Tuesday, March 29, 2011

Obtaining an NOC is Not Grounds for an Infringement Action

Eli Lilly Canada Inc v Nu-Pharm Inc / olanzapine 2011 FC 255 Snider J

When a generic pharmaceutical company obtains an NOC for a drug, it seems natural to assume that it intend to begin selling that drug, and patentee pharma companies are often anxious to begin infringement proceedings as soon as possible. The courts have been consistently unwilling to allow an action to proceed solely on the basis that the generic has obtained an NOC: AstraZeneca Canada Inc. v Novopharm Ltd. / rosuvastatin, 2009 FC 1209 Hughes J. affm’d 2010 FCA112 Noël JA: Pelletier, Dawson JJA, is the leading case, both for Hughes J’s review of the case law, and because his decision striking the Statement of Claim was affirmed by the FCA. The basic problem for the patentee is that the Federal Court has been unwilling to infer that the generic will enter the market prior to the expiry of the relevant patent, simply from the fact that it has obtained an NOC (see 2009 FC 1209 [14]). A quia timet claim for future infringement will fail for this reason [ibid 23]. A bare assertion that the defendant has manufactured the compound etc. will be disregarded as too speculative to support a claim of current infringement if made without any evidentiary foundation [ibid 18].

Snider J's decision in the olanzapine case confirms and extends this line of cases. In the rosuvastatin case, the generic had not obtained an NOC at all, which added an layer of speculation, particularly as the patentee was seeking an order of prohibition at the same time that it sought to launch an infringement action. In the olanzapine case, Nu-Pharm had obtained an NOC, days after the patent had been declared invalid in infringement proceedings (Eli Lilly Canada Inc. v. Novopharm Ltd. / olanzapine 2009 FC 1018) and before the trial decision invalidating the patent was reversed and remanded (2010 FCA 197). However, Snider J nonetheless held that the Statement of Claim should be struck, as there was no allegation of activity outside of the regulatory safe-harbor of section 55.2(1). Snider J made this holding on the assumption that the preparation of the ANDS and the obtaining of the NOC are in themselves acts of infringement [25], a point which is not yet settled.

Beyond these details, the case affirmed the general point that a patentee cannot launch an infringement action merely because the generic has obtained an NOC: “the pleadings disclose nothing beyond an assertion that Nu-Pharm is positioning itself, through an unnamed third party, to enter the market for olanzapine and, that by doing so, Nu-Pharm will infringe the patent. . . .[T]he Statement of Claim is, at least in part, very much a quia timet proceeding to which the findings of Justice Hughes and the Court of Appeal in AstraZeneca FCA are applicable” [31].

Direct evidence of commercial stockpiling would presumably suffice. But what about the patentee’s basic point that one can reasonably infer an intent to infringe from the fact that the generic has obtained an NOC? (While the question of whether obtaining an NOC is itself an act of infringement is in principle open, I cannot see how getting permission to make or sell is the same as making or selling.) It would be interesting to have statistical evidence on this point. If it turned out that a generic that obtained an NOC only launched during the term of the relevant patent 30% the time, then the view that obtaining an NOC cannot support a quia timet action would seem sound. But if that figure is 95%, the common sense inference would be stronger. Of course, it is not clear whether a court would find statistical evidence relevant to the intent of a particular defendant, and in any event I am not aware of any such study. I’d certainly be curious to find out what those stats are.

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