case with the 1986 applications, in the cover letter and executed petition, Palmaz and Schatz submitted to the Commissioner that they were a small entity. As Schatz and Palmaz, by their agents, later admitted, the fee was deficient because Palmaz and Schatz had not been a small entity on March 23, 1989.
[23] On November 10, 1989, Palmaz and Schatz, by their agents, advised the Commissioner that they were not a small entity on March 23, 1989 and were not entitled to pay the small entity fee. Palmaz and Schatz, by their agents, then purported to file an additional amount to retroactively "top-up" the initial fee deficiency. However, no additional fee, such as completion fees, was ever submitted. The Commissioner appears to have accepted the additional amount to correct the filing fee's deficiency and allowed the prosecution of the 1989 application to continue to issuance.
[24] No maintenance fee which is required under Sections 27.1 or 46 of the amended Patent Act was ever remitted with respect to the 1989 application.
[25] In the meantime, on March 29, 1988, United States Patent No. 4,733,665 (the U.S. '665 Patent) was issued. The U.S. '665 Patent is for the same invention as the '303 Patent. On April 26, 1988, United States Patent No. 4,739,762 (the U.S. '762 Patent) was issued. The U.S. '762 Patent is for the same invention as the '505 Patent. Both U.S. '762 Patent and '505 Patent claim priority from U.S. '009 application filed on November 7, 1985. As well, both the U.S '665 Patent and the '303 Patent claim priority from U.S. '009 application.
PROCEEDINGS BEFORE THIS COURT
[26] The defendant's motion for summary judgment was heard on June 24, 2003, together with a similar motion made by Arterial Vascular Engineering Canada Inc., Medtronic Ave, Inc., and Medtronic of Canada Ltd. (the other defendants) who are also sued by the plaintiffs in another action alleging infringement of the patents in suit and of a fourth patent not in issue here (file T-808-98). In this regard, the reasons provided in the present proceeding are referred to and included in the reasons for order issued concurrently in file T-808-98 and which concern the similar motion made by the other defendants.
[27] Days before the hearing of these two motions, plaintiffs sought an adjournment pending the coming into force of the Rules Amending the Patent Rules, which were published in part II of the Canada Gazette on June 18, 2003 as SOR/2003-208. I dismissed their request for an adjournment. At the hearing, I therefore heard argument on the merits of the summary judgment motions. That being said, I allowed the parties to file supplementary written submissions on the impact, if any, of the aforementioned pending regulatory changes which came into effect on January 1, 2004.
[28] Moreover, during the time the case was under advisement, on August 8, 2003, the Government of Canada announced its intention to present to Parliament retroactive amendments to the Patent Act, L.R.C. 1985, c. P-4, in response to the decisions of this Court and the Federal Court of Appeal in Dutch Industries Ltd., supra.
[29] On November 2, 2003, upon motion by the plaintiffs pursuant to paragraph 50(1)(b) of the Federal Courts Act, R.S.C. 1985, c. F-7 (the Federal Courts Act), I ordered a stay of proceedings for a period of one year. The stay was granted on two grounds: 1) the anticipated (retroactive) legislative changes; 2) a pending leave application to appeal to the Supreme Court of Canada from the Dutch Industries Ltd. case. The stay order was appealed. The Federal Court of Appeal dismissed the appeal (Johnson & Johnson Inc. v. Boston Scientific Ltd., 2004 FCA 354) Sexton J.A. who gave the reasons of the Federal Court of Appeal stated that "it was clearly appropriate for the Motion Judge to grant a stay based upon the pending leave application in Dutch Industries Ltd., supra." With respect to the other ground for the stay, while making no comment, Sexton J.A. nevertheless mentioned that "it is a rare circumstance where the Court will decline to proceed because of anticipated legislative changes."
[30] Since the above stay was granted, a whole year has passed. In the meantime, the Supreme Court of Canada refused to grant leave in the Dutch Industries Ltd., supra, case and the anticipated retroactive legislation has not been enacted. Taking into consideration the particular circumstances of this case and the relevant jurisprudence, I have refused to extend the stay as requested by the plaintiffs. This leaves the present motion for summary judgment which has to be decided on the law which currently governs it.
ISSUES IN DISPUTE AND PARTIES' POSITION
[31] The issues to be decided here are relatively straightforward. This motion raises the question of whether the pleadings disclose any genuine issue regarding the validity of the patents in suit. The relevant facts are not in dispute. Essentially, the Court is asked to determine whether the individual applicants for the patents in suit, Palmaz and Schatz, were entitled to claim small entity status at the date of filing of same. If they were not, what are the legal consequences which result from the applicants' failure to pay the prescribed filing fees (and completion fees as well) within the statutory twelve month period prescribed at paragraph 30(1) of the Patent Act? Are the applications for the patents in suit deemed to have been permanently abandoned since no reinstatement petition was presented to the Commissioner?
[32] The defendant submits that there is no genuine issue for trial. More particularly, the defendant argues that the patents in suit are invalid, void and of no effect. As a result of the large sum of money paid to EGP pursuant to the licence agreement entered on August 27, 1986 with Ethicon, Palmaz and Schatz were not entitled to claim small entity status. In order to correct the applications filed, the applicants paid, on June 30, 1989, to the Commissioner the sum which was equivalent to the difference between the filing fee for a large entity and the filing fee for a small entity. Alternatively, if this Court determines that the 1986 applications were given a filing date of November 6, 1986, those applications were deemed abandoned on November 6, 1987, for failure to complete the application by paying the prescribed filing fee for a large entity and the completion fee pursuant to subsection 30(1) of the Patent Act. As no petition to reinstate the 1986 applications were made prior to November 6, 1988, the defendant argues that those applications became permanently abandoned. Alternatively, if this Court determines that the 1986 applications were accorded a filing date of June 30, 1989, the date on which the whole of the prescribed fee for a large entity was paid, the defendant submits that the '505 and '303 Patents are invalid by virtue of the prior issuance of the U.S. '762 Patent and the U.S. '665 Patent pursuant to paragraph 27(2)(b) of the applicable (post October 1, 1989) Patent Act.
[33] In regards to the '186 Patent, the defendant submits that it is and has always been invalid, void and of no effect, as the prescribed fee for a large entity was not paid on the filing date. If it is determined that the 1989 application is accorded a filing date of March 23, 1989; the date where the application was first made in Canada, then the defendant argues that the application was deemed abandoned on March 23, 1991, for failure to complete the application by paying the prescribed fee for a large entity and the completion fee pursuant to subsection 30(1) Patent Act. Furthermore, the defendant notes that no petition to reinstate the 1989 application was made prior to March 23, 1991, and therefore the 1989 application became permanently abandoned as of that date. Alternatively, if this Court finds that the 1989 application is accorded a filing date of November 10, 1989; the date on which the whole of the prescribed filing fee was paid, then the defendant argues that the 1989 application was deemed abandoned on November 10, 1991, by virtue of section 73 of the applicable (post October 1, 1989) Patent Act for failure to pay the maintenance fee required pursuant to subsection 27.1(1) of the applicable (post October 1, 1989) Patent Act. The defendant also points out that no petition to reinstate the 1989 application was made prior to November 10, 1992. Therefore, the 1989 application became permanently abandoned as of that date.
[34] For their part, the plaintiffs submit that proceeding by way of summary judgment is not appropriate in this particular case. First, they argue that the defendant should have proceeded by way of judicial review since the defendant is challenging the decision of the Commissioner. Second, the plaintiffs point out that section 59 of the Patent Act provides that a defendant " (...) may plead as a matter of defence any fact or default which by this Act or by law renders the patent void ". In this regard, they argue that the defendant has not specifically pleaded section 59. The plaintiffs submit that even if the defendant has pleaded section 59, this provision may only be relied upon to support pleadings "as a matter of defence", and therefore it does not afford the relief sought in the motion (which, by result of the counterclaim made by the defendant, and section 60 of the Patent Act, seeks a declaration of invalidity). (Please note that in file T-808-98, the other defendants expressly refer to both sections 59 and 60 of the Patent Act).
[35] The plaintiffs further submit that the patents in suit were properly issued, as the proper fees were paid. The plaintiffs submit that the determination as to whether the applicant was a small entity should have been determined when the patent regime was first engaged which, in this case, was at the time of filing of the first U.S. applications, on November 7, 1985 (the "priority date"), pursuant to subsection 28(1) of the Patent Act. Accordingly, the applicant was entitled to claim small entity status.
[36] The plaintiffs further argue that section 77 of the Patent Act creates the "legal fiction" that all preconditions to a valid patent issuance have been met for the patents in suit and therefore the patents in suit are deemed to have been properly issued.
[37] The plaintiffs further rely on subsection 4(1) of the Patent Act and Rules 32, 34 and 137 of the Patent Rules, which deal with the powers of the Commissioner. As a result, the plaintiffs note that in 1985, the Commissioner established a procedure to accept the additional fees or in other words the payment of a correcting fee where small entity status had been claimed erroneously. The procedure was published in a Bulletin available to the public and provided that where the application was filed with an incorrect claim to small entity status, the applicant should notify the Patent Office of the error and remit the additional amount to correct the filing fee. Therefore the plaintiffs submit that the published procedure was followed and the additional fees were tendered and accepted. In light of the above, the plaintiffs are of the opinion that the patents at issue in this case were given filing dates which the Commissioner chose not to change when he accepted the additional fees. Furthermore, the plaintiffs submit that the Commissioner did not treat these applications as incomplete or abandoned, nor did the Commissioner state that they were.
DECISION
[38] I have determined that the present motion as well as the similar motion made by the other defendants in file T-808-98 should be granted. There is no genuine issue for trial. I entirely accept the arguments submitted in this regard by the defendant and by the other defendants in file T-808-98 in their respective pleadings which I do not need to reproduce here. I also dismiss the arguments made by the plaintiffs. I have already exposed the applicable legal framework and summarized the relevant facts which are not in dispute. That being said, I will complete my reasons by addressing specific issues in the order which I have just presented the arguments made by the plaintiffs.
SHOULD THE DEFENDANT HAVE PROCEEDED BY WAY OF JUDICIAL REVIEW?
[39] The plaintiffs submit that the defendant is attacking the authority of the Commissioner. More specifically, the defendant is alleging that the Commissioner erred in issuing the patents. As such, the plaintiffs submit that the relief contemplated by the defendant is overriding the Commissioner's exercise of his statutory duties. The plaintiff therefore concludes that the defendant should have proceeded by way of judicial review. The plaintiffs rely on subsection 18(3) of the Federal Courts Act, which provides that the remedies sought by defendant can only be obtained through a judicial review application as they were in Dutch Industries Ltd., supra.
[40] It is trite law that not all administrative acts are "decisions" under section 18.1 of the Federal Courts Act. It must be a "decision" made in the exercise of the powers conferred by an Act of Parliament (Monsanto Co. v. Canada, [1999] F.C.J. No. 1144 (F.C.T.D.) (QL)). It must also be a "decision" which has the legal effect of settling the matter or purports to have such legal effect (Canada (Attorney General) v. Cylien, [1973] F.C. 1166 (C.A.); Singh v. Canada (1994), 82 F.T.R. 68; Cynamid Agricultural de Puerto Rico, Inc. v. Commissioner of Patents (1983), 74 C.P.R. (2d) 133). Once the tribunal has exercised its jurisdiction; in this case when the Commissioner has issued the patent, then the matter is decided. In Monsanto, supra, it has been established that the issuance of a patent is a final "decision". However, this case, the defendant is not seeking a judicial review of the Commissioner's decision regarding its own patent applications. The defendant is attacking the issuance of the patents in suit in favour of the plaintiffs.
[41] In Cangene Corp v. Eli Lilly and Co. (1995), 63 C.P.R. (3d) 377, Jerome A.C.J. was dealing with an application for an order extending the time to commence an application for judicial review of a decision of the Commissioner. Although the situation is different from the application at issue, his words are timely, at page 379:
I am not prepared to grant the application. The provisions of the Patent Act clearly demonstrate that Parliament has provided a comprehensive scheme for challenging the decisions of the Commissioner of Patents. The procedure set out in the Act and the Rules does not contemplate the type of judicial review proceedings which the applicant in the present case seeks to commence.
[42] Further on, Jerome A.C.J. refers to section 42 which is now section 41 of the Patent Act, and goes on to say:
The right of appeal is given only to those persons who have failed to obtain a patent by reason of a refusal or a rejection from the Commissioner, in the present case, the respondent Eli Lilly. A third party such as Cangene does not have such right.
[43] I accept that the procedure found in sections 59 and 60 of the Patent Act, which is available to a defendant being sued in an infringement action or any other interested persons provides a comprehensive scheme for challenging any decision of the Commissioner which has ultimately led to issuance of a patent. This includes any ground of invalidity based on an excess of jurisdiction.
[44] That being said, in the present case, the defendant has a competitive commercial interest and as such is not "directly affected by the matter" as provided for under section 18.1 of the Federal Courts Act. There is a consistent body of jurisprudence which stands for the principle that such an interest cannot amount to a standing to challenge administrative decisions affecting a rival (Glaxo Canada Inc. v. Canada (Minister of National Health & Welfare) (1990), 31 C.P.R. (3d) 29 (F.C.A.), affirming (1987), 18 C.P.R. (3d) 206; Pfizer Canada Inc. v. Canada (Minister of National Health and Welfare) (1986), 12 C.P.R. (3d) 438 (F.C.A.); Apotex Inc. v. Canada (Attorney General) (1986), 9 C.P.R. (3d) 193 (F.C.T.D.) and Apotex Inc. v. Canada (Attorney General) (1993), 48 C.P.R. (3d) 296 (F.C.T.D.)).
[45] Similarly, in Pharmascience Inc. v. Canada (Commissioner of Patents), [1998] F.C.J. No. 1735 (T.D.) (QL), Pinard J. of this Court was dealing with an application by Pharmascience for judicial review of the decision of the Commissioner who had granted the respondent G.D. Searle & Co. a late entry allowance. Pinard J. dismissed the application on the ground that Pharmascience had not satisfactorily explained its one year delay in seeking judicial review and further that Pharmascience lacked standing as it was not a party directly affected by the decision. Pinard J. stated as follows at paragraph 9:
Pharmascience lacks standing. Subsection 18.1(1) of the Federal Court Act limits judicial review to "anyone directly affected by the matter in respect of which relief is sought". In my view the only person "directly affected by decisions taken during the prosecution of a patent application before the Canadian Patent Office is generally, the patent "applicant" as defined in section 2 of the Patent Act.
(My emphasis)
[46] Furthermore, it is obvious in this case that the defendant would never have sought to have the patents in suit adjudged invalid, had the plaintiffs not sued the defendant in the first place. Moreover, when the decisions were made by the Commissioner to accept the late payment made by the applicants which eventually led to the issuance of the patents in suit, the applicants were the only ones aware of these decisions. In light of the reasons stated above, it is clear that a procedure under judicial review would not be appropriate in this case.
IS THE DEFENDANT ENTITLED TO OBTAIN A DECLARATION THAT THE PATENTS IN SUIT AND ALL CLAIMS THEREOF ARE INVALID AND VOID?
[47] In view of what has been mentioned above, the question then becomes what options for having a patent declared invalid or void are available to a defendant within the scheme of the Patent Act with reference to a plaintiff's infringement claim? As part of its defence, the defendant may plead that the patents in suit should be declared void pursuant to subsection 53(1) of the Patent Act if any material allegation in the petition of the applicant in respect of the patent is untrue, or if the specification and drawings contain more or less than is necessary for obtaining the end for which they purport to be made, and the omission or addition is wilfully made for the purpose of misleading. Alternatively, the defendant may launch an action (or as the case may be, make a counterclaim) under section 60 of the Patent Act to have the patent declared invalid or void even though the patent has been issued (Monsanto, supra). As a matter of defence, a defendant may also rely on section 59 of the Patent Act which provides that in any action for infringement of a patent, the defendant may plead as matter of defence any fact or default which renders the patent void.
[48] The defendant relies on sections 59 and 60 of the Patent Act. In the case at bar, the defendant also initially relied upon the provisions relating to void patents contained in section 53 of the Patent Act, and stated in its defence and counterclaim that: " (...) a patent is void if any material allegation in the petition of the applicant in respect of the patent is untrue (...)". However, in the course of the hearing of the present motion for summary judgment, the defendant withdrew its section 53 allegation, and amended its memorandum of fact and law filed in support of its notice of motion, so as to remove all of the submissions dealing with "material allegations". As a result, for the purposes of the present motion for summary judgment, the defendant only seeks determination of the issue of the invalidity of the patents in suit due to the plaintiffs' failure to correctly pay the filing fees and the plaintiffs' subsequent failure to complete the patent applications within the time set forth at section 30 of the Patent Act.
[49] Strictly speaking, under section 59 of the Patent Act, the defendant is not entitled to a declaration in rem that the patent is invalid. A dismissal of a patent infringement action on the basis of section 59 of the Patent Act constitutes a judgment inter partes and not a judgment in rem on the invalidity of the patent (Sno Jet Ltd. v. Bombardier Limitée (1975), 22 C.P.R. (2d) 224 (F.C.T.D.); Inline Fiberglass Ltd. v. Omniglass Ltd. 48 C.P.R. (3d) 214) (F.C.T.D.)). Therefore, while an impeachment action under section 60 of the Patent Act determines the validity of a patent throughout Canada, the dismissal of an infringement action under section 59 of the Patent Act would have the same effect on the parties, but would only be res judicata as between the parties to the action (Maple Creek Manufacturing & Marketing Inc. v. Hanson Marketing Inc., [1997] O.J. No. 1870). Accordingly, a defendant may rely upon section 59 as a matter of defence against the infringement action and may also obtain a declaration that the patent is invalid as between the parties, or, in reliance upon section 60 of the Patent Act, the defendant may obtain a declaration in rem that the patent is invalid or void. That being said, a section 60 claim must originate out of an original action or a counterclaim (Dableh v. Ontario Hydro, [1993] F.C.J. No. 924 (F.C.T.D.) (QL), appealed on other grounds). Conversely, a section 59 claim does not need to be pleaded as a counterclaim as it is a statutory defence (Dableh, supra), and may be pleaded in a statement of defence.
[50] I must now determine what are the consequences are, if any, of the defendant not having made specific reference to sections 59 and 60 of the Patent Act in its "amended fresh as amended statement of defence and counterclaim, dated February 11, 2002 (the amended defence).
[51] The plaintiffs submit that a failure to adequately plead an essential element of a claim or action is sufficient grounds for dismissal. To support their arguments, the plaintiffs rely on Dupont Canada Inc. v. Glopak Inc. (1998), 81 C.P.R. (3d) 44 at 58-59 (F.C.T.D.) where it was stated that a motion for summary judgment may be dismissed on that basis. In Dupont, supra, the Court held that the failure to plead the subject matter of the motion (i.e. the allegedly infringing product) in the statement of defence and counterclaim meant that the allegedly infringing product was never in issue in the action, and, accordingly, Dupont could not allege that such product infringed their patent. This omission was deemed to be material to the determination of the facts and, as such, essential to the determination of the case. This is not the situation in the present case.
[52] This Court recognizes the importance of pleadings as they identify both for the Court and for the opposing party the position which a party is advancing (Gant v. Hobbs, [1912] 1 Ch. 717 at 728 (C.A.); Esso Petroleum Co. Ltd. v. Southport Corporation, [1956] A.C. 218 at 239 (H.L); Glisic v. The Queen, [1988] 1 F.C. 731 (C.A.); TWR Inc. v. Walbar of Canada Inc. (1991), 132 N.R. 161 at 179 (F.C.A.); Prêt-à-Porter Orly Ltd. v. Canada (1994), 176 N.R. 149 (F.C.A.); DuPont Canada Inc. v. Glopak Inc. (1998), 81 C.P.R. (3d) 44 at 58-59 (F.C.T.D.); Kirin -Amgen Inc. Et al. v. Hoffmann-LaRoche Ltd. (2000), 11 C.P.R. (4th) 78 at 90 (F.C.A.)). In this case, I find that the essence of the pleadings filed by the defendant indicate the specific remedies sought by the defendant as well as the specific facts and provisions of the Patent Act upon which the defendant relies to plead that the patents in suit are void and invalid. The Court expects parties to adhere to the rules of pleading so that each side will know the case they are required to meet at trial, thereby preventing either party from being taken by surprise. That the pl