Friday, March 29, 2019

First Person & Second Person Requires Control at a Minimum and Does Not Include Additional Persons Carrying out Common Design

Genentech, Inc v Celltrion Healthcare Co, Ltd 2019 FC 293 Aylen CMJ

In this motion the plaintiffs Genentech, Inc. and Hoffmann-La Roche Ltd sought to join additional defendants and amend their statement of claim in this NOC s 6(1) action. While I don’t usually blog on procedural decisions, it raises a few interesting issues, which I will note, without engaging in a detailed analysis.

Celltrion Healthcare Co, Ltd (CTHC) is seeking to bring HERZUMA to market as a biosimilar to HERCEPTIN. CTHC filed the NDSs and served the NOAs at issue [33]. The plaintiffs alleged that CTHC entered into an exclusive partnership to commercialize HERZUMA under a Business Collaboration Agreement, with various other parties (including eg Celltrion Inc and Teva Canada Ltd) who would collectively be responsible for manufacturing, importing, marketing, and seeking regulatory approval for HERZUMA [33]. The plaintiffs sought to join these “Additional Defendants.”

The first issue was whether the Regulations permit a section 6(1) action to be brought against a person who is not a “second person” [14]. Aylen CMJ held that the answer is clearly no [24]. Her reasoning was based both on a plain reading of the regulations, which create a statutory cause of action against a second person only [15]; and on a purposive interpretation of the provision, noting that “the limitation on the claims that may be brought within the context of the Regulations is driven by a critical consideration – namely, the speed by which such actions must be determined” [19].

Given the conclusion that non-second persons cannot be joined, the next question was whether these Additional Defendants should properly be considered as second persons. This raised the question of the correct interpretation of “second person” and whether the proposed pleadings brought the Additional Defendants within that definition [24].

On the legal point, the plaintiffs had asserted that the definition of second persons is flexible enough to include the Additional Defendants by virtue of the common law concepts of agency, corporate control, inducement and common design [34]. Aylen CMJ reviewed a number of cases considering whether “control” for the purposes of being a first person under s.8 of the PMNOC can only mean “control” in the traditional sense of corporate structure, or whether “control” can have a broader meaning [26]-[32]. She concluded that the scope of the definition of a “first person” remains an unsettled issue [32], and by parallel reasoning, it remained possible that a person other than the person who filed the NDS might be considered a second person using a similar control test [32].

However, she held that the case law, while leaving the door open to a broader interpretation of the proper scope of a "first person," "is premised on the notion that the first person is controlled by the proposed additional first person, whether by virtue of corporate organization or some other means” [34]. The proposed pleading did not allege control, but merely that the parties were carrying out a common design. Aylen CMJ held that this could not satisfy the requirement for control, and hence sufficient material facts had not been pleaded to support an allegation that the Additional Defendants fell within the definition of a “second person,” even under the broader interpretation that remains an open question in the case law.

She did, however, allow the plaintiffs to plead infringement by common design against CTHC itself [38], on the view that the concept of infringement by common design, or acting in concert, has been recognized in Canadian law, even though it has not been applied in the context of a patent infringement action, and the pleading should therefore not be struck on a pleadings motion [38]-[43]. She also held that when alleging infringement by common design, it was not necessary to join all the potential joint tortfeasors in order to allow the action to proceed against one of them [44].

No comments:

Post a Comment