Wednesday, May 11, 2011

Guidance for Pleading Early Infringement

Apotex Inc v Allergan Inc / gatifloxacin 2011 FCA 134

Pharmaceutical patentees view damages as a poor substitute for a permanent injunction, and are therefore anxious to bring an action against a generic producer as soon as possible. The question of what acts constitute infringement, or are sufficient to support a quia timet action, are therefore important. The FCA decision in Allergan, affirming a decision of Beaudry J refusing to strike Allergan’s statement of claim, helps to fill in this picture.

The Federal Courts have consistently been unwilling to allow an infringement action to be brought simply on the basis that the generic has applied for or obtained an NOC. In Allergan the Court of Appeal stated that “the mere fact that a defendant pharmaceutical company has sought regulatory approval to market a medicine does not by itself support an action for patent infringement” [4]. This point had not previously been settled (see AstraZeneca 2010 FCA 112 [8-9], affm’g 2009 FC 1209), and while this statement was strictly obiter, it is consistent with the thrust of the prior case-law. The point must now be considered settled.

However, in Allergan the patentee did not rely on the generic having obtained an NOC. Rather, the main thrust of its allegations was that Apotex had obtained a tentative approval for a US ANDA, and that the ANDA indicated that Apotex had made infringing product in Canada, and that it had and intended to import infringing product into Canada for formulation and export to the US: see the decision appealed from, T-1267, 9 Nov 2010. Consequently, it was not a quia timet action at all: “[t]he claims of past and continuing infringement support the claim of future continuing infringement” [14].

This point is not directly relevant to the paradigmatic case in which the patentee seeks to prevent manufacture and sale into the Canadian market. Of more general interest is the holding respecting particularity of the pleading. The courts have consistently been unwilling to allow an action based on a bald general allegation of infringement, on the basis that an action cannot be allowed to serve as a fishing expedition: the leading case is AstraZeneca (see esp. 2009 FC 1209 [17]) and see Eli Lilly / olanzapine 2011 FC 255 [8-9], also striking the statement of claim. The particulars pleaded in Allergan did go beyond those pleaded in either AstraZeneca or Eli Lilly, and the FCA held at [8] that it was reasonably open to the trial judge to hold that they were adequate. Thus we now have case-law on both side of the line separating adequate from inadequate pleading of material facts.

In Allergan Apotex also argued that Allergan’s statement of claim should be struck on the basis that the regulatory use exception of s. 55.2(1) applies, as in Eli Lilly. However, as the FCA pointed out [12-13], Allergan is distinguishable as in Eli Lilly “there is absolutely nothing pleaded that is not part of the regulatory requirements” (2011 FC 255 [28]), while in Allergan the allegations clearly went beyond those requirements. The FCA also stated that “the existence of even a strong defence to a claim does not justify an order striking the claim” [9]. This is not entirely easy to reconcile with Eli Lilly, but in any event, the FCA relied mainly on the differences in the allegations.

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