Date: 20091006
Docket: T-1524-08
Citation: 2009
FC 1013
Toronto, Ontario, October 6, 2009
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
MYCOGEN PLANT SCIENCE, INC.
Plaintiff
and
BAYER BIOSCIENCE N.V.,
MONSANTO TECHNOLOGY LLC
SYNGENTA PARTICIPATIONS A.G.
Defendants
Docket: T-1569-08
AND BETWEEN:
MONSANTO TECHNOLOGY LLC
Plaintiff
and
BAYER BIOSCIENCE N.V., MYCOGEN PLANT
SCIENCE, INC.
SYNGENTA PARTICIPATIONS A.G.
Defendants
Docket: T-1581-08
AND
BETWEEN:
SYNGENTA PARTICIPATIONS A.G.
Plaintiff
and
BAYER BIOSCIENCE N.V., MYCOGEN PLANT
SCIENCE, INC.
MONSANTO TECHNOLOGY LLC
Defendants
REASONS FOR ORDER AND ORDER
[1]
These
Reasons for Order and Order deal with motions by each of Monsanto Technology
LLC and Mycogen Plant Science, Inc. to amend their pleadings. In particular
Monsanto seeks to amend its Reply and Defence to Counterclaim in action
T-1524-08 to add certain paragraphs relating to what I will call the Jansens Affidavit.
Mycogen seeks to amend its Statement of Claim in T-1524-08 also to address the
Jansens Affidavit. For the reasons that follow I will order that, with some
exceptions, Monsanto’s proposed amendments will be allowed. Mycogen’s proposed amendments
will be allowed. Costs will be in the cause.
[2]
These
three actions have been ordered to proceed together using a combined style of
cause. They will be heard together with a target trial date late next year. All
of these actions arise out of what is known as conflict proceedings in the Canadian
Patent Office. The Canadian Patent Act, R.S.C. 1985, c. P-4 underwent
substantial amendments effective October 1, 1989, wherein applications for
patents filed before that date are treated in a significantly different manner
than those filed after that date. One of the most significant amendments was a
change from “first to invent” under the pre-October 1, 1989 regime to a “first
to file” regime after that date. The first to invent regime is in many respects
similar to that which prevailed and to some extent still prevails in the United States, whereas the first to file regime
resembles a regime followed in Europe and many other countries.
[3]
Conflict
proceedings such as these actions are governed by section 43 of the pre-October
1, 1989 Patent Act and were the subject of a special Rule, Rule 701, in
this Court. That Rule no longer exists as conflict actions are now rare. I am
advised that very few, perhaps a dozen or two, applications for a patent filed
in the Canadian Patent Office before October 1, 1989, still are in processing
in the Patent Office. Those applications and the contents of the prosecution
files, unlike the post October 1, 1989 applications, are not open to the
public. Entitlement to a patent, where it appears to the Patent Office that two
or more patent applications are directed to the same subject matter (something
that occurs more often than one might think) are determined by the Commissioner
of Patents by reviewing affidavits submitted by the competing parties directed
to the date or the dates when the invention was made by their inventors.
Parties who are unsatisfied with that determination may proceed to request a
new determination by way of an action filed in this Court. These three actions
are examples in which there was a determination by the Commissioner as to who
was the first to invent the subject matter of certain claims, the dissatisfied
parties seek a re-determination in this Court.
[4]
Under the
post October 1, 1989 regime a patent is awarded to the first party to file an
application regardless of the date of invention.
[5]
When an
action, such as these, is filed, a party knows only what is in its own file in
the Patent Office, the file of the other parties is not of public record. Once
pleadings are complete and discovery begins, each party gains access, usually on
a confidential basis, to the patent application files of the other parties.
Thus it is not unexpected that some of the parties may seek to amend their
pleadings, as is the situation here.
[6]
The
present amendment sought by each of Monsanto and Mycogen deal with a submission
made by patent agents acting for Bayer to the Canadian Patent Office during the
course of prosecuting its patent application involved in those conflict
proceedings. In a response to an office action, Bayer’s agents drew the patent
examiner’s attention to certain statements made in an affidavit of Jansens
filed with the United States Patent Office in the course of prosecuting an
application there. A copy of that affidavit was submitted to the patent
examiner.
[7]
In proceedings
before the United States District Court for the Eastern District of Missouri,
Eastern District, Monsanto Company v. Bayer Bioscience BV, that Court in
a decision decided August 28, 2006, 2006 U.S. Dist. LEXIS 97254 addressed the
same Jansens affidavit in respect of a Bayer patent similar to the Bayer Canadian
application and made findings, including these at page 40 of these reasons that
Bayer committed inequitable conduct in submitting a knowingly false Jansens’
declaration, and failing to disclose to the United States Patent Office known
negative results that would have refuted Bayer’s claims, the patent was
declared to be unenforceable.
[8]
The amendments
now proposed by Monsanto and Mycogen arise, therefore, from the submissions by
Bayer to the Canadian Patent Office of the same Jansens affidavit. Bayer vigorously
opposes the proposed amendments.
[9]
In general
the Court will allow amendments to pleadings provided such amendments will not
result in an injustice to the opposite party that cannot be compensated in
costs and that it would serve the interests of justice. I cite, from the many
examples, the Federal Court of Appeal in Canderel Ltd. v. Canada, [1994]
1 F.C. 3 at paragraph 9:
With respect to amendments, it may be stated, as a result of the
decisions of this Court in North- west Airporter Bus Service Ltd. v. The Queen
and Minister of Transport; The Queen v. Special Risks Holdings Inc.; Meyer
v. Canada; Glisic v. Canada and Francoeur v. Canada and
of the decision of the House of Lords in Ketteman v. Hansel Properties Ltd which
was referred to in Francoeur, that while it is impossible to enumerate all the
factors that a judge must take into consideration in determining whether it is
just, in a given case, to authorize an amendment, the general rule is that an
amendment should be allowed at any stage of an action for the purpose of
determining the real questions in controversy between the parties, provided,
notably, that the allowance would not result in an injustice to the other party
not capable of being compensated by an award of costs and that it would serve
the interests of justice.
[10]
In the
present case Bayer does not allege any prejudice nor does it argue that the
amendments were not sought in a timely manner. Bayer rests its argument on the
sole basis that the amendments sought do not raise an issue that can properly
be determined in the context of the present actions. In so doing Bayer’s
counsel refers to the reasons of the Federal Court of Appeal in Nidek Co.
Ltd. v. Visx Inc. (1996), 72 C.P.R. (3rd) 19 per Isaac CJ for
the Court at page 24:
In determining whether an amendment to a
defence should be allowed, it is often helpful for the Court to ask itself
whether the amendment, if it was already part of the proposed pleadings, would
be a plea capable of being struck out under Rule 419. If yes, the amendment
should not be allowed. See, for example, Chrysler Canada Ltd. v. The Queen,
[1978] 1 F.C. 137 (T.D.). Procedurally, the Court will not receive any evidence
where the basis for striking out paragraphs in a statement of defence is
alleged to be that they disclose no reasonable defence (Rule 419(1)(a)). Rule
419(2) expressly prohibits the use of evidence on a Rule 419(1)(a) motion. In
similar fashion, the Court should not accept any evidence in support of an
application for leave to amend pleadings under Rule 420, unless evidence is
required in order to clarify the nature of the proposed amendments. Rather, the
Court must assume that the facts pleaded in the amendments are true for the
purposes of considering whether or not to grant leave to amend.
[11]
All
Counsel, including Bayer’s Counsel, accept that, as stated by the Supreme Court
of Canada in Hunt v. Casey Canada Inc., [1990] S.C.R. 959 at 980, on a
motion such as these the facts as set out in the proposed amendments are to be
taken as proved and that, in order to succeed, it must be shown by the party
resisting the amendment that it is plain and obvious that the amendment sought
cannot succeed. To that I would add that the Supreme Court also said that the
length and complexity of the issues and the novelty of what is pleaded should
not be a bar. I repeat what Wilson J. for the Court wrote at page 980:
Thus, the test in Canada governing the
application of provisions like Rule 19(24)(a) of the British Columbia Rules of
Court is the same as the one that governs an application under R.S.C. O. 18, r.
19: assuming that the facts as stated in the statement of claim can be proved,
is it “plain and obvious” that the plaintiff’s statement of claim discloses no
reasonable cause of action? As in England, if there is a change that the plaintiff
might succeed, then the plaintiff should not be “driven from the judgment
seat”. Neither the length and complexity of the issues, the novelty of the
cause of action, nor the potential for the defendant to present a strong
defence should prevent the plaintiff from proceeding with his or her case. Only
if the action is certain to fail because it contains a radical defect ranking
with the others listed in Rule 19(24) of the British Columbia Rules of Court
should the relevant portions of a plaintiff’s statement of claim be struck out
under Rule 19(24)(a).
[12]
Put
succinctly, the amendments sought are based on some kind of concept of lack of
candour or bad faith on the part of Bayer during the prosecution of its
application at issue in submitting the Jansens affidavit. I hasten to add that
Jansens is not named by Bayer as an inventor and that affidavit was not
submitted in response to a request for affidavits to support a date of
invention rather, the affidavit was submitted as part of a response to an
Office action so as to argue for broader claims.
[13]
Bayer’s counsel
argued that there is no statutory basis which would call for a duty of candour
on behalf of an applicant for a patent, nor is there any statutory penalties
provided for lack of candour. Further, Bayer’s counsel argues that there is no
common law or other non-statutory duty of candour nor penalties for lack of
candour. Thus, says Bayer’s counsel, even if one assumes that the allegations
made in the amendments are true, which Bayer must accept for the purpose of the
motion but not otherwise, there are no consequences and no relief can be
claimed by Monsanto or Mycogen as a result.
[14]
Counsel
for each of Monsanto and Mycogen argue that, while they do not rely on section
73 of the post October 1, 1989 Patent Act (dealing with the effect of
changes to the Act) nor section 53 (dealing only with what is set out in the
petition for the patent and the specification) there are at least common law
provisions and section 30 of the Act which provides a basis for the
relief claimed.
[15]
I am satisfied
that the state of the law respecting conflict proceedings in general and the
duty of candour in respect of submissions to the Patent Office is sufficiently
in a state of flux and is not so certain and to make it “plain and obvious”
that the allegations put forward in the proposed amendments cannot succeed.
[16]
With
respect to conflict proceedings Justice Snider of this Court in Laboratoires Servier v. Apotex Inc. (2008), 67 CPR (4th)
241, 2008 FC 825 at paragraphs 399 to 403 wrote that conflict proceedings are
directed to issues of priority of inventorship, and later proceedings dealing
with a patent issued after the resolution of the conflict proceedings may deal
with other issues. This does not mean, however, that in the course of conflict
proceedings, the parties to those proceeding cannot raise issues as to why an
opposite party should not get a patent in the first place. For instance,
section 43(4) of the pre-October 1, 1989 Patent Act permits a party to a
conflict to submit prior art which it may allege anticipates a claim or claims
in conflict.
[17]
I
addressed the question of a duty of candour upon an applicant for a patent in
dealing with the Patent Office in G.D. Searle & Co. v. Novopharm Ltd.,
[2008] 1 F.C.R. 477, reversed on other grounds, [2008] 1 F.C.R. 529. I wrote at
paragraphs 71 to 73:
71 Since
at least 60 years ago there has been a doctrine of good faith in respect of
patents. President Thorson of the Exchequer Court in Minerals
Separation North American Corporation v. Noranda Mines Ltd., [1947] Ex. C.R. 306,
at page 317, said that the inventor must act uberrimae
fide and give all information known to him that will enable the
invention to be carried out to the best effect as contemplated by him.
72 A
patent is a monopoly sought voluntarily by an applicant, there is no compulsion
to do so. An application for a patent is effectively an ex parte
proceeding, only the applicant and the Patent Office examiner are involved in
dialogue. The patent, when issued, is afforded a presumption of validity by the
Patent Act.
73 A
patent is not issued simply to afford a member of the public an opportunity to
challenge its validity (see e.g. by way of analogy to revenue legislation Kingstreet Investments Ltd. v. New
Brunswick (Finance), [2007] 1 S.C.R. 3,
at paragraph 54). An obligation arises on those seeking to gain a patent to act
in good faith when dealing with the Patent Office. The application for the
patent includes a specification and draft claims. The specification is the
disclosure for which the monopoly defined by the claims is granted. This
disclosure, as the Supreme Court has said, should be full, frank and fair.
Further disclosure made in dialogue with the Patent Office examiner. Since at
least October 1, 1996, communications with the examiner must be made in good
faith. It is to be expected that there will be full, frank and fair disclosure.
There is afforded during the prosecution ample opportunity to make further disclosure
or to correct an earlier misstatement or shortcoming. It is not harsh or
unreasonable, if after the patent issues, and disclosure is found to lack good
faith, that the Court deems the application and thus the patent, to have been
abandoned.
[18]
Justice Shore expressed a contrary opinion in Janssen-Ortho
Inc. v. Apotex Inc. 2008 FC 744 at paragraph 201:
201 It is clear that there is no express
duty of candour contained in the Patent Act or the Patent Rules
and that the word "candour" does not even appear in this legislation.
While a duty of candour and good faith exists during the prosecution of patent
applications in the United States Patent Office, a similar duty does not exist
in Canada. The facts alleged by Apotex in its NOA
are addressed by subsection 30(1) of the Patent Act and paragraphs 40(l)(a), 40(1)(c) and section 45 of the Patent
Rules. There is no
basis in Canadian law for the separate allegation of breach of candour put
forth by Apotex. As the Federal Court of Appeal stated in Flexi-Coil
Ltd. v. Bourgault Industries Ltd., the disclosure required "can only
be... that which the statute, the rules and the jurisprudence already require.
Furthermore, even if the duty of disclosure had been extended as suggested by
counsel, the impact of the extension would be felt not at the level of the
validity of the patent but at the level of the remedies where equitable
considerations might come into play." (Stewart Affidavit paras. 68-70, AR
v. 29 Tab 42 p. 9081; Flexi-Coil Ltd. v. Bourgault
Industries Ltd. (1999), 237 N.R. 74,
86 C.P.R. (3d) 221
at 231-232 (FCA), aff'ing (1998), 80 CPR (3d) 1,
78 A.C.W.S. (3d) 373
(F.C.T.D.).)
[19]
Given the uncertainty
of the state of the law as to the duty of candour, I cannot find that it is
plain and obvious that a plea of lack of candour cannot succeed if appropriate relief
as a result can be claimed.
[20]
The matter
does not end there, given that a plea of lack of candour could be made, what is
the resulting relief that could be claimed in Mycogen’s Statement of Claim or defence
raised or counterclaim made by Monsanto. Bayer argues that there is no
provision for relief in the Patent Act. Monsanto argues that Bayer has asked
for a declaration that it is entitled to the claims in conflict, and that such
a declaration is a form of equitable relief. Pointing to the Federal Court of
Appeal’s decision in Volkswagen Canada Inc. v. Access International
Automotive Ltd, [2001] 1 F.C. 311 Monsanto’s counsel argues that where an
unclean hands defence has been raised, equitable remedies can be refined.
Bayer’s counsel argues that the declaration of entitlement that it seeks is not
an equitable remedy but a statutory remedy.
[21]
Section
43(8) of the pre-October 1, 1989 version of the Patent Act provides for
a number of remedies which this Court in these actions may provide. It states:
(8) Disposition of applications unless
proceedings taken in Federal Court- The claims in conflict shall be rejected or
allowed accordingly unless within a time to be fixed by the Commissioner and notified
to the several applicants one of them commences proceedings in the Federal
Court for the determination of their respective rights, in which event the
Commissioner shall suspend further action on the applications in conflict until
it has been determined in those proceedings that
(a)
there
is in fact no conflict between the claims in question;
(b)
none
of the applicants is entitled to the issue of a patent containing the claims in
conflict as applied for by him;
(c)
a
patent or patents, including substitute claims approved by the Court, may issue
to one or more of the applicants; or
(d)
one
of the applicants is entitled as against the others to the issue of a patent
including the claims in conflict as applied for by him.
[22]
At this
stage I find that it is not plain and obvious that a claim for relief, or a
defence cannot be raised on the basis of section 43(8) including, in
particular, subsection (d). It is not necessary at this time to make a final
and binding determination upon the merits. It is sufficient to say that it is not
plain and obvious that such a plea cannot succeed.
[23]
Thus,
subject to my comments following, the proposed amendments should be allowed.
[24]
My
comments have to do with paragraphs 13 and 14 of Monsanto’s proposed
amendments. I am advised by Monsanto’s counsel that the wording of paragraph 13
is taken almost verbatim from paragraph 12 of Justice Sharlow’s decision in the
Federal Court (as she then was) in Connaught Laboratories Ltd. v. Medeva
Pharma Ltd (1999), 4 C.P.R. (4th) 508:
12 The broad principle underlying
the prothonotary's decision is that a claim should be struck only if it is
plain and obvious that the claim will fail: Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959.
The first step in the analysis is to examine the proposed legal arguments as set
out in paragraph 25, which are based on one or more of "res judicata,
issue estoppel, collateral estoppel, comity, abuse of process." These are
different expressions of the general principle that judicial proceedings must
at some point be conclusive, that an issue of fact need only be decided once.
[25]
In my view,
Justice Sharlow was not proposing a model plea, she was simply repeating parts
of the plea at issue before her. Bayer’s counsel argues that paragraph 13 lacks
particularization as to what portions of Justice Webber’s findings in the United States case are being put in issue
and contrasts this plea with Mycogen’s proposed plea at paragraphs 18 and 22. I
agree, paragraph 13 requires particularization before the amendment is allowed.
[26]
Paragraph
14 of Monsanto’s proposed amendment also requires consideration. That paragraph
is framed on the basis that the “Commissioner would not have concluded”
something and “would not be included” something. So pleaded, these are
assumptions and speculations as to actions that the Commissioner of Patents
might have taken. The Supreme Court of Canada in Operation Dismantle Inc. v. Canada,
[1985] 1 S.C.R. 441 at paragraph 27 warned against the pleading of assumptions
and speculations:
27
We are not, in my
opinion, required by the principle enunciated in Inuit Tapirisat, supra, to
take as true the appellants' allegations concerning the possible consequences
of the testing of the cruise missile. The rule that the material facts in a
statement of claim must be taken as true for the purpose of determining whether
it discloses a reasonable cause of action does not require that allegations
based on assumptions and speculations be taken as true. The very nature of such
an allegation is that it cannot be proven to be true by the adduction of
evidence. It would, therefore, be improper to accept that such an allegation is
true. No violence is done to the rule where allegations, incapable of proof,
are not taken as proven.
[27]
Paragraph
14 as presently drafted cannot be said to be acceptable. It should be
appropriately redrafted so as to avoid assumptions and speculations.
[28]
As a
result Mycogen’s motion to amend will be allowed as will Monsanto’s subject to
particularization of paragraph 13 and rewording of paragraph 14. Costs are most
appropriately left in the cause.
ORDER
FOR THE REASONS given:
THE COURT ORDERS that:
1.
Mycogen’s
motion to amend its Statement of Claim in the manner provided is allowed;
2.
Monsanto’s
motion to amend its Statement of Defence and Counterclaim is allowed provided
that paragraph 13 is particularized and paragraph 14 is reworded as discussed
in the Reasons;
3.
Costs in
the cause.
“Roger T. Hughes”
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