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September 20, 2010

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Law timeS • September 20, 2010 An online resource 1.800.263.3269 Focus On INTELLECTUAL PROPERTY/TRADEMARK LAW U.S. cases foreshadow patent issues in Canada Lawyers disappointed as courts have yet to offer clear guidance on difficult questions BY JUDY VAN RHIJN For Law Times T wo recent decisions south of the border have grappled with the issue of what is and isn't patent- able, a question the Canadian judiciary is facing as well. Addressing the controversial areas of business methods and human genes, the American judgments were expected to clarify the situation and off er some guid- ance here as well. But Brian Gray, a senior partner at Ogilvy Renault LLP, was disappointed in the U.S. Supreme Court decision in Bil- ski v. Kappos on June 28. "It's like when you go to the Delphic oracle," he says. "You expect to get advice, but the Su- preme Court decision is very uncertain, very unclear. You can almost read into it anything you want." Gray believes the result of the case was never in doubt. Th e invention is a busi- ness system that explains how commodi- ties buyers and sellers in the energy mar- ket can protect or hedge against the risk of price changes through a series of steps put into a simple mathematical formula. Th e patent examiner rejected it because the invention doesn't involve working on a specifi c apparatus but merely manipu- lates an abstract idea and solves a purely mathematical problem. Th e Federal Circuit court affi rmed the 1/8 5.8125 x 3375 decision of the appeals board to uphold the rejection but discarded the test it had been applying in previous cases. Instead, it pre- scribed the machine or transformation test, which the Supreme Court had endorsed as the only proper test. It says a patent is eligible if it's tied to a particular machine or apparatus or it transforms an article into a diff erent state or thing. Th e appeal to the Supreme Court aimed to determine if this was in fact the exclusive test. "Most everyone thought the case would 1/4 9.875 x 3.875 fail at the Supreme Court," says Gray. "Th e question was how it would be rejected. Would the machine or transformation test be upheld or would the court reject it and, if so, what would the test be for patentabil- ity?" Lawyers are still debating what the out- Recruiting? come actually was. "Some say the court rejected it and said the real test is in the statute — whether or not it's an abstract idea," says Gray. "Th at is an extremely dif- fi cult test as it's more a statement of gen- eral principle. How do you determine it? One way is the machine and transforma- tion test. Th e court then said that it was not exclusive but very helpful, and they didn't substitute a more practical test." David Heller, a partner at Ridout Post your position on GREAT RATES. GREAT REACH. GREAT RESULTS. Contact Sandy Shutt at sshutt@clbmedia.ca for details. & Maybee LLP in Toronto, says the Supreme Court left the door open by not giving a closed defi nition of what's patentable. "It's a bit of a failure in that there's no clear guidance but it's good that they haven't built a box around it and said that if something doesn't fi t in the box, it's not patentable. By the very nature of technology, we don't know what's going to be invented tomorrow." Heller advises people that when their Recruiting? Post your position on GREAT RATES. GREAT REACH. GREAT RESULTS. Contact Sandy Shutt at sshutt@clbmedia.ca for details. 1/2 9.875 x 7.75 www.lawtimesnews.com The U.S. Supreme Court decision in Bilski is 'very uncertain, very unclear,' says Brian Gray. inventions are on the fringe, no intelligent lawyer who's up on the case law could be certain if they're patentable or not at the moment. "Where the line's drawn is very much up in the air," he says. "If it's a bor- derline invention like business methods, I say they'll have a rough time at the U.S. Patent and Trademark Offi ce. Th ey are still applying the machine and transfor- mation test even after Bilski. Th ey are basically not dealing with the rest of the Bilski decision." Many lawyers view the Bilski decision as a harbinger of the Supreme Court's thinking on future patent cases, including the anti-gene patenting suit fi led by Myri- ad Genetics Inc. It may reach the Supreme Court following the March decision in As- sociation for Molecular Pathology v. United States Patent and Trademark Offi ce by the U.S. District Court. It ruled that seven of Myriad's patents on breast cancer genes BRCA1 and BRCA2, along with cor- relations between the existence of a mu- tation and the likelihood of developing cancer, weren't eligible for patents. Th e appellants argued the patents would give Myriad a broad and unavoid- able monopoly in the market for medical research and services and patient care. For its part, Myriad conceded its breast cancer test doesn't catch all possible mutations and is too expensive for many patients. It also admitted that its aggressive litigation pos- ture stopped the use of tests employing im- proved genetic technology so that patients can't even get an independent second opin- ion. In turn, the judge found that isolated DNA isn't markedly diff erent in function or the information it contains from gene sequences in the body and that the correla- tions represent a law of nature. As such, it's not patentable subject matter. "It's a question of the limits of the statu- tory subject matter," says Gray. "Th e level of inventiveness and ingenuity required to get a patent is always an issue in the biologi- cal area. You want to [encourage] people to make discoveries and you must remember that patents don't go forever. Th ere is debate over whether, as a matter of public policy, is it right to give 20 years' exclusivity to make these kinds of discoveries. You want to reward people who discover enough to make an improvement to human life but if you reward people when they have not put in suffi cient time and eff ort, you cause a bottleneck to other people." Lawyers now fi nd themselves left wondering whether the U.S. decisions will be infl uential in Canada. Th ere has been speculation that the Federal Court's decision in Amazon.com Inc. v. Th e Attor- ney General of Canada has been on hold pending the release of the Bilski ruling. One point that might be of use is that the U.S. Supreme Court found that business methods weren't necessarily ineligible for patents, which contrasts with the recent attitude of Canadian authorities. In the Amazon.com hearing, the Department of Justice conceded this point but said the methods must be tied to the physi- cal world in some way. Now the Federal Court will have to fi nd its own way to off er guidance on the matter. LT PAGE 9

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