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A recent decision of the Federal Court of Appeal has called into question the long-held principle that a patent cannot be held invalid simply because of misrepresentations made during prosecution of a patent application, at least in the absence of fraud. This principle is based on the concept that, once a patent has issued, the Court will not question the procedures undertaken during prosecution of the application. The Court concluded that the decisions that support this principle date from before the 1996 introduction into the Patent Act of a provision that a patent application is deemed abandoned if the applicant does not respond in good faith to a requisition from the patent examiner.

There is a line of court decisions dating back to 1927 that stands for the proposition that a patent is not invalid simply as a result of a misrepresentation made during the prosecution of the application, at least in the absence of fraud. This line of decisions begins with the Supreme Court of Canada decision in Fada Radio Ltd. v. Canadian General Electric Co.[1] Faced with an allegation that the reissued patent in suit was invalid because the reissue application had not been accompanied by an affidavit, the Supreme Court stated:

[W]e are satisfied that any insufficiency in the material on which the Commissioner acts . cannot, in the absence of fraud, which in this instance has not been suggested, avail an alleged infringer as a ground of attack on a new patent issued under s. 24 [concerning reissued patents]. It is not a "fact or default, which, by this Act, or by law, renders the patent void" (Patent Act, s. 34 [now s. 59]). The recital of the patent that the applicant as assignee of the Langmuir patent no. 196,390, "has complied with the requirements of the Patent Act" is conclusive against the appellant in the absence of fraud.

This ruling by the Supreme Court of Canada has been applied many times. In Lovell Manufacturing Co. v. Beatty Bros. Ltd.,[2] the defendant contended that untrue material allegations had been made during prosecution of the patents in suit, and that the patents were therefore invalid under subsection 53(1). The defendant sought to submit the prosecution histories of the patent in suit and the corresponding U.S. patent as part of its evidence. The Court stated:

Under [subsection 53(1)] evidence would clearly be admissible to show that a material allegation in the petition for the patent was untrue, but there is no provision in the Patent Act that an untrue allegation, even amounting to a misrepresentation, made in the course of the prosecution of the application for the patent in the Canadian Patent Office has any effect on the validity of the patent.

Moreover, there is a recital in each of the patents in suit that the applicant Walter Lee Kauffman II "has complied with the requirements of The Patent Act". The effect of this recital in a patent was considered by the Supreme Court of Canada in Fada Radio Ltd. v. C.G.E. Co. [citation omitted] where Anglin, C.J.C., in delivering the judgment of the Court, said: "The recital of the patent that the applicant ... 'has complied with the requirements of the Patent Act' is conclusive against the appellant in the absence of fraud."

In my opinion, even if the facts alleged . were true they would have no effect on the validity of the patent. They could have no more effect on its validity than a misrepresentation in the course of a parliamentary debate could have on the validity or meaning of a Parliamentary enactment.

The discussion in Lovell, to the effect that a patent is not invalid due to misrepresentations made during prosecution of the application, was cited with approval by Richard J., as he then was, in Eli Lilly and Co. v. Apotex Inc.[3]

A recent decision of the Federal Court of Appeal, Pason Systems Corp. v. Varco Canada Limited,[4] has qualified this basic principle. In this case, the defendant alleged that the patent in suit was invalid because the patentee's representative had not replied in good faith to a request by the patent examiner, during prosecution of the application, for information about prior art in relation to applications for the same invention in the United States and in Europe. The plaintiff sought to have this allegation struck from the defendant's pleading. The motions judge had granted the motion. At appeal, the Court referred to the Lovell and Eli Lilly decisions, among others, but reversed the decision of the motions judge, allowing the action to proceed with the invalidity allegation based on misrepresentation.

The Court of Appeal noted that a pleading should not be struck unless it is plain and obvious that it has no chance of success. The Court also noted that the earlier decisions had been decided before the enactment of paragraph 73(1)(a) of the Patent Act:

73. (1) An application for a patent in Canada shall be deemed to be abandoned if the applicant does not

(a) reply in good faith to any requisition made by an examiner in connection with an examination, within six months after the requisition is made or within any shorter period established by the Commissioner;

Based on the transitional provisions of the Patent Act, subsection 73(1) applies to all applications filed since October 1, 1989, but does not apply to applications filed before that date. Therefore, it may be possible to challenge the validity of a patent that was applied for since October 1, 1989 on the basis that the patentee misled the Examiner in reply to a requisition, even in the absence of fraud.

Subsection 73(1) also provides that an application shall be deemed abandoned if the applicant does not (i) respond as required to a notice that the application is incomplete; (ii) pay the prescribed maintenance fees; (iii) request examination as prescribed; or (iv) pay the issue fee within six months after the Notice of Allowance. The Court in Pason noted two recent decisions in which patents were held invalid under subsection 73(1) because prescribed fees were not paid during prosecution: Dutch Industries Ltd. v. Canada (Commissioner of Patents)[5] and Johnson & Johnson Inc. v. Boston Scientific Ltd.[6] Abandoned applications can be reinstated, but only as provided for in subsection 73(3). For example, a reinstatement request must be made and a prescribed reinstatement fee paid, both within twelve months after the abandonment. After that, the abandonment is irreversible.

It should be noted that another recent Federal Court decision reached a different conclusion. On March 29, 2006, three weeks after the Pason decision, Madam Justice Tremblay-Lamer struck out an allegation of patent invalidity that was based on the fact that the patentee had amended its claims during prosecution with a view to covering competing products: Litebook Company Ltd. v. Apollo Light Systems Inc.[7] The Court relied on the discussion mentioned above in the Lovell and Eli Lilly decisions. The Court made no mention of paragraph 73(1)(a) of the Patent Act. It should also be noted that a Notice of Appeal of this decision was filed on April 7, 2006.

While it should not come as a surprise to many patentees that they risk losing patent rights if they make misrepresentations to the examiner during prosecution of the application, parties involved in patent disputes in Canada should keep two things in mind: (i) a defendant in a patent infringement action may, and should, probe exchanges with the Patent Office during prosecution of the application (e.g. representations, fee payments, responses to requisitions) to determine if there are grounds to argue that the application was deemed abandoned at any time and not properly reinstated; and (ii) such grounds, even if they exist, may not affect the validity of patents applied for before October 1, 1989, unless they amount to fraud.

[1]. [1927] S.C.R. 520.

[2]. (1962), 41 C.P.R. 18 (Ex. Ct.).

[3]. (1998), 80 C.P.R. (3d) 80 (F.C.T.D.).

[4]. 2006 FCA 100.

[5]. [2003] 4 F.C. 67 (F.C.A.).

[6]. [2005] 4 F.C. 110 (F.C.) (under appeal).

[7]. 2006 FC 399.

The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault LLP or any member of the firm on the points of law discussed.

© Ogilvy Renault LLP 2006 - All Rights Reserved

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