Ordinary or Extraordinary: The NOC Regulations

Transcription

1 Ordinary or Extraordinary: The NOC Regulations Bill Richardson Partner McCarthy Tétrault LLP (Toronto) Co-authors: Jacob Glick, Meighan Leon and Tamara Ramsey Associates McCarthy Tétrault LLP March 29-30, 2004

2 Contents 1. INTRODUCTION BURDEN OF PROOF IN PM(NOC) PROCEEDINGS WHOSE BURDEN TO PROVE WHAT?... 1 (a) Why the Burden Matters... 1 (b) Statutory Presumptions Favouring Patentees... 2 (c) The First Person s Legal Burden... 2 (d) The Second Person s Evidential Burden... 3 (e) Reconciling the Burdens ELIGIBILITY FOR LISTING... 4 (a) The Extraordinary Facts of BMS and Ferring... 5 (b) Problems with Applying Ferring too Broadly DISTINGUISHING BETWEEN THE APPLICATION OF SUBSECTIONS 5(1) AND 5(1.1)... 7 (a) Biolyse v. BMS... 9 (b) Implications of the Biolyse Decision DECEPTIVE AND MISLEADING NOTICES OF ALLEGATION (a) Sufficient NoA (b) Failure to Address all the Relevant Facts (c) Grave Consequences (d) Failure to Address all Relevant Patent Claims ADEQUACY AND TIMING OF DISCLOSURE (a) Orders for Disclosure under subsection 6(7) (b) Disclosure of the Drug Master File (c) Disclosure of Samples (d) Timing Issues SECTION 8 REMAINS CONTENTIOUS AND COMPLEX (a) No Entitlement to Legal Expenses (b) All Other Claims for Damages Remain Undecided CONCLUSION... 21

3 1 1. Introduction The Patented Medicines (Notice of Compliance) Regulations (the PM(NOC) Regulations ) 1 have not ceased to produce interesting and unique legal problems. This paper will cover six issues of recent controversy. First, the burden of proof in applications for prohibition. Second, recent decisions about eligibility for listing on the patent register with respect to supplementary new drug submissions. Third, new issues concerning the applicability of subsections 5(1) and 5(1.1). Fourth, the requirements for proper notices of allegations and consequences of deceptive and misleading notices of allegation. Fifth, an analysis of recent cases concerning the adequacy and timing of disclosure by second persons. Finally, actions for damages pursuant to section 8. 2 The views expressed are those of the authors and should not be taken as those of any client. 2. Burden of Proof in PM(NOC) Proceedings Whose Burden to Prove What? The PM(NOC) Proceedings are initiated when a second person (typically a generic pharmaceutical manufacturer) issues a Notice of Allegation ( NoA ) pursuant to the PM(NOC) Regulations. In their NoA the second person typically alleges both that a particular patent which is listed on the Patent Register is invalid and/or that the second person s proposed method of manufacture does not infringe the first person s patent. These allegations are brought pursuant to subparagraphs 5(1)(b)(iii) and 5(1)(b)(iv) of the PM(NOC) Regulations. Whether the allegations are of invalidity or non-infringement, the question arises who bears the burden of proof. (a) Why the Burden Matters This is an important question to answer because, like in any civil action, the party with the burden of proof bears the onus of proving their case on a balance of probabilities. If a litigant is unable to discharge the applicable burden their claim cannot succeed. Moreover, a party who 1 SOR/ as amended by SOR/98-166; SOR/ This paper presupposes a familiarity with the PM(NOC) Regulations and their operation.

4 2 does not bear a burden of proof can succeed without leading any evidence at all if the other party fails to discharge its burden. In any practical context, it is logical that the person making an allegation should bear the burden of proving its veracity. Notwithstanding logic, the PM(NOC) Regulations requires the first person, in bringing the application, to effectively disprove each and every allegation made by the second person in the NoA. 3 It is especially bizarre in the context of an allegation of noninfringement where, the proof of the allegation rests in the hands of the second person (or its drug supplier). The problem is further exacerbated by the fact the Courts have held that allegations in a NoA are presumed to be true. (b) Statutory Presumptions Favouring Patentees Pursuant to subsection 43(2) of the Patent Act 4, patents are presumed valid absence evidence to the contrary. By subsection 6(6) of the PM(NOC) Regulations, product by process patents are presumed to be infringed by the second person making allegations of non-infringement, absence proof to the contrary. Given these various considerations, the typical burden imposed on applicants, balanced against the legislative presumptions in favour of patent holders, courts have struggled in their analysis of determining who ultimately bears the onus in PM(NOC) proceedings. This thorny problem was recently clarified by Mr. Justice Gibson in his October 2003 decision in Bayer A.G. v. Apotex Inc. 5, discussed below. (c) The First Person s Legal Burden The first step in analyzing the parties respective burdens is to understand the legal burden of the applicant/first person. The first person having launched the proceeding bears what is described as the legal burden of demonstrating that the allegations made by the respondent/second person in the NoA are not justified: subsection 6(2) PM(NOC) Regulations. 3 PM(NOC) Regulations subsection 6(2) 4 R.S. 1985, c-p FC 1199 (T.D.); [2003] F.C.J. No

5 3 In some instances, the first person does not need to affirmatively prove the validity of the patent or that the second person s process or product infringes the patent. If the allegations in the NoA are mere assertions and not substantiated by facts, then the statutory presumptions of validity and infringement would operate to fulfill the first person s legal burden of demonstrating that the second person s allegations are not justified. Practically, however, this rarely occurs as second persons now appreciate the necessity of providing a thorough (if not exhaustive) detailed statement of the legal and factual basis for each allegation. (d) The Second Person s Evidential Burden Second persons must lead evidence to rebut the statutory presumptions of validity and infringement, such that there is an evidential burden on the second person. Mr. Justice Stone in Hoffmann-La Roche Ltd. v. Canada (Minister of National Health and Welfare) 6 said the evidential burden: consists of the burden of putting an issue in play and means that a party has the responsibility to ensure that there is sufficient evidence of the existence or non-existence of a fact or an issue on the record to pass the threshold for that particular fact or issue. 7 What we are left with is (i) the allegations contained in the NoA, which are presumed to be true except to the extent that the contrary can be shown by the first person, puts the issues of infringement and/or validity in play, but (ii) merely putting the issues in play does not discharge the second person s evidential burden. The second person must provide enough evidence to sufficiently substantiate a conclusion for administrative purposes 8 the allegations made in the NoA. (e) Reconciling the Burdens Another important issue that arises in this context is the question of what the court should make of the differently worded statutory presumptions favouring the first person. How do subsection 6 (1996) 70 C.P.R. (3d) 206 (C.A.). 7 ibid at Pharmacia Inc. v. Canada (Minister of National Health and Welfare), (1994) 58 C.P.R. (3d) 209 at 216

6 4 6(6) of the PM(NOC) Regulations and subsection 43(2) of the Patent Act operate in the context of a section 6 Prohibition Proceeding? Specifically, subsection 43(2) of the Patent Act states in the absence of any evidence to the contrary an issued patent is presumed valid. Subsection 6(6) of the PM(NOC) Regulations provides that a patentee s process patent shall be considered to be infringed by a second person in the absence of proof to the contrary. It is not clear from the cases whether the standard of proof to the contrary required to establish allegations of non-infringement is a higher standard than any evidence to the contrary required to establish allegations of invalidity. One could argue that requiring proof to the contrary over any evidence suggests a higher standard to support allegations of non-infringement. The jurisprudence appears to be moving in the opposite direction, with Courts reconciling the burdens applicable to allegations of invalidity and non-infringement rather than differentiating them. 9 While not intending to be too simplistic, reconciling the applicable burdens in assessing claims of invalidity and non-infringement is attractive. It is easier if one need only consider one type of analysis and can apply that analysis to either situation. However, such an approach may undermine the intent of strong language in subsection 6(6) of the PM(NOC) Regulations. This issue is one that courts may need to consider in the future. For the time being however, Mr. Justice Gibson s decision 10 discussed above is the most helpful articulation of the relevant legal and evidentiary burdens faced by the parties. That said, there is still room for further argument. 3. Eligibility for Listing Following the Federal Court of Appeal s recent decision in Ferring 11, we have been forced to consider again the extent to which supplementary new drug submissions ( SNDS s ) will form a proper basis for listing a patent on the patent register. The Ferring decision, while reaffirming 9 see Bayer A.G. v. Apotex Inc., supra at paras ibid. 11 Ferring Inc. v. Canada (Attorney General), (2003), 26 C.P.R. (4th) 155 (F.C.A.) [herein Ferring]

7 5 the Appeal Court s holding in Apotex v. Canada 12 that a SNDS constitutes a submission for a NOC within the meaning of section 4 of the PM(NOC) Regulations, also articulates circumstances in which the Court will look at the patentee s motive for filing a submission in order to assess the listing eligibility of a patent. To appreciate the implications of Ferring it is necessary to understand the facts that led to it as well as the facts from Bristol-Myers Squibb Canada Inc. v. Canada (Attorney General) 13. Both cases arose in situations where, through inadvertence, the first person placed itself outside of the timing requirements contemplated under subsection 4(4) of the PM(NOC) Regulations which state that: a person may after the filing of a submission for 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 for an amendment to an existing patent list that includes the information referred to in subsection (2). (a) The Extraordinary Facts of BMS and Ferring In BMS the innovator was late in submitting its patent for inclusion on the patent register. 14 In, Ferring the innovator filed its SNDS before having filed its patent application rather than after, as specified by the PM(NOC) Regulations. 15 In BMS, after learning that its patent would not be placed on the patent register, the innovator made several attempts to list its patent. After several failed attempts, it was finally successful when it filed an administrative SNDS to change the name of its product from SERZONE to SERZONE-5HT [2]. In all other respects the product monographs were identical. No new use or indication was added to the product monograph. No other explanation for the name change 12 Apotex Inc. v. Canada (Minister of Health), (1999), 87 C.P.R. (3d) 271 (F.C.T.D), affirmed by (2001) 11 C.P.R. (4 th ) 538 (C.A.) (Rothstein J.A.) 13 (2001) 10 C.P.R. (4th) 318 (F.C.T.D), affirmed by (2002) 16 C.P.R. (4th) 425 (C.A.) [hereinafter BMS] 14 ibid. at paras Ferring at para. 11

8 6 was offered at all. 16 It was admitted that the only reason for the name change SNDS was to circumvent the timing requirements of the PM(NOC) Regulations. Similarly, in Ferring, after being informed by the Minister that its patent would not be listed on the patent register because of a timing error, the first person filed a name change SNDS apparently for the sole purpose of listing the patent. 17 The Court of Appeal found that no other rationale was provided for the name change 18 other than that it was part of a strategy to circumvent the timing requirements of the PM(NOC) Regulations. The drug at issue was not even marketed under the new name for some two years. 19 The Court held in both instances that the first person could not circumvent the timing requirements of the PM(NOC) Regulations by filing what amounted to a bogus SNDS. The Trial Division in BMS (upheld by the Court of Appeal) and the Court of Appeal in Ferring held that to allow a patent to be listed on the patent register so as to circumvent the timing requirements of the PM(NOC) Regulations would defeat the purpose of having the strict time requirements and thus yield an absurd result. The Court of Appeal in Ferring explicitly rejected the literal interpretation of section 4 of the PM(NOC) Regulations applied by the motions judge which allowed a patent list on the patent register on the basis of a suspect name change SNDS, saying that such interpretation would render the time requirements embodied in this section meaningless. 20 In the view of innovators, Ferring and BMS are extraordinary cases. Generic manufacturers may take a different view. 16 BMS at para Ferring at paras ibid. at para ibid. at para ibid. at para. 17

9 7 (b) Problems with Applying Ferring too Broadly Is Ferring a general invitation for the courts to substitute their own judgment for that of the Minister in determining what constitutes a bona fide or substantive SNDS? It is telling that in both BMS and Ferring the Minister actively opposed the patent s eligibility. Is the proper interpretation of BMS and Ferring that a patentee cannot use the artifice of a name change SNDS to circumvent the timing requirements or is it that only a substantive, not administrative, SNDS will suffice? One could argue that the courts are ill positioned to determine what constitutes a substantive SNDS and what constitutes an insubstantive SNDS as this gets into complex scientific and regulatory issues best left to Health Canada specifically the Therapeutic Products Directorate which is charged with maintaining the Patent Register and determining whether to list a patent in the first place. One view is that the Court should only intervene to de-list patents from the patent register where the only conclusion that can be drawn is that the drug submission was part of a scheme designed to circumvent the timing requirements of the PM(NOC) Regulations. Such colourable conduct as evidenced on the facts of Ferring and BMS may justify the delisting of the patents from the patent register. However, the courts should be cautious in applying those decisions more broadly because in so doing, they may usurp the policy and regulatory authority of the Minister of Health whose job it is to determine whether patents are properly listed. That is the purpose of subsection 4(3) of the PM(NOC) Regulations. 4. Distinguishing between the application of subsections 5(1) and 5(1.1) Another recent controversy involves the obligation to serve a NoA on a first person pursuant to subsection 5(1.1) and the Court of Appeal s decision in Biolyse (discussed below). We start our discussion at subsection 5(1). Subsection 5(1) of the PM(NOC) Regulations requires a second person who makes a submission for a NOC in respect of a drug and who, for the purposes of demonstrating bioequivalence, makes a comparison with or reference to a previously approved drug which has been marketed in

10 8 Canada pursuant to the issuance of a NOC, to serve a NoA on the first person(s) in respect of all patents listed on the Patent Register. The reference in subsection 5(1) to filing a submission for a Notice of Compliance imparts an obligation on a second person(s) to serve a NoA to a first person(s) whether or not the submission takes the form of a New Drug Submission ( NDS ) or an Abbreviated New Drug Submission ( ANDS ). This obligation arose following the decision in Merck & Co. v. Canada (Attorney General) [hereinafter, Merck ] where the Federal Court interpreted submission as it appeared in the pre-1999 subsection 5(1) to include a NDS, an ANDS or a supplement to either. 21 In Merck, it was argued that subsection 5(1) did not apply where a drug manufacturer compared the bioequivalence of its generic drug to a second person s generic drug, even though the second person had sought an NOC by comparing the bioequivalence of its drug to that of the first person. Madam Justice McGillis rejected this interpretation of subsection 5(1) and held that a person could not piggy back on the efforts of a first person by making an indirect comparison in an ANDS to the submission of another second person (i.e., generic). Following the decision in Merck, Section 5(1.1) was introduced into the PM(NOC) Regulations. In effect, subsection 5(1.1) requires a drug manufacturer who seeks approval of a drug that contains the same medicine in comparable strength and dosage form as a previously approved drug to address the patents listed on the patent register by serving a NoA on a first person(s). Subsection 5(1.1) states as follows: 5(1.1) subject to subsection (1.2) where subsection (1) does not apply and where a person files or has filed a submission for a notice of compliance in respect of a drug that contains a medicine found in another drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent included on the register in respect of the other drug containing the medicine, where the drug 21 (1999) 176 FTR 21 (F.C.T.D.) at para. 59, affirmed (2000) 179 FTR 278 (note) (F.C.A.), leave refused by S.C.C. (2000), 259 N.R. 196

11 9 has the same route of administration and a comparable strength and dosage form, (a) state that the person accepts that the notice of compliance will not issue until the patent expires; or (b) allege that (i) the statement made by the first person pursuant to paragraph 4(2)(c) is false, (ii) the patent has expired, (iii) the patent is not valid, or (iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed. The interpretation of submission in Merck and the subsequent addition of Section 5(1.1) to the PM(NOC) Regulations represented a united judicial and legislative attempt to confront the increasing trend whereby generic drug manufacturers were attempting to avoid triggering section 5 by submitting documents that took the form of a NDS, but in reality, were disguised ANDSs. These NDSs relied heavily on data generated by the first person, but without making a direct comparison to demonstrate bioequivalence. 22 This practice was further confirmed by the Federal Court of Appeal in Merck & Co. v. Nu-pharm Inc., where the Court held that pursuant to the amended version of subsection 5(1), an indirect comparison with a first person s drug was also sufficient to trigger the obligation to serve a NoA. 23 (a) Biolyse v. BMS Biolyse Pharma Corporation v Bristol-Myers Squibb Co. concerned the issuance of a NOC for Biolyse s Paclitaxel drug. Paclitaxel belongs to a class of drugs known as taxanes which slow or stop the growth of cancer cells in humans. The active ingredient, also known as Paclitaxel, is derived from Yew tree extractions. Paclitaxel contains the same active medicinal ingredient (Paclitaxel) as Bristol-Myers Squibb Co s ( BMS ) blockbuster cancer drug Taxol, the only distinction being that Biolyse s drug is extracted from the leaves and twigs of one species of the Yew tree and BMS s drug is extracted from the bark of a different species of the Yew tree. 22 Biolyse, infra note 14 at para (2000), 5 C.P.R. (4 th ) 138 (F.C.A.).

12 10 In response to Biolyse s submission for a NOC, Health Canada took the position that Paclitaxel was a new medicine from a new botanical source that was different from BMS s Taxol. As a result, Biolyse was not permitted to use the Taxol clinical data for the purposes of bioequivalence and Biolyse was required to submit a NDS rather than an ANDS. The Minister subsequently issued a NOC for Biolyse s Paclitaxel without a NoA being served on the first person, BMS. BMS applied for judicial review of the Minister s decision to issue an NOC to Biolyse for Paclitaxel. BMS argued that the NOC for Paclitaxel should be set aside because, on the basis of subsection 5(1.1), a NoA should have been served on BMS as a first person with two patents listed on the patent register in respect of Taxol. BMS pointed out that although Biolyse had not compared directly to Taxol for the purposes of demonstrating bioequivalence, the NDS for Paclitaxel contained many comparisons to Taxol and was much shorter than the average NDS because it piggy-backed on much of the Taxol data. Mr. Justice Blanchard held that the Minister erred in failing to apply subsection 5(1.1) to Biolyse s NDS and quashed the NOC for Paclitaxel. On appeal of Mr. Justice Blanchard s decision, Biolyse argued that the legislative intent in enacting subsection 5(1.1) was to deal specifically with the situation in Merck where a third person submitted an ANDS and compared its drug for the purpose of demonstrating bioequivalence to a second person s drug in respect of which a patent list had been submitted. In this regard, Biolyse argued that subsection 5(1.1) should be interpreted narrowly, that the words filed a submission should be construed to mean filed an ANDS. Biolyse also proposed that the word comparable in subsection 5(1.1) should be interpreted to mean used to establish bioequivalence only. Mr. Justice Evans dismissed the argument of Biolyse and upheld the decision of the Trial Division. He was satisfied that the elements of subsection 5(1.1) had been met and held that Biolyse should have served BMS with a NoA considering in particular that:

13 11 Biolyse s Paclitaxel had the same route of administration and a comparable strength and dosage form as Taxol; Biolyse s NDS for Paclitaxel contained the same medicine found in Taxol; and Taxol was marketed in Canada pursuant to a NOC in respect of which a patent list had been submitted. In attempting to resolve the structural relationship between 5(1) and 5(1.1), the Court of Appeal considered the words of subsection 5(1.1) in their grammatical and ordinary sense as well as their entire context. The Court rejected the notion that additional words were required to make this subsection intelligible, particularly given the interpretation of submission provided by the Court in Merck. The interpretation advocated by Biolyse went beyond the ordinary meaning of subsection 5(1.1) by requiring the addition of words so as to interpret file the submission to mean filed an abbreviated new drug submission. The Court held that this narrow interpretation of subsection 5(1.1) advocated by Biolyse would make subsection 5(1) redundant. The Court concluded that the plain meaning approach to the interpretation of subsection 5(1.1) was consistent with the overall purpose of the PM(NOC) Regulations, to graft more effective patent protection onto the regime for the approval of new drugs on the basis of their safety and efficacy. (b) Implications of the Biolyse Decision The Biolyse decision defined the relationship between subsection 5(1) and 5(1.1) and clarified the legislative intent behind the introduction of subsection 5(1.1). However, in failing to define the scope of subsection 5(1.1), the Biolyse decision has left it open to the courts to apply subsection 5(1.1) very broadly in and effort to prevent circumvention of the PM(NOC) Regulations. For example, Health Canada has applied subsection 5(1.1) to biological products of the same class of drugs which, unlike Paclitaxel, do not have the same chemical composition. The application of section 5(1.1) to biological products which do not have the same chemical composition begs the question as to whether such products actually do contain the same medicine. The Court has yet to define the threshold criteria for determining whether medicines are the same pursuant to subsection 5(1.1).

14 12 The Appeal Court s decision does not address the meaning of comparable in subsection 5(1.1). Although the Court does suggest that the use of comparable in subsection 5(1.1) is akin to of similar effect, this construction also requires further elaboration in order for the decision to have a clear, meaningful effect. These questions will presumably be addressed when the Supreme Court of Canada considers the Federal Court of Appeal s decision next year Deceptive and Misleading Notices of Allegation Although the requirements for a sufficient NoA have been thoroughly canvassed by the Federal Court and Federal Court of Appeal in recent years, new issues continue to emerge. One issue that has not been fully explored are the consequences for deceptive and misleading NoAs. NoAs are deceptive and misleading if they fail to set forth all the relevant facts or address all relevant patent claims. Of particular concern are NoAs that appear adequate on their face, but omit important information. The occasions on which the Court has commented on deceptive and misleading NoAs are few and far between, but nevertheless raise interesting issues about the appropriate consequences for not complying with the PM(NOC) Regulations. (a) Sufficient NoA A second person must serve a NoA that provides a detailed statement of the legal and factual basis for each allegation. The requirements for a NoA are well known: the NoA must provide all of the facts the second person intends to rely upon in subsequent prohibition proceedings and it cannot rely on facts that exceed those laid out in the NoA. 25 The Federal Court of Appeal has stressed that the entire factual basis must be set out in the NoA: The intent appears to be that the entire factual basis be set forth in the statement rather than be revealed piecemeal when some need happens to arise in a section 6 proceeding. This Court has cautioned persons in the position of the respondent that they assume a risk that a particular allegation may not be in compliance with the Regulations and that the deficiency cannot be cured by the Court in a section 6 proceeding Leave was granted on November 30, AB Hassle v. Apotex Inc., 2002 FCT 931 at paras. 63 and AB Hassle v. Canada (Minister of National Heath and Welfare) (2000), 7 C.P.R. (4th) 272 at para. 23 (F.C.A.).

15 13 A NoA that does not provide a sufficiently detailed statement of the legal and factual basis for an allegation does not comply with section 5 of the PM(NOC) Regulations. The consequence for a second person of a defective NoA is that an order for prohibition will be granted. Unfortunately, the first person must marshal a full case on the merits even where the sufficiency of the NoA is in doubt because the Court will not determine whether an NoA is defective until the hearing of the application for prohibition. 27 This appears to be an imbalance under the PM(NOC) Regulations given subsection 6(5) gives the second person the right to challenge the first person s case on an interlocutory basis. (b) Failure to Address all the Relevant Facts In 1996, the Federal Court of Appeal rejected an argument that an NoA failed to disclose facts sufficient to justify its allegation of non-infringement and found that there was no obligation under the PM(NOC) Regulations to disclose an allegedly non-infringing composition. 28 At that time, it was sufficient for the second person to allege that it would not use some of the components claimed in the patent. That said, the Federal Court of Appeal held that NoAs are intended to be accurate, specifically: I have no doubt, nevertheless, that such an allegation is intended to be accurate. Once a second person s product reaches the market the first person is in a position to test the accuracy of the detailed statement; if it were shown to be inaccurate, the consequences for a second person could well be very grave indeed. Presumably because of this decision, the PM(NOC) Regulations were amended and subsection 6(7) was added to enable a first person to get disclosure from a second person. (c) Grave Consequences In 2002 the Federal Court of Appeal had an opportunity to comment on the grave consequences that flow from serving deceptive and misleading NoAs. In Syntex (U.S.A.) L.L.C. v. Canada, 29 Syntex brought a judicial review application to prohibit the Minister from issuing a NOC to 27 See e.g. Parke-Davis Division v. Canada (Minister of Health), 2002 FCA 454 at para Hoffman-La Roche Ltd. v. Canada (Minister of National Health & Welfare), (1996) 70 C.P.R. (3d) 206 (F.C.A.). 29 Syntex (U.S.A.) L.L.C. v. Canada (Minister of Health), 2002 FCA 289.

16 14 Apotex on the grounds that Apotex had served a misleading and deceptive NoA. Syntex submitted that if it had not been deceived and misled, it would have realized that Apotex s product infringed its patent and it would have filed an application for prohibition within the prescribed time. Syntex argued that a deceptive and misleading allegation was tantamount to no allegation at all such that the PM(NOC) Regulations were never engaged and the Minister had no jurisdiction to issue a NOC to Apotex. Before the Federal Court of Appeal the issue was whether a deceptive and misleading NoA is tantamount to no NoA at all. Mr. Justice Rothstein held that if a NoA that satisfies the formal requirements of section 5 has been served, the PM(NOC) Regulations have been engaged and it is up to the patentee to take steps to protect its rights. However, the Federal Court of Appeal, again held that a generic producer who serves a deceptive and misleading NoA faces grave consequences: [A] generic producer that files a deceptive and misleading notice of allegation risks serious consequences. Such consequences may arise pursuant to prohibition proceedings under the Regulations or pursuant to an action for patent infringement. Under the Regulations, a deceptive or misleading notice of allegation may be found to be defective with the result that an allegation of noninfringement will be determined not to be justified by the generic producer, in which case, an order for prohibition will be granted If a patentee does not apply for an order of prohibition under the Regulations because of a deceptive and misleading notice of allegation, the patentee may seek punitive damages or solicitorclient costs in a patent infringement action. 30 As in this case, where the alleged deception was not discovered until it was too late, the grave consequences do not seem quite so grave. However, it is interesting to note the Court s suggestion that a second person s conduct with respect to the PM(NOC) Regulations may result in the serious consequence of punitive damages or solicitor-client costs in an infringement action. 30 Syntex (U.S.A.) L.L.C. v. Hoffman-La Roche, supra at para. 11.

17 15 (d) Failure to Address all Relevant Patent Claims If a second person fails to address all of the relevant patent claims in its NoA the court will make an order of prohibition. In Genpharm v. Canada, 31 the Federal Court of Appeal held that a NoA must allege that none of the patent claims will be infringed. Mr. Justice Rothstein elaborated by explaining that it is not necessary for the second person to address each and every dependant patent claim if the basic claim or claims that describe the invention are addressed in the NoA, but it is not open to the second person to ignore patent claims that cover the basic invention. This issue was considered again a few months later in Pfizer Canada Inc. v. Apotex Inc. 32 In this case Pfizer was the owner of a patent for new uses of sertraline for the treatment of anxietyrelated disorders, in addition to depression. Sertraline is sold and marketed in Canada for the treatment of depression, panic disorder and obsessive-compulsive disorder. Pfizer s patent has claims for use in the treatment of specific anxiety-related disorders for which no marketing authorization has been granted. Pfizer argued that for a NOC to issue, an allegation of noninfringement must be justified with respect to all the claims in the patent. Apotex replied that it should not be kept out of the market for authorized uses only because it had not challenged the validity of those claims related to non-authorized uses. The Court held that Apotex is not obliged to put in issue the validity of claims contained in a patent for non-authorized uses of a drug, that: relevance is based on the proposed uses by the second person and by the comparison which triggers the application of section 5 of the PM(NOC)Regulations. More succinctly, [t]he purpose of the Regulations does not require that allegations be made that irrelevant use claims are invalid, at least where the irrelevant use claims relate solely to non-approved uses of a drug. Pfizer Canada Inc. v. Apotex Inc. thus seems to provide an exception to the general rule in Genpharm v. Canada all claims to the basic invention must be put in issue by restricting claims to those that are relevant to the second person s proposed use. 31 Genpharm v. Canada (Minister of Health), 2002 FCA 290 at para Pfizer Canada Inc. v. Apotex Inc., 2002 FCT 1138 at paras

18 16 6. Adequacy and Timing of Disclosure The adequacy and timing of disclosure by the second person has been the recent subject of judicial comment. The Federal Court of Appeal has articulated a somewhat flexible criteria for the exercise of the Court s discretion to order disclosure pursuant to subsection 6(7). 33 While this criteria has assisted in standardizing the disclosure process, in some instances it has contributed to the complexity of disclosure motions. In addition, the production of a second person s Drug Master File and the production of samples are two disclosure issues that have received judicial attention in the past two years. The Courts have also settled the law on the timeliness of disclosure motions. (a) Orders for Disclosure under subsection 6(7) Subsection 6(7) of the PM(NOC) Regulations provides: (7) On the motion of a first person, the court may, at any time during a proceeding, (a) order a second person to produce any portion of the submission for a notice of compliance filed by the second person relevant to the disposition of the issues in the proceeding and may order that any change made to the portion during the proceeding be produced by the second person as it is made; and (b) order the Minister to verify that any portion produced corresponds fully to the information in the submission. In Novartis Pharmaceuticals Canada Inc. v. Abbott Laboratories Ltd. Mr. Justice Rothstein set out the criteria that the Court may consider in exercising its discretion, including: whether the information sought is relevant to the issues in the proceeding; whether disclosure is required or important; the adequacy of disclosure in the NoA; and 33 See Novartis Pharmaceuticals Canada Inc. v. Abbott Laboratories Ltd. (2000), 7 C.P.R. (4 th ) 264 (F.C.A.)

19 17 whether, on a balance of probabilities, there is evidence to support disclosure. However, Mr. Justice Rothstein cautioned that his criteria should not be viewed as a test applicable to all motions for disclosure. Rather, it is open to the Court to assess which criteria are appropriate in the circumstances. 34 The approach outlined by the Court suggests that the criteria which guides the exercise of discretion is a variable one which can and should be modified according to the circumstances of the case. (b) Disclosure of the Drug Master File The Court may order production of portions of the Drug Master File ( DMF ) of a second person and a second person s third party supplier if the discretionary test for disclosure is met. The third party supplier s DMF filed with the Minister contains the details of the manufacturing process to be used in the making of the active pharmaceutical ingredient. In many cases, the ANDS filed by a second person will incorporate some portion of the information contained in the third party supplier s DMF by cross-reference. In Abbott Laboratories v. Canada(Minister of Health) [hereinafter, Abbott ] Madam Justice Sharlow held that information that is cross-referenced in [an ANDS] is an integral part of the abbreviated new drug submission, whether or not the generic manufacturer has actual knowledge of the information. 35 In Abbott, the Court commented that disclosure of a DMF should not be ordered if it is established by credible evidence that a first person cannot obtain or has no legal right to obtain a copy of the DMF for the purpose of disclosing it in the Prohibition Proceeding. However, Madam Justice Sharlow held that it is open to a judge to order a second person to use its best efforts to obtain the information and to insist on a credible explanation if those best efforts fail. 36 Therefore, a DMF belonging to a second person and/or third party supplier may be ordered to be produced where the discretionary test for disclosure is met, where the DMF is incorporated by 34 Ibid at para FCA 333 at para ibid at para. 31.

20 18 reference into the ANDS and where the generic manufacturer has a legal right to obtain a copy of the DMF. (c) Disclosure of Samples Samples of the drug manufactured by a second person may be compelled if: (a) (b) the Court is persuaded that the criteria for exercising its discretion under subsection 6(7) has been proven on a balance of probabilities; and the samples were provided to the Minister as part of the submission for a NOC. In Pfizer Canada Inc. v. Apotex Inc.[hereinafter, Pfizer ] the Court held that the Applicant is not bound to show that samples were provided to the Minister. 37 Rather, to obtain an order for production of samples, the second person must advise whether or not samples were submitted and must require the Minister of Health to verify that samples were not provided. 38 The decision in Pfizer has been applied in subsequent cases using the dual criteria noted above to order production of samples relevant to the question of non-infringement. 39 (d) Timing Issues To succeed on a motion for disclosure it must be presented without delay under subsection 6(7). In this regard, the Court has held that the words at any time in subsection 6(7) should not be interpreted literally and the Applicant must move for a disclosure order without delay. In the event that there is delay, the Applicant must provide affidavit evidence explaining the timing of the motion and the reason(s) for delay. 40 Disclosure motions should be accompanied by expert affidavit evidence to prove the relevance, necessity or importance of the information sought, the insufficiency of any previous disclosure, and/or the inadequacy of the NoA. Expert evidence must satisfy the criteria set out in subsection 6(7) in order for a party to be successful on a disclosure motion, particularly as it pertains to 37 ibid at para (2002), 18 C.P.R. (4 th ) 323 (F.C.T.D.) at para Glaxosmithkline Inc. v. Pharmascience Inc. 2002, FCT 683 (F.C.T.D.). 40 Biovail Corp. v. Canada (Minister of National Health & Welfare), 2002 FCT 1143 at para 41 and 45.

21 19 detailed information about the relevancy of the manufacturing processes and the drug composition. In Merck Frosst Canada & Co. v. Canada, the Court held that an expert s evidence should specifically state why the disclosure of the requested portions is required or important to the issues in the Application. 41 In order to provide this evidence, an expert must review the NoA, the detailed statement and any disclosure voluntarily provided by the second person, all within a short time frame. 7. Section 8 Remains Contentious and Complex Section 8 of the PM(NOC) Regulations provides second persons with a right of action whereby they may assert a claim for damages caused by the statutory stay (pursuant to subsection 7(2)) where the application by a first person is withdrawn, discontinued or dismissed. To date attempts by first persons to get judicial input on the proper interpretation and application of section 8 have largely failed. The courts have declined to interpret and apply both the old and new versions of section 8 in the context of summary judgment motions (for example), claiming that such complicated matters are best left to a full trial. The one exception, in which the Court held that second persons were not entitled to claim for legal expenses, also refused to grant summary judgement with respect to other claims for damages. All other issues of statutory interpretation remain unconsidered and undecided. 42 (a) No Entitlement to Legal Expenses To date, the most significant decision to consider section 8, and one of the few to interpret it, is Apotex Inc. v. Bristol-Myers Squibb. 43, decided on April 8, 2003 and affirmed by the Federal Court of Appeal on January 27, Bristol-Myers Squibb was successful on one ground of a motion for partial summary judgment with respect to Apotex s claim for legal expenses incurred in connection with the related application for prohibition FCT 287 (F.C.T.D.)at para Apotex Inc. v. R., 2003 FCT 414, affirmed 2003 FCA 43 (A ); Apotex Inc. v. Merck & Co., Inc., 2004 FC Apotex Inc. v. R., 2003 FCT 414, affirmed 2003 FCA 43 (A ).

22 20 In this case, the prohibition application was discontinued on a without costs basis. Mr. Justice Russell dismissed the idea that legal expenses may be distinguished from costs. He held that legal expenses and costs are coterminous and that the parties had agreed that there would be no claim against each other for expenses incurred in connection with the prohibition application. Thus, on the issue of legal expenses there was no genuine issue for trial and the motion for summary judgement was granted dismissing the claim for legal expenses. While this case did not address a situation in which costs are assessed and awarded pursuant to sub-sections 6(9) and (10), there is no basis to believe that the same reasoning would not apply. That is, legal expenses are coterminous with costs awarded pursuant to sub-section 6(9) of the PM(NOC) Regulations and are not recoverable separately under section 8 of the PM(NOC) Regulations. (b) All Other Claims for Damages Remain Undecided Mr. Justice Russell refused to dismiss Apotex s claim for profits realized by Bristol-Myers Squibb on a summary judgment motion. He followed the same reasoning as in previous decisions about striking claims under section 8 and held that a motion hearing is not the place to make decisions about contentious issues of a complex nature better suited for determination at trial. 44 Further, he held that such complex and far-reaching issues require a more thorough going contextual explanation of the meaning and purposes of section 8 than was placed before me and are the proper domain of the trial judge. 45 This decision is consistent with several other interlocutory motions in which the court declined to strike pleadings in section 8 actions ibid at para ibid at para Apotex Inc. v. Eli Lilly & Co., 2001 FCT 636; Apotex Inc. v. Eli Lilly & Co., 2001 FCT 1144, 15 C.P.R. (4 th ) 129 at para. 21, aff d 2002 FCA 411, 22 C.P.R. (4 th ) 19; Apotex Inc. v. Merck & Co., 2002 FCT 166, [2002] F.C.J. No.236 at para. 11 (T.D.); Apotex v. Syntex Pharmaceuticals International Ltd., 2001 FCT 1375, 16 C.P.R. (4 th ) 473 at para. 15 (T.D.).

23 21 Most recently the Federal Court again refused to grant summary judgment against Apotex s claims under section 8 for damages, profits, and unjust enrichment. In Apotex Inc. v. Merck & Co., Inc. 47 Madam Justice Snider observed that on no less than 11 occasions the Federal Court and the Federal Court of Appeal have concluded that issues of interpretation of section 8 should proceed to trial. 48 In this case, Apotex s claim for unjust enrichment was considered. Madam Justice Snider held that the issue of the availability of a claim for unjust enrichment was interwoven with the interpretation of section 8, and equitable remedies such as unjust enrichment require the Court to take into account equitable considerations which are best left to the trial judge. 49 Madam Justice Snider also declined to refer issues related to the interpretation of section 8 to a Judge under Rule 220(1) for a preliminary determination of a question of law. As in previous decisions involving motions to strike and summary judgment, Madam Justice Snider held that the issues are ones of statutory interpretation that are best finally settled after trial Conclusion The PM(NOC) Regulations continue to give rise to interesting, complicated and unexpected issues which makes the practice of law under the regulations ever challenging. The most contentious issues include the eligibility for listing on the patent register with respect to SNDSs and actions for damages pursuant to section 8. First persons and second persons must carefully consider the application of subsection 6(5), in particular the fact-specific analysis carried out by the Court in Ferring. Similarly, the interpretation of section 8 remains unclear as we await the first trial of a section 8 action. In the intervening period, given the issues of statutory interpretation involved, the Court remains reluctant to strike pleadings or grant summary judgment in Section 8 proceedings. 47 Apotex Inc. v. Merck & Co., Inc., 2004 FC ibid at para ibid at para ibid at para. 43.

24 22 Although somewhat less contentious for the time being, each step in the Prohibition Proceeding requires careful consideration. Second persons should be wary of omitting important information or including inaccurate information in their NoAs and should consider in particular the consequences of serving a deceptive and misleading NoA. In deciding whether to file a motion for disclosure, first persons must proceed on a timely basis and with sufficient expert affidavit evidence to validate the importance of disclosure. Finally, the problem of reconciling the applicable burdens of first persons and second persons is ongoing while the case law has firmly established that first persons bear the legal burden of proving that the allegations of the second person are not justified, second persons must lead evidence to rebut the statutory presumptions that operate in favour of first persons. The year ahead will bring new developments as the Supreme Court of Canada considers the application of the PM(NOC) Regulations for the first time in the appeal of the Biolyse decision. In the interim period, second persons must carefully consider whether their drugs contain medicines that are substantially similar to medicines currently marketed in Canada pursuant to a NOC so as to trigger the requirements under subsection 5(1.1). WHR