Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC (NOC) 2015 FC 17 de Montigny J
2,226,784 – tadalafil– CIALIS
In law we are accustomed to issues with two conflicting lines of authority. But when it comes to s 27(5) of the Act, which concerns claims framed in the alternative, we have one single line of authority – that ends of up contradicting itself, like a snake swallowing its own tail. There are
two questions: (1) when a claim is framed in the alternative, so that s 27(5) applies, does the
validity of the alternative in issue depend on the validity of the other alternatives?; (2) when a
claim is not framed in the alternative, so that s 27(5) does not apply, does the validity of the
alternative in issue depend on the validity of the other alternatives ? There are four possible
answers to these two questions, and now, with de Montigny J’s Tadalafil decision, the courts
have given all four answers, all based on one leading authority.
Monday, January 26, 2015
Friday, January 23, 2015
Date for Assessing Obviousness-Type Double Patenting Is Priority Date of Earlier Patent
Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC (NOC) 2015 FC 17 de Montigny J
2,226,784 – tadalafil– CIALIS
The claims at issue in this NOC proceeding were to tadalafil (CIALIS) for the treatment of ED in men, specifically by oral administration [18]-[25]. As discussed yesterday, de Montigny J rejected Mylan’s utility attack.
The second substantive issue was obviousness type double-patenting over the 2,181,377 patent. Smooth muscle tissue, including heart and vascular muscles, as well as penile tissue, is relaxed by the so-called NO/cGMP PATHWAY, with the end result that increased concentration of cGMP causes the smooth muscle tissue to relax [7]. Relaxation of penile tissue induces an erection. A class of enzymes known as PDEs break down cGMP. A compound that inhibits PDE can therefore prevent the breakdown of cGMP, resulting in increased concentration of cGMP, relaxation of the smooth muscle tissue, including penile erectile tissue. This was all known before sildenafil and taladafil were discovered to treat ED. The ‘377 patent is a compound claim to tadalafil, and it discloses that tadalafil is a potent and selective PDEV inhibitor. The essential obviousness argument in this proceeding (as well as in various earlier proceedings regarding sildenafil), was that the information regarding the NO/cGMP pathway, combined with the knowledge that taladafil was a selective PDEV inhibitors, made it obvious that taladafil would be effective in treating ED.
The main legal question on this issue turned on the fact that the ‘377 patent, which revealed that taladafil is a selective PDEV inhibitor, was not published until 27 July 1995, two weeks after the claim date of the ‘784 patent (14 July 1995). Thus the ‘377 patent could not be raised in a straight obviousness argument, because under s 28.3 obviousness is assessed in light of information disclosed before the patent's claim date.
Mylan therefore relied on obviousness-type double patenting. The key contested legal issue was whether the date for assessing obviousness type double-patenting should be the priority date of the ‘784 patent or the priority date of the ‘377 patent [134]-[135]. That is, in assessing whether the ‘784 patent is obvious in light of the ‘377 patent, should the art that arose after the ‘377 date, but prior to the ‘784 date, be taken into account?
de Montigny J held that the priority date of the earlier, ‘377 patent, was appropriate, for two main reasons. First:
This strikes me as a very strong point. The judicially created obviousness type double-patenting cannot be used to do an end-run around a clear statutory provision.
His second point was that the rationale for the doctrine of obviousness type double-patenting is to prevent evergreening of the earlier patent by a claim to subject matter which makes no further inventive contribution [142]. Consequently, the question is “whether the claims of the ‘784 Patent disclose novelty or ingenuity over the ‘377 Patent” [133]. If it does, then the later expiry date of the second patent is not impermissible evergreening, but a reward for a further inventive contribution. That point also strikes me as compelling.
Having decided that the appropriate date was the ‘377 priority date, de Montigny J held that it was clear that there was no obviousness type double-patenting. The fact that tadalafil was a PDE inhibitor, and was useful for relaxing smooth muscle tissue, did not make it obvious that it would be useful for treating ED, because prior to the sildenafil patent and related publications, everyone had thought that relaxing smooth muscle tissue would cause ED, rather than treat it, by generally lowering the patient’s blood pressure [136]. The breakthrough that lead to the realization that taladafil (and sildenafil) could be used to treat ED was the discovery that the the main PDE activity in human penile tissue is due to a particular type of PDE, PDEV, so that oral administration of PDEV would relax penile tissue but not vascular tissue [109]. That was far from obvious at the priority date of the ‘377 patent.
While important, the question of the appropriate date for assessing obviousness type double-patenting was not determinative, because de Montigny J also held on the facts that the use of tadalafil to treat ED would not have been obvious over the ‘377 patent and the common general knowledge even at the priority date of the ‘784 patent [149], for essentially the same reason: the state of the art had not changed significantly in the interim, and even at that later date it was still thought that oral administration of any PDE inhibitor, including a PDEV, inhibitor, would result in systemic hypotension.
2,226,784 – tadalafil– CIALIS
The claims at issue in this NOC proceeding were to tadalafil (CIALIS) for the treatment of ED in men, specifically by oral administration [18]-[25]. As discussed yesterday, de Montigny J rejected Mylan’s utility attack.
The second substantive issue was obviousness type double-patenting over the 2,181,377 patent. Smooth muscle tissue, including heart and vascular muscles, as well as penile tissue, is relaxed by the so-called NO/cGMP PATHWAY, with the end result that increased concentration of cGMP causes the smooth muscle tissue to relax [7]. Relaxation of penile tissue induces an erection. A class of enzymes known as PDEs break down cGMP. A compound that inhibits PDE can therefore prevent the breakdown of cGMP, resulting in increased concentration of cGMP, relaxation of the smooth muscle tissue, including penile erectile tissue. This was all known before sildenafil and taladafil were discovered to treat ED. The ‘377 patent is a compound claim to tadalafil, and it discloses that tadalafil is a potent and selective PDEV inhibitor. The essential obviousness argument in this proceeding (as well as in various earlier proceedings regarding sildenafil), was that the information regarding the NO/cGMP pathway, combined with the knowledge that taladafil was a selective PDEV inhibitors, made it obvious that taladafil would be effective in treating ED.
The main legal question on this issue turned on the fact that the ‘377 patent, which revealed that taladafil is a selective PDEV inhibitor, was not published until 27 July 1995, two weeks after the claim date of the ‘784 patent (14 July 1995). Thus the ‘377 patent could not be raised in a straight obviousness argument, because under s 28.3 obviousness is assessed in light of information disclosed before the patent's claim date.
Mylan therefore relied on obviousness-type double patenting. The key contested legal issue was whether the date for assessing obviousness type double-patenting should be the priority date of the ‘784 patent or the priority date of the ‘377 patent [134]-[135]. That is, in assessing whether the ‘784 patent is obvious in light of the ‘377 patent, should the art that arose after the ‘377 date, but prior to the ‘784 date, be taken into account?
de Montigny J held that the priority date of the earlier, ‘377 patent, was appropriate, for two main reasons. First:
[134] If, as Mylan would have it, the relevant date was to be the priority date of the
second patent (in this case, July 14, 1995), the obviousness-type double patenting analysis
would morph into a pure obviousness analysis, with the added benefit that the timing
requirements of section 28.3 of the Patent Act would be circumvented.
This strikes me as a very strong point. The judicially created obviousness type double-patenting cannot be used to do an end-run around a clear statutory provision.
His second point was that the rationale for the doctrine of obviousness type double-patenting is to prevent evergreening of the earlier patent by a claim to subject matter which makes no further inventive contribution [142]. Consequently, the question is “whether the claims of the ‘784 Patent disclose novelty or ingenuity over the ‘377 Patent” [133]. If it does, then the later expiry date of the second patent is not impermissible evergreening, but a reward for a further inventive contribution. That point also strikes me as compelling.
Having decided that the appropriate date was the ‘377 priority date, de Montigny J held that it was clear that there was no obviousness type double-patenting. The fact that tadalafil was a PDE inhibitor, and was useful for relaxing smooth muscle tissue, did not make it obvious that it would be useful for treating ED, because prior to the sildenafil patent and related publications, everyone had thought that relaxing smooth muscle tissue would cause ED, rather than treat it, by generally lowering the patient’s blood pressure [136]. The breakthrough that lead to the realization that taladafil (and sildenafil) could be used to treat ED was the discovery that the the main PDE activity in human penile tissue is due to a particular type of PDE, PDEV, so that oral administration of PDEV would relax penile tissue but not vascular tissue [109]. That was far from obvious at the priority date of the ‘377 patent.
While important, the question of the appropriate date for assessing obviousness type double-patenting was not determinative, because de Montigny J also held on the facts that the use of tadalafil to treat ED would not have been obvious over the ‘377 patent and the common general knowledge even at the priority date of the ‘784 patent [149], for essentially the same reason: the state of the art had not changed significantly in the interim, and even at that later date it was still thought that oral administration of any PDE inhibitor, including a PDEV, inhibitor, would result in systemic hypotension.
Thursday, January 22, 2015
Utility of CIALIS Patent Upheld on the Facts
Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC (NOC) 2015 FC 17 de Montigny J
2,226,784 – tadalafil– CIALIS
In this NOC proceeding, de Montigny J held that Lilly had established that its ‘784 patent was valid in the face of Mylan’s allegations of lack of utility and obviousness-type double patenting. The utility issue turned on the facts, and Lilly won comprehensively, so that alternative constructions of the promise of the patent were largely rendered moot. Perhaps the point of most general interest is that de Montigny J rejected the proposition that the word "treatment" implies lack of undue side effects. The obviousness-type double patenting issue raised one novel point of law, namely the appropriate date for assessing obviousness in the context of double patenting. Tomorrow’s post will look at that question. Perhaps the most interesting legal question raised by this case, albeit tangentially, turned on the interpretation of s 27(5), which provides that when a claim is framed in terms of alternatives, each alternative is to be considered a separate claim. A third post will discuss that issue.
The claims at issue were to tadalafil and 3-methyl tadalafil, or a pharmaceutical composition comprising those compounds, for the treatment of ED in men, specifically (Claim 18) by oral administration [18]-[25]. The argument relating to utility turned on the promise of the patent. The contentious issues were whether the patent merely promised the treatment of erectile dysfunction (ED) by use of tadalafil, as Lilly argued, or whether it also included efficacy in oral administration [76], and / or lack of toxicity [87], as argued by Mylan. Some interesting points of law were raised tangentially, but were largely rendered moot by de Montigny J’s holdings on the facts.
2,226,784 – tadalafil– CIALIS
In this NOC proceeding, de Montigny J held that Lilly had established that its ‘784 patent was valid in the face of Mylan’s allegations of lack of utility and obviousness-type double patenting. The utility issue turned on the facts, and Lilly won comprehensively, so that alternative constructions of the promise of the patent were largely rendered moot. Perhaps the point of most general interest is that de Montigny J rejected the proposition that the word "treatment" implies lack of undue side effects. The obviousness-type double patenting issue raised one novel point of law, namely the appropriate date for assessing obviousness in the context of double patenting. Tomorrow’s post will look at that question. Perhaps the most interesting legal question raised by this case, albeit tangentially, turned on the interpretation of s 27(5), which provides that when a claim is framed in terms of alternatives, each alternative is to be considered a separate claim. A third post will discuss that issue.
The claims at issue were to tadalafil and 3-methyl tadalafil, or a pharmaceutical composition comprising those compounds, for the treatment of ED in men, specifically (Claim 18) by oral administration [18]-[25]. The argument relating to utility turned on the promise of the patent. The contentious issues were whether the patent merely promised the treatment of erectile dysfunction (ED) by use of tadalafil, as Lilly argued, or whether it also included efficacy in oral administration [76], and / or lack of toxicity [87], as argued by Mylan. Some interesting points of law were raised tangentially, but were largely rendered moot by de Montigny J’s holdings on the facts.
Monday, January 19, 2015
A Rule Without a Principle: Patentability of Methods of Medical Treatment
AbbVie Biotechnology Ltd v Canada (Attorney General) 2014 FC 1251 Kane J
Kane J’s Humira dosage regime decision is the latest chapter in the continuing saga of the patentability of methods of medical treatment. While Kane J’s holding that the claims in question are patentable is defensible, I am not persuaded by her view that the case law is consistent [84], as there is support in the case law for the opposite result. So far as I can tell, the case law is incoherent in the sense that it cannot be explained on the basis of any unifying principle, and progress in this area of the law will not be possible until that fact is generally acknowledged.
2,385,745* – anti-TNF-α antibodies / HUMIRA dosage regime
Kane J’s Humira dosage regime decision is the latest chapter in the continuing saga of the patentability of methods of medical treatment. While Kane J’s holding that the claims in question are patentable is defensible, I am not persuaded by her view that the case law is consistent [84], as there is support in the case law for the opposite result. So far as I can tell, the case law is incoherent in the sense that it cannot be explained on the basis of any unifying principle, and progress in this area of the law will not be possible until that fact is generally acknowledged.
Tuesday, January 13, 2015
When is a New Drug Submission "Administrative"?
Pfizer Canada Inc v Canada (Attorney General) 2014 FC 1243 Gleason J
2,409,059 – exemestane – AROMASIN.
Yesterday’s post discussed Gleason J’s holding that the standard of review of the Minister’s interpretation of s 5(1) of the PM(NOC) Regulations is correctness. Today’s post looks at the substantive question: when a first generic has received an NOC, is a second generic which licenses from that first generic subject to s 5? If the answer is yes, this means that a patentee can decide whether to respond to each NOA in light of the threat it perceives from the particular generic; if the answer is no, a patentee must respond to every NOA it receives, or take the risk that the generic in question will subsequently license. As a matter of law, this resolution of this question turns on the interpretation of the word “submission” for an NOC in s 5(1).
To recap the facts, GMP filed an ANDS with the Minister with respect to exemestane using Pfizer’s exemestane product, AROMASIN, as the reference product [45]. GMP served Pfizer with an NOA, and Pfizer chose not to respond. An NOC was then issued to GMP. On the same day, Health Canada also issued an NOC to Teva with respect to exemestane. This NOC was granted on the basis of an “administrative” ANDS filed by Teva, based on a licensing agreement with GMP. The NOC issued to Teva also shows AROMASIN as the Canadian Reference product [46]. Teva never served an NOA on Pfizer.
Teva undoubtedly did file a submission with Health Canada requesting an NOC, and the NOC was granted. The reference product was AROMASIN, and it is consequently clear on the authorities, and now on the face of the Regulations, that Teva’s ANDS compared its product “directly or indirectly” with Pfizer’s product. The only argument, then, is that the ANDS submitted by Teva is not a “submission” for the purpose of the Regulations. As noted yesterday, the AG carried the argument on this question.
The AG’s first argument was that the purpose of the Regulations is to allow the “early working” by a generic company of a patented drug, and Teva did not take advantage of the early-working exception – GMP did – so therefore, that under a purposive approach, Teva’s submission is not a “submission for an NOC.” Gleason J rightly rejected this purposive argument, noting that “The Regulations exist not only to allow generic companies to early work patented medicines to develop generic formulations and to have them ready as soon as possible but, also, to balance these interests with those of the patentee in obtaining protection for innovations that are legitimately patented” [133]. As noted in yesterday’s post, the proposition that the Regulations implement a balance is very well established. Moreover, the AG’s submission on the purpose of the provision seems to miss the point. S 5(1) does not implement the early working exception at all, which is found in s 55.2(1) of the Act. S 5(1) strikes the other half of the balance, namely the protection of the patentee’s interests. The Regulations as a whole strike the balance alluded to by Gleason J, and the purpose of s 5(1) in particular is almost the opposite of that suggested by the AG.
The AG’s next submission was in effect that the case law has established that not all submissions are “submissions” for the purpose of s 5(1); in particular, “administrative” submissions are not considered “submissions” which trigger s 5(1) [129]. The question then is what makes a submission an “administrative” submission?
The AG relied in particular on a series of cases holding that certain supplemental NDSs, specifically, those required where there is a change in the name of a drug, a drug manufacturer, or a change of manufacturing site, are not “submissions” for the purpose of submitting a patent list under s 4: see eg Hoffman-LaRoche 2005 FCA 140 [25]. Gleason J held that those cases were not relevant, on the basis that the concern in those cases – that the patentee should not be able to extend its entitlements under the Regulations with administrative filings – is very different from concerns as to whether the patentee should be required to address a particular generic [143]. While this strikes me as sound as a matter of purposive analysis, the textual argument that the word “submission” should be interpreted in the same way in both s 4 and s 5 is strong. But even if we accept that textual point, the cases cited are not particularly helpful, as the types of changes they discussed were different, and arguably less significant, than a submission by an entirely different party based on a licence.
The AG then appealed to the GlaxoSmithKline 2004 FC 1302 decision, in which Lemieux J held that Health Canada’s Name Change Policy did not trigger s 5. The product in GSK was a salbutamol inhaler. GSK has obtained a NOC for its salbutamol inhaler product, VENTOLIN, and it also obtained a formulation patent which it listed against that product. 3M obtained an NOC for its its salbutamol inhaler product, AIROMIR, on the basis of an entirely separate NDS. 3M also obtained a formulation patent which it listed against its product [13]. 3M and Apotex then entered into a licensing agreement permitting Apotex to sell 3M’s product under Apotex’s name. Apotex sought an NOC based on that agreement. GSK argued that Apotex’s submission triggered s 5, requiring Apotex to address GSK’s patent.
Gleason J held that GSK was distinguishable because Apotex was not required to address GSK’s patents because it was not using GSK’s product as a reference. That is, Apotex was not comparing its product, directly or indirectly, with GSK’s [142]. In this respect, GSK anticipates Biolyse 2005 SCC 26.
While I agree that GSK is strictly distinguishable for that reason, the fact that the comparison was indirect was something of a secondary consideration in Lemieux J’s decision. He also addressed the name change issue. On that point, Lemieux J’s decision in GSK turned on the fact that in its submission, Apotex certified that
Lemieux J held that the administrative NDS was not a submission because the purpose of the Food and Drug Regulations, which impose the requirement for an NOC, is to ensure the safety and effectiveness of drug products on the Canadian market [66]. The changes in the submission by Apotex were not relevant to the safety and effectiveness of the drug in question – it was “identical” to 3M’s product down to the point of being made in exactly the same plant – so the application for an NOC should not be seen as a “submission” for the purposes of the Food and Drug Regulations [68]. Moreover, because of the linkage between those Regulations and the PM(NOC) Regulations, the meaning of “submission” in the PM(NOC) Regulations should be given a similar interpretation [64].
Lemieux J’s purposive analysis strikes me as sound. In this case, if Teva would be manufacturing in a different plant from GMP, then GSK would be clearly distinguishable, and indeed, it strongly implies that the submission would not be purely administrative in that case. From an NOC perspective, the argument is reinforced; particularly in the case of a formulation patent (such as the 059 patent) the plant in which the product is made might be very significant in a patentee’s decision whether to address an NOA, because the likelihood of infringement would be directly affected. On the other hand, if Teva would be purchasing its product in final form from GMP, the argument that the filing was administrative is much stronger. GSK would still be distinguishable, because of the comparison point discussed at the outset, but the question would be very different. The question would be whether the patentee would be entitled to decide whether to challenge a particular NOA based on its assessment of the business practices of the generic in question, rather than the technical aspects of the product.
It is not clear to me which scenario is at issue in Exemestane. The nature of the license between GMP and Teva is not spelled out, and are details of Teva’s ANDS are not provided, so it is not apparent whether it has a certification similar to that emphasized by Lemieux J in GSK. Nor is s 3.4.1 of the PM(NOC) Guidance Document clear, at least to me. It applies only when the licensee seeks to sell the “identical” drug, but that term is not defined in that Guidance document. The policy on Changes in Manufacturer’s Name and/or Product Name does specify that for the purposes of that policy, a drug is considered identical only when the conditions of manufacture and sale are identical, but it is not obvious to me that that definition is intended to apply across all technical guidance documents.
Gleason J also relied on Nu-Pharm 1 (1997), 73 CPR (3d) 510, [22], aff’d (1998), 80 CPR (3d) 74 (FCA) and Nu-Pharm 2 [1999] FCJ No 1825, aff’d (2000), 5 CPR (4th) 138, holding that these cases were not distinguishable. I don’t know if I agree. In the Nu-Pharm decisions Generic 1 had obtained an NOC using a patentee’s product as a reference product, and Generic 2 sought to avoid having to address the patents by using Generic 1's product as a reference product. The FCA held that Generic 2 could not avoid addressing the patents by this strategy. This has been legislatively affirmed by the reference to an “indirect” comparison in the current s 5(1).
Gleason J held that the Nu-Pharm decisions were not distinguishable because “In both Nu-Pharm cases the generic company, just like Teva, had acquired the right to produce the drug in question under a licence from another generic company” [141]. However, I could not find any reference to a licence in any of the Nu-Pharm decisions. (And I don’t really see what kind of proprietary interest Generic 1 might have had in the right to produce the drug, so it’s not clear to me why Generic 2 would have required a licence.) So it is not clear to me if the Nu-Pharm cases are distinguishable. If, in this case, Teva intends to purchase the final product from GMP, then it seems to me that the cases are distinguishable, because it appears that in the Nu-Pharm cases Generic 2 was going to manufacture the product itself. On the other hand, if Teva intends to manufacture at a different plant than GMP, then I agree with Gleason J the cases are not distinguishable. That this is the case is suggested by Gleason J saying that Teva acquired “the right to produce the drug in question” under licence from GMP, implying that Teva, not GMP will be the manufacturer. But as discussed above, the case as a whole is not clear on this point.
In conclusion, some facts that seem to me to be quite important are simply not clear to me, and consequently I cannot assess the merits of the decision. While the facts in question were no doubt clear to the parties and to Gleason J, for the sake of guidance for future applicants and litigants, I hope that on the inevitable appeal, the FCA will clarify these issues or explain why the questions I have discussed are not relevant.
2,409,059 – exemestane – AROMASIN.
Yesterday’s post discussed Gleason J’s holding that the standard of review of the Minister’s interpretation of s 5(1) of the PM(NOC) Regulations is correctness. Today’s post looks at the substantive question: when a first generic has received an NOC, is a second generic which licenses from that first generic subject to s 5? If the answer is yes, this means that a patentee can decide whether to respond to each NOA in light of the threat it perceives from the particular generic; if the answer is no, a patentee must respond to every NOA it receives, or take the risk that the generic in question will subsequently license. As a matter of law, this resolution of this question turns on the interpretation of the word “submission” for an NOC in s 5(1).
To recap the facts, GMP filed an ANDS with the Minister with respect to exemestane using Pfizer’s exemestane product, AROMASIN, as the reference product [45]. GMP served Pfizer with an NOA, and Pfizer chose not to respond. An NOC was then issued to GMP. On the same day, Health Canada also issued an NOC to Teva with respect to exemestane. This NOC was granted on the basis of an “administrative” ANDS filed by Teva, based on a licensing agreement with GMP. The NOC issued to Teva also shows AROMASIN as the Canadian Reference product [46]. Teva never served an NOA on Pfizer.
Teva undoubtedly did file a submission with Health Canada requesting an NOC, and the NOC was granted. The reference product was AROMASIN, and it is consequently clear on the authorities, and now on the face of the Regulations, that Teva’s ANDS compared its product “directly or indirectly” with Pfizer’s product. The only argument, then, is that the ANDS submitted by Teva is not a “submission” for the purpose of the Regulations. As noted yesterday, the AG carried the argument on this question.
The AG’s first argument was that the purpose of the Regulations is to allow the “early working” by a generic company of a patented drug, and Teva did not take advantage of the early-working exception – GMP did – so therefore, that under a purposive approach, Teva’s submission is not a “submission for an NOC.” Gleason J rightly rejected this purposive argument, noting that “The Regulations exist not only to allow generic companies to early work patented medicines to develop generic formulations and to have them ready as soon as possible but, also, to balance these interests with those of the patentee in obtaining protection for innovations that are legitimately patented” [133]. As noted in yesterday’s post, the proposition that the Regulations implement a balance is very well established. Moreover, the AG’s submission on the purpose of the provision seems to miss the point. S 5(1) does not implement the early working exception at all, which is found in s 55.2(1) of the Act. S 5(1) strikes the other half of the balance, namely the protection of the patentee’s interests. The Regulations as a whole strike the balance alluded to by Gleason J, and the purpose of s 5(1) in particular is almost the opposite of that suggested by the AG.
The AG’s next submission was in effect that the case law has established that not all submissions are “submissions” for the purpose of s 5(1); in particular, “administrative” submissions are not considered “submissions” which trigger s 5(1) [129]. The question then is what makes a submission an “administrative” submission?
The AG relied in particular on a series of cases holding that certain supplemental NDSs, specifically, those required where there is a change in the name of a drug, a drug manufacturer, or a change of manufacturing site, are not “submissions” for the purpose of submitting a patent list under s 4: see eg Hoffman-LaRoche 2005 FCA 140 [25]. Gleason J held that those cases were not relevant, on the basis that the concern in those cases – that the patentee should not be able to extend its entitlements under the Regulations with administrative filings – is very different from concerns as to whether the patentee should be required to address a particular generic [143]. While this strikes me as sound as a matter of purposive analysis, the textual argument that the word “submission” should be interpreted in the same way in both s 4 and s 5 is strong. But even if we accept that textual point, the cases cited are not particularly helpful, as the types of changes they discussed were different, and arguably less significant, than a submission by an entirely different party based on a licence.
The AG then appealed to the GlaxoSmithKline 2004 FC 1302 decision, in which Lemieux J held that Health Canada’s Name Change Policy did not trigger s 5. The product in GSK was a salbutamol inhaler. GSK has obtained a NOC for its salbutamol inhaler product, VENTOLIN, and it also obtained a formulation patent which it listed against that product. 3M obtained an NOC for its its salbutamol inhaler product, AIROMIR, on the basis of an entirely separate NDS. 3M also obtained a formulation patent which it listed against its product [13]. 3M and Apotex then entered into a licensing agreement permitting Apotex to sell 3M’s product under Apotex’s name. Apotex sought an NOC based on that agreement. GSK argued that Apotex’s submission triggered s 5, requiring Apotex to address GSK’s patent.
Gleason J held that GSK was distinguishable because Apotex was not required to address GSK’s patents because it was not using GSK’s product as a reference. That is, Apotex was not comparing its product, directly or indirectly, with GSK’s [142]. In this respect, GSK anticipates Biolyse 2005 SCC 26.
While I agree that GSK is strictly distinguishable for that reason, the fact that the comparison was indirect was something of a secondary consideration in Lemieux J’s decision. He also addressed the name change issue. On that point, Lemieux J’s decision in GSK turned on the fact that in its submission, Apotex certified that
...all aspects of the submission pertaining to: Apo-Salvent CFC Free submitted by:
Apotex Incorporated are identical to Airomir... submission(s) except for a change in the
manufacturer/sponsor's name and/or product name and that the product will be
manufactured in the same location with identical specifications and procedures".
[Lemieux J’s emphasis] [20]
Lemieux J held that the administrative NDS was not a submission because the purpose of the Food and Drug Regulations, which impose the requirement for an NOC, is to ensure the safety and effectiveness of drug products on the Canadian market [66]. The changes in the submission by Apotex were not relevant to the safety and effectiveness of the drug in question – it was “identical” to 3M’s product down to the point of being made in exactly the same plant – so the application for an NOC should not be seen as a “submission” for the purposes of the Food and Drug Regulations [68]. Moreover, because of the linkage between those Regulations and the PM(NOC) Regulations, the meaning of “submission” in the PM(NOC) Regulations should be given a similar interpretation [64].
Lemieux J’s purposive analysis strikes me as sound. In this case, if Teva would be manufacturing in a different plant from GMP, then GSK would be clearly distinguishable, and indeed, it strongly implies that the submission would not be purely administrative in that case. From an NOC perspective, the argument is reinforced; particularly in the case of a formulation patent (such as the 059 patent) the plant in which the product is made might be very significant in a patentee’s decision whether to address an NOA, because the likelihood of infringement would be directly affected. On the other hand, if Teva would be purchasing its product in final form from GMP, the argument that the filing was administrative is much stronger. GSK would still be distinguishable, because of the comparison point discussed at the outset, but the question would be very different. The question would be whether the patentee would be entitled to decide whether to challenge a particular NOA based on its assessment of the business practices of the generic in question, rather than the technical aspects of the product.
It is not clear to me which scenario is at issue in Exemestane. The nature of the license between GMP and Teva is not spelled out, and are details of Teva’s ANDS are not provided, so it is not apparent whether it has a certification similar to that emphasized by Lemieux J in GSK. Nor is s 3.4.1 of the PM(NOC) Guidance Document clear, at least to me. It applies only when the licensee seeks to sell the “identical” drug, but that term is not defined in that Guidance document. The policy on Changes in Manufacturer’s Name and/or Product Name does specify that for the purposes of that policy, a drug is considered identical only when the conditions of manufacture and sale are identical, but it is not obvious to me that that definition is intended to apply across all technical guidance documents.
Gleason J also relied on Nu-Pharm 1 (1997), 73 CPR (3d) 510, [22], aff’d (1998), 80 CPR (3d) 74 (FCA) and Nu-Pharm 2 [1999] FCJ No 1825, aff’d (2000), 5 CPR (4th) 138, holding that these cases were not distinguishable. I don’t know if I agree. In the Nu-Pharm decisions Generic 1 had obtained an NOC using a patentee’s product as a reference product, and Generic 2 sought to avoid having to address the patents by using Generic 1's product as a reference product. The FCA held that Generic 2 could not avoid addressing the patents by this strategy. This has been legislatively affirmed by the reference to an “indirect” comparison in the current s 5(1).
Gleason J held that the Nu-Pharm decisions were not distinguishable because “In both Nu-Pharm cases the generic company, just like Teva, had acquired the right to produce the drug in question under a licence from another generic company” [141]. However, I could not find any reference to a licence in any of the Nu-Pharm decisions. (And I don’t really see what kind of proprietary interest Generic 1 might have had in the right to produce the drug, so it’s not clear to me why Generic 2 would have required a licence.) So it is not clear to me if the Nu-Pharm cases are distinguishable. If, in this case, Teva intends to purchase the final product from GMP, then it seems to me that the cases are distinguishable, because it appears that in the Nu-Pharm cases Generic 2 was going to manufacture the product itself. On the other hand, if Teva intends to manufacture at a different plant than GMP, then I agree with Gleason J the cases are not distinguishable. That this is the case is suggested by Gleason J saying that Teva acquired “the right to produce the drug in question” under licence from GMP, implying that Teva, not GMP will be the manufacturer. But as discussed above, the case as a whole is not clear on this point.
In conclusion, some facts that seem to me to be quite important are simply not clear to me, and consequently I cannot assess the merits of the decision. While the facts in question were no doubt clear to the parties and to Gleason J, for the sake of guidance for future applicants and litigants, I hope that on the inevitable appeal, the FCA will clarify these issues or explain why the questions I have discussed are not relevant.
Monday, January 12, 2015
Correctness Standard of Review for Minister's Interpretation of S 5 of the PM(NOC) Regulations
Pfizer Canada Inc v Canada (Attorney General) 2014 FC 1243 Gleason J
2,409,059 – exemestane – AROMASIN.
Under s 3.4.1 of the most recent (2012) Guidance Document: Patented Medicines (Notice of Compliance) Regulations, if one generic has received an NOC by comparing its product with a patentee's reference product, and a second generic obtains a licence from the first, the licensee is not required to comply with s 5 of the PM(NOC) Regulations, which is to say that the licensee need not serve an NOA on the patentee and need not address the patents listed against the drug [33]. Prior to April 2012, when the new Guidance document came into effect, a licensee would have been required to comply with s 5 [31]. Under the new policy Health Canada will require only an “administrative” drug submission, such as is used when a party that has received an NOC changes its name as a result of a corporate restructuring [28].This change in policy was made as a matter of Health Canada’s changed interpretation of the Regulations; there was no change to the Regulations themselves.
In this case, Pfizer successfully challenged that new policy (though an appeal will no doubt follow). Note that counsel for the Attorney General carried the argument in this case [51], so Health Canada evidently (and rightly) views this as a policy issue of general significance.
Generic Medical Partners Inc. [GMP] filed an ANDS with the Health Canada with respect to exemestane, using Pfizer’s exemestane product, AROMASIN, as the reference product [45]. In August 2013 GMP sent Pfizer an NOA with respect to the ‘059 Patent, which was listed by Pfizer against AROMASIN. Pfizer chose not to commence a prohibition application against GMP, apparently because GMP does not sell products in Canada [44]. The NOC was issued to GMP for exemestane in October [45]. On the same day, Health Canada also issued an NOC to Teva with respect to exemestane. This NOC was granted on the basis of an administrative ANDS filed by Teva, based on a licensing agreement with GMP. The NOC issued to Teva also shows AROMASIN as the Canadian Reference product [46]. Teva never served an NOA on Pfizer. Pfizer sought judicial review to set aside the NOC granted to Teva [1].
There were two main issues. The first was the standard of review applicable to the Minister’s interpretation of the PM(NOC) Regulations. I discuss that issue in this post. The second was the substantive interpretation of the relevant provisions. I will discuss that in tomorrow’s post.
There were three main issues relating to the standard of review: (1) whether prior case law of the Federal Courts applying a correctness standard to decisions of the Minister of Health under the PM(NOC) Regulations were still binding in light of recent SCC case law [58]; (2) whether it mattered that the decision-maker was the Minister as opposed to an administrative tribunal [59]; and third, whether the decision of the SCC in Canadian National Railway v Canada 2014 SCC 40 [CN] meant that a reasonableness standard is always applicable when an administrative decision-maker interprets its constituent statute or regulation, or a statute or regulation that is closely connected with its function, unless the decision falls into one of four exceptions which were not suggested to be relevant in this case [60].
On the first issue, Gleason J agreed with the Attorney General that pre-Dunsmuir 2008 SCC 9 case law of the FC and FCA [58] cannot be considered determinative, and that in light of Dunsmuir and subsequent SCC cases, the reasonableness standard is “presumptively” applicable whenever an administrative decision-maker interprets its constituent statute or a statute or regulation that is closely connected with its function [67].
While the conclusion that pre-Dunsmuir case law of the Federal Courts can no longer be determinative seems fair enough, I am puzzled by the fact that the SCC Biolyse 2005 SCC 26 decision was not discussed in this context. The question at issue in this Exemestane case was the Minister’s interpretation of “submission" for an NOC in s 5(1) of the Regulations [123]. The question at issue in Biolyse was the interpretation of the word “submission” in s 5(1.1) as it then was [Biolyse 40ff]. The changes to s 5 were aimed at addressing when a patentee's product is considered a reference product (when a comparison is made "directly or indirectly" in the current provision), and not what constitutes a "submission." That is, the question was the deference to be given to the Minister’s interpretation of the very same word, in functionally the same provision. This is the very next thing to being exactly the same question.
In Biolyse, the SCC held that “On the question of interpretation, the Minister's opinion is not entitled to deference. The Federal Court quite properly said that the standard of review on that point is correctness” [36]. The discussion was brief, but this is evidently because the SCC thought the point was clear, and in any event it was undoubtedly part of the ratio of the case. It is true that the FC’s 2002 FCT 1205 [20]-[29] assessment of the standard of review in Biolyse was based on the “ pragmatic or functional analysis” that is no longer the accepted approach. But my understanding is that Dunsmuir was intended to simplify the previous three-standard model (correctness, reasonableness and patent unreasonablness) that had proven too difficult to apply: “What is needed is a test that offers guidance, is not formalistic or artificial, and permits review where justice requires it, but not otherwise. A simpler test is needed” [Biolyse 43]. In particular, the crux of the difficulty was that "lower courts were struggling with the conceptual distinction between patent unreasonableness and reasonableness simpliciter" [40]. So, the problem is not that SCC itself was getting wrong answers, but that it was not providing sufficient guidance. I don't see this as saying that the highly contextual functional test which had been previously applied was wrong in principle, just that it was too difficult to apply. None of this calls into question the specific results of the contextual, functional analysis, properly applied.
Given the difficulty of applying the previous test, we might well doubt whether it was properly applied by lower courts, but I don’t see why Dunsmuir should call into question the outcome of the functional analysis when the previous test was applied by the SCC itself. In this case, the SCC Biolyse decision was discussed at length in other parts of Gleason J’s decision, but not at all in the context of the standard of review, presumably because it was not argued. It seems that the parties must have thought it so clear that Biolyse was implicitly overruled that it was not worth even discussing the specific SCC holding in Biolyse. This is quite remarkable. Biolyse itself was not discussed in Dunsmuir, so if it is no longer good law on this point, it can only be because Dunsmuir implicitly over-ruled all prior SCC decisions, not just on the general approach, but on the specific holding of all those cases on their facts. This seems to me to be far-fetched, given that the SCC built its new approach by a synthesis of the strengths of its prior case law (see eg [54]). Moreover, all of the members of majority in Dunsmuir, except Bastarache J, were also members of the majority in Biolyse that held the standard of review to clearly be correctness. Could they really have changed their minds so dramatically about judicial review in the intervening three years as to want to repudiate their own specific holdings?
I am not an administrative law expert, so I may well be missing something glaring. But it certainly looks to me like the SCC itself has already held that the appropriate standard of review for the Minister's interpretation of the word "submission" in s 5 of the PM(NOC) Regulations is correctness, and this holding is still good law.
Moving on, Gleason J also agreed with the Attorney General that the fact that the Minister was the decision-maker does not in itself alter that presumption [84], given that FCA case law was split on this point [80].
However, Gleason J rejected the view that CN implies that the presumption of a reasonableness standard can only be rebutted in the four enumerated exceptions [88]. After an extensive review of the SCC authorities, Gleason J held that while the SCC case law as a whole does establish a presumption that the standard is reasonableness, the SCC authority requires a contextual analysis as to whether the presumption has been rebutted [98]. The four exceptions in which a correctness standard applies are only four cases where it has been settled, by a contextual analysis, that the presumption of a reasonableness standard has been rebutted; they do not constitute an exhaustive taxonomy of the only times the reasonableness standard can possibly be rebutted.
Again, I am not an administrative law expert, but Gleason J’s analysis appears to me to be sound in light of the many cases she cites. Moreover, it seems to me that the four exceptions cannot be exhaustive. For example, if the relevant statute explicitly provided that the administrative decision-maker was not entitled to deference, then a correctness standard would necessarily apply, even though that situation is not one of the four enumerated exceptions. (The closest is the existence or absence of a privative clause, which is a contextual factor, not an enumerated exception.) The discussion of the standard of review in CN is quite brief – only eight paragraphs ([55] - [62]) – and it strikes me as nothing but an application of the established framework of analysis, resulting in a finding of a reasonableness standard on the facts of the particular case. I think Gleason J is right to say that “[i]t would take a much more deliberate treatment of the issue by the Supreme Court than that which is contained in CN” to effect a change in the approach endorsed by the SCC [98].
The question then was whether, on a contextual analysis, the presumption of a reasonableness standard should be considered to be rebutted in this case. Gleason J held that it was rebutted. One key point was that the Minister has no discretion as to when to issue an NOC [114], and indeed,
This latter point in particular strikes me as compelling. A purposive analysis plays an important role in the modern approach to statutory interpretation. The purpose of the provision must be considered, but it must be considered in light of the purpose of the legislation as a whole. That is particularly true in the case of the PM(NOC) Regulations, where both the case law and the RIAS accompanying the 2006 amendments make it clear that the PM(NOC) Regulations are intended to strike a balance between the goals of promoting timely entry of generics, and providing effective patent enforcement: [16], [134], Biolyse [2]. The Minister of Health has no particular expertise in the construction of the PM(NOC) Regulations as a whole. The various provisions have been heavily litigated before the courts, and often the Minister, though a party to the proceeding, does not participate. This is true even of cases which raise issues of the interpretation of the Regulations. So, for example, the Minister has no view as to whether the allegations in the NOA must be correct as of the date of the hearing or as of the date the NOA was served: 2009 FC 648 [7]. Indeed, some of the provisions will never be interpreted by the Minister, even nominally, because they are only applicable in an action between the generic and the patentee (eg the s 8 remedial provisions). Because the Federal Courts are called on to interpret and apply all aspects of the Regulations, they have a better understanding of the balance sought by the Regulations as a whole. When the legislative history insists that the Regulations must be understood as a whole, it seems to me very unlikely that when the legislature would have intended to give deference to an interpretation by the Minister, who actively engages with only a part of those Regulations.
Finally, on a personal note, Dunsmuir was the clerk of the court in Fredericton, New Brunswick (the full name of the case is Dunsmuir v New Brunswick), and my wife and I were married in 2004 at the Fredericton City Hall, by David Dunsmuir, about a year before he was removed from office. He did a brief Elvis impersonation, which my wife particularly enjoyed, but so far as I know he performed competently, and we are validly married.
2,409,059 – exemestane – AROMASIN.
Under s 3.4.1 of the most recent (2012) Guidance Document: Patented Medicines (Notice of Compliance) Regulations, if one generic has received an NOC by comparing its product with a patentee's reference product, and a second generic obtains a licence from the first, the licensee is not required to comply with s 5 of the PM(NOC) Regulations, which is to say that the licensee need not serve an NOA on the patentee and need not address the patents listed against the drug [33]. Prior to April 2012, when the new Guidance document came into effect, a licensee would have been required to comply with s 5 [31]. Under the new policy Health Canada will require only an “administrative” drug submission, such as is used when a party that has received an NOC changes its name as a result of a corporate restructuring [28].This change in policy was made as a matter of Health Canada’s changed interpretation of the Regulations; there was no change to the Regulations themselves.
In this case, Pfizer successfully challenged that new policy (though an appeal will no doubt follow). Note that counsel for the Attorney General carried the argument in this case [51], so Health Canada evidently (and rightly) views this as a policy issue of general significance.
Generic Medical Partners Inc. [GMP] filed an ANDS with the Health Canada with respect to exemestane, using Pfizer’s exemestane product, AROMASIN, as the reference product [45]. In August 2013 GMP sent Pfizer an NOA with respect to the ‘059 Patent, which was listed by Pfizer against AROMASIN. Pfizer chose not to commence a prohibition application against GMP, apparently because GMP does not sell products in Canada [44]. The NOC was issued to GMP for exemestane in October [45]. On the same day, Health Canada also issued an NOC to Teva with respect to exemestane. This NOC was granted on the basis of an administrative ANDS filed by Teva, based on a licensing agreement with GMP. The NOC issued to Teva also shows AROMASIN as the Canadian Reference product [46]. Teva never served an NOA on Pfizer. Pfizer sought judicial review to set aside the NOC granted to Teva [1].
There were two main issues. The first was the standard of review applicable to the Minister’s interpretation of the PM(NOC) Regulations. I discuss that issue in this post. The second was the substantive interpretation of the relevant provisions. I will discuss that in tomorrow’s post.
There were three main issues relating to the standard of review: (1) whether prior case law of the Federal Courts applying a correctness standard to decisions of the Minister of Health under the PM(NOC) Regulations were still binding in light of recent SCC case law [58]; (2) whether it mattered that the decision-maker was the Minister as opposed to an administrative tribunal [59]; and third, whether the decision of the SCC in Canadian National Railway v Canada 2014 SCC 40 [CN] meant that a reasonableness standard is always applicable when an administrative decision-maker interprets its constituent statute or regulation, or a statute or regulation that is closely connected with its function, unless the decision falls into one of four exceptions which were not suggested to be relevant in this case [60].
On the first issue, Gleason J agreed with the Attorney General that pre-Dunsmuir 2008 SCC 9 case law of the FC and FCA [58] cannot be considered determinative, and that in light of Dunsmuir and subsequent SCC cases, the reasonableness standard is “presumptively” applicable whenever an administrative decision-maker interprets its constituent statute or a statute or regulation that is closely connected with its function [67].
While the conclusion that pre-Dunsmuir case law of the Federal Courts can no longer be determinative seems fair enough, I am puzzled by the fact that the SCC Biolyse 2005 SCC 26 decision was not discussed in this context. The question at issue in this Exemestane case was the Minister’s interpretation of “submission" for an NOC in s 5(1) of the Regulations [123]. The question at issue in Biolyse was the interpretation of the word “submission” in s 5(1.1) as it then was [Biolyse 40ff]. The changes to s 5 were aimed at addressing when a patentee's product is considered a reference product (when a comparison is made "directly or indirectly" in the current provision), and not what constitutes a "submission." That is, the question was the deference to be given to the Minister’s interpretation of the very same word, in functionally the same provision. This is the very next thing to being exactly the same question.
In Biolyse, the SCC held that “On the question of interpretation, the Minister's opinion is not entitled to deference. The Federal Court quite properly said that the standard of review on that point is correctness” [36]. The discussion was brief, but this is evidently because the SCC thought the point was clear, and in any event it was undoubtedly part of the ratio of the case. It is true that the FC’s 2002 FCT 1205 [20]-[29] assessment of the standard of review in Biolyse was based on the “ pragmatic or functional analysis” that is no longer the accepted approach. But my understanding is that Dunsmuir was intended to simplify the previous three-standard model (correctness, reasonableness and patent unreasonablness) that had proven too difficult to apply: “What is needed is a test that offers guidance, is not formalistic or artificial, and permits review where justice requires it, but not otherwise. A simpler test is needed” [Biolyse 43]. In particular, the crux of the difficulty was that "lower courts were struggling with the conceptual distinction between patent unreasonableness and reasonableness simpliciter" [40]. So, the problem is not that SCC itself was getting wrong answers, but that it was not providing sufficient guidance. I don't see this as saying that the highly contextual functional test which had been previously applied was wrong in principle, just that it was too difficult to apply. None of this calls into question the specific results of the contextual, functional analysis, properly applied.
Given the difficulty of applying the previous test, we might well doubt whether it was properly applied by lower courts, but I don’t see why Dunsmuir should call into question the outcome of the functional analysis when the previous test was applied by the SCC itself. In this case, the SCC Biolyse decision was discussed at length in other parts of Gleason J’s decision, but not at all in the context of the standard of review, presumably because it was not argued. It seems that the parties must have thought it so clear that Biolyse was implicitly overruled that it was not worth even discussing the specific SCC holding in Biolyse. This is quite remarkable. Biolyse itself was not discussed in Dunsmuir, so if it is no longer good law on this point, it can only be because Dunsmuir implicitly over-ruled all prior SCC decisions, not just on the general approach, but on the specific holding of all those cases on their facts. This seems to me to be far-fetched, given that the SCC built its new approach by a synthesis of the strengths of its prior case law (see eg [54]). Moreover, all of the members of majority in Dunsmuir, except Bastarache J, were also members of the majority in Biolyse that held the standard of review to clearly be correctness. Could they really have changed their minds so dramatically about judicial review in the intervening three years as to want to repudiate their own specific holdings?
I am not an administrative law expert, so I may well be missing something glaring. But it certainly looks to me like the SCC itself has already held that the appropriate standard of review for the Minister's interpretation of the word "submission" in s 5 of the PM(NOC) Regulations is correctness, and this holding is still good law.
Moving on, Gleason J also agreed with the Attorney General that the fact that the Minister was the decision-maker does not in itself alter that presumption [84], given that FCA case law was split on this point [80].
However, Gleason J rejected the view that CN implies that the presumption of a reasonableness standard can only be rebutted in the four enumerated exceptions [88]. After an extensive review of the SCC authorities, Gleason J held that while the SCC case law as a whole does establish a presumption that the standard is reasonableness, the SCC authority requires a contextual analysis as to whether the presumption has been rebutted [98]. The four exceptions in which a correctness standard applies are only four cases where it has been settled, by a contextual analysis, that the presumption of a reasonableness standard has been rebutted; they do not constitute an exhaustive taxonomy of the only times the reasonableness standard can possibly be rebutted.
Again, I am not an administrative law expert, but Gleason J’s analysis appears to me to be sound in light of the many cases she cites. Moreover, it seems to me that the four exceptions cannot be exhaustive. For example, if the relevant statute explicitly provided that the administrative decision-maker was not entitled to deference, then a correctness standard would necessarily apply, even though that situation is not one of the four enumerated exceptions. (The closest is the existence or absence of a privative clause, which is a contextual factor, not an enumerated exception.) The discussion of the standard of review in CN is quite brief – only eight paragraphs ([55] - [62]) – and it strikes me as nothing but an application of the established framework of analysis, resulting in a finding of a reasonableness standard on the facts of the particular case. I think Gleason J is right to say that “[i]t would take a much more deliberate treatment of the issue by the Supreme Court than that which is contained in CN” to effect a change in the approach endorsed by the SCC [98].
The question then was whether, on a contextual analysis, the presumption of a reasonableness standard should be considered to be rebutted in this case. Gleason J held that it was rebutted. One key point was that the Minister has no discretion as to when to issue an NOC [114], and indeed,
the Governor in Council left the ultimate determination of whether an NOC should be
issued under the PMNOC Regulations to this Court as it is the Court that is required to
rule on prohibition applications made by innovator companies who wish to forestall the
issuance of an NOC to a generic company through an ANDS. The role assigned to this
Court under the PMNOC Regulations is inconsistent with application of the
reasonableness standard to interpretations of the Minister or officials at Health Canada of
the Regulations. [115]
This latter point in particular strikes me as compelling. A purposive analysis plays an important role in the modern approach to statutory interpretation. The purpose of the provision must be considered, but it must be considered in light of the purpose of the legislation as a whole. That is particularly true in the case of the PM(NOC) Regulations, where both the case law and the RIAS accompanying the 2006 amendments make it clear that the PM(NOC) Regulations are intended to strike a balance between the goals of promoting timely entry of generics, and providing effective patent enforcement: [16], [134], Biolyse [2]. The Minister of Health has no particular expertise in the construction of the PM(NOC) Regulations as a whole. The various provisions have been heavily litigated before the courts, and often the Minister, though a party to the proceeding, does not participate. This is true even of cases which raise issues of the interpretation of the Regulations. So, for example, the Minister has no view as to whether the allegations in the NOA must be correct as of the date of the hearing or as of the date the NOA was served: 2009 FC 648 [7]. Indeed, some of the provisions will never be interpreted by the Minister, even nominally, because they are only applicable in an action between the generic and the patentee (eg the s 8 remedial provisions). Because the Federal Courts are called on to interpret and apply all aspects of the Regulations, they have a better understanding of the balance sought by the Regulations as a whole. When the legislative history insists that the Regulations must be understood as a whole, it seems to me very unlikely that when the legislature would have intended to give deference to an interpretation by the Minister, who actively engages with only a part of those Regulations.
Finally, on a personal note, Dunsmuir was the clerk of the court in Fredericton, New Brunswick (the full name of the case is Dunsmuir v New Brunswick), and my wife and I were married in 2004 at the Fredericton City Hall, by David Dunsmuir, about a year before he was removed from office. He did a brief Elvis impersonation, which my wife particularly enjoyed, but so far as I know he performed competently, and we are validly married.
Wednesday, December 31, 2014
No Discretion to Extend Time Limits for Reinstatement of Abandoned Applications
Cloutier c Thibault 2014 CF 1135 St-Louis J
2,437,612, 2,470,139, 2,553,144
Mr Cloutier invented a new type of crimping tool for use in plumbing. He entered into a partnership with Mr Thibault to patent the invention and commercialize it [5]. Mr Thibault filed three patent applications for the invention without informing Mr Cloutier, and naming himself rather than Mr Cloutier as the inventor [6], [9]. Mr Cloutier successfully moved to have the partnership dissolved and to establish his entitlement to the inventions [11], but during and shortly after that litigation the applications were abandoned for failure to pay maintenance fees, in accordance with s 27.1 and 73 of the Act [12]. No application for reinstatement was made within the 12 month grace period provided by s 98 of the Rules.
In this case, Mr Cloutier asked the court to reinstate the application, and to name him as the inventor. St-Louis J refused, on the ground that the court has no jurisdiction in law or equity to extend the mandatory time limits established by the Act [23-24]. That proposition is well-established by the authorities cited by St-Louis J: see in particular Hoffmann-La Roche AG v Canada (Commissioner of Patents), 2003 FC 1381 [41-45] aff’d 2005 FCA 399 [7-8].
Given the mandatory nature of the time limits, this conclusion would evidently follow regardless of whether Mr Cloutier would have been in a position to seek relief in a timely manner, but the court noted that the evidence suggested that Mr Cloutier could have taken steps before the applications were irrevocably abandoned [25].
The court also refused to order the application amended to show Mr Cloutier as the inventor, as this would have been pointless given the refusal to reinstate the application [27].
2,437,612, 2,470,139, 2,553,144
Mr Cloutier invented a new type of crimping tool for use in plumbing. He entered into a partnership with Mr Thibault to patent the invention and commercialize it [5]. Mr Thibault filed three patent applications for the invention without informing Mr Cloutier, and naming himself rather than Mr Cloutier as the inventor [6], [9]. Mr Cloutier successfully moved to have the partnership dissolved and to establish his entitlement to the inventions [11], but during and shortly after that litigation the applications were abandoned for failure to pay maintenance fees, in accordance with s 27.1 and 73 of the Act [12]. No application for reinstatement was made within the 12 month grace period provided by s 98 of the Rules.
In this case, Mr Cloutier asked the court to reinstate the application, and to name him as the inventor. St-Louis J refused, on the ground that the court has no jurisdiction in law or equity to extend the mandatory time limits established by the Act [23-24]. That proposition is well-established by the authorities cited by St-Louis J: see in particular Hoffmann-La Roche AG v Canada (Commissioner of Patents), 2003 FC 1381 [41-45] aff’d 2005 FCA 399 [7-8].
Given the mandatory nature of the time limits, this conclusion would evidently follow regardless of whether Mr Cloutier would have been in a position to seek relief in a timely manner, but the court noted that the evidence suggested that Mr Cloutier could have taken steps before the applications were irrevocably abandoned [25].
The court also refused to order the application amended to show Mr Cloutier as the inventor, as this would have been pointless given the refusal to reinstate the application [27].
Friday, December 26, 2014
No New Cases for the Week of 22 December
No new patent / NOC / data protection cases were released for the week of 22 December 2014.
Sunday, December 21, 2014
Liability Decision is Res Judicata in a Bifurcated Action
Merck & Co Inc v Apotex Inc 2014 FC 1058 Hughes J var’g 2014 FC 883 Lafrenière J
1,275,350 – lisinopril – PRINIVIL
This motion to amend relates to the upcoming damages portion of a bifurcated action. In the underlying Liability decision, 2006 FC 524 aff’d 2006 FCA 323, the patent was held invalid and infringed, in part on the basis of the law set out in Boehringer (1962), 39 CPR 201. Subsequently, in its Viagra decision 2012 SCC 60 [57], the SCC reversed, or at least reinterpreted Boehringer on the relevant issue. In this motion Apotex argued that the law having changed, it should be able to amend its Statement of Issues to argue, in effect, that it should not be made to pay damages for infringement of an invalid patent. In the decision under appeal, Lafrenière J held that the amendment would not be allowed, on the basis of res judicata. In a brief decision, Hughes J has affirmed, largely adopting Lafrenière J’s reasoning [7]. My post on Lafrenière J’s decision discusses the issues in more detail. I noted that while Lafrenière J’s reasoning was strong, I was not convinced that the prior Canadian case law was entirely settled. In adopting Lafrenière J’s reasons, Hughes J’s decision clarifies Canadian law on this point.
In a point which I did not discuss in my previous post, Apotex had also sought an amendment alleging that Merck had breached provisions of the Competition Act. That amendment had also been refused by Lafrenière J. Hughes J allowed these amendments in light of certain concessions made by Apotex regarding their scope [14]-[15].
1,275,350 – lisinopril – PRINIVIL
This motion to amend relates to the upcoming damages portion of a bifurcated action. In the underlying Liability decision, 2006 FC 524 aff’d 2006 FCA 323, the patent was held invalid and infringed, in part on the basis of the law set out in Boehringer (1962), 39 CPR 201. Subsequently, in its Viagra decision 2012 SCC 60 [57], the SCC reversed, or at least reinterpreted Boehringer on the relevant issue. In this motion Apotex argued that the law having changed, it should be able to amend its Statement of Issues to argue, in effect, that it should not be made to pay damages for infringement of an invalid patent. In the decision under appeal, Lafrenière J held that the amendment would not be allowed, on the basis of res judicata. In a brief decision, Hughes J has affirmed, largely adopting Lafrenière J’s reasoning [7]. My post on Lafrenière J’s decision discusses the issues in more detail. I noted that while Lafrenière J’s reasoning was strong, I was not convinced that the prior Canadian case law was entirely settled. In adopting Lafrenière J’s reasons, Hughes J’s decision clarifies Canadian law on this point.
In a point which I did not discuss in my previous post, Apotex had also sought an amendment alleging that Merck had breached provisions of the Competition Act. That amendment had also been refused by Lafrenière J. Hughes J allowed these amendments in light of certain concessions made by Apotex regarding their scope [14]-[15].
Sunday, December 14, 2014
No New Cases for the Week of 8 December
No new patent / NOC / data protection cases were released for the week of 8 December 2014.
Monday, December 8, 2014
No New Cases for the Week of 1 December
No new patent / NOC / data protection cases were released for the week of 1 December 2014.
Tuesday, November 25, 2014
A New Framework for Determining Reasonable Royalty Damages in Patent Litigation
Following a jury trial in 2012, a US federal district court entered judgment in the amount of $1
billion in favor of Monsanto in a patent infringement dispute against DuPont. The strange thing
about this case is that DuPont had not sold any infringing product at all; yes, you are reading
correctly – $1 billion in royalties on zero sales. The $1 billion damages award reflected the jury’s
best estimate of the lump-sum royalties that would have been agreed to in a hypothetical
negotiation taking place just before the infringement began, in which the parties would only have
had information available to the parties at that time (“ex ante information”) That DuPont
ultimately did not actually sell any infringing product was ignored as being information that
would not have been available to the parties at the time of the negotiation (“ex post
information”).
Professor Tom Cotter and I have just posted a draft paper on SSRN, "A New Framework for Determining Reasonable Royalty Damages in Patent Litigation," arguing that this result is wrong. More generally, we argue that the hypothetical negotiation used for assessing a reasonable royalty should be assumed to take place at the time of first infringement (or, more precisely, first reliance), but the parties should be assumed to have available to them all the information that was available at trial. We call this the “contingent ex ante” approach; the hypothetical negotiation takes place ex ante, but it is contingent on all information available ex post. We apply our analysis to a variety of contexts, including standard essential patents; unexpected exogenous events (the market value of the invention changes because of unforeseen factors); separate and distinct infringements (when should damages be assessed on the basis of two distinct hypothetical negotiations, rather than one); regulatory uncertainty (when the patented invention received regulatory approach after the time of the first infringement); non-infringing alternatives (when a patent covering an NIA is held to be invalid after the time of the first infringement, but prior to trial), as well as in the context of lump-sum versus running royalties (which raises considerations of risk-shifting, strategic considerations in licensing and the time value of money).
While our discussion focuses entirely on US law, in my view the principles we discuss are equally applicable to Canadian law. Indeed, I suggest the argument is even stronger in Canadian law, for two reasons.
First, our basic argument is that using all available information, including ex post information, better serves the purpose of the Patent Act, which is to provide an incentive to develop inventions for the benefit of the public. Using ex post information allows more accurate determination of the true value of the invention, and so better aligns the patent incentive with the purpose of the Act. While patent damages are often analogized to a species of tort, they are ultimately statutory, and under the modern Canadian approach to statutory interpretation, the statutory provisions should be interpreted in a manner that it consistent with the purpose of the Act. (This makes our argument stronger than in the US, which has not yet fully embraced a purposive approach to statutory interpretation.)
Secondly, our argument is fully consistent with the Canadian approach to tort damages. In Athey v Leonati [1996] 3 SCR 458, the SCC said “past events must be proven, and once proven they are treated as certainties” [28]. This refers to all event prior to trial: “In this case, the disc herniation occurred prior to trial. It was a past event, which cannot be addressed in terms of probabilities” [30]. Most obviously, special damages are assessed on the basis of reasonable expenses that were actually incurred prior to trial, not what expenses the parties might have anticipated would be incurred. The fact that the plaintiff had not in fact suffered any harm as a result of a tort, perhaps because of a miraculously quick recovery, or that she had suffered unusually severe harm (the thin-skull rule), would certainly be considered in a Canadian tort case; we argue that in a case like Monsanto v DuPont, the fact that the infringer had not in fact made any sales should also be taken into account, for essentially the same reasons.
Here is the abstract:
The paper is available at SSRN. It is a draft, so comments are welcome.
Professor Tom Cotter and I have just posted a draft paper on SSRN, "A New Framework for Determining Reasonable Royalty Damages in Patent Litigation," arguing that this result is wrong. More generally, we argue that the hypothetical negotiation used for assessing a reasonable royalty should be assumed to take place at the time of first infringement (or, more precisely, first reliance), but the parties should be assumed to have available to them all the information that was available at trial. We call this the “contingent ex ante” approach; the hypothetical negotiation takes place ex ante, but it is contingent on all information available ex post. We apply our analysis to a variety of contexts, including standard essential patents; unexpected exogenous events (the market value of the invention changes because of unforeseen factors); separate and distinct infringements (when should damages be assessed on the basis of two distinct hypothetical negotiations, rather than one); regulatory uncertainty (when the patented invention received regulatory approach after the time of the first infringement); non-infringing alternatives (when a patent covering an NIA is held to be invalid after the time of the first infringement, but prior to trial), as well as in the context of lump-sum versus running royalties (which raises considerations of risk-shifting, strategic considerations in licensing and the time value of money).
While our discussion focuses entirely on US law, in my view the principles we discuss are equally applicable to Canadian law. Indeed, I suggest the argument is even stronger in Canadian law, for two reasons.
First, our basic argument is that using all available information, including ex post information, better serves the purpose of the Patent Act, which is to provide an incentive to develop inventions for the benefit of the public. Using ex post information allows more accurate determination of the true value of the invention, and so better aligns the patent incentive with the purpose of the Act. While patent damages are often analogized to a species of tort, they are ultimately statutory, and under the modern Canadian approach to statutory interpretation, the statutory provisions should be interpreted in a manner that it consistent with the purpose of the Act. (This makes our argument stronger than in the US, which has not yet fully embraced a purposive approach to statutory interpretation.)
Secondly, our argument is fully consistent with the Canadian approach to tort damages. In Athey v Leonati [1996] 3 SCR 458, the SCC said “past events must be proven, and once proven they are treated as certainties” [28]. This refers to all event prior to trial: “In this case, the disc herniation occurred prior to trial. It was a past event, which cannot be addressed in terms of probabilities” [30]. Most obviously, special damages are assessed on the basis of reasonable expenses that were actually incurred prior to trial, not what expenses the parties might have anticipated would be incurred. The fact that the plaintiff had not in fact suffered any harm as a result of a tort, perhaps because of a miraculously quick recovery, or that she had suffered unusually severe harm (the thin-skull rule), would certainly be considered in a Canadian tort case; we argue that in a case like Monsanto v DuPont, the fact that the infringer had not in fact made any sales should also be taken into account, for essentially the same reasons.
Here is the abstract:
Conventional analysis often assumes that there are only two theoretical options for
calculating a reasonable royalty in patent disputes: a "pure ex ante" approach, under
which a court reconstructs the hypothetical bargain the parties would have struck prior to
infringement, based on the information available to them at that time; and a "pure ex
post" approach, under which the court considers the bargain the parties might have
reached as of some later date such as the date of judgment. The first approach avoids
patent holdup - basing the royalty partly on the infringer's ex post switching costs - but
cannot easily explain other longstanding features of how royalties are calculated, and can
lead to awards that reflect the parties' erroneous ex ante expectations. By contrast, the
pure ex post approach uses more accurate information about the invention's actual value,
but it also enables the patentee to capture some of the patent's ex post holdup value. In
this Article, we show that a "contingent ex ante" framework, under which the court
reconstructs the bargain the parties would have reached ex ante, based on all relevant
information that is available ex post, is superior to both of the conventional approaches.
More specifically, our framework enables courts to base the royalty on the most accurate
information available of patent value while avoiding the holdup risk arising from the pure
ex post approach. We analyze how courts can apply our approach in various settings,
including cases involving SEPs, sequential infringement, regulatory uncertainty, and
unexpected exogenous events.
The paper is available at SSRN. It is a draft, so comments are welcome.
Monday, November 24, 2014
“The reasonable person thinks in terms of economics, not principle"
Apotex Inc v Canada 2014 FC 1087 Hughes J
Trazodone
This decision emerged from a test case in which Apotex and Health Canada battled over the question of whether a generic could apply for an NOC on the basis of a foreign reference product. The case settled on terms favourable to Apotex, but HPB did not live up to the settlement agreement. In this decision Hughes J held Canada liable for breaching that agreement (though because of quirks in the pleadings, the formal ground of liability was in tort rather than contract). In an interesting part of the decision, Hughes J held that Apotex was subject to a duty to mitigate, which would essentially have required it to abandon its test case and leave the question of legal principle unanswered. Hughes J held that the duty to mitigate was nonetheless applicable, because “the reasonable person thinks in terms of economics, not principle” [159].
In the late 1980s, the attitude of what was then the Health Protection Branch (HPB) of Health Canada towards the use of a foreign drug product as the reference product in a generic’s application for an NOC was uncertain. It was the usual practice to use a product approved in Canada as a reference product, but occasionally an NOC would be granted on the basis of a foreign reference product. Apotex wanted a test case to establish whether it was entitled to use a foreign reference product [105]. It picked trazodone, and in January 1988 Apotex filed a New Drug Submission comparing its Apo-Trazad product to the innovator’s US product. On the particular facts, the use of a foreign reference product was scientifically sound, but HPB was concerned that allowing the use of a foreign reference product might set a precedent for circumstances in which the comparison was not appropriate [39]. Consequently, HPB “insisted on a Canadian standard, unless the United States reference product could be ‘conclusively proven to be identical’ to the Canadian product” [44]. The requirement of identicality made it effectively impossible to use a foreign reference product [44]. In other words, both Apotex and HPB were treating this as a test case. In light of this impasse, in 1990 Apotex sought judicial review of the Minister’s position. That litigation was settled on terms favourable to Apotex by a Settlement Agreement in November of 1990 in which HPB agreed to assess the application on the basis of “equivalency” rather than identicality [51].
Trazodone
This decision emerged from a test case in which Apotex and Health Canada battled over the question of whether a generic could apply for an NOC on the basis of a foreign reference product. The case settled on terms favourable to Apotex, but HPB did not live up to the settlement agreement. In this decision Hughes J held Canada liable for breaching that agreement (though because of quirks in the pleadings, the formal ground of liability was in tort rather than contract). In an interesting part of the decision, Hughes J held that Apotex was subject to a duty to mitigate, which would essentially have required it to abandon its test case and leave the question of legal principle unanswered. Hughes J held that the duty to mitigate was nonetheless applicable, because “the reasonable person thinks in terms of economics, not principle” [159].
In the late 1980s, the attitude of what was then the Health Protection Branch (HPB) of Health Canada towards the use of a foreign drug product as the reference product in a generic’s application for an NOC was uncertain. It was the usual practice to use a product approved in Canada as a reference product, but occasionally an NOC would be granted on the basis of a foreign reference product. Apotex wanted a test case to establish whether it was entitled to use a foreign reference product [105]. It picked trazodone, and in January 1988 Apotex filed a New Drug Submission comparing its Apo-Trazad product to the innovator’s US product. On the particular facts, the use of a foreign reference product was scientifically sound, but HPB was concerned that allowing the use of a foreign reference product might set a precedent for circumstances in which the comparison was not appropriate [39]. Consequently, HPB “insisted on a Canadian standard, unless the United States reference product could be ‘conclusively proven to be identical’ to the Canadian product” [44]. The requirement of identicality made it effectively impossible to use a foreign reference product [44]. In other words, both Apotex and HPB were treating this as a test case. In light of this impasse, in 1990 Apotex sought judicial review of the Minister’s position. That litigation was settled on terms favourable to Apotex by a Settlement Agreement in November of 1990 in which HPB agreed to assess the application on the basis of “equivalency” rather than identicality [51].
Friday, November 14, 2014
No New Cases for the Week of 10 November
No new patent / NOC / data protection cases were released for the week of 10 November 2014.
Tuesday, November 4, 2014
It Is Not Necessarily an Abuse of Process for an Innovator to Switch Positions Across NOC Proceedings
Apotex Inc v Pfizer Canada Inc and G.D. Searle & Co / celecoxib (NOC) 2014 FCA 250 Noël
CJ: Trudel, Boivin JJA aff’g ) 2014 FC 38 and NOC) 2014 FC 314 Harrington J
2,177,576 / celecoxib / CELEBREX
The decisions under appeal, Mylan / celecoxib (NOC) 2014 FC 38 and Apotex / celecoxib (NOC) 2014 FC 314 (blogged here and here, respectively), turned primarily on the construction of the promised utility of the ‘576 patent. In both cases Harrington J interpreted the promise of the patent modestly and granted an order of prohibition to Pfizer. In a decision which is primarily an application of Plavix FCA 2013 FCA 186 (blogged here), the FCA has now affirmed both of Harrington J’s decisions. (While Harrington J’s decisions were separate, the reasoning was common, and the appeals were heard together [3].) While the FCA decision elaborates on some points relating to the promise of the patent, it is perhaps more noteworthy in its treatment of abuse of process, particularly the holding that it is not necessarily an abuse of process for an innovator to switch positions across NOC proceedings.
2,177,576 / celecoxib / CELEBREX
The decisions under appeal, Mylan / celecoxib (NOC) 2014 FC 38 and Apotex / celecoxib (NOC) 2014 FC 314 (blogged here and here, respectively), turned primarily on the construction of the promised utility of the ‘576 patent. In both cases Harrington J interpreted the promise of the patent modestly and granted an order of prohibition to Pfizer. In a decision which is primarily an application of Plavix FCA 2013 FCA 186 (blogged here), the FCA has now affirmed both of Harrington J’s decisions. (While Harrington J’s decisions were separate, the reasoning was common, and the appeals were heard together [3].) While the FCA decision elaborates on some points relating to the promise of the patent, it is perhaps more noteworthy in its treatment of abuse of process, particularly the holding that it is not necessarily an abuse of process for an innovator to switch positions across NOC proceedings.
Monday, November 3, 2014
Ex Turpi Causa Not Relevant to Patent Litigation
Les Laboratoires Servier & Anor v Apotex Inc & Ors [2014] UKSC 55 aff’g [2012] EWCA Civ
593 (IPKat) rev’g [2011] EWHC 730 (Pat) (here and IPKat)
perindopril; Ex turpi causa
Patent protection is national, but trade and innovation incentives are international. This case begins to address that tension. The UKSC held that ex turpi causa is not applicable in the patent context, and so will not affect litigation where goods sold in one country were infringing in another country. Instead of using the blunt hammer of ex turpi causa, the tension should be resolved with the finer sword of damages. The result is to make Canadian damages law more relevant to foreign disputes; the damages portion of the bifurcated Canadian Perindopril, 2008 FC 825 aff’d 2009 FCA 222 litigation, in particular, has taken on added significance.
In 2006 Servier commenced an action in the UK against Apotex for infringement of its European patent for a crystalline form of perindopril. Servier obtained an interlocutory injunction, subject to the usual undertaking in damages. Servier's action was ultimately dismissed, as the patent was declared invalid, and Apotex sought damages on the undertaking for the loss of UK sales. However, the perindopril which Apotex would have sold in the UK would have been manufactured by Apotex in Canada, and Servier also held a Canadian patent for the compound perindopril itself. In proceedings paralleling the UK litigation, Servier sued Apotex in Canada for infringement of the Canadian compound patent. An interlocutory injunction was denied, but Servier was ultimately successful. Thus it became clear that manufacture in Canada of the product which Apotex would have sold in the UK but for the interlocutory injunction, would have infringed the Canadian patent. In the UK proceedings on the undertaking, Apotex conceded that the award on the undertaking should be reduced by an amount equal to the liability that Apotex would (hypothetically) have faced under Canadian law for manufacturing the perindopril which it would (hypothetically) have sold in the UK had the interlocutory injunction not been in place [EWCA 22]. Servier, on the other hand, argued that Apotex should be entirely precluded from collecting on the undertaking because the Canadian infringement constituted sufficient "turpitude" to engage the doctrine of ex turpi causa. (This summarizes a somewhat complex procedural history, described in more detail at [2]-[8]; and see also my IPKat post on the EWCA decision.)
perindopril; Ex turpi causa
Patent protection is national, but trade and innovation incentives are international. This case begins to address that tension. The UKSC held that ex turpi causa is not applicable in the patent context, and so will not affect litigation where goods sold in one country were infringing in another country. Instead of using the blunt hammer of ex turpi causa, the tension should be resolved with the finer sword of damages. The result is to make Canadian damages law more relevant to foreign disputes; the damages portion of the bifurcated Canadian Perindopril, 2008 FC 825 aff’d 2009 FCA 222 litigation, in particular, has taken on added significance.
In 2006 Servier commenced an action in the UK against Apotex for infringement of its European patent for a crystalline form of perindopril. Servier obtained an interlocutory injunction, subject to the usual undertaking in damages. Servier's action was ultimately dismissed, as the patent was declared invalid, and Apotex sought damages on the undertaking for the loss of UK sales. However, the perindopril which Apotex would have sold in the UK would have been manufactured by Apotex in Canada, and Servier also held a Canadian patent for the compound perindopril itself. In proceedings paralleling the UK litigation, Servier sued Apotex in Canada for infringement of the Canadian compound patent. An interlocutory injunction was denied, but Servier was ultimately successful. Thus it became clear that manufacture in Canada of the product which Apotex would have sold in the UK but for the interlocutory injunction, would have infringed the Canadian patent. In the UK proceedings on the undertaking, Apotex conceded that the award on the undertaking should be reduced by an amount equal to the liability that Apotex would (hypothetically) have faced under Canadian law for manufacturing the perindopril which it would (hypothetically) have sold in the UK had the interlocutory injunction not been in place [EWCA 22]. Servier, on the other hand, argued that Apotex should be entirely precluded from collecting on the undertaking because the Canadian infringement constituted sufficient "turpitude" to engage the doctrine of ex turpi causa. (This summarizes a somewhat complex procedural history, described in more detail at [2]-[8]; and see also my IPKat post on the EWCA decision.)
Friday, October 31, 2014
STELARA / Anti-IL-12 Antibody Decision Set Aside
Janssen Inc v AbbVie Corporation, 2014 FCA 242 Trudel, Webb, Boivin JJA (for the Court)
rev’g 2013 FC 1148 Hughes J and setting aside 2014 FC 55 Hughes J
Janssen Inc v Abbvie Corporation 2014 FCA 241 Trudel, Webb, Boivin JJA (for the Court) setting aside 2014 FC 489 Hughes J
In 2013 FC 1148 Hughes J dismissed Janssen’s motion to amend its Schedule A to its Defence and Counterclaim so as to remove some and add other prior art references. The decision of the FCA in 2014 FCA 242 reverses that decision of Hughes J. Consequently, because the amendments in question “go to the heart of one of the major invalidity issues” [15], the FCA also set aside Hughes J’s subsequent decision in the infringement action itself, 2014 FC 55 (blogged here and here). In light of the intimate relationship between the validity and infringement issues, the FCA declined to order a new trial solely on the issues most directly affected by the prior art in question; instead, it acceded to Janssen’s request for a new trial of all the issues [32]. The FCA also ordered that the trial would be before a new judge [32].
In 2014 FCA 241 the FCA set aside the injunction that had been granted by Hughes J in 2014 FC 489 (blogged here) in consequence of his liability decision. While the reasons were very brief, it is evident that the injunction was set aside purely in consequence of the setting aside of the liability decision, and not on its own merits.
In 2014 FC 863, Janssen was held to be prima facie in contempt of that injunction, as blogged here. Presumably the setting aside of the injunction would provide a defence to the prima facie contempt.
Janssen Inc v Abbvie Corporation 2014 FCA 241 Trudel, Webb, Boivin JJA (for the Court) setting aside 2014 FC 489 Hughes J
2,365,281 / IL-2 antibodies
In 2013 FC 1148 Hughes J dismissed Janssen’s motion to amend its Schedule A to its Defence and Counterclaim so as to remove some and add other prior art references. The decision of the FCA in 2014 FCA 242 reverses that decision of Hughes J. Consequently, because the amendments in question “go to the heart of one of the major invalidity issues” [15], the FCA also set aside Hughes J’s subsequent decision in the infringement action itself, 2014 FC 55 (blogged here and here). In light of the intimate relationship between the validity and infringement issues, the FCA declined to order a new trial solely on the issues most directly affected by the prior art in question; instead, it acceded to Janssen’s request for a new trial of all the issues [32]. The FCA also ordered that the trial would be before a new judge [32].
In 2014 FCA 241 the FCA set aside the injunction that had been granted by Hughes J in 2014 FC 489 (blogged here) in consequence of his liability decision. While the reasons were very brief, it is evident that the injunction was set aside purely in consequence of the setting aside of the liability decision, and not on its own merits.
In 2014 FC 863, Janssen was held to be prima facie in contempt of that injunction, as blogged here. Presumably the setting aside of the injunction would provide a defence to the prima facie contempt.
Thursday, October 30, 2014
Res Judicata in a Bifurcated Action
Merck & Co Inc v Apotex Inc 2014 FC 883 Lafrenière J
1,275,350 – lisinopril – PRINIVIL
This motion to amend a Responding Statement of Issues raises a very interesting and difficult issue respecting the application of res judicata to a bifurcated action when the law has changed between the liability and damages portions, though at the end of the day I doubt the resolution of that question would make any difference to the outcome.
In the underlying Lisinopril Liability decision, 2006 FC 524 aff’d 2006 FCA 323, Apotex argued that the ‘350 patent was invalid because it was improperly divided from the parent ‘340 application, which disclosed only one invention. Hughes J rejected this on the basis that he was bound by prior case law, including Boehringer (1962), 39 CPR 201, to hold that each claim constitutes a different invention [116]. The FCA affirmed on this basis [39]. Subsequently, in its Viagra decision 2012 SCC 60 [57], the SCC held that Boehringer “does not stand for the proposition that every claim in a patent application is a separate invention.” In this motion Apotex argued that the law having changed – or at least, the Liability decision having been based on a misunderstanding of the law – it should be able to amend its defence in the damages portion of the action to argue that the Merck did not suffer any damages as a result of Apotex’ activities [28.12].
Essentially, the argument is that even though Apotex has been found liable for infringement, it should not be made to pay damages for infringement of an invalid patent. In support, Apotex relied on the UKSC decision in Virgin Atlantic [2013] UKSC 46. In Virgin Atlantic, the EWCA had held the patent at issue to be valid and infringed, and ordered an enquiry as to damages [11]. Subsequently, the EPO held the patent to be invalid [12]. The effect of the EPO decision is that the patent on which the liability decision was based is deemed never to have existed [27]. However, the EPO decision could not be raised by way of an appeal of the liability decision, as the order of the EWCA was final and not subject to appeal [16]. The question before the UKSC was whether the defendant should be able to raise the invalidity in the enquiry as to damage [16]. The UKSC held that the invalidity could be considered in the damages enquiry [37].
1,275,350 – lisinopril – PRINIVIL
This motion to amend a Responding Statement of Issues raises a very interesting and difficult issue respecting the application of res judicata to a bifurcated action when the law has changed between the liability and damages portions, though at the end of the day I doubt the resolution of that question would make any difference to the outcome.
In the underlying Lisinopril Liability decision, 2006 FC 524 aff’d 2006 FCA 323, Apotex argued that the ‘350 patent was invalid because it was improperly divided from the parent ‘340 application, which disclosed only one invention. Hughes J rejected this on the basis that he was bound by prior case law, including Boehringer (1962), 39 CPR 201, to hold that each claim constitutes a different invention [116]. The FCA affirmed on this basis [39]. Subsequently, in its Viagra decision 2012 SCC 60 [57], the SCC held that Boehringer “does not stand for the proposition that every claim in a patent application is a separate invention.” In this motion Apotex argued that the law having changed – or at least, the Liability decision having been based on a misunderstanding of the law – it should be able to amend its defence in the damages portion of the action to argue that the Merck did not suffer any damages as a result of Apotex’ activities [28.12].
Essentially, the argument is that even though Apotex has been found liable for infringement, it should not be made to pay damages for infringement of an invalid patent. In support, Apotex relied on the UKSC decision in Virgin Atlantic [2013] UKSC 46. In Virgin Atlantic, the EWCA had held the patent at issue to be valid and infringed, and ordered an enquiry as to damages [11]. Subsequently, the EPO held the patent to be invalid [12]. The effect of the EPO decision is that the patent on which the liability decision was based is deemed never to have existed [27]. However, the EPO decision could not be raised by way of an appeal of the liability decision, as the order of the EWCA was final and not subject to appeal [16]. The question before the UKSC was whether the defendant should be able to raise the invalidity in the enquiry as to damage [16]. The UKSC held that the invalidity could be considered in the damages enquiry [37].
Monday, October 27, 2014
No New Cases for the Week of 20 October
No new patent / NOC / data protection cases were released for the week of 20 October 2014.
Keep in mind that I generally only blog on substantive patent / pharma cases. If you want to keep abreast of all new Canadian decisions, including procedural decisions and cases outside that core substantive area, I recommend subscribing to the Daily Intellectual Property News service from Alan Macek's IPPractice.
Keep in mind that I generally only blog on substantive patent / pharma cases. If you want to keep abreast of all new Canadian decisions, including procedural decisions and cases outside that core substantive area, I recommend subscribing to the Daily Intellectual Property News service from Alan Macek's IPPractice.
Tuesday, October 14, 2014
More on the Perfect Match Requirement of Listing on the Patent Register
ViiV Healthcare ULC v Teva Canada Ltd 2014 FC 893 Hughes J aff’g 2014 FC 328
Milczynski J (here)
abacavir & lamivudine. / KIVEXA & TRIZIVIR / 2,289,753
Hughes J applied the “perfect match” requirement for listing of a patent on the Patent Register, as set out by the FCA in the leading case of Gilead / COMPLEREA 2012 FCA 254 (blogged here), to uphold Milczynski J decision (blogged here) that the ‘753 patent cannot be listed on the Patent Register against KIVEXA or TRIZIVIR. There is not really any new law in this decision, though Hughes J does provide a thorough review of the case law at [47], and a list of principles emerging from those cases at [48]. The main point of interest is that in this litigation, the Minister of Health had argued that while a perfect match is required to list a patent claiming a formulation under 4(2)(b) of the NOC Regulation, a perfect match is not required to list of a patent claiming a medicinal ingredient, which is governed by 4(2)(a). However, as Milczynski J held, in Gilead the FCA clearly held that the perfect match is required under 4(2)(a), and Hughes J has now affirmed. In other posts on the listing requirement I have argued that the perfect match requirement is rigid formalism, because eligibility for listing turns on how the claims are drafted rather than on the substantive scope of the claims. I can understand how the “relevant” standard developed by the courts under the old Regulations was too liberal, but requiring a perfect literal match strikes me as too strict; it seems to me that a “would necessarily infringe” standard would strike a better balance. But the point is settled law now.
Here is the summary of the law provided by Hughes J:
As the last bullet point indicates, Hughes J considered whether the prior case law left open the possibility that a patent claiming one medicinal ingredient might be listable against a drug with two medicinal ingredients if there was no synergy between drugs. However, he ultimately held that
For a discussion of the facts related to KIVEXA, see my post on Milczynski J’s decision, here. This appeal also consolidated a closely related proceeding in which Apoex also challenged the listing of the ‘753 patent against KIVEXA [9], as well as a third proceeding in which Apotex challenged the listing of the ‘753 patent against TRIZIVIR. The legal issues were substantially the same in all the proceedings.
Milczynski J (here)
abacavir & lamivudine. / KIVEXA & TRIZIVIR / 2,289,753
Hughes J applied the “perfect match” requirement for listing of a patent on the Patent Register, as set out by the FCA in the leading case of Gilead / COMPLEREA 2012 FCA 254 (blogged here), to uphold Milczynski J decision (blogged here) that the ‘753 patent cannot be listed on the Patent Register against KIVEXA or TRIZIVIR. There is not really any new law in this decision, though Hughes J does provide a thorough review of the case law at [47], and a list of principles emerging from those cases at [48]. The main point of interest is that in this litigation, the Minister of Health had argued that while a perfect match is required to list a patent claiming a formulation under 4(2)(b) of the NOC Regulation, a perfect match is not required to list of a patent claiming a medicinal ingredient, which is governed by 4(2)(a). However, as Milczynski J held, in Gilead the FCA clearly held that the perfect match is required under 4(2)(a), and Hughes J has now affirmed. In other posts on the listing requirement I have argued that the perfect match requirement is rigid formalism, because eligibility for listing turns on how the claims are drafted rather than on the substantive scope of the claims. I can understand how the “relevant” standard developed by the courts under the old Regulations was too liberal, but requiring a perfect literal match strikes me as too strict; it seems to me that a “would necessarily infringe” standard would strike a better balance. But the point is settled law now.
Here is the summary of the law provided by Hughes J:
[48] I draw the following principles respecting the interpretation of the various
subsections of 4(2) of the NOC Regulations having regard particularly to the Federal
Court of Appeal decisions and the Reasons of Justice Russell in Bayer, as affirmed by the
Federal Court of Appeal:
• There is no sound reason to adopt different legislative requirements of product
specificity for the various subparagraphs of subsection 4(2) of the NOC
Regulations (Gilead, paragraph 39);
• absent precise and specific matching between what the patent claims and the
product/use/dosage forms for which the NOC has been granted to the first person,
the Minister cannot properly list the patent (Purdue, paragraphs 43; Abbott,
paragraph 49; Gilead, paragraphs 37-38);
• a claim for a
formulation means a claim that includes both medicinal and
non-medicinal ingredients. A claim directed to medicinal ingredients,
without claiming
also non-medicinal ingredients, does not qualify for listing as a
formulation under
subsection 4(2)(b) of the NOC Regulations (Gilead, paragraphs 27 to 32, 49;
Bayer, paragraphs 67 to 69).
• where a patent claims only one medicinal ingredient, it cannot be listed as
against an NOC obtained for two (or more) medicinal ingredients; at least where,
to use the words of Russell J, at paragraph 69 of Bayer, where “…a drug with one
medicinal ingredient will have a different effect from a drug where two medicinal
ingredients are combined “to achieve the desired effect [emphasis added].” This
same distinction appears in Gilead, where Trudel JA wrote at paragraphs 31 and
32:
31 Finally, the overall inventive step of the '475 Patent, as found by the
Judge, is the combination of chemically stable medicinal ingredients. The
'475 Patent emphasizes the beneficial effects of combining chemically
stable combinations of medicinal ingredients.
32 Thus, I conclude that the '475 Patent falls under paragraph 4(2)(a), as
the relevant claims consist of chemically stable combinations of medicinal
ingredients.
As the last bullet point indicates, Hughes J considered whether the prior case law left open the possibility that a patent claiming one medicinal ingredient might be listable against a drug with two medicinal ingredients if there was no synergy between drugs. However, he ultimately held that
[89] In my view, it is not productive when considering the listing requirements of
subsection 4(2) of the NOC Regulations to consider synergy or not. The decision of the
Federal Court of Appeal in Gilead is sufficiently clear. A patent claim for only one
medicinal ingredient cannot support a listing under the NOC Regulations where the
underlying NOC is for a combination (synergistic or otherwise) of two or more medicinal
ingredients.
For a discussion of the facts related to KIVEXA, see my post on Milczynski J’s decision, here. This appeal also consolidated a closely related proceeding in which Apoex also challenged the listing of the ‘753 patent against KIVEXA [9], as well as a third proceeding in which Apotex challenged the listing of the ‘753 patent against TRIZIVIR. The legal issues were substantially the same in all the proceedings.
Tuesday, September 30, 2014
Prosecution History Estoppel Meets Section 53
NOV Downhole Eurasia Limited v TLL Oil Field Consulting 2014 FC 889 Mosley J
The pigeons are coming home to roost from the SCC’s ill-advised holding in Free World 2000 SCC 66, [66], that prosecution history is not to be used in claim construction (for my critique of the SCC decision, see here).
The invention at issue in NOV Eurasia v TLL Consulting is a downhole oilwell tool which comprises a valve. The defendant alleged that during patent prosecution the applicant had amended the application to restrict the claims to embodiments which included a transverse valve, and they now sought to assert the patent against the defendants, even though the allegedly infringing tool does not have a transverse valve [9].
If we had a doctrine of prosecution history estoppel, this would be a straightforward matter. If indeed the applicant had given up the scope in question during prosecution, then the patentee would not be estopped from reclaiming that scope in litigation, and the patent would be construed accordingly. The claim, and the patent, would remain valid, but the defendant’s tool (assuming it did not in fact contain a transverse valve), would not infringe. This is an eminently fair and sensible result.
But because the SCC in Free World held that prosecution history cannot be considered as a matter of claim construction, the defendant in this case pleaded that the applicant’s statements were made “with the intention of misleading the Patent Office,” and so the entire patent is void pursuant to s 53(1) [9], which provides that:
A patent is void if any material allegation in the petition of the applicant in respect of the patent is untrue, or if the specification and drawings contain more or less than is necessary for obtaining the end for which they purport to be made, and the omission or addition is wilfully made for the purpose of misleading.
The patentee in this case brought a motion to have the paragraphs pleading s 53 struck. Prothonotary Milczynski granted the motion, but Mosley J reversed, holding, after a review of the case law, that “[i]t remains a live issue whether section 53 of the Patent Act may void an entire patent due to steps taken in the application process” [32]. I think Mosley J is right on this point, but given the low threshold for allowing the pleading to stand I will not review the case law in detail.
The broader point is that the SCC’s Free World holding has created an unpalatable dilemma for the lower courts. If s 53 cannot be used in this manner, then a patentee may be able to narrow the scope of its claim during prosecution to obtain the patent, and then try to reclaim that scope in subsequent litigation. On the other hand, if s 53 can be used, then what would have been a battle over claim construction, turns into an atomic bomb of patent invalidity. This will increase uncertainty, as opposed to the option of admitting prosecution history in claim construction, because the intent element of s 53 is inherently uncertain. Moreover, to the extent that there is any justification for excluding prosecution history, it is to simplify the claim construction exercise; but to introduce exactly the same evidence under s 53 means that while claim construction is simpler, the litigation as a whole is at least as complex. Indeed, it will be more complex, because the stakes have been raised from scope to validity, ensuring that all the more money will be put into this uncertain issue.
It is not unlikely that in this case the s 53 issue will ultimately become moot, even if it does go to trial. The claims themselves refer to “the valve member being transversely movable,” and the court may well construe the claims to exclude tools without a transverse valve even without the aid of the prosecution history. That will be all the more unfortunate, as parties in future litigation will have to engage the s 53 issue, instead of what could have been a much simpler matter of claim construction. The SCC in Free World feared opening the “Pandora’s box” [66] of file wrapper estoppel. By refusing to do so, it opened the far more dangerous box of s 53.
Friday, September 26, 2014
Form and Function in the Law of Utility
I have criticized the promise doctrine, both in this blog and in my article “The False Doctrine of
False Promise” (2013) 29 CIPR 3. In their article published in the most recent issue of the CIPR,
“The Promise of the Patent in Canada And Around the World” 30 CIPR 35, Richard Gold &
Michael Shortt defend the promise of the patent. My reply article, “Form and Function in the
Law of Utility: A Reply to Gold & Shortt,” has been accepted by the CIPR. A good draft, subject
to copy-editing, is available from SSRN. Here is the abstract:
In a recent article, “The Promise of the Patent in Canada And Around the World,”
Richard Gold and Michael Shortt argue that the law relating to the controversial
“promise” branch of the Canadian law of utility is justifiable as a matter of policy, that it
is long established in Canadian law, and that promises are enforced in a number of other
jurisdictions. In this article I argue that Gold & Shortt fail to appreciate the functional
distinction between the two branches of the utility requirement, which are consequently
conflated throughout their article. The points they make in respect of the promise doctrine
actually relate, for the most part, to the traditional “scintilla” branch of the law of utility,
though they also conflate the promise of the patent with obviousness, sufficiency and
overbreadth. This article uses Gold & Shortt’s article as a foil to explore the functional
nature of the two branches of the law of utility and the differences between them. I will
also contrast utility with sufficiency, obviousness and overbreadth.
Wednesday, September 24, 2014
Inventorship in a Combination Invention
Drexan Energy Systems Inc v The Commissioner of Patents and Thermon Manufacturing Co,
2014 FC 887 O'Keefe J
2,724,561
In 2006 Steve Makar, Konrad Mech, Wells Whitney and Umesh Sopory perceived some deficiencies heating cables used to keep pipes from freezing in cold environments, and they decide to create a new type of heating cable without those defects [3]. Their collaboration resulted in the ‘561 patent, for which Dr Whitney and Mr Sopory were the only listed inventors. By 2010 the relationship between the men had broken down. The interest of Dr Whitney and Mr Sopory was assigned to Thermon, and Mr Makar and Mr Mech was assigned to whatever rights they had Drexan, one of Thermon’s competitors. In this application Drexan sought to have Mr Makar and Mr Mech added to the ‘561 patent as co-inventors [6]. The court noted that s 52 of the Act gives the court the authority to make such an order, and that the burden lay on the applicant [23].
The court reviewed established law on inventorship and noted that the question is whether Mr Makar and Mr Mech were in some way responsible for the inventive concept, though it is not necessary for them to be wholly responsible for it, “so long as his or her ingenuity is applied to the original inventive concept and not just verification” [24, 26 citing inter alia Wellcome / AZT, 2002 SCC 77, [96]).
The main legal point of interest is that the heating cable was a combination of elements known in the prior art, and the inventive concept lay in the combination of particular elements, not in the elements themselves [27].
The case then came down to an issue of credibility [30], and ultimately O’Keefe J held that Mr Makar and Mr Mech were not co-inventors: “Undoubtedly, Mr. Makar and Mr. Mech had useful input into the design of the cable, but the applicant has not proven that it was anything more than suggesting desired features and communicating feedback from potential customers” [56]. The application was therefore dismissed [57].
(Thanks again to IPPractice for posting this case - that's six in a row.)
2,724,561
In 2006 Steve Makar, Konrad Mech, Wells Whitney and Umesh Sopory perceived some deficiencies heating cables used to keep pipes from freezing in cold environments, and they decide to create a new type of heating cable without those defects [3]. Their collaboration resulted in the ‘561 patent, for which Dr Whitney and Mr Sopory were the only listed inventors. By 2010 the relationship between the men had broken down. The interest of Dr Whitney and Mr Sopory was assigned to Thermon, and Mr Makar and Mr Mech was assigned to whatever rights they had Drexan, one of Thermon’s competitors. In this application Drexan sought to have Mr Makar and Mr Mech added to the ‘561 patent as co-inventors [6]. The court noted that s 52 of the Act gives the court the authority to make such an order, and that the burden lay on the applicant [23].
The court reviewed established law on inventorship and noted that the question is whether Mr Makar and Mr Mech were in some way responsible for the inventive concept, though it is not necessary for them to be wholly responsible for it, “so long as his or her ingenuity is applied to the original inventive concept and not just verification” [24, 26 citing inter alia Wellcome / AZT, 2002 SCC 77, [96]).
The main legal point of interest is that the heating cable was a combination of elements known in the prior art, and the inventive concept lay in the combination of particular elements, not in the elements themselves [27].
[29] This means that the focus has to be on whether Mr. Makar’s and Mr. Mech’s
contributions were directed not only to suggested features (see Weatherford (FC) at
paragraph 260), but to how they could actually be combined. Put another way, if there are
two competing products that have different advantages and disadvantages, it takes no
ingenuity at all to suggest that it would be great if there could be a product that has the
advantages of both without the disadvantages of either. If there is any inventive concept at
all in combining those two products, it lies in discovering how to make a product that has
the desired attributes of both and it is to that process that the inventive contribution must
be made.
The case then came down to an issue of credibility [30], and ultimately O’Keefe J held that Mr Makar and Mr Mech were not co-inventors: “Undoubtedly, Mr. Makar and Mr. Mech had useful input into the design of the cable, but the applicant has not proven that it was anything more than suggesting desired features and communicating feedback from potential customers” [56]. The application was therefore dismissed [57].
(Thanks again to IPPractice for posting this case - that's six in a row.)
Subscribe to:
Posts (Atom)