FCA Clarifies PM(NOC) Transitional Provisions

Merck Frosst Canada & Co v Apotex Inc / norflaxin (NOC) 2011 FCA 329 Stratas JA: Layden-Stevenson, Sexton JJA aff’g 2010 FC 287 O'Reilly J

Section 8 of the PM(NOC) Regulations, provides for compensation to a generic that has been denied entry as a result of a statutory stay. It was notoriously obscure as enacted in 1993 [59], and was amended in 1998. The transitional provision says that the 1998 version applies to an application that is “pending” when the 1998 Regulations came into force (March 11, 1998). The FCA has now clarified that an application is pending, and so the 1998 Regulations apply, when a final decision of the applications judge is under appeal: “the correct test for determining whether an application is “pending” is whether the application remains alive either at first instance, or on appeal” [17]. This effectively overrules the decision of Snider J in 2010 FC 1264 (blogged here), but I won’t go into the merits of the decision on this point. There were respectable arguments to be made on both sides as to the interpretation of “pending,” and what is important is that the FCA has given a clear and definitive answer.

The FCA also strongly implied that the whole debate was pointless, as the effect of the 1998 Regulations was to clarify rather than to change the law as intended under the 1993 Regulations. Merck had argued that if the 1998 Regulations applied, they were invalid as not being authorized by the enabling statutory provision, as they would retroactive deprive Merck of its vested rights. The FCA rejected this argument for a variety of reasons, of which two are of particular interest. First, section 8 of the 1998 Regulations is “a largely clarifying provision or a provision that largely attempts to declare what the law has been, [and so] is not retroactive or retrospective, nor does it interfere with earlier vested rights” [49]. Secondly, the original provision in the 1993 Regulations was so impenetrably obscure that Merck could not possibly have acted in reliance on the rights defined by that provision, as it was inevitable that substantial clarification would be required, either by case law, or, as it happened, through legislative amendment [64]-[67].