In this case, the Federal Court of Appeal upheld the decision of Justice Locke, who found that two patents pertaining to the drug bortezomib were invalid for obviousness, and explained that the palpable and overriding error is a high bar to meet for litigants.
In 2015, Janssen Inc. and Millennium Pharmaceuticals Inc. were unsuccessful in their application to prevent the Minister of Health from granting Teva Canada Limited a Notice of Compliance for Teva-bortezomib. Subsequently, Teva brought an action, under section 8 of the PM(NOC) Regulations, seeking damages for lost profits as a result of Janssen bringing their unsuccessful prohibition application.
As part of its defence in the section 8 action, Janssen alleged that Teva would have infringed Canadian Patents Nos. 2,203,936 and 2,435,146. Justice Locke disagreed, holding the asserted claims to be invalid for obviousness and granting Teva damages in an amount agreed upon by the parties prior to the hearing (see our previous post here).
Federal Court of Appeal’s Decision
On appeal, Janssen argues that Justice Locke had erred in his obviousness analysis, specifically by employing “hindsight” in his obviousness analysis and improperly cherry picking the prior art by ignoring prior art that taught away from the claimed invention,
The Court of Appeal found that the question before the court was one of mixed fact and law and, therefore, following the Supreme Court of Canada’s decision on Housen, the standard of palpable and overriding applied. The court went on to state that this standard was difficult to meet, and “it is not enough to pull at the leaves and branches and leave the tree standing”. For Janssen to succeed on appeal, “[t]he entire tree [must] fall”.
Citing its decision in Mahjoub, the Court reaffirmed the standard as follows:
“Palpable” means an error that is obvious. Many things can qualify as “palpable.” Examples include obvious illogic in the reasons (such as factual findings that cannot sit together), findings made without any admissible evidence or evidence received in accordance with the doctrine of judicial notice, findings based on improper inferences or logical error, and the failure to make findings due to a complete or near-complete disregard of evidence
“Overriding” means an error that affects the outcome of the case. It may be that a particular fact should not have been found because there is no evidence to support it. If this palpably wrong fact is excluded but the outcome stands without it, the error is not “overriding.” The judgment of the first-instance court remains in place.
The Court Appeal went on to state that an appellate court must be cognizant of the “wider context [which] often reveals what the first-instance court considered and decided, and why” and that preferring one line of evidence over another is the exclusive prerogative of the Trial Judge. Careful distinction must be made between what is a “overriding error on the one hand and mere inadequacies of expression on the other” by the lower court.
Having distilled the principles which an appellate court is to apply in reviewing a lower court’s decision, the Federal Court of Appeal held that Justice Locke had made no palpable and overriding error in his obviousness analysis and it was open to him to weigh the evidence as he did.
Teva was represented by David Aitken and Bryan Norrie of Aitken Klee LLP.
The decision can be found here.