Can Israel and China Develop a Symbiotic Relationship?

April 16, 2014

China Israel  yinyang

In per capita terms, Israel is the highest patenting country in the world, despite the previous blog article. China is a big market, and a manufacturing powerhouse with a very large population.

An interesting article describes symbiotic relationships between the countries.

At present, the single client who I’ve done most IP work for in the past three years is a Chinese company part owned by an Israel start-up, that is essentially a joint venture between China and Israel, with an Israeli CEO and president, and Chinese workers. I don’t know how representative this business model is, and suspect that it is a unique phenomenon, but it is a highly successful one.

I hope there will be more cooperation in future years.

China and Israel are both ancient civilisations. The classic overland trading route to China via India starts in Israel’s Negev Desert. Columbus was actually looking for a Westward way to India when he stumbled on the New World, which he called the West Indies, and the populations Indians.


Lies, Damn Lies and Statistics

April 13, 2014

statistics

Indus TechInnovations sent me the following “informatic” for publication: Patent trends – Israel. It is very gung-ho and positive. The problem is that last year’s statistics have published and are less positive. See my article from February. Since the 2013 statistics have been published, ignoring them does a disservice. Particularly where they buck the trend.

There was anArticle from Idiot Achronot last Friday, by Sever Plotzker (טור ששי) that claimed to provide the true facts behind the propaganda in various areas, one of which was patents and innovation. Dr Esther Luzzatto, managing partner of the Luzzatto Group, one of the big five accountancy firms [sic] specializing in technology and IP was quoted. Now, we can argue whether or not the Luzzatto group is one of the largest patent attorney and law firms in Israel, but it is not a large accountancy firm and I am sure that Drs Kfir and Etty Luzzatto would be the first to acknowledge that.

The article included a number of interesting statistics and theories.

Briefly, the points raised were:

  1. A drop in PCT filings of 30%
  2. Significant drop in investment in start-ups
  3. Privatization of technology incubators
  4. International companies opening R&D facilities in Israel
  5. In 2013, there were 780 start-up companies registered, where the general average is about 650 a year.

The drop in PCT filings was considered a reliable indicator of innovation in general, and patent activity in particular. It was linked to the drop in funding, which was linked to the privatization of incubators and venture capitalists wanting a quick exit and to international companies creaming off talent by opening R&D facilities, where the patents were registered in name of international holding company.

I would not be surprised if the original research by the Luzzatto group resulted in a coherent report. What was clear was that the journalist who extracted the data and summarized it in a column and a half didn’t have much of an idea about the subject matter.

Nevertheless, the article made a few points worth considering. The first one was that there is apparently a drop in PCT filings by Israelis of 30%. This statistic is worrying, but I am not convinced that Dr Luzzatto is correct that this is a representative marker of innovation or even of patenting activity. The underlying assumption that this statistic clearly shows a drop in patenting, but it actually only shows a drop in PCT filings. There is an inherent assumption that patent filing is always reflected by use of the PCT mechanism. I suspect, however, that a lot of activity is going on in telecommunications and software, particularly in developing mobile phone applications. In these fields, many start-up companies have filed PCT applications only to run out of money 18 months later. With the speed at which these fields change, it is a reasonable to file in US only. The calculation of the company’s value may be based on US market only.

Some medical device companies also only file in US. Here it is less easy to justify, but with a limited budget some companies are perhaps more careful where and how widely they file, but are, nevertheless, innovative and may be able to bring a product to market. of course, sometimes the invention is only patentable in the US. I’ve had that with medical methods, for example.

One of my clients makes industrial digital printers. The company’s market is world-wide, but competing products are manufactured by companies based in Israel, the US and recently Italy. The company has traditionally filed in Israel and then in US under the Paris Convention, and recently also files in Europe. There is little justification for them to file PCT applications. One of my client makes game changing computer hardware. The company files in the US and immediately afterwards in the Far East under the Paris Convention since their competitors are all in Asia. It may make sense or them to consider filing a PCT application for the more critical applications to keep their options open, or to file in India and Europe just in case competing factories open up there. Client considers the $100 million required to set up a fab rules out this possibility. So there you have it, start-ups, small Israel manufacturers and a large company all actively patenting, but not using the PCT mechanism.There may indeed be a drop in inventing, but it is less severe than the 30% discussed in the article.

There is a drop in venture capital. However,  in the past there have been bubbles where venture capital invested has been out of all proportion to real worth.  This is a world-wide phenomenon, not one exclusive to Israel. With low-interest on safe investments and now some govt. intervention in the property market, one imagines that venture capital will grow again. Recently investors have been looking to buy existing patents in order to sue infringers. This model is diverting funding from research, but won’t last.

Privatization of technology incubators may result in investors being short-sighted and focused on a quick return for investment. However, it is doubtful that this is related to the drop in PCT filings. One needs a first filing, maybe a provisional application, to solicit funding in the first place since investors want to see that there is something allegedly patentable. The Paris Convention Deadline, or PCT filing date, comes around a year after the provisional is filed. Private investors may want a quick return, but it won’t be that quick that the money’s run out before a PCT application can be filed.  The preference for private vs. govt. funding models are more tied up with political ideology than with anything else. Generally capitalist economics assume that the private market will do a better job than the government in creating new industries. Whether or not this us true, State funding of basic research in universities makes sense, but I am not sure that the tech transfers should be funded by the government.  Certainly some government-funded start-ups should never have received funding since the basic concept was obviously wrong.

As to International companies opening R&D facilities in Israel, this as generally positive. It is preferably for Israelis to work for large corporations such as Intel, Microsoft, Google, GM, etc. in Israel, than that they go to Silicon Valley to work for them.  The large companies offer a reasonable salary and conditions, but the entrepreneur willing and able to try to establish a start-up will forgo the salary and conditions to take the risk of starting up something of his own, if he can obtain funding. It is unlikely that the existence of R&D centers makes obtaining funding for a new venture less likely.

The drop in start-up companies from 960 In 2013, there were 780 start-up companies registered, where one would expect 650 when taking a longer perspective.

Many patent firms are keen on clients filing PCT applications. It generates income. Perhaps the hesitancy by inventors reflects a greater sophistication and realization that funding is difficult to come by, and companies are filing less widely but not necessarily less first filings?

My problem is with the article in Idiot Achronot. It is unclear to what extent it reflects the views of the Luzzatto group in general, or of Etty in particular.


Camtek announces that they have been caught infringing

April 7, 2014

camtek rudolh

Generally press releases published by companies are about the publishing company filing suit against others infringing their IP, or a court ruling in their favour. In a weird development, Camtek, an Israeli wafer imaging and processing company has announced that the district court of Minnesota has entered a summary judgment finding that certain previous models of Camtek’s Falcon systems were capable of infringing upon two claims of a Rudolph patent in the United States.

See here  for more details. Perhaps not surprisingly, Camtek’s shares dropped over 3% on the day.


Oppositions – once the genie is out of the bottle…

February 17, 2014

diamond

Once a patent is allowed in Israel, it publishes for opposition purposes. Oppositions are usually filed by competitors, since they have a commercial interest in preventing the applicant from obtaining a patent. Sometimes there is little more than commercial interest. Usually, however, the opposer knows the field better than the Examiner and may be familiar with prior art published in the scientific literature, for example. The competitor may spend considerable resources to uncover prior art and to develop arguments showing that a patent should not have been allowed.

Sometimes competing companies merge or one takes over the other. In such cases, an opposition proceedings between the parties may be dropped. The arbitrator of an opposition proceedings is, however, entitled to put himself/herself into the opposers shoes, to review the arguments and evidence submitted, and to continue the opposition as an ex-partes proceeding.

Israel Patent Application Number 156034 relates to a method of locating flaws and inclusions in diamonds.

Their main claim is as follows:

A method for localizing inclusions in a diamond wherein said diamond is fixed on a holder, characterized in that: a scan is taken of the outer surface of the diamond at an arbitrary initial position; the inclusion in the diamond is observed in at least a first and a second direction of observation; wherein the translation and rotation for every direction of observation is registered with reference to the initial position; wherein the registered translations and rotations, the  scan of the outer surface and knowledge of the refractive index of the diamond are fed in a computer to calculate 3d image including the inclusion with respect to outer surface in order to localize the inclusion with respect to the outer surface of said diamond. 

Dia Expert filed an opposition and argued that their system and its user manual were close prior art. The differences between the two systems include using the refractive index in calculations and being able to translate the stone and not just rotate it.

Opponent argued that the refractive index is simply Snell’s Law, and that its use in similar equipment is found in a couple of cited references. Similarly, the translation is also discussed in the prior art.

The opposition was withdrawn, but the Deputy Commissioner, Ms Jacqueline Bracha, argued that the opposer had demonstrated that claims 1-3 were obvious and claim 4 was anticipated by the prior art. She also felt that the opposition had convincingly argued that the patent application was not enabled.

Invoking her prerogative to refuse the patent under Section 74b of the Law, she gave the applicants 30 days to show how the claimed invention was novel, inventive and supported.

Decision re IL 156,034 to DiamCAD N.V. by Jacqueline Bracha, 27 January 2014


Cialis Again – District Court Rules that Only Parties to an Opposition have Standing to Appeal the Decision

February 10, 2014

assume a spherical cow

Lilly Icos produce a drug called Tedalafil, which is used to treat male impotence due to erectile dysfunction. The drug, is marketed as Cialis. When their patent application number IL 146742 covering the drug was allowed, TEVA opposed the patent issuing. After cross examination of expert witnesses but before final summaries were submitted, a commercial arrangement between Lilly Icos and Teva resulted in the opposition being dropped. However, then Deputy Commissioner, Noah Shalev Smylovezh ruled that the ‘inventive step’ on which the patent had been allowed was that fine grinding increased the solubility of the active ingredient. He ruled that this was obvious, and so, under authority of Section 34 of the Israel Patent Law, he rejected the patent anyway. This decision of his is correct. Dissolution is a surface effect and for a given mass of material, the more finely ground, the larger the surface area to volume ratio.

Expressed mathematically:

Assume spherical particles:

For a given mass M, the number of  particles n =  M / (4/3πr^3)

The surface area A of each sphere is 4πr^2

Thus the total surface area A = n 4πr^2 = 3M/r

As r shrinks, the surface area increases.

Since perfect spheres have the lowest surface area to volume ratio of any solid (which is why soap bubbles are spherical), for any other shape, the surface area increases even faster as the dimensions decrease.

The standard of obviousness for patentability in Israel is ‘obvious to try’ – see Fosamax decision by Dr Meir Noam, which was upheld by Israel Supreme Court.

Section 30 is there to prevent patents issuing that shouldn’t. This is a patent that then Deputy Commissioner, Noah Shalev Smylovezh had concluded lacked inventive step, and so  under Section 34 he refused the patent, thus ensuring the integrity of the register, allowing generic competition and allowing impotent men and their partners to benefit from cheaper erections.

An earlier posting on Noah Shalev Smylovezh’ decision may be found here.

The applicants requested further clarification, but Deputy Commissioner Noah Shalev Smylovezh’s contract as Deputy Commissioner had ended and he had returned to private practice. Ms Yaara Shoshani, an adjudicator at the Israel Patent Office took over his open files. She clarified the decision but gave the parties 30 days to respond. After reviewing their submissions, she decided not to use her powers under Section 34 of the Law, and to allow the patent to issue. Her reasoning, which overturns Dr Noam’s ruling regarding obvious to try is found here. Essentially she replaces the ‘obvious to try’ standard, with a ‘not necessarily the first thing one would try’ standard.

Unipharm appealed this decision to the Jerusalem District Court, where Judge Ben-Zion Greenberger heard the case.

Unipharm claimed that there was a chain of events that had resulted in a miscarriage of justice and requested that the Jerusalem District Court rehear the case. They claimed that the onus was on the applicant to prove that they deserved a patent and merely because the opposition was dropped, the basic requirement of a non-obvious inventive step remained missing.

Instead of addressing this issue, agent for patentee argued that Unipharm lacked standing since they were not a party to the opposition and therefore the case should be thrown out under Section 421 of the Civil Procedure Law and / or regulations 101 and 102. Unipharm countered that under the Patent Law, 174(a) anyone who sees himself hurt by a patent office decision has the right of appeal.

The Court ruled that before addressing the substantive patentability issue, it should address the issue of standing and relate to the correct interpretations of Sections 30, 34 and 174(a) of the Israel Patent Law and Section 421 of the Civil Procedure Law and / or regulations 101 and 102.  On this point, it ruled not to allow Unipharm standing, and so the patent remained valid and the decision of the Ms Yaar Shoshani Caspi, overturning Deputy Commissioner Smylovezh’ ruling was not addressed.

COMMENTS

This is an unsatisfactory state of affairs. The reason why the Commissioner (or his delegate) has authority under Section 34 is so that in cases where the parties do a deal and an opposition is withdrawn, but the person hearing the case believes that there are grounds for invalidating the patent, the patent office is supposed to continue in the hearing in-partes and rule on validity on the merits.

Ms Shoshani Caspi’s position disagrees with Dr Noam’s standard of obvious – obvious to try. It also overturns Noah Shalev Smylovezh’ conclusions. Unipharm should have filed an opposition, but missed the deadline. Nevertheless, Judge Ben-Zion Greenberger’ws ruling that Unipharm has no standing means that he is avoiding judicial oversight of this decision and doing so on a technicality.

The arguments put forwards by both parties had the usual dose of ‘smoke and mirrors’. The Judge quoted Barak and claimed to be doing an analysis of what the purpose of the Law was, and decided that the correct balance between patentee and opposers and rest of the public was to allow the opposers to appeal, but not third parties.

There is some logic in interpreting patent law in light of standard civil court procedures. But, clearly all generic manufacturers and importers are affected by this decision, whether or not they were a party to the opposition. indeed, the public – at least the male impotent members subsection of the public – is served by preventing monopolistic pricing on the drug in question. It therefore seems to me that the Court of Appeal should address the issues of patentability, specifically the issue of obviousness on its merit.

Maybe a user of Cialis should have filed the case, perhaps as a class action? Perhaps the way forward is for Unipharm to file cancellation proceedings and to make sure that the issue of inventive step is considered on its merits. Alternatively, they can appeal this decision to the Supreme Court.

We note that in a recent decision the Supreme Court ruled that when hearing an appeal of an opposition ruling, the district court can even hear new evidence if appropriate. In that decision, which also challenged a strange Israel Patent Office decision, the Supreme Court ruled that appeals of Patent Office decisions are different from regular appeals of court decisions and an appeal may, if warranted, be a new trial with new evidence. I think that in the present case, it is likely that the Supreme Court would refer the case back to the District Court to consider on its merits. If that happens, I believe the ruling should be reversed.


What Costs are Legitimate to Claim on Winning a Patent Opposition in Israel?

February 5, 2014

measuring costs

Israel Weapons Industries (IWI) successfully cancelled Israel Patent Application Number 175676 to FN Herstal.

There was an attempt to have the opposition thrown out in its entirety which failed, and Israel Weapons Industries (IWI) paid 4000 shekels in costs to FN Herstal. On applicant withdrawing patent application, Israel Weapons Industries (IWI) filed for real costs, consisting of 33,272 Shekels in legal fees, 14,750 Shekels for 50 hours of IWI employee time in preparing the request and a refund of the 4000 Shekels costs paid out in the first action. FN Herstal accepted their obligation to pay real legal costs, but rejected the request to pay for IWI employee time and to refund the legal fees.

In his ruling, Commissioner of Patents and Trademarks, Assa Kling noted that in an earlier decision (relating to IL 141762), the patent office had ruled that staff are paid globally and that no additional costs are incurred for their time. He also saw no reason to reopen his previous ruling concerning the 4000 Shekels. He therefore ruled that the 33,272 Shekels should be paid and that both parties should pay their own costs for this additional decision.

 


Drop in Patent Filings into Israel

February 5, 2014

stats

The Israel Patent Office has just published official figures for 2013.

Some 6185 patent applications were filed in 2013, of which 5,294 were Paris Convention or PCT National Phase Filings, and the remaining 891 were first filings. I’ve compared these figures to those in the 2012 Israel Patent Office Report and it would appear that these are the lowest figures for a decade.

The obvious things that have changed are that the Israel Patent Office put its fees up 40% past year and the Shekel is very strong against foreign currencies.

It seems though, that Israeli inventors are also thin on the ground or first filing elsewhere. Since the America Invents Act I think US provisional applications are less attractive. It could be, however, that with more Israel patent firms filing direct into the US and the low dollar, coupled with the draconian raise in Israel Patent Office filing, extension and issue fees, that the these are being scared off as well.

The Israel Patent Office has to find salaries for the 100 examiners it employs as a prerequisite to obtaining International Search Authority Status. We further note that the number of new practitioners is increasing, so it seems that there is less patent work to go around.

It could be that there is significant drafting going on for Israeli clients. However, they are not filing in Israel. Apparently the number of PCT applications filed with the Israel Patent Office in 2012 was 1199 which is an 11.4% increase compared to the 1062 filed last year. There were also at least 192 further PCT applications filed in Geneva that requested that the Israel Patent Office conducts the International Search.

Of course the Israel Patent Office has put a positive spin on things. The report notes a drop in patent pendency times. Well, with less work coming in and more hands to do it, what does one expect? 

1360 design applications were filed in 2013, which is a 12% drop from 1546 last year, and is similar to the 1362 applications filed in 2002 and 1369 applications filed in 2003, but lower than any year in the past decade which peaked at 1775 in 2008.

It is not all doom and gloom though. There was a 10% increase in trademark filings into Israel, with 8733 marks filed in 2012 and 9578 filed in 2013.


Adding Evidence in Israel Patent Opposition

February 2, 2014

abbott

Patent oppositions proceedings in  Israel follow a set path.

the Opposer(s) file their statement of case. The Applicant responds, and the opposer submits evidence. Evidence should be submitted at the first opportunity, and applicants are not allowed to submit further evidence at a later stage, to prevent cases being unnecessarily dragged out.

It happens, however, that evidence may sometimes not be submitted at the first opportunity as the  applicant or opponent does not consider it relevant. The statement of witnesses brought by opposing counsel may make it relevant and necessary to add such evidence at a later stage. The Israel Patent Office regulations enable such late submissions, if there is a prima facie basis for determining that the evidence was not submitted earlier, not in order to drag out proceedings, but because either the evidence was not known to its presenter at an earlier date, or because the presenter was unaware of its relevance which only became clear due to statements made by the opposing counsel.

Israel Patent Application No. 122546 to Abbott was published for opposition purposes on 31 December 2012. On 29th April 2012, Teva Pharmaceutical Industries and Vertex Pharmaceuticals Inc. filed oppositions.

In response to the oppositions, the applicant requested to correct the specification. In Israel it is legitimate to correct the specification at this stage provided that such corrections are in no way widening of the requested monopoly.

Opposers opposed the request to amend the specification on legal grounds and thus did not submit evidence. Abbott’s witness argued scientific grounds for allowing the amendment, and so Opposers requested permission to submit evidence against this request. Abbott’s counsel argued that it was too late to submit such evidence and that the Opposers were widening the grounds for opposition.

The topic in question relates to whether the 3A4 enzyme is an example of the P450 family of enzymes.

In his ruling, Commissioner Adv. Assa Kling ruled that there were no sweeping grounds to forbid submission of evidence and on weighing it up, he would see whether the evidence was indeed submitted in response to Abbott’s witness, or if there was indeed, evidence that opposers were filing evidence as a delaying tactic or to widen the scope of the opposition.  He noted that he could award costs to one side or the other when ruling costs on the amendment to the claims.

COMMENT

I think the patent office is taking the correct approach here. the rules for submitting evidence are there to prevent abuse. If the applicant is claiming abuse, he has to support his case.


Israel Supreme Court Resuscitates Patent Application that Suffered Sudden Death

January 28, 2014

cot empty cot

On 4 January 2013, I reported on a strange decision by the patent office wherein Ms Jacqueline Bracha accepted an opposition filed by Colb on behalf of Aminach a mattress manufacturer, that alleged that Israel Patent Application No. 179840 for a mattress claimed to minimize cot death (Sudden Infant Death Syndrome or SIDS) should be refused due to lack of utility. My original article may be found here.

Essentially the inventors had not proven their case that the mattress provided the desired effect. Perhaps foolhardily, the inventors not only drafted their own application but also fought the opposition themselves.

On losing the opposition, the inventors appealed to the Tel Aviv District Court which ruled that on Appeal, they could review the legal conclusions of the deputy commissioner but could not hear new evidence. This ruling was appealed to the Israel Supreme Court who has now ruled that unlike regular civil procedure, in an appeal of a decision of the patent office to the courts, new evidence may be heard.

The Supreme Court ruled that Section 177 of the Israel Patent Law and Ordinance 193 of the patent regulations allow the court of Appeal hearing an appeal against a patent office decision to hear new evidence and to try the case as if it is the first court of Appeal. This should not be interpreted as meaning that the court has to hear new evidence and give the appellant a second bite at the judicial cherry. Nevertheless, the court may here new evidence where it sees fit.

In this case, Applicant had laboratory evidence that their prototype did have an effect. Instead of relating to this evidence, the District Court decided under Section 457 of the Civil Court Procedure that it could not hear new evidence that could and should have been presented to the patent office during the opposition. 

In the ruling, Judge Handel noted that the inventors were unrepresented, yet nevertheless persuaded the Deputy Commissioner that their invention was novel and inventive over the prior art. They argued that they never thought it necessary to demonstrate utility. Judge Handel felt that prior to refusing the patent application on grounds of utility, the Deputy Commissioner should have actively solicited evidence from the applicant, particularly as they were not represented and were fighting against a large mattress manufacturer who was represented. he ruled that in the circumstances, the Court of Appeal should here and consider evidence that the claimed invention works. He also noted that the US, UK and EPO had all allowed the invention on its merits.

Judge Handel realized that in the absence of a conflicting expert opinion, the Deputy Commissioner had accepted the expert opinion provided by the opposers and had not been swayed by attempts by applicants to point out logical flaws in his argument.

In the circumstances, the District Court should not have been considered as rehearing evidence weighed up by the Deputy Commissioner.

The Supreme Court referred the case back to the District Court to hear fully, allowing the parties to file new evidence.

Judges Juvran and Shaham concurred. No costs were awarded.

Appeal 5041/13 Gabai vs. Aminach

(this time the Gabais were represented by Adv. Amir Friedman).

COMMENT

In general, patent offices do not test hypotheses. The applicant does not have to show proof that his idea works to obtain a patent except in cases such as perpetual motion machines, turning lead into gold, anti-gravity and nuclear cold fusion where there is a consensus among scientists that the idea is impossible.    

At the time of the first write up I had been contacted by a lawyer to provide expert testimony. I did not want to address the issues. That fell through.

I can therefore now point out that the expert testimony provided by Aminach’s witness in no way proved that the mattress does not work. It is true that Applicants have also not proven that their mattress does have efficiency. There is, of course, a problem in that the correct scientific way to test the theory requires a large population of identical twins and putting one to sleep on a regular mattress and the other on the mattress of the invention in otherwise identical conditions. Once there have been a statistically significant number of cot deaths, one can see if the two mattresses function differently. This type of experiment, is, however, not very practical.

In the brief period I worked on this, I discovered some theories for cot death that provided theoretical support for the hypothesis that such a mattress would work, and also found a researcher who was modelling the effects of different mattresses on carbon dioxide build-up. I also spoke to polymer scientists who make foam mattresses. I am sure that it is possible to provide sufficient evidence to support the hypothesis as reasonable.

 

I think that having convinced the Deputy Commissioner that their claimed invention is novel and inventive, should have been awarded a patent. If it does not work, then Aminach will presumably not have a need to infringe it.

It would have been fun to fight this. I look forward to reporting that the patent has been allowed.


Teva’s at risk launch of a generic version of Atripla for treatment of AIDS withstands challenge in Canada

January 15, 2014

Atripla    atripla 3

On January 13, 2014, the Canada Federal Court dismissed an application by Bristol-Myers Squibb, Gilead Sciences, LLC and Merck Sharp & Dohme Corp.  under the Patented Medicines (Notice of Compliance) Regulations for an order prohibiting the Minister of Health from issuing a Notice of Compliance for Teva’s generic version of its Atripla® tablets (2014 FC 30).

Atripla® tablets are a combination of three anti-retroviral medicines that is used to treat HIV/AIDS.  The three active ingredients are efavirenz, emtricitabine and tenofovir disoproxil fumarate.

Merck et al. sought an order prohibiting the Minister from issuing a Notice of Compliance to Teva until after the expiry of Canadian Patent No. 2,279,198  on February 2, 2018.  The 198 Patent disclosed and claimed novel processes for making a particular crystalline polymorphic form of efavirenz called “Form I”.  However, the only claims at issue were those that claimed Form I per se.

For Teva to infringe the patent, the patent has to be valid and Teva’s actions have to infringe.

Teva alleged that claims 1 to 3 of the Patent were invalid on several grounds, including obviousness, double patenting, claims broader than the invention made or disclosed, lack of utility and anticipation.

With respect to non-infringement, the central issue was whether the crystalline form of efavirenz in the Teva tablets (“Form Teva”) would convert to the claimed Form I during or after the manufacturing process.  As a preliminary point, Merck argued that an adverse inference ought to be drawn for Teva’s refusal to produce samples of its final tablets.  No adverse inference was warranted, however, since Form Teva could be made from a publicly available process and Teva had provided details of its manufacturing process.  With this information, Merck was able to perform experiments in an attempt to establish that Teva’s tablets contained Form I efavirenz.

Merck’s conversion experiments on Form Teva included grinding with a mortar and pestle, heating, and combined grinding and heating in an attempt to demonstrate conversion to Form I. 

Justice Barnes found that the experiments were irrelevant because they were not representative of the Teva manufacturing process.  Specifically, Merck’s expert did not grind the ingredients in a manner analogous to Teva’s manufacturing process. In the grinding experiments, the expert was unaware of the size of the samples that were ground, did not record the grinding pressure applied, and could not recall if he was present for the grinding.  As a result, the Court was unable to conclude that the energy applied during Merck’s grinding studies accurately approximated the forces applied during Teva’s manufacturing process.  Accordingly, the court found that Merck failed to meet its burden of proving that the Teva tablets will contain Form I efavirenz and the application was dismissed.

The Court declined to rule on Teva’s invalidity allegations, instead basing its judgment solely on Teva’s justified allegations of non-infringement.

In this respect, Justice Barnes noted that voluminous evidentiary record, the relatively short period of time remaining in the 24-month automatic stay period, and his finding with respect to non-infringement made it “unnecessary and probably unwise to attempt to resolve the validity issues.”  Nonetheless, Justice Barnes did observe that Teva presented a stronger obviousness case than was previously before him in the Mylan case which dealt with the same patent (2012 FC 1142).


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