Thursday, June 6, 2019

Rule Against Joinder in NOC Actions Is Strict

Teva Canada Innovation v Pharmascience Inc 2019 FC 595 Tabib J
            2,702,437 / glatiramer acetate

In this motion to strike, some unusual facts have given Tabib J the opportunity to clarify aspects of the relationship between an action under the new PM(NOC) Regulations and an action under the Patent Act. In particular, Tabib J held that it is clear that the prohibition on subsequent actions for infringement under s 6.01 applies only to a drug made in accordance with the specific SNDS which was the subject of the NOA; it is also clear that the rule against joinder of non-NOC actions is strict, with no room for discretion; but it is not clear – at least not clear enough to survive a motion to strike – whether a s6(1) action continues to be predicated on the allegations in the NOA, or whether it now looks to the content of the SNDS and whether a drug made in accordance with that submission would infringe a listed patent. (Note that I have a couple more posts on Aux Sable that aren't ready yet.)

Teva is the licensee* of the 437 patent, which claims glatiramer acetate for use in treating multiple sclerosis. Teva holds NOCs in relations to 20mg/mL and 40mg/mL dosages, but it only listed the 40mg dosage on the Register [3]. Pharmascience obtained an NOC for the 20mg dosage without having to address the 437 patent, and has been marketing it under the name Glatect for a couple of years [4], [6]. Pharmascience has now sought an NOC for the 40mg dosage, and has accordingly served Teva with an NOA addressing the 437 patent by alleging non-infringement and invalidity [6]. In its statement of claim responding to the NOA, Teva sought a declaration that both Glatect 20 mg and 40 mg would infringe, and seeking damages — not merely an order of prohibition – for past and current infringement in respect of Glatect 20mg [7]. Pharmascience moved to strike all aspects relating to Glatect 20mg [8].

The principal issue, therefore, was “whether it is reasonably arguable that Teva has a cause of action pursuant to section 6(1) of the Regulations in respect of Glatect 20 mg, and if so, whether that cause of action includes a cause of action for past and current infringement” [14].

The first issue is whether Teva has a reasonably arguable cause of action in respect of Glatect 20 mg pursuant to section 6(1), even though the 437 patent was not listed on the Register against the 20mg dosage, and Pharmascience had already obtained an NOC for it. Teva relied on the plain wording of s 6(1), to argue that “The cause of action contemplated in section 6(1) is. . . no longer predicated on the content of the NOA and on whether the allegations are justified, as it was under the old regime, but on the content of the submission and on whether a drug made in accordance with that submission would infringe a listed patent” [21]. Pharmascience used a purposive interpretation to argue that the scheme of the Regulations require “a clear relationship between the rights of action conferred by section 6(1) and the obligation of second person to serve a NOA” [22]. Tabib J refused to strike, not on the basis that Teva’s argument was correct, but that it was a complex issue of statutory interpretation which should not be decided on a motion to strike while the law respecting the new Regulations is in an “embryonic state” [23].

The next question was whether Teva has a reasonably arguable cause of action under section 6(1) in respect of past or current infringement by Glatect 20 mg. The answer is pretty clearly “no” on the face of s 6(1), but Teva made a purposive argument that the answer must be “yes” because otherwise it would be barred by s 6.01 from subsequently asserting those claims in an ordinary infringement action [26]. Section 6.01 is part of the scheme for addressing the “two kicks at the can” problem which arose under the old scheme, where the same issues could be litigated in relation to the same drug and same patent, once under the Regulations and again under the Act. In broad terms, s 6.01 provides that if the patentee does not respond to an NOA served under the Regulations in respect of a particular SNDS, it cannot subsequently bring an infringement action. Teva argued that in this case, if it could not bring its claim for damages under the Regulations, it would be barred from doing so in an action under the Act. Tabib J rejected this argument, holding that it was clear on the text of the provision that the prohibition on subsequent actions for infringement is only in respect of a drug made in accordance with the specific SNDS which was the subject of the NOA [28]-[30], in this case the 40 mg dosage.

A third question was whether Teva’s allegations related to Glatect 20 mg should be struck as improper joinder, contrary to s 6.02 of the Regulations, which, broadly, prohibits joinder of an ordinary infringement action with an NOC proceeding. Teva argued that on the facts of this case, joinder should be permitted, given that “the same patent, the same invalidity allegations, the same medication and substantially the same infringement allegations are at issue” [45]. Tabib j rejected this argument, noting while the Federal Court Rules give the court discretion in joinder decisions:

Section 6.02 is clear and mandatory. Unlike many other provisions of the Regulations, it does not provide for the exercise of the Court’s discretion to modify or depart from its provisions. Accordingly, the Court is bound to apply it, irrespective of any efficiency that might otherwise be gained [47].

However, Tabib J suggested that “scheduling the trial of common issues to proceed simultaneously” would not be contrary to s 6.02 [47].

*The patentee is Yeda, and strictly, the decision says only that Teva has obtained NOCs and listed the 437 patent on the Register with the consent of the Yeda, without referring to a formal licence [3]. However, Teva also asserts that it would be able to bring an infringement action under the Act and this was not contested [26]. This implies Teva is a person “claiming under” the patentee, presumably a licensee.

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