The Great Library at Osgoode Hall in Toronto has been operated and maintained by the Law Society of Upper Canada (Law Society) since 1845. For more than 150 years, the library has been used by lawyers to research the law on behalf of their clients. Twenty years ago, the library itself became the subject of a precedent-setting copyright case.

The Great Library provided two services for the reproduction of legal materials. One of these services was a request-based photocopy service (custom photocopy service), by which Great Library staff delivered the materials in person, by mail or by facsimile to a requester. The second service was the provision of self-service photocopiers in the Great Library.

In 1993, publishers of legal materials sued the Law Society for copyright infringement for reproducing their copyrighted works through these two services. The Law Society, in turn, sought a declaration that it did not infringe the publishers’ copyrights.

With this factual situation, the Supreme Court of Canada (SCC) in CCH Canadian Ltd. v Law Society of Upper Canada, addressed two important copyright questions.

The first was whether, by offering the self-service photocopiers, the Law Society was liable for “authorizing” patrons of the Great Library to copy works in breach of the Copyright Act.

The second was whether the Law Society’s custom photocopy service could be considered “fair dealing” under section 29 of the Copyright Act. If so, the Law Society would not be liable for copyright infringement for copying works to provide this service.

The SCC found in favour of the Law Society, concluding that neither of the Law Society services amounted to copyright infringement.

Regarding the self-service photocopiers, the SCC held that the Law Society’s mere provision of photocopiers did not constitute authorization to use the photocopiers to infringe copyright. Merely authorizing the use of equipment that could be used to infringe copyright did not amount to authorizing infringement. In this case, there was no evidence that the photocopiers had been used in an infringing manner. Further, the warning posted near the copiers stating that the Law Society would not be responsible for any infringing copies was not deemed to be an acknowledgement that the copiers would be used for infringement. Finally, the court decided that even if there had been evidence that the copiers were used to infringe copyright, this did not lead to the conclusion that the Law Society authorized the infringement, since it did not have sufficient control over the library’s patrons.

The custom photocopy service was found to fall within the fair dealing exception, which is a user’s right and should be considered an integral part of the Copyright Act rather than merely a defence. To establish fair dealing, a defendant must show that the dealing was for the purpose of research or private study and that it was fair.

The SCC determined that “research” must be given a “large and liberal interpretation in order to ensure that users’ rights are not unduly constrained”, and was not restricted to non-commercial or private contexts. In this case, research for the purpose of practising law was considered to be within the meaning of “research” as used in section 29 of the Copyright Act.

The SCC agreed with six factors set out by the Federal Court of Appeal to determine whether the dealing was fair: (1) the purpose of the dealing; (2) the nature of the dealing; (3) the amount of the dealing; (4) alternatives to the dealing; (5) the nature of the work in question; and (6) the effect of the dealing on the commercial market for that work.

Applying those factors to the case, the SCC determined that the Law Society’s dealings with the publishers’ works were fair.

Michael Erdle comments on the importance of the case:

“Fair dealing” has been part of Canadian copyright law for a long time, but until the decision of the Supreme Court in CCH Canadian Ltd v Law Society of Upper Canada there was considerable uncertainty about what exactly fair dealing meant. There was an understanding that it was different from “fair use” in the United States, but was it the same as “fair dealing” in the UK or Australia? The Supreme Court clarified, first, that the references to “research” and “private study” should be read broadly and included professional or business research such as a lawyer’s. And the Court endorsed six specific factors to determine what kind and amount of copying is “fair”. In 2012, as part of a major update of the Copyright Act, Parliament made amendments to state explicitly that it is not an infringement for a library to do anything on behalf of a person that the person could do himself or herself under the fair dealing provisions. The case also opened discussion of many other aspects of copying by libraries and other institutions in the digital age.

Summary by: Cheryl Cheung

Alice Corporation’s (Alice’s) patents at issue covered a computerized trading platform for managing risk in financial transactions using third-party shadow credit and debit accounts to verify the parties’ ability to perform a transaction before completing it. The claims at issue covered methods, devices and systems for exchanging obligations between parties using the third-party shadow accounts.

In the lower district court, CLS Bank International (CLS) had sought a declaration of non-infringement, invalidity and unenforceability of Alice’s patents. On a summary judgment motion, the district court ruled Alice’s claims were patent-ineligible for being drawn merely to an abstract idea. On appeal, this was reversed and Alice’s claims were upheld on the basis they covered a practical application of a business concept in a specific way requiring computer-implemented steps. However, the Court vacated the decision below and reheard the case with ten judges sitting in an en banc panel. The en banc Court, by splitting 5-5, affirmed the district court’s finding that Alice’s claims are patent-ineligible.

Judge Lourie, writing for five judges, held that a patent-eligible claim must disclose a process, machine, manufacture, or composition of matter and must not be drawn to a law of nature, a natural phenomenon or abstract idea. He further added that the claim must provide a substantive limitation over an abstract idea; the limitation must give rise to a practical effect and cannot merely be a formality; and the patent eligibility of the claim should be assessed flexibly and pragmatically, in a manner adaptive to technological advancement. He rejected the method claims on the basis the added steps of “creating shadow records” and “using a computer to adjust and reconcile the records” provided no substantive limitation over the abstract idea of “reducing settlement risk by effecting trades through a third party intermediary”. He rejected the system and device claims on the basis they were not substantively distinguishable from the method claims, because the computer elements were described too broadly, and covered any device capable of performing the steps recited in the method claims.

Chief Judge Rader, writing for Judges Moore, Linn and O’Malley, found the system claims were patent-eligible on the basis the claims disclosed physical and structural limitations specifically adapted to solve a complex problem. He noted the limitations were not inherent in the abstract idea and it would be improper for the court to ignore the limitations and decide patent eligibility by assessing the “gist” or “heart” of the invention. Chief Judge Rader and Judge Moore rejected the method and device claims as ineligible on the basis that those claims merely limited the concept of an escrow in a particular field and did not add a substantive limitation to an abstract idea. Judges Linn and O’Malley held the method and device claims were patent-eligible on the basis they included the same substantive limitations present in the system claims. In separate reasons, Judge Newman upheld the eligibility of all the claims, identifying the concern underlying claiming an abstract idea to truly be a concern of overbreadth of the claim, indicating the claims should be evaluated separately from patent eligibility, under sections 102, 103 or 112 of the Patent Act.

Chief Judge Rader issued a further opinion reflecting on the decision of the court. He regretted the lack of certainty in recent case law on patent eligibility, which he attributed to a misguided assessment of inventiveness under the “abstract idea” exemption. He indicated that the uncertainty could be resolved by keeping the inventiveness and patentability analyses separate and focusing the eligibility analysis on the language of the Patent Act. He also warned that a lack of certainty in this area of the law may stifle innovation and is ripe for judicial re-consideration:

I am concerned that the current interpretation of § 101, and in particular the abstract idea exception, is causing a free fall in the patent system. The Supreme Court has taken a number of our recent decisions and, in each instance, concluded that the claims at issue were not patent-eligible. See Bilski, Prometheus, Myriad (under consideration). Today, several of my colleagues would take that precedent significantly further, lumping together the asserted method, media, and system claims, and holding that they are all patent-ineligible under § 101. Holding that all of these claims are directed to no more than an abstract idea gives staggering breadth to what is meant to be a narrow judicial exception. And let’s be clear: if all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents.

One can only hope that the Supreme Court will hear an appeal, and consider Judge Rader’s words carefully.

Summary by: Darren Hall

The ‘948 Patent is entitled “Touch event model”, and was issued on February 9, 2011. It relates to software involved in the recognition of single versus multiple touch events in touch sensitive screen enabled devices. Specifically, the software allows these devices to configure certain “views” to:

1. receive either multi-touch or only single touch event information; and
2. ignore touch information to other views while certain views are active.

The software is said to cause the device to operate in a new and improved way by ignoring excess data processing by the device and it is also said to present an improved interface for application software writers.

The lower court concluded that the invention was not patentable because it related to a computer program. Computer programs are excluded from patentability under Article 52 of the European Patent Convention. However, the Court of Appeal, in relying on its own precedents, particularly Fujitsu Ltd’s Application, [1997] RPC 608 (CA), held that a patent is not invalid merely because a computer program is used to implement its contribution if its contribution is “technical” in nature.

The Court of Appeal held that the problem which the ‘948 Patent addresses is essentially technical and therefore does not fall within the excluded matter of Article 52:

The problem which the patent addresses, namely how to deal with multiple simultaneous touches on one of the new multi-touch devices, is essentially technical, just as were the problems of how to communicate more effectively between programs and files held in different processors within a known network which lay at the heart of the decision in IBM Corporation/Data processing network, and how to provide a visual indication about events occurring in the input/output device of a text processor which lay at the heart of the decision in IBM Corporation/Computer related invention.

For more commentary see:

http://tinyurl.com/bo5p63l

Summary by: Thomas Wong

To quote from a recent article in The Globe and Mail, the Competition Bureau “says TREB is unfairly keeping data about home sales away from online services that compete with real estate agents and potentially eat into their commissions. TREB, for its part, argues that it is upholding privacy laws and protecting the personal information of home buyers and sellers”.

For the full file on the proceedings, including the eight-page reasons and order of the three-person panel, click here.

Summary by: Richard Potter

The Patent Act requires that an invention is useful. This term is understood in law to mean that, as of the patent filing date, the invention has been demonstrated or soundly predicted to deliver the result described in the patent. Since 2005, the Canadian Federal Courts have found that where another specific “promise” can be derived from the patent specification (e.g. a more effective drug treatment with fewer side effects), utility is to be measured against that more specific promise. Generic drug companies have had growing success in Canada based on the developing “promise doctrine”, making effective utility arguments against brand company patents as courts have looked deeper into at what exactly is “promised” by their patents.

Recently, brand pharmaceutical company Eli Lilly (Lilly) sought leave to appeal to the Supreme Court of Canada regarding the invalidation of its patent for ZYPREXA® (olanzepine) for lack of utility. The patent in question was found to describe olanzepine as a safe and effective treatment for chronic schizophrenia, yet at the time the patent was applied for, Lilly had not completed a long-term human study. As a result, there was found to be insufficient evidence available at the time of application on which to soundly predict the long-term safety and efficacy of the drug that was promised.

In a rare occurrence, the Supreme Court ordered an oral hearing of Lilly’s leave application. Leave to appeal was denied, leaving Lilly with no further avenue of appeal under Canadian domestic law. Notably, US and European versions of the Lilly patent were found valid on the issue of utility, entrenching the finding against Lilly as a prime example of the concerns expressed by the USTR over the Canadian utility doctrine.

Lilly has served the Government of Canada with a notice of intent to submit a claim to arbitration under NAFTA Chapter 11, alleging that the invalidation of its patent for STRATTERA® (atomoxetine) on similar utility grounds is inconsistent with Canada’s investment obligations under NAFTA. With the pressure mounting on Canadian lawmakers to override the promise doctrine, ETIPS® will keep close tabs on any new developments.

For the Federal Court decision on the Lilly patent for ZYPREXA® (olanzepine) (affirmed without reasons by the Federal Court of Appeal, 2012 FCA 232), see 2011 FC 1288.

Summary by: John Lucas

Apparently, with minimal evidence, the plaintiffs threatened to sue thousands of people who had allegedly downloaded a pornographic film owned by the plaintiffs. They generally offered to settle for $4000, a sum that Judge Wright reckoned was “calculated to be just below the cost of a bare-bones defense”. This brought in proceeds in the millions of dollars for the plaintiffs. In cases that they pursued in court, the plaintiffs were found to have provided minimal evidence of actual infringement, and in one case, the judge characterized evidence of downloading as a “blatant lie”.

In addition to applying a “punitive multiplier” for the plaintiffs’ “brazen misconduct and relentless fraud”, Judge Wright referred several lawyers involved to their state bar associations, as well as to the Criminal Investigation Division of the Internal Revenue Service and stated that he will also notify all judges before whom these lawyers have pending cases.

Star Trek fans will also appreciate Judge Wright’s several references to Star Trek, such as “though Plaintiffs boldly probe the outskirts of law, the only enterprise they resemble is RICO” (“RICO” referring to the US Racketeer Influenced and Corrupt Organizations Act”).

Summary by: Tom Feather

Judge Stanton called the action a “Frankenstein monster posing as a class action” because the putative class consisted of “every person and entity in the world who owned infringed copyrighted works, who have or will register them with the US Copyright Office as required, whose works fall into either of two categories: they were the subject of infringement which was blocked by YouTube after notice, but suffered additional infringement through subsequent uploads (the ‘repeat infringement class’), or are musical compositions which defendants tracked, monetized or identified and allowed to be used without proper authorization (the ‘music publisher class’).”

Stanton stated that copyright claims are generally poor candidates for class-action treatment and that the issues of copyright infringement identified in the case must be resolved upon facts that are particular to the particular claim of infringement and based on individualized evidence. Further, he stated that while most class actions are justified by an economic need to combine cases whose costs would prevent individual litigation, that was not applicable in this case.

Due to the impracticality of administering claims of a worldwide class of copyright owners in a single legal action and carrying out individualized analysis of issues such as copyright ownership, fair use, infringement and damages, the court denied certification of the class, finding that the class was too large and the interests were too disparate:

Plaintiffs offer no explanation of how the worldwide members of this proposed class are to be identified, how they are to prove copyright ownership by themselves or by their authorized agent, or how they will establish that defendants became aware of the specific video clips which allegedly infringed each of the potentially tens of thousands of musical compositions incorporated into specific videos.

This ruling marks the second major defeat in recent weeks for litigants suing Google over the use of copyrighted material on YouTube without owners’ permission. Last month, as E-TIPS® previously reported, in Viacom v YouTube, Judge Stanton dismissed Viacom’s infringement suit against YouTube because it falls within the safe harbor provision of the DMCA.

Summary by: Sumaiya Sharmeen

Sanofi-Synthelabo (Sanofi) marketed the drug product PLAVIX, which contained as the active ingredient, clopidrogrel bisulfate, an anti-coagulant that inhibited platelet aggregation activity in the blood. Clopidogrel was covered by two Canadian patents, Canadian Patent No 1,194,875 (the 875 Patent) and Canadian Patent No 1,336,777 (the 777 Patent). The 875 Patent was filed in 1983 and expired in 2003. The 777 Patent was filed in 1988 and expired in 2012.

The 875 Patent disclosed a genus or class of compounds including approximately 250,000 compounds. The 777 Patent was referred to a “selection patent” because it claimed and described a selected member of this class, namely, clopidogrel.

In 2003, Apotex sought to make a generic version of PLAVIX before the expiry of the 777 Patent. Thus, through the procedure dictated by the Patented Medicines (Notice of Compliance) Regulations, Apotex alleged that the 777 Patent was invalid because clopidogrel was anticipated (not new), obvious, and a double patent in light of the earlier 875 Patent.

The issue before the Supreme Court of Canada (SCC) was whether selection patents were invalid in principle or the 777 Patent was invalid on the facts of the case. In its reasons for the decision to uphold the validity of the 777 Patent, the SCC imported legal principles from cases in the United Kingdom and the United States in order to deal with selection patents.

The SCC confirmed that in Canada a system of genus and selection patents was acceptable in principle, following the line of cases beginning with In Re I G Farbenindustrie AG’s Patents (1930), 47 RPC 289 (Ch D). Thus, the question was whether, on the facts presented in the case, the 777 Patent specifically was anticipated, obvious or a double patent.

The SCC first refined the test of anticipation set out in the Canadian case of Beloit Canada Ltd v Valmet Oy (1986), 8 CPR (3d) 289. Following the reasoning in the UK case Synthon BV v SmithKline Beecham plc, [2006] 1 All ER 685, [2005] UKHL, the SCC stated that there were two requirements for a finding of anticipation: prior disclosure and enablement.

Applying this test to the facts of the case, the SCC concluded that the 875 Patent did not disclose the invention of the 777 Patent, clopidogrel, which was a compound having better properties than other compounds in the 875 Patent. As a result, the 777 Patent was not anticipated by the 875 Patent.

The SCC then sought to bring better structure and more objectivity and clarity to the obviousness analysis by introducing into Canadian law the four-step approach used in the UK case Pozzoli SPA v BDMO SA, [2007] FSR 37, [2007] EWCA Civ 588, which was an update to the approach in Windsurfing International Inc v Tabur Marine (Great Britain) Ltd, [1985] RPC 59 (CA). Relying on the reasoning of the UK and US cases, the SCC further stated that it may be appropriate to consider certain “obvious-to-try” factors in some circumstances as part of this approach.

Conducting this analysis in this case, the SCC concluded that the subject matter of the 777 Patent was not obvious from that of the 875 Patent.

Finally, with respect to the issue of double-patenting, the SCC held that the claims of the 777 and 875 Patents were not directed to the “same invention” since the 777 Patent claimed a narrower invention, and it was found clopidogrel was disclosed to have better properties. Therefore, Apotex’s allegation of invalidity on that ground failed.

Heather Watts highlights the key points of the case:

Sanofi-Synthelabo was a defining case regarding the status of selection patents under Canadian law. It also modified the tests for obviousness and anticipation set out in the previous leading case Beloit Canada Ltd v Valmet Oy (1986). This decision provided for an analytical approach to obviousness and the opportunity to argue that inventions won by experimentation would have been obvious to try. The decision also clarified that in order for a single prior art document to anticipate, it must both disclose and enable the claimed invention. As a result of this decision, the test for obviousness arguably became easier to meet in some cases, while the test for anticipation became more stringent.

A more detailed discussion about the legal concepts of this case was previously reported in E-TIPS® here.

Summary by: Cheryl Cheung

In 2004 and 2009, Access Copyright, a collective society representing the reproductive copyrights of visual artists and publishers, filed tariffs for the reproduction of its works by employees of certain provincial and territorial governments (Governments). The Governments challenged the tariffs before the Copyright Board of Canada (Board) on the basis they were immune from the Act under section 17(1) of the Interpretation Act, alleging that the Act expressed no intention to bind the Crown. The Board rejected the Governments’ argument, identifying provisions in the Act exempting the Crown from infringement, which would be unnecessary if the Crown was not bound by the Act. The Board also commented that the purpose of the Act would be thwarted if the Crown was free to use copyrighted material without restriction and had to waive immunity to enforce its own copyright.

The Governments brought an application for judicial review of the Board’s decision seeking a declaration that they were immune from the Act. The Federal Court of Appeal (Court) dismissed their application.

The Court agreed with the Board’s analysis, finding that an intention to bind the Crown existed on a purposive construction of the Act, even though the Act did not expressly bind the Crown. In particular, the Court noted that the wording of section 12 “without prejudice to any right or privilege of the Crown” was intended to preserve the Crown’s rights, but did not exempt the Crown from the Act. The Court also found provisions 29.7(1), 30.3 and 41.2, exempting educational institutions from certain activities under the Act, demonstrated an intention in the Act to bind the Crown, for the provisions would otherwise be unnecessary.

The Court’s ruling makes it clear that governments are now clearly subject to the Act and will be required to pay applicable Copyright tariffs levied against them.

Summary by: Darren Hall

In 2009, the PMPRB held that Teva had excessively priced its copaxone syringes in Canada and ordered Teva to pay close to $2.5 million to the Crown. Teva challenged that decision by way of judicial review and on November 12, 2009, Justice Hughes granted Teva’s application. Justice Hughes held that the PMPRB had improperly limited its review to only one of the four factors that must be considered under subsection 85(1) of the Patent Act. Specifically, he held that the Board improperly focused on section 85(1)(d) which pertains to the Consumer Price Index (CPI) and that the Board paid “lip service” to the other enumerated factors. Justice Hughes ordered the matter be returned to the PMPRB for redetermination and required the matter to be considered using all the factors listed in section 85(1) to provide “intelligible, clear reasons as to the consideration and weight given to each factor.”

By its decision dated February 23, 2012, the PMPRB once again found Teva’s pricing of copaxone syringes excessive and ordered a payment of over $2.8 million. Despite finding that Teva’s copaxone syringes were the lowest priced medicine in its class relative to the nearest competitors since 2004 and that it was priced lower in Canada than in other countries between 2004 and 2010, the Board discounted the importance of these factors including stating that pricing in other countries might be affected by “exogenous factors”. The Board, instead, placed heavy weight on the CPI and in two paragraphs provided the reasoning for its findings of excessive pricing.

In reasons dated April 30, 2013, Justice Zinn allowed the application. He held that the PMPRB had “paid no more than lip service to the factors favouring the conclusion that the medicine was not excessively priced, namely paragraphs 85(1)(b) and (c) and again treated paragraph 85(1)(d), as a conclusive factor.” He went on to find that the Board had committed a “fundamental legal error” in its interpretation of section 85(1) generally. The Board incorrectly believed that section 85(1) provides “limits” on pricing. Rather, section 85(1) provides a list of factors that are relevant to determine whether a medicine is excessively priced. No one factor provides any protection or limit in pricing.

The matter has been sent back to the PMPRB for redetermination in accordance with the Court’s reasons.

The full reasons for judgment can be found here:

http://decisions.fct-cf.gc.ca/en/2013/2013fc448/2013fc448.html

Summary by: Kavita Ramamoorthy