Terms of service: not everything that is written is automatically valid

As a follow-up to my last post (from 4 years ago!), here’s the result of the eBay lawsuit, where two users were suing eBay for cancelling their auction, which had reached $98,000.

The ruling is from december last year (which goes to show how long it takes for a case to go to trial these days) and offers a really interesting look at how Quebec law approaches Terms of Services.

The case is pretty simple: plaintiffs put a pair of limited edition Nike shoes on eBay, the auction reached $98,000 when eBay cancelled it. Plaintiffs re-posted the ad, but the bidding only reached $1,500, so they cancelled the sale and sued eBay for damages.

To justify cancelling the auction, eBay claimed multiple Terms of Service (TOS) violations by the plaintiffs, none of which were accepted by the court, so we won’t discuss them here.

eBay’s last defense was that their TOS had a clause allowing them to suspend service, as well as a limitation of liability clause, that would prevent them from being liable for damages in this case.

We note here that the judge does not just go ahead and apply the clause, but rather, takes the time to examine its validity. This is because the contract between the plaintiffs and eBay (the TOS) was a “contract of adhesion” as well as a “consumer contract”. In these types of contracts, abusive clauses are forbidden and courts will not apply them.

“A contract of adhesion is a contract in which the essential stipulations were imposed or drawn up by one of the parties, on his behalf or upon his instructions, and were not negotiable.[…]” (1379, Civil Code of Quebec)

“A consumer contract is a contract whose field of application is delimited by legislation respecting consumer protection whereby one of the parties, being a natural person, the consumer, acquires, leases, borrows or obtains in any other manner, for personal, family or domestic purposes, property or services from the other party, who offers such property or services as part of an enterprise which he carries on.[…]” (1384, Civil Code of Quebec)

The Court found that the wording of the service suspension clause was too broad, allowing eBay to cancel service withought justification. The Court therefore deemed this clause abusive and refused to apply it.

Now, if eBay is not allowed to cancel a sale without justification, they may still cancel it if the action is justified by a serious reason. This is based on general contracts rules:

“The contractor or the provider of services may not resiliate the contract unilaterally except for a serious reason, and never at an inopportune moment; otherwise, he is bound to make reparation for injury caused to the client as a result of the resiliation.

Where the contractor or the provider of services resiliates the contract, he is bound to do all that is immediately necessary to prevent any loss.” (2126, Civil Code of Quebec)

The Court analyzed the various reasons brought up by eBay to justify the termination, but concluded that none of them were valid. Moreover, the Court also points out the lack of notice before the cancellation (the law says “never at an inopportune moment”). Therefore, eBay is liable for damages.

How does the court award damages?

Plaintiffs are asking for $98,000, which is the last bid, whereas eBay claims the shoes are only worth about $1,200.

The “loss of a future gain” may be compensated if the gain was certain or probable.

In this case, the court accepted the $98,000 valuation, which represented the last bid, rejecting eBay’s various claims that the buyers may not have honored their bids, as well as the claims that the shoes were worth between $170 and $3,200 based on other transactions.

However, just because the shoes could have been sold for $98,000 does not mean this is the amount that will be compensated. Various amounts may be deducted, and whether the Court will allow these deductions depends on the proof presented at trial.

For example, eBay claimed that the top bidder may have pulled out of the deal, but did not have proof to back that claim.

On the other hand, the judge did allow a 10% deduction, which represents the fee that would have been paid to eBay. The actual amount the plaintiffs would have received is therefore $88,200 (98,000 – 9,800).

Another issue is that plaintiffs must seek to minimize their own damages. In this case, plaintiffs should have sold the shoes for $1,500, and since they can still sell the shoes, the judge deducted the $1,500 from the damamges, for a final amount of $86,700 (98,000 – 9,800 – 1,500).

* * *

As an aside, I’d like to point out, regarding that last deduction, that many amounts were mentioned in the judgment:
– eBay valued the shoes at $1,200
– eBay sales of the same shoes went between $170 and $3,200
– plaintiffs’ second ad reached $1,500

The judge could have picked any of these numbers, and it is up to the parties to present arguments on the best number to pick.

eBay valued the shoes at $1,200, which is actually less than the value granted by the judge in the end. Tactically, this seemed strange to me, as a higher valuation would’ve given more deduction, but made sense when I thought about it: there’s no knowing which way the judge would lean, and eBay was hoping all along to only reimburse the market value of the shoes. In this context, it makes sense to hedge their bets and put forward a reasonable, middle-ground amount.

I also noticed that the judge did not deduct the 10% eBay fee on the $1,500 like it was done for the $98,000, possibly because nobody asked for it.

Quebec Court Invalidates Jurisdiction Clause in Ebay TOS

Two Quebec students with what is probably the most badass names recently won a small victory in Quebec Courts.

In Mofo Moko c. Ebay Canada Ltd. (French, but worth reading in its entirety), Plaintiffs are suing Ebay for loss of profit, or loss of opportunity, after Ebay’s untimely cancellation of their auction, which was nearing $50,000.

Plaintiffs filed their lawsuit in Montreal, which was promptly opposed by Ebay on the grounds that their user agreement specifies any litigation must be carried out in California.

The Court, however, points out that the User Agreement is 6 and a half pages when printed, written in a hardly understandable language.

The Agreement specifies that the law applicable to the contract is the law of Ontario and applicable Federal laws, meaning any lawsuit will have to be not only in California, but based on Canadian and Ontarian laws.

The Court concluded that the intention behind such a condition was to discourage lawsuits, and is excessive, unreasonable, and abusive, and, when found in a “contrat d’adhésion”, is null and void.

The present ruling only concerns Ebay’s Motion to Dismiss, which they lost. It will be interesting to see if the main suit ever gets carried to term.

Small Claims Sunday #5

Apologies for the hiatus. I have been unusually busy the last month due to starting an internship. I might only have time to cover one decision every Sunday for now.

Membrane de PVC Duradek Québec inc. c. Lévesque, 2012 QCCQ 12094 (payment for construction work)
Plaintiff is suing for payment of the balance on a sales & installation contract of membranes to cover 3 “galeries”. The contract was concluded in May 2011, and Defendant paid $2015,90 deposit. However, by July 2011, only 2 of the 3 “galeries” were completed. Plaintiff refused to finish the work until a second instalment was paid. Defendant contests the amount, and claims Plaintiff did not have the proper construction registrations.
Result: The Court had to answer many questions before reaching a verdict:
Is the contract valid?
Articles 46 and 50 of the Loi sur le bâtiment state that constructors must be registered, and a contract with a non-registered constructor may be nullified.

46. Nul ne peut exercer les fonctions d’entrepreneur de construction, en prendre le titre, ni donner lieu de croire qu’il est entrepreneur de construction, s’il n’est titulaire d’une licence en vigueur à cette fin.

Aucun entrepreneur ne peut utiliser, pour l’exécution de travaux de construction, les services d’un autre entrepreneur qui n’est pas titulaire d’une licence à cette fin.

50. La personne qui n’est pas elle-même un entrepreneur qui a conclu un contrat pour l’exécution de travaux de construction avec un entrepreneur qui n’est pas titulaire de la licence appropriée peut en demander l’annulation. […]

However, the court did not consider the installation of the membrane to be “construction work”, and declined to apply the principles above.

When does the work have to be paid?
2111 CCQ states the client does not have to pay until the work is delivered; so did the Defendant’s contract. Plaintiff was wrong in asking Defendant to pay before the work was completed.

Given the behaviour of the parties, should the contract be terminated (résilié)?

1604. Where the creditor does not avail himself of the right to force the specific performance of the contractual obligation of the debtor in cases which admit of it, he is entitled either to the resolution of the contract, or to its resiliation in the case of a contract of successive performance. […]

Yes. The Court will not order the complete cancellation of the contract, as substantial work has been done, but only resiliation, which is valid for the future.

Amount owed to Plaintiff
Duradek claims: $4 064.51
Court deducts: $750 for corrective work defendant will have to have done.
Court deducts: $2 015.90 for the deposit
Court adds: $604.20 for the third membrane specifically ordered for the job.

Amount owed to Defendant
Court awarded $500 to compensate for loss of profit from the sale of the building.
Court also awarded $600 for inconveniences to Defendant, including having to find a new contractor to correct the work, having to answer to the buyer about the work, and hassles dealing with Plaintiff.

Since when are interests owed?
For Plaintiffs, from the date the action was filed at court, given the lack of formal notice.
For Defendants, from the date the counter-claim was filed.

Brace yourselves, copyright shakedowns are coming!

News have been going around lately that Voltage Pictures is targeting thousands of IP addresses belonging to TekSavvy users for alleged copyright enforcement. Voltage is seeking a court order to force TekSavvy to disclose the identities of the users behind these IP addresses.

Unfortunately, TekSavvy has so far refused to oppose the motion, as opposed to the ISPs targeted last time someone tried to get a similar motion.

Everybody should know though that we have looked into all angles to determine what our position should be in this situation and after spending a significant amount of time and soliciting a considerable amount of advice from numerous respected sources, we found that we simply could not comment on the merits of the case. Our place is to ensure that we provide adequate notice and also to make known to others that these requests have occurred and that the best way to make sure to avoid being involved is to simply not engage in such activities. If somehow you end up involved and you feel its not right, the place to voice your concern is the hearing on Monday. If you intend to appear, please let us know also.

Now, I don’t think this is a particularly good response, although I see where this is coming from. You have here an independent ISP whose position in the market is catering to tech-savvy people. One might suppose that a larger proportion of its users engage in file sharing, compared to other mainstream ISPs. It would then be understandable that TekSavvy feels it needs to take position against illegal filesharing, as opposed to fighting for its users, so as to not seem like it condones the activities of its users.

That being said, I do think this position is misguided. TekSavvy doesn’t have to comment on the merits of the case. Last time around, in 2005, a similar disclosure request was rejected by the Court after the ISPs fought for their users. Ultimately, the argument retained by the Court was one of privacy: there had been too much time elapsed between the moment the rightholders obtained the IP addresses and the moment it asked for disclosure.

[43]If there is a lengthy delay between the time the request for the identities is made by the plaintiffs and the time the plaintiffs collect their information, there is a risk that the information as to identity may be inaccurate. Apparently this is because an IP address may not be associated with the same individual for long periods of time. Therefore it is possible that the privacy rights of innocent persons would be infringed and legal proceedings against such persons would be without justification. Thus the greatest care should be taken to avoid delay between the investigation and the request for information. Failure to take such care might well justify a court in refusing to make a disclosure order.

Apart from that, the Federal Court of Appeals pretty much overruled the other arguments of the lower court, which were based on the actual substance, or merits of the case.

The current case is set to resume in January, so one can hope that there is enough pressure for TekSavvy to reconsider its position. Ultimately, it is up to the company to look at the facts of the case and make a good legal and PR decision.

Small Claims Sunday #4

Lots of new decisions this week, but not a lot of interesting ones, so I’ve only picked 4.

Legault c. Opris (insurance, car repairs)
Plaintiff is suing for damages from the repairs (or lack thereof) to his vehicle, and cost of car rental during the time of the repairs. Plaintiff brought the vehicle to Defendant’s garage for repairs after an accident. Plaintiff’s insurance company sent an agent to the garage to assess damages, after which the agent issued a check to Defendant to cover repair costs. The car was only given back to Plaintiff over a month later, with some repairs omitted. Defendant claims the insurance company signed off on the repairs, so Plaintiff should complain to his insurer.
Result: The judge rejected the damages regarding rental of a car during the repairs. The document used to prove the costs has been drafted by a friend of Plaintiff. However, testimony showed the car had been lent to Plaintiff in exchange of services rendered. Moreover, the receipt said taxes were included, thought the friend had no authorisation to levy taxes. The Court concluded the deal was against tax laws, and Courts will not honour such agreements.
As for the damages regarding repairs, Plantiff should have sued his insurer, as it was the insurance company who had the obligation to return the car in the state it was before the accident.

Arama c. Azoulay (copyright violation)
Plaintiff is asking for $5000 over damages after Defendant used a photo taken by Plaintiff, without compensation or attribution. Plaintiff had posted a low-resolution version of the photo to a website. Defendant used the photo on the cover of his book. Plaintiff attended the book’s launching and confronted Defendant. He claims having found the image on a website, with no source or attribution. He claims having used the image in good faith. He also demands $999 from Plaintiff for spoiling his book launch.
Result: The usage of the image infringes on Plaintiff’s copyright, and causes her prejudice as she is a professional photographer. The Court grants Plaintiff $2000 in damages.
On the other hand, The Court rejected the $999 counter-suit since Plaintiff’s behaviour was caused by Defendant’s infringement.
Note: the court didn’t consider being rude as illegal or, at least in this case, as warranting damages. We also note that the Court does sometimes “arbitrarily” set damages. In this case, we can’t tell if Plaintiff testified on the cost of a license for her pictures. One could imagine the defendant could have reduced his damages if he could prove Plaintiff usually licences her images at a lower rate.

Dumont c. Dépanneur Yun Wang (damages to car due to gas quality)
Plaintiff is asking for $1 240,73 over damages to his car caused by the poor quality of gas bought at Defendant’s gas station. Plaintiff filled up his car at defendant’s gas station, then notices his motor emitting smoke later that day. He decides to bring his car to the garage the next week, but the car does not even start. However, after replacing the diesel by new fuel, the car starts normally, and Plaintiff has not had a problem since.
Result: Claim is rejected. Plaintiff never formally notified Defendants as required by law (CCQ 1595, 1738). Moreover, Plaintiff has not proven that the gas was tainted or unfit for use (nobody kept a sample for analysis), and defendant never got any complaint from anyone else.

St-Pierre c. Bell Mobilité cellulaire inc. (damages from change in cell phone plan)
Plaintiff is suing Bell for $4950 worth of damages after Defendant made changes to Plaintiff’s cell phone plan. Plaintiff was a long term customer of Defendant’s. In 2010, Defendant offered Plaintiff a new cell phone should he sign up for a 3-year contract. Shortly thereafter, Plaintiff saw some of his services cut, and his voicemail erased. Defendant also charged him for more service fees. Being a consultant, Plaintiff claims the changes affected his business.
Result: The Court awarded Plaintiff $2000 for partial damages. Plaintiff claimed expenses to produce new supplies with a different phone number, but had no invoice to prove them. However, since Defendant was at fault for not disclosing the changes in their service plans, and Plaintiff did suffer damages, the Court decided on the amount of $2000.

New diagrams: confinement & psych evaluations

English follows.

La section sur la garde en établissement et les évaluations psychiatriques s’appliquent dans le cas où une personne (habituallement majeure) est emmenée dans un établissement pour y recevoir des soins psychiatriques, malgré son désaccord. Pour la protection du patient et du public, le code civil va permettre, sous certaines conditions, à l’établissement de garder le patient, même contre son gré.

Pour ce faire, le patient doit représenter un danger pour lui-même ou pour autrui. Une garde préventie est permise si le danger est grave et imminent, mais l’autorisation du tribunal sera nécessaire pour lui faire subir un examen psychiatrique.

Les articles 26 à 31 prévoient les règles relatives à la garde, à l’examen, ainsi qu’aux rapports d’évaluation psychiatriques. Ci-dessous, la version réarrangée.


The section on confinement and psych evaluations applies when a person (usually of full age) is brought into a institution to receive psychiatric care, in spite of his opposition. To protect the patient and the public, the Civil code will allow, under certain conditions, the institution to keep the patient, even against his will.

To do so, the patient must be a danger to himself or others. Preventive confinement is permitted if the danger is serious and imminent, but authorisation of the court will be necessary to make him undergo a psychiatric assessment.

Articles 26 to 31 sets out the rules applicable to confinement, assessment, and psych assessment reports. Below is the re-arranged version.

Small Claims Sunday #3

Not a whole lot of interesting decisions this week; I only picked out 4.

First case is about revoking a previous small claims judgement.
Lauzon c. Lepage
Plaintiffs are asking for the judge to revoke a previous ruling. The original audition was held on Feb 20, but Plaintiffs were absent. The presiding judge rejected Plaintiffs’ claim due to their absence. Plaintiffs claim they made a mistake in the time, and thought the audition was set at 19:00 instead of 9:00.
Result: A small claims ruling may be revoked according to the code of civil procedure:

989. If a party against whom a judgment by default is rendered was unable to contest the action or attend the hearing owing to surprise, fraud or any other sufficient cause, the party may apply for the revocation of the judgment.

A party may also apply for the revocation of the judgment in any case described in article 483 that is not inconsistent with the provisions of this Book.

A party’s negligence is not sufficient to justify a revocation. Misreading the time indicated in the convocation papers constitutes a gross mistake that cannot be used to justify a revocation.
Note: In the decision below, the judge allowed a revocation for a Plaintiff who did not show up. The Plaintiff claimed he never received the convocation letter, and that he was given a wrong date when he called the courthouse.

Gélinas c. Desjardins Assurances générales (insurance claim)
Plaintiff is suing his insurance company for the price of a stolen sound system. Plaintiff lives on the 4th floor of an apartment building, and the pieces of the sound system weighed up to 110lbs. Plaintiff has a history of misdemeanors, thefts, fraud, assault.
Result: Claim is rejected. Plaintiff never gave a plausible explanation of the theft, not an explanation on how people could have moved such heavy pieces out of his apartment. Plaintiff also had no proof of property (purchasing invoices) or possession of the goods.
Note: I’ve heard tips like “tape your invoices to the back of the items to have them handy if you need to return it or something”. Sounds like a really bad idea now. The Court did not find Plaintiff to be a particularly credible witness. I’m not quite sure what the judge wants as a “plausible explanation”, seems like most of the time the story is “I went out, I came back, my stuff was gone”. On the other hand, if you live on the 4th floor with narrow stairs, and get your stereo stolen, it might be good to have some explanation on why the crime could be so targeted.

Gaudreau c. Montréal (Ville de) (damage to car)
Plaintiff is suing the City of Montreal for damages to his car after he hit the “ring of a manhole cover”. The City claims the ring is usually welded to the manhole frame, and is not supposed to come off. The city employee testifies he has never seen such an incident in 9 years at the city.
Result: claim rejected. Plaintiff has not proven the City’s fault or negligence, The Court considers there was no way to prevent such an incident as the rings are welded tight and do not receive any special maintenance. It has always been this way, and no other such incident has ever happened.

Dahmane c. 2744-2169 Québec inc. (Groupe Verdun) (warranty)
Plaintiff demands reimbursement of purchase price of kitchen counters because of unusual deterioration after 3 months. Defendant claims the damage is due to Plaintiff’s defective dishwasher.
Result: Defendants condemned to reimburse price of counters. The proof did not establish the cause of the damage. Defendant did not prove the dishwasher was defective, so is liable for the quality of his product, as per the Consumer Protection Act.

New diagrams: organ donations and experiments

(English follows)

Deux nouveaux diagrammes aujourd’hui, pour compléter la section sur les soins: les articles 19 à 25, traitant du consentement à l’aliénation d’organes, et à une expérimentation médicale. Ces articles indiquent les cas où il est permis ou interdit de faire un don d’organes ou de subir, ou faire subir, une expérimentation à un patient.

En général, la loi donne libre choix à un majeur pour consentir, mais s’assure de protéger les mineurs ou les personnes inapes à consentir.

Ci-dessous, les articles réarrangés. Dans la colonne de gauche, les règles concernant de droit d’aliéner ou de soumettre quelqu’un à une expérimentation, et dans la colonne de droite, les modalités d’exercice de ces droits.

*** *** ***

Two new diagrams today to complete the section on Care: articles 19 to 25, related to consent to alienation of organs (organ donation) and to undergo a medical experiment. These articles specify cases where it is permitted or forbidden to donate an organ, or to take part in, or force someone to take part in an experiment.

In general, the law allows the patient of full age freedom to choose what to do with his/her body, but makes sure to protect minors and those unable to consent.

Image below are the same articles rearranged. In the left column are the rules concerning the right to alienate or experiment, and the column on the right contain rules on the conditions governing the exercise of the rights.

Small Claims Sunday #2

A truckload of decisions this weeks, from which I’ve picked a few.

First, two decisions on latent defects on houses. Latent defects, or “vices cachés” are defects that were hidden and unknown by the buyer, until something breaks and people find out about them.

Tremblay c. Pilote (latent defects/vices cachés in house)
Plaintiffs bought a house from Defendant in 2001. In 2011, after water damage, they found out required drains were not installed in the foundations, as would’ve been mandatory from regulations. The house was built in 1989. Defendant himself bought the house in 1995 and did not know it was missing drains.
Result: The legal warranty in CCQ 1726 applies, and Defendant is liable for the damages since Plaintiffs were able to prove the latent defect, their ignorance of the defect, and that the defect was severe. Defendant was held liable for $7000 (maximum allowed in small claims).
Note that whether Defendant knew about the defects has no impact on his liability. He does potentially have a recourse against the people from whom he bought the house, and the builder, if he can find them.

Avenel c. Gauthier (latent defects in house)
Plaintiff bought house in 2010. 4 months later, sewer backup as they flush the toilet, due to the evacuation drain connecting the house to the city sewers having caved in.
Result: The judge rejected the claim, as Plaintiff’s proof did not establish that the damage existed before the sale, even though it has only been 4 months since they bought the house.

Next, 2 decisions involving cities. Suing a city is pretty hard in general due to many immunities different laws grant them, but not impossible.

Roberge c. Saguenay (Ville de) (water damage to property due to river)
Plaintiff is suing the city of Saguenay for water damage to basement caused by overflowing river.
Result: Claim rejected. The law making cities responsible for waterways on their territory (Loi sur les compétences municipales) states at §105 that municipalities must re-establish normal flow of a waterway when informed of an obstruction. In this case, the city has been regularly checking on the river, which is more than what the law requires, and has not detected any anomaly. Moreover, the city was never informed of any obstruction. Therefore, no fault has been committed by the city.
Note that in this case, the judge was still generous and did not condemn Plaintiff to costs, as she was unaware of the Loi sur les compétences municipales. The judge would probably not be as lenient if she were represented by a lawyer, at the Cour du Quebec.

Deschesnes c. Saguenay (Ville de) (car damage due to pothole)
Plaintiff is suing the city for damages to his car tire & rim after driving over a pothole.
Result: Court condemned the City to partial damages. §604.1 of the Loi sur les Cités et Villes states the City is not “responsable des dommages causés par l’état de la chaussée ou de la voie cyclable aux pneus ou au système de suspension d’un véhicule“. However, because of §1474 CCQ, the city “may not exclude or limit his liability for material injury caused to another through an intentional or gross fault”. It has been proven that the City knew about the pothole on May 30th, 2 days before the accident on June 1st, and had not taken measures to fix it or block it off. The pothole was still not fixed 2 days after the accident. The court considered this to be wanton or reckless negligence = gross fault.
However, the court only allowed part of the claim, as Plaintiff did not prove the rim (scratched) needed to be replaced. The court still allowed a certain amount, as it had indeed been damaged.
Note: The Court’s conclusion of wanton or reckless negligence was partly based on the City’s behaviour after the fact. The city official testified it takes about 2 days to fix a pothole, meaning it should’ve been fixed July 1st in the afternoon, or, considering the request to fix had been put out May 31, July 2nd, after the accident. On could argue that at the time of the accident, there hasn’t been wanton or reckless negligence yet, and the only fault was not putting signalling around the hole.

Finally, 2 cases about warranties.

Bois c. Gagnon Frères Immeubles inc. (Magasin d’Alma) (warranty on washing machine)
Plaintiff is suing for cost of repairs on a washer bought in 2005, invoking legal warranty. The timer on the washer had been fixed 3 times by the owner since the purchase, without having notified the seller. In 2011, the rince cycle stops working.
Result: Court rejected claim. Plaintiff needed to notify the seller when the timer broke.

Sukherman c. BMW Canada inc. (warranty on vehicle)
Plaintiff is suing for repairs on the motor of his BMW (bought in 2003, now shows 121,078 km).
Result: Plaintiff is a consumer and benefits from the Loi sur la protection du consommateur, whereby goods must be able to serve normal use for a reasonable amount of time. This warranty applies even if the contractual one expired. A normal motor should last hundreds of thousands of kilometers. Plaintiff was awarded $7000 (upper limit for small claims, price for fixing motor: $9,251.46).

SCC invalidates Viagra patent, reiterates basic patent principle

The Supreme Court of Canada has just released a decision today in which it voids Pfizer’s patent for viagra.

The SCC restated the basic principle of the patent system:

The patent system is based on a “bargain”, or quid pro quo: the inventor is granted exclusive rights in a new and useful invention for a limited period in exchange for disclosure of the invention so that society can benefit from this knowledge. This is the basic policy rationale underlying the Act. […]

The issues in this case must be considered in light of the quid pro quo: Is the public getting what it ought to be getting in exchange for exclusive monopoly rights?

The Court ruled that Pfizer did not meet the disclosure requirement. The Viagra patent lists different classes of compounds, and the wording of the patent did not specify which compound was useful to treat erectile dysfunction.

Although Patent ’446 includes the statement that “one of the especially preferred compounds induces penile erection in impotent males” (A.R., vol. X, at p. 173), the specification does not indicate that sildenafil is the effective compound, that Claim 7 contains the compound that works, or that the remaining compounds in the patent had been found not to be effective in treating ED. The claims were structured as “cascading claims”, with Claim 1 involving over 260 quintillion compounds, Claims 2 to 5 concerning progressively smaller groups of compounds, and Claims 6 and 7 each relating to an individual compound.

Pfizer defended itself by claiming that anybody just had to test the 2 final compounds and they’d figure it out. The SCC didn’t buy that and voided the patent.

[…]the public’s right to proper disclosure was denied in this case, since the claims ended with two individually claimed compounds, thereby obscuring the true invention. The disclosure failed to state in clear terms what the invention was. Pfizer gained a benefit from the Act — exclusive monopoly rights — while withholding disclosure in spite of its disclosure obligations under the Act. As a matter of policy and sound statutory interpretation, patentees cannot be allowed to “game” the system in this way. This, in my view, is the key issue in this appeal. It must be resolved against Pfizer.

The Viagra patent is set to expire in 2014, so the generic producers get at about a 2-year head start in the market.