Friday, June 22, 2012

Can Comity Rationalize NOC Litigation?

Allergen Inc v Apotex Inc / COMBIGAN (NOC) 2012 FC 767 Hughes J

In Allergen Inc v Apotex Inc / combigan (NOC) Hughes J faced an NOC proceeding involving the same product and the same patent, but a different generic, as was addressed by Crampton J in Allergan Inc v Sandoz Canada Inc / combigan (NOC) 2011 FC 1316 (blogged here and here). Crampton J held that Sandoz’s allegation that Allergan’s 764 patent was invalid for obviousness was not justified. In contrast, Hughes J concluded that Apotex’s allegation that the patent was invalid for obviousness was justified. Hughes J nonetheless granted an order of prohibition, citing the need for comity. He also expressed concern that “that this Court is overwhelmed at times with NOC Regulation proceedings,” [70] and that it is necessary for the FCA to give instruction on the question of “how, in an NOC context, previous decisions of a Court on the same issues respecting the same patent, should be considered” [193]. He concluded that “only practical way to get the matter before the Court of Appeal is for me to grant the Order for prohibition in the likely expectation that Apotex will appeal” [194].

It is now established that if a patentee is unsuccessful in NOC proceedings against one generic, it is an abuse of process for it to relitigate the same allegation when brought by a different generic: Sanofi-Aventis Canada Inc v Novopharm Ltd / ramipril (NOC) 2007 FCA 163. On the other hand, the FCA has held that if a generic is unsuccessful in an NOC proceeding, it is not an abuse of process for a different generic to relitigate the same allegation: Apotex Inc v Janssen-Ortho Inc / levoflaxin (NOC) 2009 FCA 212 rev’g Shore J 2008 FC 744. Hughes J was of the view that in the latter situation, even though a subsequent court is not bound by the decision of the earlier court, comity requires that the prior decision be taken into account. After a review of the case law on comity, the rule enunciated by Hughes J at [82] is that “what a Court in Canada must do when faced with an earlier decision in NOC proceedings involving failed invalidity allegations raised by a different generic is:

• do the best it can from the reasons of the Court in the earlier proceeding to discern what the evidence and argument was;
• compare that evidence and argument with that in the proceedings at hand;
• determine if there are meaningful differences between the evidence and argument in the earlier case and present case;
• give respect to the earlier decision but, if there are determinative differences in the evidence, the Court must make its own decision; and
• if the previous decision contains a critical error of law or if the law has changed the Court must make its own decision as to the law.

Even this runs very close to the line drawn by the FCA in Apotex / levoflaxin. In that case, the FCA reversed Shore J, who had held that it is an abuse of process for a second generic to relitigate the same patent unless it has “better evidence or a more appropriate legal argument” [2009 FCA 212 [45]]. The FCA stated that the judge in the second proceeding is “required to assess the evidence put before him by both parties independently of the findings” made in the first proceeding. In the approach set out by Hughes J, the second judge will only make his own independent decision if there are determinative differences in the evidence, or if the law has changed. This is hard to distinguish from requiring “better evidence or a more appropriate legal argument.”

In any event, Hughes J did not really follow his own rule. While he referred extensively to the decision of Crampton J, and compared the evidence available to him with that reviewed by Crampton J, he clearly made his own independent assessment of the evidence before him, as required by the FCA. Furthermore, he identified both substantial differences in the evidence, and what he took to be a significant error of law in Crampton J’s approach [176]. He therefore came to his own conclusion, which was that the claimed invention was obvious. Despite this conclusion, he granted the order of prohibition, saying:

[191] I must consider the question of comity. Is the evidence and argument before me “different” from or “better” than the evidence and argument before Crampton J in Sandoz? There is no real way to measure “different” or “better”. The evidence and argument is of the same kind. In some cases Crampton J had unrebutted evidence whereas I have rebutted evidence. The difference in the evidence and argument is more one of quality to the best that can be discerned from the record that I have, and this Court not having the record as to what was before Crampton J.

In this paragraph Hughes J does not say that comity required him to respect the decision which Crampton J had arrived at, despite his own conclusion, because the evidence and law were sufficiently similar. Rather, he seems to be saying that the rule which he enunciated in [82] is impossible to apply, because a court cannot really tell if there were determinative differences in the evidence. If anything, he is saying that he should follow the decision of Crampton J notwithstanding differences in the evidence and the law. This is really a form of issue estoppel, except that it is applies as between different parties.

I say ‘if anything,” because Hughes J never actually said that comity required him to come to the same conclusion as Crampton J. He moved directly from his observations in [191], to three paragraphs asserting that the law in this area needs to be clarified by the FCA, and that would not happen if he granted the order because the NOC would be granted and the case would be moot. In other words, Hughes J’s actual decision was motivated by a desire to have the law clarified, rather than by a respect for comity.

There are several problems with Hughes J’s decision. First, I doubt that the rule he set out in [82] reflects the law of comity. Comity, as discussed in the cases cited by Hughes J, requires that courts respect prior decisions of the same court on matters of law, even if these are not strictly binding. The rule set out by Hughes J deals primarily with matters of fact and evidence, rather than matters of law.

The law must develop, particularly in novel contexts such as NOC proceedings, so this is not a fatal objection, But I doubt that the rule that he asserts in [82] will solve the problem of the court being overwhelmed by NOC proceedings, because it would require a detailed examination of the evidence and argument in order to determine whether there was different evidence or an error law. Hughes J’s decision in this case illustrates this. Indeed, the effect of his rule would likely be to increase the complexity of litigation, as the parties would have to litigate the current proceeding, and almost relitigate the prior one.

The rule he actually applied, that a prior decision on a particular issue in an NOC proceeding is strictly binding on other parties in subsequent NOC litigation involving the same drug, would no doubt reduce the court’s workload, but it is extremely difficult to justify such a rule on the FCA precedent. Hughes J asserts that the FCA decisions in Novopharm / ramipril 2007 FCA 163 and Apotex / levoflaxin are “somewhat contradictory” [193]. I do not agree. The common principle is simply that “All parties are held to the same standard: they must each put forward their entire case, complete with all relevant evidence, at first instance." This does apply both ways: "Generics likewise must put forward their full case at the first opportunity. Multiple NOAs issued by the same generic relating to a particular drug and alleging invalidity of a particular patent will generally not be permitted.” [2007 FCA 163 [50]].

In the end, Hughes J’s frustration with repeated litigation of the same issue in NOC proceedings is understandable, but in my view, he has not provided a workable solution. As Hughes J pointed out, “[i]n proceedings in the United States brought under the Hatch-Waxman Act, endeavours are made to join as many generics as possible in one proceeding so that all may be bound by the result” [81]. But as he also pointed out, “Canada has no similar provisions.” I doubt whether comity can take its place.

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