SUMMARY DISMISSAL MOTIONS UNDER SECTIONS 6(5)( a) AND 6(5)(b) OF THE PM(NOC) REGULATIONS

Andy Radhakant

Heenan Blaikie

CBA National IP Section Advocacy in Intellectual Property Matters: Motions That Matter

Ottawa, May 13, 2010

Summary Dismissal Motions Under Sections 6(5)(a) and 6(5)(b) of the PM(NOC) Regulations

Andy Radhakant*

Heenan Blaikie LLP Introduction ...................................................................................................................- 1 - Standard of Review in Dismissal Motions..................................................................- 3 - Abuse of Process: 6(5)(b) motions ...............................................................................- 4 -

Section 6(5)(b) ............................................................................................................- 4 - Traditional approach .................................................................................................- 5 - Modified approach .....................................................................................................- 6 - Abuse by re-litigation .................................................................................................- 8 - Abuse where no evidence capable of finding infringement or inducement ............- 9 - Strategic considerations: Timing and supporting materials .................................- 11 -

Improper Listing: 6(5)( a) motions.............................................................................- 13 - Purpose and framework...........................................................................................- 13 - Eligibility for Listing on the Register ......................................................................- 16 -

i. Pre-2006 Amendments......................................................................................- 16 - ii. Post-2006 Amendments ...................................................................................- 21 -

Introduction

The increasing volume and complexity of litigation under the Patented Medicines (Notice

of Compliance) Regulations1 (the “Regulations”) has brought a concomitant increase in

summary dismissal motions. It has also spawned a large number of decisions on the issue

of abuse of process in a variety of contexts. Recent decisions by the Federal Court of

Appeal and Supreme Court of Canada have gone a long way towards clarifying the

relevant tests and underlying policy rationale for these arguments in the context of the

Regulations. This paper surveys the current status of these doctrines and argues that the

connecting thread appears to be a strong desire among the judiciary to move away from

litigation under the Regulations, in favour of full patent infringement and impeachment

actions.

Prior to discussing these issues, a brief review of the underlying purpose of the

Regulations is in order. The Regulations lie at the intersection between the enforcement

* The assistance of Jonathan Stainsby and Andrew McIntyre of Heenan Blaikie LLP, who prepared a prior version of this paper, is gratefully acknowledged. 1 SOR/93-133, as amended by SOR/98-166, SOR/99-379, SOR/2006-242 and SOR/2008-211.

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of patent rights under the Patent Act2 and the regulatory approval process for drugs under

the Food and Drugs Act3 and Food and Drug Regulations.4 The stated goal of the

Regulations is to balance the effective enforcement of patent rights and the ability of

generic drug manufacturers to bring their products to market as soon as possible.5 The

procedural framework under the Regulations has been described by the Supreme Court of

Canada as “draconian” in that the applicant (the brand company) receives an automatic

24-month stay preventing the generic from receiving its Notice of Compliance (“NOC”)

until the statutory procedures have played themselves out.6 Certainly, the Regulations

give pharmaceutical patentees rights enjoyed by no other patentees, who must satisfy the

standard tests in order to obtain an interlocutory injunction.

Applications under the Regulations are intended to be summary proceedings, susceptible

of a quick determination by the Court,7 but only for the limited purpose of making (or

declining to make) an order prohibiting the Minister of Health from issuing an NOC to

the second person.8 A patentee that fails to obtain an order of prohibition under the

Regulations may nonetheless seek to protect its perceived legal rights by bringing a

patent infringement action.9 Furthermore, the findings in a prohibition proceeding are not

binding upon the Court that hears a subsequent patent infringement action on the same

patent.10

Recent history, however, has shown that this regulatory intention has been thwarted by

the proliferation of issues and expert affiants, rising to over twenty experts in some

cases.11 This has led the Court to characterize the practice as “unwieldy” and the

2 R.S.C. 1985, c. P-4, as amended. 3 R.S.C. 1985, c. F-27. 4 C.R.C., c. 870. 5 Bristol-Myers Squibb Co. v. Canada (Attorney General) (2005), 39 C.P.R. (4th) 449 (S.C.C.); Regulations Amending The Patented Medicines (Notice of Compliance) Regulations, Regulatory Impact Analysis Statement, SOR/98-166, Canada Gazette part II, Vol. 132, No. 7 at 1057-8. 6 Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1998), 80 C.P.R. (3d) 368 at para. 33 (S.C.C.). 7 AB Hassle v. Apotex Inc. (2006), 47 C.P.R. (4th) 329 at para. 2 (F.C.A.); Eli Lilly Canada Inc. v. Novopharm Ltd. et al., 2007 FCA 359 at paras. 32-34. 8 Ibid. 9 Sanofi-Aventis Canada Inc. v. Novopharm Ltd., 2007 FCA 163, 59 C.P.R. (4th) 416 at para. 40, leave to appeal refused, 60 C.P.R. (4th) vi [Sanofi-Aventis]. 10 Ibid. 11 Eli Lilly Canada Inc. v. Apotex Inc., 2007 FC 455 at para. 5.

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Regulations as “Byzantine”, “arcane” and “unworkable”.12 In one case, the Court issued

the arguably desperate plea for parties to appreciate that judges are “human, not

computers”, and thus ill-equipped to assimilate and synthesize the mountains of technical

expert evidence put before them.13 The result has been an understandable push toward

streamlining the proceedings through mandating fewer experts14 and to a policy shift that

is intended to result in substantially fewer proceedings under the Regulations. Whether

these changes will achieve the desired result, or whether legislative reform – possibly

involving the repeal of the Regulations – is needed in order to achieve these ends,

remains to be seen. It is, however, clear that the law has shifted toward this end and that

summary dismissal of these “summary” proceedings is now far more readily obtained

than it was even a few years ago.

It is in this context that we consider the issues of abuse of process and improper listing

under the Regulations.

Standard of Review in Dismissal Motions

As noted by the Federal Court of Appeal in Sanofi-Aventis Canada Inc. v. Novopharm

Ltd. (“Sanofi-Aventis”), a decision to dismiss a proceeding as an abuse of process is

discretionary.15 As such, a decision to dismiss the proceeding based on an abuse of

process will not be reversed on appeal unless there was an error in law or principle, or a

failure to exercise the discretion judicially.16

12 Altana Pharma Inc. v. Novopharm Ltd. (2007), 58 C.P.R. (4th) 192 at para. 17 (Proth.), aff’d 62 C.P.R. (4th) 321 (F.C.); Apotex Inc. v. Eli Lilly and Co. (2004), 36 C.P.R. (4th) 111 at para. 2 (F.C.A.); Ferring Inc. v. Canada (Minister of Health) (2007), 55 C.P.R. (4th) 271 at para. 4 (F.C.), aff’d 60 C.P.R. (4th) 273 (F.C.A.); Eli Lilly Canada Inc. v. Novopharm Ltd. (2007), 58 C.P.R. (4th) 214 at paras. 26-27 (F.C.); Pfizer Canada Inc. v. Ratiopharm Ltd., 2009 FC 1165, 78 C.P.R. (4th) 428 at para. 1. 13 Eli Lilly Canada Inc. v. Novopharm Ltd. (2007), 58 C.P.R. (4th) 214 at para. 7 (F.C.), cited in Altana Pharma Inc. v. Novopharm Ltd. (2007), 58 C.P.R. (4th) 192 at para. 34 (Proth.), aff’d 62 C.P.R. (4th) 321 at para. 56 (F.C.). 14 Altana Pharma Inc. v. Novopharm Ltd. (2007), 58 C.P.R. (4th) 192 (Proth.), aff’d 62 C.P.R. (4th) 321 (F.C.). See also the Court’s December 7, 2007 “Practice Direction – NOC Proceedings”. 15 Sanofi-Aventis, supra note 9 at para. 13. 16 Ibid.

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Abuse of Process: 6(5)(b) motions

Section 6(5)(b)

Section 6(5)(b) of the Regulations allows the Court to dismiss an application that is

redundant, scandalous, frivolous, vexatious, or an abuse of process. Section 6(5)(b) reads

as follows:

6(5) Subject to subsection (5.1), in a proceeding in respect of an application under subsection (1), the court may, on the motion of a second person, dismiss the application in whole or in part

[…]

(b) on the ground that it is redundant, scandalous, frivolous or vexatious or is otherwise an abuse of process in respect of one or more patents.17

Section 6(5)(b) came into force on March 11, 1998. According to the Regulatory Impact

Analysis Statement associated with this amendment, the purpose of the Regulations is to

promote fairness and effectiveness and reduce unnecessary litigation:

The link between the patent status of a drug and approval for a generic version of the drug is being maintained, to provide effective enforcement of patent rights, while at the same time ensuring that generic drugs can enter the market as soon as possible; either as soon as it is determined that they are not covered by a patent, or, where they are covered by a patent, immediately after the expiry of the patent. Overall, since the amendments are designed to make the Regulations fairer and more effective, and reduce unnecessary litigation, compliance costs to private sector parties should be reduced. The amendments will not significantly alter costs of administering, or adjudicating cases under the Regulations.

The amendments reinforce the balance between providing a mechanism for the effective enforcement of patent rights and ensuring that generic drug products enter the market as soon as possible. Consistent with maintaining this balance, certain changes will further facilitate market entry of generic drugs: for example, reducing the length of the stay, clarifying the court’s discretion to shorten the stay, and providing a mechanism for early dismissal of a case.18 [Emphasis added.]

17 Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, as amended, s. 6(5)(b). 18 Regulations Amending The Patented Medicines (Notice of Compliance) Regulations, Regulatory Impact Analysis Statement, SOR/98-166, Canada Gazette part II, Vol. 132, No. 7 at 1057-8.

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The purpose of section 6(5)(b) was enunciated by the Federal Court of Appeal:

Permitting the same innovator to relitigate the same issues repeatedly poses a severe threat to the integrity of the adjudicative process, the principle of finality, and the efficiency of the judicial system. In my view the Governor in Council recognized this threat and enacted paragraph 6(5)(b) of the NOC Regulations to allow for the early dismissal of proceedings like the one at issue.19

Traditional approach

Traditionally, the dismissal of a proceeding under the Regulations as an abuse of process

required a finding that the application was “clearly futile” and/or that it was “plain and

obvious” that it could not succeed. These tests were adopted in the context of NOC

proceedings prior to the enactment of section 6(5)(b) in 1998. As the pre-1998

Regulations lacked any express provision allowing the Court to dismiss an application as

an abuse of process, the Court looked to (then) Rule 419 of the Federal Court Rules

dealing with striking out pleadings in an action.20 This test did not fit easily into the

context – it had been developed to assess whether the statement of claim in an action,

assuming all facts pleaded were true, disclosed a cause of action. Its invocation in the

context of considering whether an application was an “abuse of process” was at best

awkward.

However, when faced with section 6(5)(b) motions, the Court continued to apply the

principles developed for striking out pleadings in an action. The Court generally held

that in order to have the proceeding dismissed, the moving party had to show that the

case was “so clearly futile that it has not the slightest chance of success” or that it was

“plain and obvious” that the applicant had no chance of success.21 This approach

19 Sanofi-Aventis, supra note 9 at para. 26. 20 Ibid. at para. 32, citing Pharmacia Inc. v. Canada (Minister of National Health and Welfare) (1994), 58 C.P.R. (3d) at 217 (F.C.A.). 21 Ibid. at para. 28, citing Pfizer Canada Inc. v. Apotex Inc. (1999), 1 C.P.R. (4th) 358 at paras. 28-32 (F.C.T.D.); Bayer Inc. v. Apotex Inc. (1998), 85 C.P.R. (3d) 334 at paras. 23-24 (F.C.T.D.); Apotex Inc. v. Merck Frosst Canada Inc. (1999), 87 C.P.R. (3d) 30 at paras. 5-6 (F.C.A.); GlaxoSmithKline Inc. v. Apotex Inc. (2003), 29 C.P.R. (4th) 350 at paras. 12-13 (F.C.).

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imposed a very high burden on the moving party seeking to obtain dismissal based on

abuse of process.22

Modified approach

In 2007, the Federal Court of Appeal adopted a modified approach in dealing with

dismissal motions under section 6(5)(b) of the Regulations. In Sanofi-Aventis,23 the

Court adopted a broader, policy-driven analysis of the doctrine of abuse of process. The

Court did so citing Justice Arbour’s decision in Toronto (City) v. C.U.P.E. Local 79

(“C.U.P.E.”),24 in which she thoroughly canvassed and analyzed the concepts of issue

estoppel, collateral attack and abuse of process as they relate to the re-litigation of

already adjudicated issues and claims.

In C.U.P.E., the Supreme Court had found that the doctrine of abuse of process was

flexible enough to be applied to circumstances where the strict requirements of issue

estoppel were not met. Following C.U.P.E., the doctrine of abuse of process can be

applied to prevent the misuse of the Court’s process in a way that would bring the

administration of justice into disrepute.25 Abuse of process is seen to prevent re-litigation

in circumstances where, even though the requirements of issue estoppel are not met,

“…allowing the litigation to proceed would nonetheless violate such principles as judicial

economy, consistency, finality and the integrity of the administration of justice.”26

Some of the policy grounds supporting this interpretation of the doctrine are:

(a) that there be an end/finality to litigation;

(b) that no one should be twice vexed by the same cause;

(c) that Courts’ and litigants’ resources are preserved; and

22 Novartis Pharmaceuticals Canada Inc. v. Apotex Inc. (2002), 20 C.P.R. (4th) 300 at para. 18 (F.C.T.D.). 23 Sanofi-Aventis, supra note 9. 24 2003 SCC 63, [2003] 3 S.C.R. 77 [C.U.P.E.]. 25 Ibid. at para. 37. 26 Ibid.

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(d) that the integrity of the legal system is upheld by avoiding inconsistent

results.27

The Supreme Court made three observations in support of this policy-based

interpretation:

First , there can be no assumption that relitigation will yield a more accurate result than the original proceeding. Second, if the same result is reached in the subsequent proceeding, the relitigation will prove to have been a waste of judicial resources as well as an unnecessary expense for the parties and possibly an additional hardship for some witnesses. Finally , if the result in the subsequent proceeding is different from the conclusion reached in the first on the very same issue, the inconsistency, in and of itself, will undermine the credibility of the entire judicial process, thereby diminishing its authority, its credibility and its aim of finality.28 [Emphasis added.]

Combining the traditional test with the broader interpretation from C.U.P.E. and applying

it in the context of the Regulations, an abuse of process argument can succeed in any of

the following situations:

(a) where the case of the patent holder is clearly futile or plainly has no

chance of success (the traditional test);

(b) where allowing the application to proceed would give rise to the

possibility of inconsistent judicial decisions; or

(c) where there is a compelling reason to avoid further straining the resources

of the parties and of the courts through repetitive litigation.29

The Court in C.U.P.E. also listed instances where re-litigation would be permissible and

in fact enhance the integrity of the judicial system. Examples listed by the Court

included (1) when the first proceeding was tainted with fraud or dishonesty, (2) when

new and previously unavailable evidence impeaches the original result, and (3) when

27 Ibid. at para. 38. 28 Ibid. at para. 51. 29 Sanofi-Aventis, supra note 9 at paras. 36-37.

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fairness dictates that the original result should not be binding (a very open and undefined

consideration).30

Abuse by re-litigation

In Sanofi-Aventis, the Federal Court of Appeal was presented with an appeal brought by

Sanofi (supported by Schering, the patentee) from Justice Tremblay-Lamer’s decision

which had dismissed Sanofi-Aventis’ application on the basis that an allegation of

invalidity in relation to the patent at issue had been found to be justified in a prior NOC

proceeding against Apotex. The application against Apotex had been dismissed on the

basis of lack of sound prediction and had been based upon facts that, by the time of the

second proceeding, were twenty years old. Subsequently, Novopharm alleged lack of

sound prediction (among other things) in its NOA.

Even though the decision in the Apotex application regarding the issue of sound

prediction was fact-based (and therefore not binding on the Court that would hear the

Novopharm application), the Court of Appeal upheld Tremblay-Lamer J.’s decision to

dismiss the Novopharm application under section 6(5)(b). In the majority decision,

Justice Sexton wrote:

Proceedings in which the case for the patent holder is clearly futile or plainly has no chance of success because of an earlier, binding authority continue to be impermissible as abuses of process because such proceedings will waste judicial resources and impose hardship on generic drug manufacturers without any corresponding benefit such as a more accurate result. However, applying the principles outlined by Arbour J., it is evident that the types of proceedings that constitute abuses of process go beyond those that are clearly futile to include cases such as the one at present. Many of the concerns raised by Arbour J. are applicable to this appeal. Allowing Sanofi-Aventis to proceed with its application will give rise to the possibility of inconsistent judicial decisions, with one judge holding that the inventors of the '206 patent lacked a sound basis for predicting the utility of their invention and another holding that there was sound prediction. Thus one generic would receive an NOC because of invalidity based on lack of sound prediction while another would be refused an NOC even though its NOA raised the same allegation. As Arbour J. identified, permitting that type of inconsistency would threaten the credibility of the adjudicative process. Likewise, as Arbour J. noted, there is no reason to think that a second proceeding under section 6 of the NOC Regulations will lead to a more accurate result than the first. This scenario is in contrast to an action for a declaration of patent

30 C.U.P.E., supra note 24 at para. 52.

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invalidity, where because the parties have the benefit of a full trial and all the attendant procedural safeguards, a more accurate result may arise. That is why the courts have on numerous occasions stated the principle that decisions rendered under the NOC Regulations are not binding on actions for patent infringement or to declare a patent invalid. [Citations omitted.] In the context of the NOC Regulations, encouraging the efficient use of scarce judicial resources is also of particular concern. Judicial resources are already taxed considerably by the voluminous proceedings brought under the regulations. An attempt to further strain the resources of parties and of the courts through repetitious litigation without any compelling justification strongly favours a finding of abuse of process.31

Accordingly, success on a section 6(5)(b) motion for abuse of process no longer requires

showing that the prior decision would dictate the outcome of the present application, or

that the first person has no chance of success.32 The Court also held that it was not open

to Sanofi to put forward better evidence in the second proceeding, as (echoing the

summary judgment jurisprudence) an applicant for an order of prohibition under the

Regulations is required to put its best foot forward in the first proceeding.33

Abuse where no evidence capable of finding infringement or inducement

As discussed, the traditional section 6(5)(b) test (clearly futile or plainly having no

chance of success) remains a valid basis for dismissing an application under the NOC

Regulations as an abuse of process. In another 2007 decision, Sanofi-Aventis Canada

Inc. v. Novopharm Ltd.34 (“Sanofi-Aventis #2”), the Federal Court of Appeal dismissed

Sanofi’s application under section 6(5)(b) on the basis that there was no evidence capable

of finding infringement or inducement by Novopharm.

The patents at issue in Sanofi-Aventis #2, for new uses of ramipril, were listed on the

patent register against ALTACE® (Sanofi did not have NOCs for the new uses, but the

propriety of the listings was not at issue). Novopharm sought an NOC for the old use of

ramipril, the treatment of hypertension. In its NOA, Novopharm alleged that its proposed

ramipril product would not infringe or induce others to infringe the patents at issue since

its product would not be made or sold for any of the new uses. 31 Sanofi-Aventis, supra note 9 at paras. 36-37. 32 Ibid. at para. 38. 33 Ibid. at para. 47. 34 2007 FCA 167, 59 C.P.R. (4th) 24 [Sanofi-Aventis #2].

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The Court cited case law for the proposition that an allegation of non-infringement of a

claim for the use of a medicine is justified where the generic manufacturer is seeking an

NOC only for an old use and the evidence fails to establish that the generic will induce

others to infringe the new use claim.35 Novopharm sought to have the application

dismissed under section 6(5)(b) on the basis that there was no evidence capable of finding

infringement or inducement:

Novopharm argues that it is inevitable that its non-infringement allegation will be found to be justified because Novopharm is not seeking approval to market its product for any of the new uses claimed in the 089 patent or the 948 patent, and there is no evidence that Novopharm will induce others to use its product for any of those new uses. The Judge rejected this argument because the evidence on the question of infringement is not yet complete and because, given the time already taken to get the proceedings to this stage, Sanofi should not be deprived of its opportunity to complete the cross-examinations on the affidavits even though there is only a slim chance of any improvement in the evidentiary foundation for its application. In my view, the Judge erred in law in rejecting Novopharm's argument on this point. The evidence in the prohibition proceedings consists of the affidavits filed by Sanofi and the affidavits filed by Novopharm. An exhibit to one of the affidavits submitted by Sanofi includes the product monograph for the proposed Novopharm ramipril product. It is redacted, but only in respect of the composition of the generic product and specific information about research relating to bioavailability. All of the information in the product monograph touching on the use of the generic product is unredacted. There is nothing in the redacted product monograph, or any of the other documents in the record, that is capable of establishing that Novopharm will infringe the 089 patent or the 948 patent, either directly or by inducing infringement by others. Sanofi does not contend that there is such evidence, but argues that something might emerge on cross-examination. In my view, that argument should have been rejected as entirely speculative. Once the speculative possibility of additional evidence is set aside, it is inevitable that the prohibition application in this case would fail because Novopharm's non-infringement allegation is justified.36

As there was no evidence capable of supporting a finding of infringement or inducement,

the Court dismissed the application under section 6(5)(b). Parenthetically, this decision

also reinforces the proposition that parties are not permitted to maintain “entirely

speculative” litigation, for which no evidentiary basis can be demonstrated.

35 Ibid. at paras. 8-9, citing Aventis Pharma Inc. v. Pharmascience Inc. (2006), 53 C.P.R. (4th) 453 (F.C.A.) and Sanofi-Aventis Canada Inc. v. Apotex Inc. (2006), 55 C.P.R. (4th) 388 (F.C.A.). 36 Ibid. at paras. 12-13.

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Strategic considerations: Timing and supporting materials

There is a fundamental practical reality that underlies most motions by generics for

summary dismissal of prohibition applications. For a number of reasons related to the

regulatory environment, and to pharmacist and consumer preferences, the first company

to bring to market a generic version of a particular drug normally achieves a substantial

and permanent advantage in the market.37 The goal for generic manufacturers in this area

of litigation is therefore to be the first to navigate the NOC minefield successfully (or, at

the very least, not to be a distant second or subsequent entrant).

Therefore, the reality on the ground for counsel to a generic is likely to be that, at some

point, based upon careful monitoring and evaluation of the status of proceedings

involving other generics seeking approval for the same drug, counsel will be instructed to

bring a 6(5)(b) motion, often on a fairly urgent basis. The question at that point is not so

much what to include in or leave out of the supporting motion record, but rather what

material in support of the motion is available in the first place, keeping in mind the test

that the Court will apply in deciding the motion. The amount of material available to

support the 6(5)(b) motion is a direct function of how close to a hearing the prohibition

application is. There are several possibilities:

• At one extreme (“Scenario A”) are cases in which the applicant has not yet filed

its affidavits in support of the prohibition application. Nycomed Canada Inc. v.

Sandoz Canada Inc.38 is an example of this situation.

• At the other extreme (“Scenario B”) are cases in which the evidentiary record on

the prohibition application is complete: all affidavits have been filed and all

cross-examinations have been completed.

• A number of intermediate possibilities exist; one such possibility (“Scenario C”)

is that the applicant’s affidavits have been filed but the respondent’s have not.39

37 See, for example, A. Hollis, “The importance of being first: evidence from Canadian generic pharmaceuticals” Health Econ. 11: 723-734 (2002). 38 2008 FC 555.

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Alternatively, other possibilities are that all affidavits have been filed but no

cross-examinations have yet been conducted (“Scenario D”),40 or that all

affidavits have been filed and some but not all cross-examinations have been

conducted (“Scenario E”).41

The least desirable position to be in from the perspective of the generic bringing a 6(5)(b)

motion, generally speaking, is Scenario A, in which the brand company has not yet filed

its affidavits. Where the allegation is one of non-infringement, the Court may be

reluctant to conclude that a brand company that has not yet filed its evidence will be

unable to produce any evidence disproving the allegation of non-infringement. In

Nycomed v. Sandoz,42 for example, the Court, in dismissing the generic’s 6(5)(b) motion,

observed that Sandoz “ha[d] not shown that Nycomed could not possibly adduce

evidence…which would support an inference of intention to induce infringement.”

The outlook for a generic in Scenario A is much more positive where the grounds for the

6(5)(b) motion are that a similar invalidity allegation made by a different generic has

already been found to be justified: in those circumstances, applying Sanofi-Aventis, it

should not be open to the brand company to argue that the application should be allowed

to continue because it will offer better evidence than it did in the prior proceeding.43

Scenario B, in which all affidavits have been filed and all affiants have been cross-

examined, is obviously a more solid position from which to bring a 6(5)(b) motion

because the generic can state with certainty that there is no chance that the brand

company’s evidence will get any better. However, the commercial reality often does not

permit generics to wait for that certainty. Furthermore, it is important not to overstate the

advantage that flows from having conducted more cross-examinations: a prohibition

application that is otherwise bound to fail based on the affidavits of the applicant only

39 Eli Lilly Canada Inc. v. Novopharm Ltd., 2009 FC 675, is an example. In such a case, it follows from Rule 84 of the Federal Courts Rules that ordinarily no cross-examinations will have been conducted. 40 Scenario D is unlikely to arise frequently in practice because cross-examinations usually start soon after the last round of affidavits has been filed. 41 Sanofi #2 was such a case. See also Nycomed Canada Inc. v. Novopharm Ltd., 2008 FC 454, 65 C.P.R. (4th) 30. 42 Supra note 38. 43 See, for example, Pfizer Canada Inc. v. Novopharm Ltd. (Apr. 18, 2008, Doc. T-1566-07, Tabib P.), aff’d 2008 FC 674, 67 C.P.R. (4th) 203, aff’d 2008 FCA 263, 74 C.P.R. (4th) 329.

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(Scenario C) or the affidavits of both sides (Scenario D) cannot be allowed to continue

merely because of the speculative possibility that something helpful to the applicant

might emerge on cross-examination, as the Court of Appeal clearly stated in Sanofi-

Aventis #2. In that sense, in many cases there should be little difference between

Scenarios B, D and E.

The remaining distinction to be evaluated from a strategic perspective is the distinction

between Scenario C on the one hand (applicant’s affidavits have been filed; respondent’s

have not) and Scenarios B, D and E on the other hand (both sides’ affidavits have been

filed; all, none or some cross-examinations have been completed). In other words, once

the brand company’s evidence in support of the application for prohibition is in, should

the generic bring a motion under section 6(5)(b) or file its own responsive Rule 307

affidavits first? This decision will obviously be fact-specific and will depend upon the

precise allegations being advanced, but the case law suggests some reasons (apart from

the ever-present need for speed) why it may be advantageous for the generic to proceed

right away, before it files its own Rule 307 affidavits. Firstly, where the brand

company’s affidavits are incapable on their face of demonstrating infringement, as a

practical matter the generic’s affidavits would seem to add little to the analysis.

Secondly, it may be strategically disadvantageous to bring a 6(5)(b) motion in which the

judge or prothonotary is confronted with two sets of squarely contradictory expert

affidavits and may be tempted to conclude that the apparent conflicts can only be

resolved after a full hearing on a full evidentiary record.

Improper Listing: 6(5)( a) motions

Purpose and framework

Section 6(5)(a) of the Regulations provides for the dismissal of applications in whole or

in part where the patents in question are not eligible for inclusion on the Register:

6(5) Subject to subsection (5.1), in a proceeding in respect of an application under subsection (1), the court may, on the motion of a second person, dismiss the application in whole or in part

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(a) in respect of those patents that are not eligible for inclusion on the register; …44

The number and importance of motions under section 6(5)(a) have been significantly

curtailed since the summer of 2008 by virtue of an amendment45 to the Regulations that

was pre-published on April 26, 2008 and brought into force seven weeks later after an

abridged 15-day public comment period, apparently at the insistence of brand

pharmaceutical companies. This amendment (subsection 6(5.1)) provides that the court

shall not dismiss an application in whole or in part solely on the basis that a patent on a

patent list that was submitted before June 17, 200646 is not eligible for inclusion on the

register.

Motions under section 6(5)(a) of the Regulations are to be considered with a view to the

principles governing NOC proceedings. NOC proceedings are not actions but summary

proceedings, limited to determining whether allegations of invalidity and non-

infringement are justified. They are in the nature of judicial review applications, the sole

purpose of which is to determine whether the Minister of Health may issue an NOC to a

generic manufacturer. NOC proceedings do not determine patent validity or infringement

or whether a patent will remain listed on the Register.47

Applications under the Regulations can cause true prejudice to the generic manufacturer

by reason of the automatic 24-month injunction granted to the “first person”, while the

second person’s NOC application goes into deep-freeze and the statutory procedures play

themselves out.48 As previously mentioned, the Supreme Court of Canada has repeatedly

described this regime as “draconian”.49

To prevent abuse of the automatic 24-month injunction, and to mitigate the prejudice to

second persons, the Federal Court of Appeal has described section 6(5)(a) of the

44 PM(NOC) Regulations, SOR/93-133, as amended, at paragraph 6(5)(a). 45 SOR/2008-211, registered and in force June 12, 2008. 46 June 17, 2006 was the date of pre-publication of the 2006 amendments, which was the key date for some of the transitional provisions that applied when those amendments ultimately came into force on October 5, 2006. 47 Supra, notes 2-10; Wyeth Canada v. Ratiopharm Inc. (2007), 60 C.P.R. (4th) 375 at para.21 (F.C.A.). 48 Supra note 5 at para. 24. 49 Supra notes 5 and 6; AstraZeneca Canada Inc. v. Canada (Minister of Health), [2006] 2 S.C.R. 560 at para. 17.

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Regulations as an important mechanism to dismiss applications at an early stage where

ineligible patents are on the Register:

The PM (NOC) Regulations expressly provide a process by which generic manufacturers may obtain relief in the event they are prejudiced by reason of ineligible patents being included on the Register…

…

This form of relief may not be a perfect solution for the generic manufacturers because, as appellants’ counsel pointed out, the prohibition application will only be dismissed if all the patents at issue are not eligible for inclusion on the Register and because the proceeding does not provide for a court order requiring the Minister to purge the Register of ineligible patents. However, the remedy provided by paragraph 6(5)(a) does directly address the problem of a generic manufacturer having to compare its product with the drug of a patent holder whose drug is based on an ineligible patent. It provides a judicial forum in which the eligibility of the specific patent or patents at issue can be decided by the Court after hearing from the patent holder and the generic competitor.50

It should be noted that as a result of the 2006 amendments, it is expressly provided that

applications can be dismissed in whole or in part.51 Thus, if some but not all of the

relevant patents are found to have been improperly listed, the related portion of the

application can be dismissed.

Motions under section 6(5)(a) are not analogous to motions for summary judgment or

motions to strike proceedings and so should not be governed by the same principles. The

purpose of section 6(5)(a) can only be achieved if section 6(5)(a) motions are heard and

decided prior to the hearing on the merits.52 Furthermore, when considering a motion

under section 6(5)(a), the fact that the Minister listed the patent is irrelevant:

A motion under paragraph 6(5)(a) requires the Judge to determine, on the basis of the evidence presented in the motion, whether the patent in issue is eligible for listing. The evidence that the Minister took into account in deciding to permit the patent to be listed may or may not be the same as the record on the motion. The parties may or may not present to the Federal Court the evidence upon which the Minister acted, and they are free to present evidence that was not before the Minister. It is not correct to treat such a motion as analogous to a judicial review of the Minister's listing decision, much less as an appellate review as though the

50 Apotex Inc. v. Canada (2000), 3 C.P.R. (4th) 1 at para. 22-24 (F.C.A.). 51 Pfizer Canada Inc. v. Canada (Minister of Health) et al., 2007 FC 188 at para. 6. 52 Wyeth Canada v. Ratiopharm Inc. (2007), 60 C.P.R. (4th) 375 at para. 36 (F.C.A.), leave to appeal refused, [2007] S.C.C.A. No. 572 [Wyeth].

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listing of the patent was the result of a judicial decision. In a motion under paragraph 6(5)(a), the fact that the Minister concluded that the patent was eligible for listing is not relevant.

It follows that a motion under paragraph 6(5)(a) entails no standard of review. It is a judicial decision as to the sufficiency of the relationship between an innovator's application to list a particular patent and the NDS or SNDS upon which that application is based…53

This, of course, is an explicit adoption of Justice Binnie’s reasoning in the Supreme

Court’s decision in AstraZeneca Canada Inc. v. Canada (Minister of Health).54

Eligibility for Listing on the Register

The general scheme of the Regulations and Patent Register has recently been described

by the Supreme Court of Canada:

The general scheme of the NOC Regulations is to create a Patent Registry within the Department of Health in which an innovator drug company like AstraZeneca may have patents listed relevant to its various drug submissions for regulatory approval (s. 4). A generic manufacturer that is not prepared to await the expiry of what are alleged to be the relevant patents must challenge their validity or applicability to its proposed product (s. 5). The challenge is to be embodied in a notice of allegation, which will generally trigger an application in the Federal Court by the patent owner to prohibit the issuance of a NOC based on (in its view) the relevance, validity and applicability of the listed patents (s. 7).55

i. Pre-2006 Amendments

For patent listing applications made prior to June 17, 2006, eligibility for listing is

governed by section 4 of the Regulations as they existed prior to the October 5, 2006

amendments.56 The relevant portions of section 4 of the old Regulations state:

4. (1) A person who files, or has filed a submission for, or has been issued, a notice of compliance in respect of a drug that contains a medicine may submit to the Minister a patent list certified in accordance with subsection (7) in respect of the drug.

(2) A patent list submitted in respect of a drug must

53 Ibid. at paras. 54-55. For a recent refinement of the standard of review in respect of these issues, see G.D. Searle & Co. v. Canada, 2009 FCA 35, 71 C.P.R. (4th) 389. 54 2006 SCC 49, [2006] 2 S.C.R. 560 [AstraZeneca]. 55 Ibid. at para. 17. 56 Wyeth, supra note 52 at paras. 54-55.

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…

(b) set out any Canadian patent that is owned by the person, or in respect of which the person has an exclusive license or has obtained the consent of the owner of the patent for the inclusion of the patent on the patent list, that contains a claim for the medicine itself or a claim for the use of the medicine and that the person wished to have included on the register.

…

(3) Subject to subsection (4), a person who submits a patent list must do so at the time the person files a submission for a notice of compliance.

(4) A first person may, after the date of filing of a submission for a notice of compliance and within 30 days after the issuance of a patent that was issued on the basis of an application that has a filing date that precedes the date of filing of the submission, submit a patent list, or an amendment to an existing patent list, that includes the information referred to in subsection (2).

(5) When a first person submits a patent list or an amendment to an existing patent list in accordance with subsection (4), the first person must identify the submission to which the patent list or amendment relates, including the date of which the submission was filed.

(6) A person who submits a patent list must keep the list up to date but may not add a patent to an existing patent list except in accordance with subsection (4).

(7) A person who submits a patent list or an amendment to an existing patent list under subsection (1) or (4) must certify that

(a) the information submitted is accurate; and

(b) the patents set out on the patent list or in the amendment are eligible for inclusion on the register and are relevant to the dosage form, strength and route of administration of the drug in respect of which the submission for a notice of compliance has been filed.57

According to subsection 4(1) of the Regulations, only a drug manufacturer that has filed a

New Drug Submission (“NDS”) has the right to have a patent listed on the Register in

respect of that drug. This is enforced by subsection 4(5), which states that the patent list

must identify the NDS to which it relates and the date on which it was filed. Patents

cannot be listed until the underlying NDS has been approved and an NOC has issued. As

57 PM(NOC) Regulations, SOR/98-166, s. 4.

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a result, every patent listing is permanently tied to a specific NOC, its originating NDS

and the drug against which it was listed.58

The time limits for submitting a patent listing are set out at subsections 4(3) and (4) of the

Regulations. An application to list a patent must be made at the same time as filing the

NDS on which it is based. Alternatively, a patent can be listed which issued after the

filing of the NDS where (a) the patent application was filed prior to the filing of the NDS,

and (b) the patent listing application was filed within 30 days after the issuance of the

patent.59

It has been previously determined that the reference in section 4 to a submission for a

notice of compliance includes a supplementary NDS (“SNDS”). It is now established

that an SNDS can support a patent listing application only if the change reflected in the

SNDS may be relevant to the potential infringement of a patent claim within the scope of

the Regulations. The question of whether a particular SNDS may support a patent listing

is determined on the basis of the changes reflected in that SNDS, independently of any

prior NOCs.60

Only a “substantive” change reflected in an SNDS is capable of supporting a patent

listing. Assessing whether a change is “substantive” requires an analysis of its impact on

or relation to the patented invention or the patent claims.61 This must be contrasted with

the use of the term “substantive” for the purposes of the Food and Drug Regulations (i.e.,

one that effects the safety and efficacy of the drug) or with reference to the cost or

amount of supporting information required for the SNDS, neither of which is necessarily

capable of supporting a patent listing.62 An SNDS that is administrative for the purposes

of the Food and Drug Regulations most likely cannot support a patent listing.63

58 AstraZeneca, supra note 54 at para. 20-22; Wyeth, supra note 52 at para. 22. 59 Wyeth, supra note 52 at para. 23. 60 Ibid. at para. 24. 61 Ibid. at para. 26. 62 Ibid. 63 Ibid.

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In AstraZeneca,64 the Supreme Court of Canada emphasized that the Regulations must be

interpreted and applied with careful regard to the limited purpose for which they are

authorized – namely, the prevention of infringement by a second person that takes the

benefit of the “early working” exception by using the “patented invention” for the

purpose of demonstrating that its product is bioequivalent to the first person’s product:

The whole obligation incurred by the generic manufacturer under the NOC Regulations is based on its “early working” of patents embodied in “another drug for the purpose of demonstrating bioequivalence”.65

The Supreme Court strongly emphasized the key requirement of relevance or “linkage”

between a listed patent and the submission against which it was listed.

The general scheme of the NOC Regulations is to create a Patent Registry within the Department of Health in which an innovator drug company…may have patents listed relevant to its various drug submissions for regulatory approval (s. 4).

…

The list of relevant patents is to be filed by the “first person” (i.e. the innovator pharmaceutical company) at the time of its NDS…, or updated within 30 days of issuance of a new patent(s) that had been applied for prior to filing for a submission but not issued until afterwards (s. 4(4)).

…

I emphasize the words in s. 4(5) that in the case of patents added afterwards, “the first person must identify the submission to which the patent list or the amendment relates, including the date on which the submission was filed”. In addition, s. 3(3) provides that “[n]o information submitted pursuant to section 4 shall be included on the register until after the issuance of the notice of compliance in respect of which the information was submitted”. These provisions, it seems to me, provide an important key to understanding the scheme. Entry of the “Patent list” does not destroy the linkage between the patent and the submissions(s) to which it relates, nor to the NOC to which the submission(s) are directed. Specific patents are associated with one or more NDS, ANDS or SNDS, which in turn (if approved) give rise to specific NOCs, which in turn approve a specific manufacturer’s product, which a generic manufacturer may seek to copy. There is no linkage between the 037 and 470 patents and the submissions that lead to the Losec 20 product copied by Apotex. Those after-acquired patents were listed in relation to a SNDS dated January 22, 1999 by AstraZeneca for a new medical use for Losec 20 (treatment of H. pylori), a use for which the Apotex product is not approved, and to an administrative

64 AstraZeneca, supra note 54. 65 Ibid. at para. 37.

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SNDS submitted by AstraZeneca dated July 12, 2000, which submission has nothing at all to do with the technology incorporated in Losec 20.

…

Section 4(5) ensures the Minister’s ability to identify the precise patents relevant to the “early working” by a generic manufacturer of its copy-cat product. This identification is important having regard to the limited purposes for which the NOC Regulations are authorized by s. 55.2(4) of the Patent Act.66

By emphasizing the need for relevance between a listed patent and the submission against

which it is listed, the Court rejected the view that a patent list is submitted in respect of a

“drug” and not in respect of any particular submission. In so doing, the Supreme Court

departed from prior Federal Court of Appeal jurisprudence. The Court stated that:

AstraZeneca relies on Eli Lilly Canada Inc. v. Canada (Minister of Health), [2003] 3 F.C. 140…for the proposition that a patent list is submitted in respect of a drug and not in respect of any particular submission. This is also the view taken by the majority judgment of the Federal Court of Appeal in this case. On this view a “first person” could carry on “evergreening” its product indefinitely by the addition of new patents of marginal significance which would trigger an indefinite series of 24-month statutory freezes even though such subsequently listed patents are not the subject of “early working” by the generic manufacturer, and from which (as in the circumstances here) the generic manufacturer derives no advantage. As this case further illustrates, AstraZeneca even managed to piggy-back the 037 and 470 patents onto an administrative SNDS. An interpretation that would freeze the generic product out of the market vacated by AstraZeneca in 1996 for a further two years or more in these circumstances flies in the face of the limited purpose authorized by s. 55.2(4) of the Act. It is not to be presumed that s. 4(5) of the NOC Regulations insisted on linking particular patents to particular submissions for no purpose.67 [emphasis added]

In Wyeth Canada v. Ratiopharm Inc.,68 the Federal Court of Appeal adopted the

following line of reasoning:

This appeal deals with the propriety of a patent listing. The part of AstraZeneca that is most relevant to that issue is the part explaining that the listing of a patent on the basis of a SNDS requires a certain link between the change reflected in the SNDS, the NOC issued in response to that SNDS, and the patent sought to be listed…

66 Ibid. at paras. 17, 20-22. 67 Ibid. at para. 23. 68 Wyeth, supra note 52.

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I also agree with the Judge that AstraZeneca reverses part of the reasoning for the decision of this Court in Eli Lilly Canada Inc. v. Canada (Minister of Health) , [2003] 3 F.C. 140, 23 C.P.R. (4th) 289 (C.A.). The part of the Eli Lilly reasoning that cannot stand with AstraZeneca is the proposition that a patent containing a claim for the medicine in a drug is listed generally against the drug, rather than against a specific NOC issued in response to the NDS or SNDS upon which the patent listing is based.69 [emphasis added]

Therefore, a 6(5)(a) motion with respect to patents listed on the register prior to June 17,

2006 requires:

(a) an identification of the “patented invention”; and

(b) a determination, for each SNDS or NDS upon which a listing was

obtained, as to whether there is a sufficiently relevant link between the

submission, the NOC that resulted from the submission, and the patented

invention or the patent claims.70

ii. Post-2006 Amendments

The amendments to the Regulations introduced on October 5, 200671 were intended to

“restore the balanced policy underlying the [Regulations] by reaffirming the rules for

listing patents on the register and clarifying when listed patents must be addressed.”72

The new listing requirements result in an explicit regulatory codification of when a patent

is eligible to be listed on the register.

Section 6 of the Amending Regulations sets June 17, 2006 as the cut-off date for the

application of the new listing requirements under section 4.73 Patent lists submitted after

June 17, 2006 are subject to the new requirements under section 4, while patent lists

submitted prior to this date remain subject to the old listing requirements and case law

discussed above.

69 Ibid. at paras. 29-30. 70 Ibid. at para. 47. 71 Regulations Amending the Patented Medicines (Notice of Compliance) Regulations, SOR/2006-242. 72 Regulatory Impact Analysis Statement, SOR/2006-242, Canada Gazette, Part II, Vol. 140, No. 21, p. 1510. 73 Supra note 71, s. 6.

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The most relevant portions of the “new” Regulations regarding listing eligibility are as

follows:

4. (1) A first person who files or who has filed a new drug submission or a supplement to a new drug submission may submit to the Minister a patent list in relation to the submission or supplement for addition to the register. 4. (2) A patent on a patent list in relation to a new drug submission is eligible to be added to the register if the patent contains

(a) a claim for the medicinal ingredient and the medicinal ingredient has been approved through the issuance of a notice of compliance in respect of the submission; (b) a claim for the formulation that contains the medicinal ingredient and the formulation has been approved through the issuance of a notice of compliance in respect of the submission; (c) a claim for the dosage form and the dosage form has been approved through the issuance of a notice of compliance in respect of the submission; or (d) a claim for the use of the medicinal ingredient, and the use has been approved through the issuance of a notice of compliance in respect of the submission.

4. (3) A patent on a patent list in relation to a supplement to a new drug submission is eligible to be added to the register if the supplement is for a change in formulation, a change in dosage form or a change in use of the medicinal ingredient, and

(a) in the case of a change in formulation, the patent contains a claim for the changed formulation that has been approved through the issuance of a notice of compliance in respect of the supplement; (b) in the case of a change in dosage form, the patent contains a claim for the changed dosage form that has been approved through the issuance of a notice of compliance in respect of the supplement; or (c) in the case of a change in use of the medicinal ingredient, the patent contains a claim for the changed use of the medicinal ingredient that has been approved through the issuance of a notice of compliance in respect of the supplement.74

Recent Federal Court of Appeal decisions seem to confirm that the government appears

to have achieved its goal of requiring greater correspondence between the subject-matter

74 Supra note 1, ss. 3(2), 4(1), (2), (3).

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of patents and the drug submissions against which they are sought to be listed. For

example, in Abbott Laboratories Ltd. v. Canada,75 the Court confirmed that a patent

sought to be listed against an SNDS for a new use “must specifically claim the very

change in use which was approved by the issuance of a Notice of Compliance with

respect to an SNDS”.76

Conclusion

There has been a shift in the law toward bringing proceedings under the Regulations to an

early end. This shift is consistent with the Courts’ repeated statements that these

proceedings were intended to be summary in form and process. Faced with an

overwhelming number of highly – even overly and perhaps purposefully – complex

evidentiary records and unnecessarily lengthy proceedings, the Courts took a stand and

stated expressly that the status quo was unsustainable. This has played itself out in a

number of ways and has led directly to changes in the law designed and intended to

streamline proceedings under the Regulations and to create the possibility of bringing

these proceedings to an early, not to say untimely, end.

What remains to be seen is whether this policy shift is successful or whether the

Regulations will have to repealed in order to relieve the Courts of the burden of hearing

and deciding extremely complex and highly technical legal and scientific arguments on

written records within 24 months.

Finally, it is also an open question whether the Courts will continue the current program77

of moving the underlying patent infringement actions to trial at a speed that was not the

norm prior to 2006, requiring that they proceed to trial in less time than has been allowed

for the NOC proceedings, or whether the result will be that another monster has been

created to stand alongside the one created by the Regulations. Indeed, one must ask

whether the brand pharmaceutical companies – which insisted for years that the time to

75 2008 FCA 244, 68 C.P.R. (4th) 445, leave to appeal refused, [2008] S.C.C.A. No. 408. 76 See also G.D. Searle & Co. v. Canada, supra note 53. 77 See the Federal Court’s May 1, 2009 Practice Direction entitled “Streamlining Complex Litigation”, which states that “streamlining” means facilitating the scheduling of trials within two years of the commencement of the proceeding, where possible.

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trial must be drastically shortened if the Court was to retain its international credibility –

are now wondering if they should have been careful what they wished for. Of the four

pharmaceutical patent infringement actions of which we are aware that have gone to trial

on a “streamlined” schedule, only one has resulted in a decision that the patent was valid

and infringed: in the other three, the patent was declared invalid.78

78 Perindopril (Laboratoires Servier v. Apotex Inc., 2008 FC 825, 67 C.P.R. (4th) 241, aff’d 2009 FCA 222, 75 C.P.R. (4th) 443, leave to appeal refused, [2009] S.C.C.A. No. 403), time between issuance of claim and day one of trial = 18 months, patent valid and infringed; Olanzapine (Eli Lilly & Co. v. Novopharm Ltd., 2009 FC 1018, 78 C.P.R. (4th) 1, under appeal (A-454-09)), time between issuance of claim and day one of trial = 17 months, patent invalid; Ramipril (Sanofi-Aventis Canada Inc. v. Apotex Inc. and Novopharm Ltd., 2009 FC 676, 77 C.P.R. (4th) 99, under appeal (A-386-09, 387-09, 389-09, 390-09)), time between issuance of claim and day one of trial = 24 months (case against Apotex), 19 months (case against Novopharm), patent invalid; Amlodipine (Ratiopharm Inc. v. Pfizer Ltd., 2009 FC 711, 76 C.P.R. (4th ) 241, under appeal (A-281-09)), time between issuance of claim and day one of trial = 20 months, patent invalid.