Reduced Dosage Form of Tadalafil Obvious to Try

Eli Lilly Canada Inc. v. Mylan Pharmaceuticals ULC / tadalafil (NOC) 2015 FC 125 de Montigny J
            2,371,684 – tadalafil dosage form – CIALIS

In this NOC proceeding de Montigny J held that Lilly’s tadalafil dosage form patent was invalid for failure to satisfy the promise of the patent, as being anticipated, and for obviousness. While the decision raises some interesting legal points regarding the promise of the patent, anticipation, and prosecution history estoppel, the holding respecting obviousness was quite straightforward and it is convenient to begin by discussing that aspect of the case.

Both sildenafil and tadalafil were known in the prior art for the treatment of ED. Lilly’s ‘784 patent, claiming tadalafil for the treatment of ED, disclosed unit doses of tadalafil from 0.2 to 400 mg [4] (and see 2015 FC 17, blogged here, holding the ‘784 patent to be valid). Sildenafil was marketed in doses of 25 mg, 50 mg, and 100 mg, with 100mg being the most common dose [6], [10]. Sildenafil has a variety of side effects, including flushing, vision abnormalities, and a negative interaction with nitrates that are used to treat heart conditions [6]. Early studies with tadalafil used 100mg doses. Lilly researchers discovered that despite being equipotent with sildenafil, tadalafil did not need high doses, and lower doses of tadalafil could be used effectively and with reduced side effects. This discovery was the basis for the ‘684 patent [12]..

There was some debate as to whether the inventive concept included reduced side effects, or was simply a dosage of less than 20mg for the treatment of ED [164]. If the inventive concept was simply the dosage, then it seems to me that it must be obvious, as the ‘784 patent disclosed that dosages of tadalafil including that range would effectively treat ED, so there would be no technical contribution to what was already known. For the invention to be non-obvious, there must be something surprising about the claimed dosage range, such as unexpectedly reduced side effects. In any event, de Montigny J did not need to resolve this debate as he found that the invention was obvious even if the inventive concept included reduced side effects. He found on the facts that in drug development it is standard practice to lower the dosage to reduce side effects [168] and there is a standard process for determining a minimal effective dose [169], so it would have been routine for a skilled person to carry out a dose escalation study starting at 5mg and moving up to 50mg [170]. Even though the optimal dosage regime could not have been predicted in advance, that lower dosages were effective with reduced side effects was the unsurprising outcome of a routine research program that a skilled person would be motivated to carry out [172]. This is a classic case of an invention that is obvious to try. Lilly argued that a skilled person would not have been motivated to try doses of less than 50mg, but de Montigny J rejected this on the facts [165].

Moot NOC Proceedings Remain Moot Despite Impending CETA

Janssen Inc v Teva Canada Ltd 2015 FCA 36

This is an appeal from a decision of Barnes J in an NOC proceeding (2014 FC 1192, not yet publicly available), refusing to grant an order of prohibition [5]. The NOC was issued eight days after the judgment [6]. The patentees appealed four days later. Unsurprisingly, the FCA has dismissed the appeal as moot, in accordance with its long-established jurisprudence.

The FCA noted that while it does have the discretion to hear a moot appeal, to date it has exercised that discretion only once [8], [11]. Janssen’s main argument that the FCA should hear the appeal in this case is that Art 9 bis of the IP chapter of CETA gives all litigants “equivalent and effective rights of appeal” [12]. But as the FCA pointed out, CETA is not yet part of Canadian law [14].

Compound Pre-Judgment Interest Arrives in Canadian Patent Litigation

Eli Lilly and Co v Apotex Inc / cefaclor, 2014 FC 1254 Zinn J [Cefaclor Damages]
            1,133,007 – 1,146,536 – 1,133,468 – 1,150,725 [the Lilly Patents]
            1,095,026 – 1,132,547 – 1,136,132 – 1,144,924 [the Shionogi Patents]

Zinn J’s Cefaclor Damages decision is a major step in taking the law of pre-judgment interest in an economically sound direction. The first step was taken by Gauthier J in the liability phase of this bifurcated action, Cefaclor Liability 2009 FC 991 aff’d 2010 FCA 240. As described in more detail in my blog post on the interest issue in that decision, the common law traditionally prohibited interest and while that prohibition was statutorily reversed those statutes did not allow for compound interest. In Bank of America 2002 SCC 43, (aka Clarica Trust), the SCC recognized that simple interest is not fully compensatory, and consequently, the SCC held that even if compound interest was not available under the relevant statute, it was available under the common law of contract as compensation, so long as it was claimed as such and proven.

Allegation of Non-infringement Need Not Be Put “In Play”

Bristol-Myers Squibb & Gilead Sciences v Teva / efavirenz (NOC) 2015 FCA 3 Near JA: Dawson, Stratas JJA aff’g 2014 FC 30 Barnes J
             2,279,198 / efavirenz / ATRIPLA

In this NOC proceeding, the FCA has affirmed Barnes J’s decision that the patentee failed to established that Teva’s product would infringe the ‘198 patent for a particular crystalline form of efavirenz. The decision at first instance (blogged here) turned entirely on the facts, and the FCA affirmed on the basis that the appellant patentee had not established and palpable and overriding error.

The only point of general legal interest is that the FCA held that when non-infringement is alleged in an NOC proceeding, there is no evidentiary burden on a generic to adduce evidence in order to put that allegation “in play.” It is enough to make the allegation in the NOA, and the burden is then on the patentee to prove infringement on the balance of probabilities [11], [8]. This is in contrast to an allegation of invalidity, in which the generic must adduce some evidence to put the allegation of invalidity into play before the burden shifts to the patentee to disprove invalidity. The reason for the difference is the presumption of validity under s 43(2) of the Act [10].

"That Mode Is Adopted Which Is . . . the Least Burthensome to the Defendant"

Eli Lilly and Co v Apotex Inc / cefaclor, 2014 FC 1254 Zinn J [Cefaclor Damages]
            1,133,007 – 1,146,536 – 1,133,468 – 1,150,725 [“Lilly Patents”]
            1,095,026 – 1,132,547 – 1,136,132 – 1,144,924 [“Shionogi Patents”]

In the liability phase of this bifurcated action, Cefaclor Liability 2009 FC 991 aff’d 2010 FCA 240, Gauthier J held that at least one valid claim of each of the eight patents was infringed by Apotex. Lilly elected damages, which were assessed by Zinn J in the decision at hand. Sunday’s post concerned the misnamed “NIA defence,” which turned entirely on a question of law. Today’s post looks at what I will call “reverse springboard” damages, though that is probably also a misnomer. The question is whether Lilly should be able to claim lost profit damages for sales it would have made in the but for world, even though in the relevant period in the actual world Apotex was selling non-infringing product.

At issue were two set of four patents relating to processes for producing cefaclor. (The so-called “Shionogi patents” had been assigned to Lilly by Shionogi. The different sets of patents related to somewhat different processes.) There were essentially three processes used to make the cefaclor imported and sold by Aptoex: Kyong Bo, Lupin 1 and Lupin 2. The first two processes were infringing, but Lupin 2 was non-infringing. (More precisely, Lilly failed to prove that Lupin 2 infringed and Zinn J took this as tantamount to a finding of non-infringement for the purposes of the damages phase [61].) In the liability phase it was established that the last shipment of infringing cefaclor was received by Apotex on June 3, 1998 [Liability 228-29], [58]. Presumably there was some subsequent period during which Apotex sold infringing product that it had imported prior to that time, but unfortunately, it is not clear from either the liability decision or the damages decision exactly when the last infringing product was sold by Apotex in Canada.

On the question of when Apotex would have entered the market with non-infringing product in the “but for” world, Apotex argued that

proof of what it would have done in the but-for world is established by what it did in the real world. In the real world, when it determined that the process being used infringed the patents, it sought out a non-infringing process and continued selling in the marketplace. [63]

Zinn J rejected this, and held that in the but for world, Apotex would not have been in the cefaclor market under April 19, 2000, when the last of the Shionogi patents expired [70]. It is implicit in this exchange that in the real world, the last infringing product was sold by Apotex prior to that time. My understanding is that Apotex stopped selling infringing product by the summer of 1999 at the latest, so that all product sold in the real world in the period from (at least) the late summer of 1999 to April of 2000 was non-infringing.

So, my analysis of this point proceeds on the basis that Lilly was awarded lost profit damages on sales it would have made in the but for world for a period during which Apotex was selling non-infringing product in the real world.

On its face, Zinn J’s reasoning is based simply on the construction of the but for world on the facts. The main evidence relied on by Apotex to establish that in the but for world it would have used a non-infringing process, at least as of the summer of 1999, is that it did so in the actual world. Specifically, in the real world, Apotex “sought out” a non-infringing process “when it determined that the process being used infringed the patents” [63]. Zinn J accepted this as true [63], but he was not persuaded that that is what Apotex would have done in the but for world. His reasoning is quite brief, but if I understand it correctly, he is saying that Apotex developed an NIA only because it was in the market and wanted to stay in the market. If it had not entered the market in the first place, it would not have had any incentive to develop the NIA [63]-[64]. That is, while it would have been technically feasible for Apotex to have marketed non-infringing product, it would not have been motivated to do so. Instead, it would have stayed out of the market entirely and Lilly would have had the market to itself until the expiry of the last Shionogi patent, which would have allowed Apotex to produce non-infringing product using the Kyong Bo process [69].

This reasoning calls to mind Open Window Bakery 2004 SCC 9, in which the plaintiff had been wrongly dismissed without cause and without notice. The trial judge held that but for the breach of contract, the plaintiff would not have been dismissed, but would have been retained for the entire remainder of the contract term. The defendant argued that on the contrary, but for the wrongful dismissal, the plaintiff would have been dismissed without cause but with notice. (The putative cause for dismissal involved dishonesty, and while the plaintiff had acted inappropriately [2000] OJ 5004 [70], the trial judge held that dishonesty was not established [112]. The trial judge also held that the employees who had made honest mistakes were generously treated by defendant’s CEO [115].)

So, in Open Window Bakery there were two ways in which the defendant might have avoiding wrongdoing: (1) it might have retained the plaintiff for the duration of the contract; or (2) it might have terminated the plaintiff without cause but with notice. The trial judge found that in fact the defendant would have chosen option (1), though option (2) would have been less burdensome. This case presents much the same scenario. Apotex might have avoided infringement by (1) staying out of the market for until the expiry of the patents at issue; or (2) by developing a non-infringing alternative. Zinn J found that in fact Apotex would have chosen option (1), though option (2) would have been less burdensome.

The SCC in Open Window Bakery reversed the trial judge, without disputing his finding of fact, on the basis that as a matter of law, “where there are several ways in which the contract might be performed, that mode is adopted which is . . . the least burthensome to the defendant” [11] (and see similarly [20], [21]). Now, in Open Window Bakery the SCC emphasized this is a principle of contract law, and distinguished it from “a tort-like inquiry as to what would have happened if [the plaintiff] had not breached its contractual obligations to [the defendant]” [19]. But I am not sure that the trial judge’s approach really reflected a tort-like analysis. The tort analogy would be more exact if there were two ways of avoiding liability, and one would have resulted in harm to the defendant. I’m not sure how tort law would handle such a case, but it is not clear to me that it would necessarily be strictly by an inquiry as to what most likely would have happened. I suggest that rather than considering the principle of “least burdensome performance” as being a unique aspect of contract law, it can be explained as a presumption of law regarding the most likely course of action in fact, which simply happens to arise more commonly in contract.

In any event, while patent infringement is often described as a kind of “statutory tort” [10], it is not a tort as such, and the principles of patent damages must be interpreted in a manner that is consistent with the purposes of the Patent Act. The relevant principle is that the patentee should be rewarded commensurately with the social value of its invention, and that is the difference between the value of the invention and the value of the best non-infringing alternative. To posit that Apotex would not have entered with a non-infringing method means that Lilly would be rewarded as if it process were more valuable than it is really is. Consequently, it seems to me that the principle of least burdensome performance should apply, at least presumptively, under the Patent Act as much as in contract.

" 'I Could Have Gone Down Metcalfe Street Instead"

Eli Lilly and Co v Apotex Inc / cefaclor, 2014 FC 1254 Zinn J [Cefaclor Damages]
            1,133,007 – 1,146,536 – 1,133,468 – 1,150,725 [“Lilly Patents”]
            1,095,026 – 1,132,547 – 1,136,132 – 1,144,924 [“Shionogi Patents”]

Zinn J’s Cefaclor Damages decision raises a couple of interesting legal issues related to causation, the first of which is the relevance of a non-infringing alternative to the assessment of damages:

Apotex urges the court to find that if there is a non-infringing alternative [NIA] to the infringing product or process that was available to the infringer in place of the infringing product or process, then, even though the infringer did not employ the NIA in the real world, it must be considered in the but-for world. I shall refer to this as the NIA Defence.[21]

The phrase “NIA defence” is certainly convenient, but it is something of a misnomer, as will be discussed below. Zinn J rejected the NIA defence as a pure matter of law [57]. Zinn J’s conclusion in rejecting the NIA defence was the same as that of Snider J in Lovastatin Damages 2013 FC 751 (blogged here), whom he agreed with [52]. An appeal in Lovastatin Damages was heard in mid-January, and presumably we will be getting the FCA’s view on this issue in due course. As Zinn J’s holding is likely to be overtaken by that of the FCA, I will not try to address every argument on this issue. Instead I will focus on what I see as the intuition behind Zinn J’s rejection of the NIA defence, as I suspect that his intuition is widely shared.

Apotex’s argument was that but for the infringement, it could have would have competed just as effectively with a non-infringing alternative. Lilly’s losses were therefore not caused by the infringement, because it would have suffered exactly the same losses in the but for world in which there was no infringement. Because Zinn J rejected the argument as a matter of law, he did not explicitly address whether Apotex could have established the NIA defence on the facts (though there was some evidence to that effect, as will be discussed my next post.) But by the same token, for the purposes of this analysis we can assume that in fact Apotex would have been able to compete just as effectively using a non-infringing alternative, for at least some of the infringing production.

The essence of Zinn J’s objection to the NIA defence seem to me to be captured in these paragraphs:

[32] I concur with Mr. Creber who said: "I am not aware of any Canadian case that has allowed a tortfeasor, the person who committed the tort, to pretend they could have acted differently whether that be personal injury, whether it be negligence, whether it be patent infringement. ... If I drove my car down Elgin Street and I hit somebody, it would be not open to me to argue, 'I could have gone down Metcalfe Street instead and would have avoided hitting the person'."

[35] In short, the causal connection must be examined in the real world. Damages arise if Lilly proves in the real world that, but for Apotex selling infringing product, it would have made some or all of those sales. The causal connection is not examined in the hypothetical world where the infringer engages in different conduct than that in which it actually engaged. Such an approach permits the wrong-doer to escape all responsibility for its conduct.

That is, the NIA defence would allow a wrongdoer to say “But for the wrong, I would have acted so as to avoid the wrong, and so I should escape all responsibility.”

Claim Defined in the Alternative: A Circle of Logical Contradiction

Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC (NOC) 2015 FC 17 de Montigny J
            2,226,784 – tadalafil– CIALIS

In law we are accustomed to issues with two conflicting lines of authority. But when it comes to s 27(5) of the Act, which concerns claims framed in the alternative, we have one single line of authority – that ends of up contradicting itself, like a snake swallowing its own tail. There are two questions: (1) when a claim is framed in the alternative, so that s 27(5) applies, does the validity of the alternative in issue depend on the validity of the other alternatives?; (2) when a claim is not framed in the alternative, so that s 27(5) does not apply, does the validity of the alternative in issue depend on the validity of the other alternatives ? There are four possible answers to these two questions, and now, with de Montigny J’s Tadalafil decision, the courts have given all four answers, all based on one leading authority.

Date for Assessing Obviousness-Type Double Patenting Is Priority Date of Earlier Patent

Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC (NOC) 2015 FC 17 de Montigny J
            2,226,784 – tadalafil– CIALIS

The claims at issue in this NOC proceeding were to tadalafil (CIALIS) for the treatment of ED in men, specifically by oral administration [18]-[25]. As discussed yesterday, de Montigny J rejected Mylan’s utility attack.

The second substantive issue was obviousness type double-patenting over the 2,181,377 patent. Smooth muscle tissue, including heart and vascular muscles, as well as penile tissue, is relaxed by the so-called NO/cGMP pathway, with the end result that increased concentration of cGMP causes the smooth muscle tissue to relax [7]. Relaxation of penile tissue induces an erection. A class of enzymes known as PDEs break down cGMP. A compound that inhibits PDE can therefore prevent the breakdown of cGMP, resulting in increased concentration of cGMP, relaxation of the smooth muscle tissue, including penile erectile tissue. This was all known before sildenafil and tadalafil were discovered to treat ED. The ‘377 patent is a compound claim to tadalafil, and it discloses that tadalafil is a potent and selective PDE_V inhibitor. The essential obviousness argument in this proceeding (as well as in various earlier proceedings regarding sildenafil), was that the information regarding the NO/cGMP pathway, combined with the knowledge that tadalafil was a selective PDE_V inhibitors, made it obvious that tadalafil would be effective in treating ED.

The main legal question on this issue turned on the fact that the ‘377 patent, which revealed that tadalafil is a selective PDE_V inhibitor, was not published until 27 July 1995, two weeks after the claim date of the ‘784 patent (14 July 1995). Thus the ‘377 patent could not be raised in a straight obviousness argument, because under s 28.3 obviousness is assessed in light of information disclosed before the patent's claim date. 

Mylan therefore relied on obviousness-type double patenting. The key contested legal issue was whether the date for assessing obviousness type double-patenting should be the priority date of the ‘784 patent or the priority date of the ‘377 patent [134]-[135]. That is, in assessing whether the ‘784 patent is obvious in light of the ‘377 patent, should the art that arose after the ‘377 date, but prior to the ‘784 date, be taken into account?

de Montigny J held that the priority date of the earlier, ‘377 patent, was appropriate, for two main reasons. First:

[134] If, as Mylan would have it, the relevant date was to be the priority date of the second patent (in this case, July 14, 1995), the obviousness-type double patenting analysis would morph into a pure obviousness analysis, with the added benefit that the timing requirements of section 28.3 of the Patent Act would be circumvented.

This strikes me as a very strong point. The judicially created obviousness type double-patenting cannot be used to do an end-run around a clear statutory provision.

His second point was that the rationale for the doctrine of obviousness type double-patenting is to prevent evergreening of the earlier patent by a claim to subject matter which makes no further inventive contribution [142]. Consequently, the question is “whether the claims of the ‘784 Patent disclose novelty or ingenuity over the ‘377 Patent” [133]. If it does, then the later expiry date of the second patent is not impermissible evergreening, but a reward for a further inventive contribution. That point also strikes me as compelling.

Having decided that the appropriate date was the ‘377 priority date, de Montigny J held that it was clear that there was no obviousness type double-patenting. The fact that tadalafil was a PDE inhibitor, and was useful for relaxing smooth muscle tissue, did not make it obvious that it would be useful for treating ED, because prior to the sildenafil patent and related publications, everyone had thought that relaxing smooth muscle tissue would cause ED, rather than treat it, by generally lowering the patient’s blood pressure [136]. The breakthrough that lead to the realization that tadalafil (and sildenafil) could be used to treat ED was the discovery that the the main PDE activity in human penile tissue is due to a particular type of PDE, PDE_V, so that oral administration of PDE_V would relax penile tissue but not vascular tissue [109]. That was far from obvious at the priority date of the ‘377 patent.

While important, the question of the appropriate date for assessing obviousness type double-patenting was not determinative, because de Montigny J also held on the facts that the use of tadalafil to treat ED would not have been obvious over the ‘377 patent and the common general knowledge even at the priority date of the ‘784 patent [149], for essentially the same reason: the state of the art had not changed significantly in the interim, and even at that later date it was still thought that oral administration of any PDE inhibitor, including a PDE_V, inhibitor, would result in systemic hypotension.

Utility of CIALIS Patent Upheld on the Facts

Eli Lilly Canada Inc v Mylan Pharmaceuticals ULC (NOC) 2015 FC 17 de Montigny J
            2,226,784 – tadalafil– CIALIS

In this NOC proceeding, de Montigny J held that Lilly had established that its ‘784 patent was valid in the face of Mylan’s allegations of lack of utility and obviousness-type double patenting. The utility issue turned on the facts, and Lilly won comprehensively, so that alternative constructions of the promise of the patent were largely rendered moot. Perhaps the point of most general interest is that de Montigny J rejected the proposition that the word "treatment" implies lack of undue side effects. The obviousness-type double patenting issue raised one novel point of law, namely the appropriate date for assessing obviousness in the context of double patenting. Tomorrow’s post will look at that question. Perhaps the most interesting legal question raised by this case, albeit tangentially, turned on the interpretation of s 27(5), which provides that when a claim is framed in terms of alternatives, each alternative is to be considered a separate claim. A third post will discuss that issue.

The claims at issue were to tadalafil and 3-methyl tadalafil, or a pharmaceutical composition comprising those compounds, for the treatment of ED in men, specifically (Claim 18) by oral administration [18]-[25]. The argument relating to utility turned on the promise of the patent. The contentious issues were whether the patent merely promised the treatment of erectile dysfunction (ED) by use of tadalafil, as Lilly argued, or whether it also included efficacy in oral administration [76], and / or lack of toxicity [87], as argued by Mylan. Some interesting points of law were raised tangentially, but were largely rendered moot by de Montigny J’s holdings on the facts.

A Rule Without a Principle: Patentability of Methods of Medical Treatment

AbbVie Biotechnology Ltd v Canada (Attorney General) 2014 FC 1251 Kane J

2,385,745* – anti-TNF-α antibodies / HUMIRA dosage regime

Kane J’s Humira dosage regime decision is the latest chapter in the continuing saga of the patentability of methods of medical treatment. While Kane J’s holding that the claims in question are patentable is defensible, I am not persuaded by her view that the case law is consistent [84], as there is support in the case law for the opposite result. So far as I can tell, the case law is incoherent in the sense that it cannot be explained on the basis of any unifying principle, and progress in this area of the law will not be possible until that fact is generally acknowledged.

When is a New Drug Submission "Administrative"?

Pfizer Canada Inc v Canada (Attorney General) 2014 FC 1243 Gleason J
            2,409,059 – exemestane – AROMASIN.

Yesterday’s post discussed Gleason J’s holding that the standard of review of the Minister’s interpretation of s 5(1) of the PM(NOC) Regulations is correctness. Today’s post looks at the substantive question: when a first generic has received an NOC, is a second generic which licenses from that first generic subject to s 5? If the answer is yes, this means that a patentee can decide whether to respond to each NOA in light of the threat it perceives from the particular generic; if the answer is no, a patentee must respond to every NOA it receives, or take the risk that the generic in question will subsequently license. As a matter of law, this resolution of this question turns on the interpretation of the word “submission” for an NOC in s 5(1).

To recap the facts, GMP filed an ANDS with the Minister with respect to exemestane using Pfizer’s exemestane product, AROMASIN, as the reference product [45]. GMP served Pfizer with an NOA, and Pfizer chose not to respond. An NOC was then issued to GMP. On the same day, Health Canada also issued an NOC to Teva with respect to exemestane. This NOC was granted on the basis of an “administrative” ANDS filed by Teva, based on a licensing agreement with GMP. The NOC issued to Teva also shows AROMASIN as the Canadian Reference product [46]. Teva never served an NOA on Pfizer.

Teva undoubtedly did file a submission with Health Canada requesting an NOC, and the NOC was granted. The reference product was AROMASIN, and it is consequently clear on the authorities, and now on the face of the Regulations, that Teva’s ANDS compared its product “directly or indirectly” with Pfizer’s product. The only argument, then, is that the ANDS submitted by Teva is not a “submission” for the purpose of the Regulations. As noted yesterday, the AG carried the argument on this question.

The AG’s first argument was that the purpose of the Regulations is to allow the “early working” by a generic company of a patented drug, and Teva did not take advantage of the early-working exception – GMP did – so therefore, that under a purposive approach, Teva’s submission is not a “submission for an NOC.” Gleason J rightly rejected this purposive argument, noting that “The Regulations exist not only to allow generic companies to early work patented medicines to develop generic formulations and to have them ready as soon as possible but, also, to balance these interests with those of the patentee in obtaining protection for innovations that are legitimately patented” [133]. As noted in yesterday’s post, the proposition that the Regulations implement a balance is very well established. Moreover, the AG’s submission on the purpose of the provision seems to miss the point. S 5(1) does not implement the early working exception at all, which is found in s 55.2(1) of the Act. S 5(1) strikes the other half of the balance, namely the protection of the patentee’s interests. The Regulations as a whole strike the balance alluded to by Gleason J, and the purpose of s 5(1) in particular is almost the opposite of that suggested by the AG.

The AG’s next submission was in effect that the case law has established that not all submissions are “submissions” for the purpose of s 5(1); in particular, “administrative” submissions are not considered “submissions” which trigger s 5(1) [129]. The question then is what makes a submission an “administrative” submission?

The AG relied in particular on a series of cases holding that certain supplemental NDSs, specifically, those required where there is a change in the name of a drug, a drug manufacturer, or a change of manufacturing site, are not “submissions” for the purpose of submitting a patent list under s 4: see eg Hoffman-LaRoche 2005 FCA 140 [25]. Gleason J held that those cases were not relevant, on the basis that the concern in those cases – that the patentee should not be able to extend its entitlements under the Regulations with administrative filings – is very different from concerns as to whether the patentee should be required to address a particular generic [143]. While this strikes me as sound as a matter of purposive analysis, the textual argument that the word “submission” should be interpreted in the same way in both s 4 and s 5 is strong. But even if we accept that textual point, the cases cited are not particularly helpful, as the types of changes they discussed were different, and arguably less significant, than a submission by an entirely different party based on a licence.

The AG then appealed to the GlaxoSmithKline 2004 FC 1302 decision, in which Lemieux J held that Health Canada’s Name Change Policy did not trigger s 5. The product in GSK was a salbutamol inhaler. GSK has obtained a NOC for its salbutamol inhaler product, VENTOLIN, and it also obtained a formulation patent which it listed against that product. 3M obtained an NOC for its its salbutamol inhaler product, AIROMIR, on the basis of an entirely separate NDS. 3M also obtained a formulation patent which it listed against its product [13]. 3M and Apotex then entered into a licensing agreement permitting Apotex to sell 3M’s product under Apotex’s name. Apotex sought an NOC based on that agreement. GSK argued that Apotex’s submission triggered s 5, requiring Apotex to address GSK’s patent.

Gleason J held that GSK was distinguishable because Apotex was not required to address GSK’s patents because it was not using GSK’s product as a reference. That is, Apotex was not comparing its product, directly or indirectly, with GSK’s [142]. In this respect, GSK anticipates Biolyse 2005 SCC 26.

While I agree that GSK is strictly distinguishable for that reason, the fact that the comparison was indirect was something of a secondary consideration in Lemieux J’s decision. He also addressed the name change issue. On that point, Lemieux J’s decision in GSK turned on the fact that in its submission, Apotex certified that

...all aspects of the submission pertaining to: Apo-Salvent CFC Free submitted by: Apotex Incorporated are identical to Airomir... submission(s) except for a change in the manufacturer/sponsor's name and/or product name and that the product will be manufactured in the same location with identical specifications and procedures". [Lemieux J’s emphasis] [20]

Lemieux J held that the administrative NDS was not a submission because the purpose of the Food and Drug Regulations, which impose the requirement for an NOC, is to ensure the safety and effectiveness of drug products on the Canadian market [66]. The changes in the submission by Apotex were not relevant to the safety and effectiveness of the drug in question – it was “identical” to 3M’s product down to the point of being made in exactly the same plant – so the application for an NOC should not be seen as a “submission” for the purposes of the Food and Drug Regulations [68]. Moreover, because of the linkage between those Regulations and the PM(NOC) Regulations, the meaning of “submission” in the PM(NOC) Regulations should be given a similar interpretation [64].

Lemieux J’s purposive analysis strikes me as sound. In this case, if Teva would be manufacturing in a different plant from GMP, then GSK would be clearly distinguishable, and indeed, it strongly implies that the submission would not be purely administrative in that case. From an NOC perspective, the argument is reinforced; particularly in the case of a formulation patent (such as the 059 patent) the plant in which the product is made might be very significant in a patentee’s decision whether to address an NOA, because the likelihood of infringement would be directly affected. On the other hand, if Teva would be purchasing its product in final form from GMP, the argument that the filing was administrative is much stronger. GSK would still be distinguishable, because of the comparison point discussed at the outset, but the question would be very different. The question would be whether the patentee would be entitled to decide whether to challenge a particular NOA based on its assessment of the business practices of the generic in question, rather than the technical aspects of the product.

It is not clear to me which scenario is at issue in Exemestane. The nature of the license between GMP and Teva is not spelled out, and are details of Teva’s ANDS are not provided, so it is not apparent whether it has a certification similar to that emphasized by Lemieux J in GSK. Nor is s 3.4.1 of the PM(NOC) Guidance Document clear, at least to me. It applies only when the licensee seeks to sell the “identical” drug, but that term is not defined in that Guidance document. The policy on Changes in Manufacturer’s Name and/or Product Name does specify that for the purposes of that policy, a drug is considered identical only when the conditions of manufacture and sale are identical, but it is not obvious to me that that definition is intended to apply across all technical guidance documents.

Gleason J also relied on Nu-Pharm 1 (1997), 73 CPR (3d) 510, [22], aff’d (1998), 80 CPR (3d) 74 (FCA) and Nu-Pharm 2 [1999] FCJ No 1825, aff’d (2000), 5 CPR (4th) 138, holding that these cases were not distinguishable. I don’t know if I agree. In the Nu-Pharm decisions Generic 1 had obtained an NOC using a patentee’s product as a reference product, and Generic 2 sought to avoid having to address the patents by using Generic 1's product as a reference product. The FCA held that Generic 2 could not avoid addressing the patents by this strategy. This has been legislatively affirmed by the reference to an “indirect” comparison in the current s 5(1).

Gleason J held that the Nu-Pharm decisions were not distinguishable because “In both Nu-Pharm cases the generic company, just like Teva, had acquired the right to produce the drug in question under a licence from another generic company” [141]. However, I could not find any reference to a licence in any of the Nu-Pharm decisions. (And I don’t really see what kind of proprietary interest Generic 1 might have had in the right to produce the drug, so it’s not clear to me why Generic 2 would have required a licence.) So it is not clear to me if the Nu-Pharm cases are distinguishable. If, in this case, Teva intends to purchase the final product from GMP, then it seems to me that the cases are distinguishable, because it appears that in the Nu-Pharm cases Generic 2 was going to manufacture the product itself. On the other hand, if Teva intends to manufacture at a different plant than GMP, then I agree with Gleason J the cases are not distinguishable. That this is the case is suggested by Gleason J saying that Teva acquired “the right to produce the drug in question” under licence from GMP, implying that Teva, not GMP will be the manufacturer. But as discussed above, the case as a whole is not clear on this point.

In conclusion, some facts that seem to me to be quite important are simply not clear to me, and consequently I cannot assess the merits of the decision. While the facts in question were no doubt clear to the parties and to Gleason J, for the sake of guidance for future applicants and litigants, I hope that on the inevitable appeal, the FCA will clarify these issues or explain why the questions I have discussed are not relevant.

Correctness Standard of Review for Minister's Interpretation of S 5 of the PM(NOC) Regulations

Pfizer Canada Inc v Canada (Attorney General) 2014 FC 1243 Gleason J
            2,409,059 – exemestane – AROMASIN.

Under s 3.4.1 of the most recent (2012) Guidance Document: Patented Medicines (Notice of Compliance) Regulations, if one generic has received an NOC by comparing its product with a patentee's reference product, and a second generic obtains a licence from the first, the licensee is not required to comply with s 5 of the PM(NOC) Regulations, which is to say that the licensee need not serve an NOA on the patentee and need not address the patents listed against the drug [33]. Prior to April 2012, when the new Guidance document came into effect, a licensee would have been required to comply with s 5 [31]. Under the new policy Health Canada will require only an “administrative” drug submission, such as is used when a party that has received an NOC changes its name as a result of a corporate restructuring [28].This change in policy was made as a matter of Health Canada’s changed interpretation of the Regulations; there was no change to the Regulations themselves.

In this case, Pfizer successfully challenged that new policy (though an appeal will no doubt follow). Note that counsel for the Attorney General carried the argument in this case [51], so Health Canada evidently (and rightly) views this as a policy issue of general significance.  

Generic Medical Partners Inc. [GMP] filed an ANDS with the Health Canada with respect to exemestane, using Pfizer’s exemestane product, AROMASIN, as the reference product [45]. In August 2013 GMP sent Pfizer an NOA with respect to the ‘059 Patent, which was listed by Pfizer against AROMASIN. Pfizer chose not to commence a prohibition application against GMP, apparently because GMP does not sell products in Canada [44]. The NOC was issued to GMP for exemestane in October [45]. On the same day, Health Canada also issued an NOC to Teva with respect to exemestane. This NOC was granted on the basis of an administrative ANDS filed by Teva, based on a licensing agreement with GMP. The NOC issued to Teva also shows AROMASIN as the Canadian Reference product [46]. Teva never served an NOA on Pfizer. Pfizer sought judicial review to set aside the NOC granted to Teva [1].

There were two main issues. The first was the standard of review applicable to the Minister’s interpretation of the PM(NOC) Regulations. I discuss that issue in this post. The second was the substantive interpretation of the relevant provisions. I will discuss that in tomorrow’s post.

There were three main issues relating to the standard of review: (1) whether prior case law of the Federal Courts applying a correctness standard to decisions of the Minister of Health under the PM(NOC) Regulations were still binding in light of recent SCC case law [58]; (2) whether it mattered that the decision-maker was the Minister as opposed to an administrative tribunal [59]; and third, whether the decision of the SCC in Canadian National Railway v Canada 2014 SCC 40 [CN] meant that a reasonableness standard is always applicable when an administrative decision-maker interprets its constituent statute or regulation, or a statute or regulation that is closely connected with its function, unless the decision falls into one of four exceptions which were not suggested to be relevant in this case [60].

On the first issue, Gleason J agreed with the Attorney General that pre-Dunsmuir 2008 SCC 9 case law of the FC and FCA [58] cannot be considered determinative, and that in light of Dunsmuir and subsequent SCC cases, the reasonableness standard is “presumptively” applicable whenever an administrative decision-maker interprets its constituent statute or a statute or regulation that is closely connected with its function [67].

While the conclusion that pre-Dunsmuir case law of the Federal Courts can no longer be determinative seems fair enough, I am puzzled by the fact that the SCC Biolyse 2005 SCC 26 decision was not discussed in this context. The question at issue in this Exemestane case was the Minister’s interpretation of “submission" for an NOC in s 5(1) of the Regulations [123]. The question at issue in Biolyse was the interpretation of the word “submission” in s 5(1.1) as it then was [Biolyse 40ff]. The changes to s 5 were aimed at addressing when a patentee's product is considered a reference product (when a comparison is made "directly or indirectly" in the current provision), and not what constitutes a "submission." That is, the question was the deference to be given to the Minister’s interpretation of the very same word, in functionally the same provision. This is the very next thing to being exactly the same question.

In Biolyse, the SCC held that “On the question of interpretation, the Minister's opinion is not entitled to deference. The Federal Court quite properly said that the standard of review on that point is correctness” [36]. The discussion was brief, but this is evidently because the SCC thought the point was clear, and in any event it was undoubtedly part of the ratio of the case. It is true that the FC’s 2002 FCT 1205 [20]-[29] assessment of the standard of review in Biolyse was based on the “ pragmatic or functional analysis” that is no longer the accepted approach. But my understanding is that Dunsmuir was intended to simplify the previous three-standard model (correctness, reasonableness and patent unreasonablness) that had proven too difficult to apply: “What is needed is a test that offers guidance, is not formalistic or artificial, and permits review where justice requires it, but not otherwise. A simpler test is needed” [Dunsmuir 43]. In particular, the crux of the difficulty was that "lower courts were struggling with the conceptual distinction between patent unreasonableness and reasonableness simpliciter" [40]. So, the problem is not that SCC itself was getting wrong answers, but that it was not providing sufficient guidance. I don't see this as saying that the highly contextual functional test which had been previously applied was wrong in principle, just that it was too difficult to apply. None of this calls into question the specific results of the contextual, functional analysis, properly applied. 

Given the difficulty of applying the previous test, we might well doubt whether it was properly applied by lower courts, but I don’t see why Dunsmuir should call into question the outcome of the functional analysis when the previous test was applied by the SCC itself. In this case, the SCC Biolyse decision was discussed at length in other parts of Gleason J’s decision, but not at all in the context of the standard of review, presumably because it was not argued. It seems that the parties must have thought it so clear that Biolyse was implicitly overruled that it was not worth even discussing the specific SCC holding in Biolyse. This is quite remarkable. Biolyse itself was not discussed in Dunsmuir, so if it is no longer good law on this point, it can only be because Dunsmuir implicitly over-ruled all prior SCC decisions, not just on the general approach, but on the specific holding of all those cases on their facts. This seems to me to be far-fetched, given that the SCC built its new approach by a synthesis of the strengths of its prior case law (see eg [54]). Moreover, all of the members of majority in Dunsmuir, except Bastarache J, were also members of the majority in Biolyse that held the standard of review to clearly be correctness. Could they really have changed their minds so dramatically about judicial review in the intervening three years as to want to repudiate their own specific holdings? 

I am not an administrative law expert, so I may well be missing something glaring. But it certainly looks to me like the SCC itself has already held that the appropriate standard of review for the Minister's interpretation of the word "submission" in s 5 of the PM(NOC) Regulations is correctness, and this holding is still good law.

Moving on, Gleason J also agreed with the Attorney General that the fact that the Minister was the decision-maker does not in itself alter that presumption [84], given that FCA case law was split on this point [80].

However, Gleason J rejected the view that CN implies that the presumption of a reasonableness standard can only be rebutted in the four enumerated exceptions [88]. After an extensive review of the SCC authorities, Gleason J held that while the SCC case law as a whole does establish a presumption that the standard is reasonableness, the SCC authority requires a contextual analysis as to whether the presumption has been rebutted [98]. The four exceptions in which a correctness standard applies are only four cases where it has been settled, by a contextual analysis, that the presumption of a reasonableness standard has been rebutted; they do not constitute an exhaustive taxonomy of the only times the reasonableness standard can possibly be rebutted.

Again, I am not an administrative law expert, but Gleason J’s analysis appears to me to be sound in light of the many cases she cites. Moreover, it seems to me that the four exceptions cannot be exhaustive. For example, if the relevant statute explicitly provided that the administrative decision-maker was not entitled to deference, then a correctness standard would necessarily apply, even though that situation is not one of the four enumerated exceptions. (The closest is the existence or absence of a privative clause, which is a contextual factor, not an enumerated exception.) The discussion of the standard of review in CN is quite brief – only eight paragraphs ([55] - [62]) – and it strikes me as nothing but an application of the established framework of analysis, resulting in a finding of a reasonableness standard on the facts of the particular case. I think Gleason J is right to say that “[i]t would take a much more deliberate treatment of the issue by the Supreme Court than that which is contained in CN” to effect a change in the approach endorsed by the SCC [98].

The question then was whether, on a contextual analysis, the presumption of a reasonableness standard should be considered to be rebutted in this case. Gleason J held that it was rebutted. One key point was that the Minister has no discretion as to when to issue an NOC [114], and indeed,

the Governor in Council left the ultimate determination of whether an NOC should be issued under the PMNOC Regulations to this Court as it is the Court that is required to rule on prohibition applications made by innovator companies who wish to forestall the issuance of an NOC to a generic company through an ANDS. The role assigned to this Court under the PMNOC Regulations is inconsistent with application of the reasonableness standard to interpretations of the Minister or officials at Health Canada of the Regulations. [115]

This latter point in particular strikes me as compelling. A purposive analysis plays an important role in the modern approach to statutory interpretation. The purpose of the provision must be considered, but it must be considered in light of the purpose of the legislation as a whole. That is particularly true in the case of the PM(NOC) Regulations, where both the case law and the RIAS accompanying the 2006 amendments make it clear that the PM(NOC) Regulations are intended to strike a balance between the goals of promoting timely entry of generics, and providing effective patent enforcement: [16], [134], Biolyse [2]. The Minister of Health has no particular expertise in the construction of the PM(NOC) Regulations as a whole. The various provisions have been heavily litigated before the courts, and often the Minister, though a party to the proceeding, does not participate. This is true even of cases which raise issues of the interpretation of the Regulations. So, for example, the Minister has no view as to whether the allegations in the NOA must be correct as of the date of the hearing or as of the date the NOA was served: 2009 FC 648 [7]. Indeed, some of the provisions will never be interpreted by the Minister, even nominally, because they are only applicable in an action between the generic and the patentee (eg the s 8 remedial provisions). Because the Federal Courts are called on to interpret and apply all aspects of the Regulations, they have a better understanding of the balance sought by the Regulations as a whole. When the legislative history insists that the Regulations must be understood as a whole, it seems to me very unlikely that when the legislature would have intended to give deference to an interpretation by the Minister, who actively engages with only a part of those Regulations.

Finally, on a personal note, Dunsmuir was the clerk of the court in Fredericton, New Brunswick (the full name of the case is Dunsmuir v New Brunswick), and my wife and I were married in 2004 at the Fredericton City Hall, by David Dunsmuir, about a year before he was removed from office. He did a brief Elvis impersonation, which my wife particularly enjoyed, but so far as I know he performed competently, and we are validly married.

No Discretion to Extend Time Limits for Reinstatement of Abandoned Applications

Cloutier c Thibault 2014 CF 1135 St-Louis J
            2,437,612, 2,470,139, 2,553,144

Mr Cloutier invented a new type of crimping tool for use in plumbing. He entered into a partnership with Mr Thibault to patent the invention and commercialize it [5]. Mr Thibault filed three patent applications for the invention without informing Mr Cloutier, and naming himself rather than Mr Cloutier as the inventor [6], [9]. Mr Cloutier successfully moved to have the partnership dissolved and to establish his entitlement to the inventions [11], but during and shortly after that litigation the applications were abandoned for failure to pay maintenance fees, in accordance with s 27.1 and 73 of the Act [12]. No application for reinstatement was made within the 12 month grace period provided by s 98 of the Rules.

In this case, Mr Cloutier asked the court to reinstate the application, and to name him as the inventor. St-Louis J refused, on the ground that the court has no jurisdiction in law or equity to extend the mandatory time limits established by the Act [23-24]. That proposition is well-established by the authorities cited by St-Louis J: see in particular Hoffmann-La Roche AG v Canada (Commissioner of Patents), 2003 FC 1381 [41-45] aff’d 2005 FCA 399 [7-8].

Given the mandatory nature of the time limits, this conclusion would evidently follow regardless of whether Mr Cloutier would have been in a position to seek relief in a timely manner, but the court noted that the evidence suggested that Mr Cloutier could have taken steps before the applications were irrevocably abandoned [25].

The court also refused to order the application amended to show Mr Cloutier as the inventor, as this would have been pointless given the refusal to reinstate the application [27].

No New Cases for the Week of 22 December

No new patent / NOC / data protection cases were released for the week of 22 December 2014.

Liability Decision is Res Judicata in a Bifurcated Action

Merck & Co Inc v Apotex Inc 2014 FC 1058 Hughes J var’g 2014 FC 883 Lafrenière J
            1,275,350 – lisinopril – PRINIVIL

This motion to amend relates to the upcoming damages portion of a bifurcated action. In the underlying Liability decision, 2006 FC 524 aff’d 2006 FCA 323, the patent was held invalid and infringed, in part on the basis of the law set out in Boehringer (1962), 39 CPR 201. Subsequently, in its Viagra decision 2012 SCC 60 [57], the SCC reversed, or at least reinterpreted Boehringer on the relevant issue. In this motion Apotex argued that the law having changed, it should be able to amend its Statement of Issues to argue, in effect, that it should not be made to pay damages for infringement of an invalid patent. In the decision under appeal, Lafrenière J held that the amendment would not be allowed, on the basis of res judicata. In a brief decision, Hughes J has affirmed, largely adopting Lafrenière J’s reasoning [7]. My post on Lafrenière J’s decision discusses the issues in more detail. I noted that while Lafrenière J’s reasoning was strong, I was not convinced that the prior Canadian case law was entirely settled. In adopting Lafrenière J’s reasons, Hughes J’s decision clarifies Canadian law on this point.

In a point which I did not discuss in my previous post, Apotex had also sought an amendment alleging that Merck had breached provisions of the Competition Act. That amendment had also been refused by Lafrenière J. Hughes J allowed these amendments in light of certain concessions made by Apotex regarding their scope [14]-[15].

No New Cases for the Week of 8 December

No new patent / NOC / data protection cases were released for the week of 8 December 2014.

No New Cases for the Week of 1 December

No new patent / NOC / data protection cases were released for the week of 1 December 2014.

A New Framework for Determining Reasonable Royalty Damages in Patent Litigation

Following a jury trial in 2012, a US federal district court entered judgment in the amount of $1 billion in favor of Monsanto in a patent infringement dispute against DuPont. The strange thing about this case is that DuPont had not sold any infringing product at all; yes, you are reading correctly – $1 billion in royalties on zero sales. The $1 billion damages award reflected the jury’s best estimate of the lump-sum royalties that would have been agreed to in a hypothetical negotiation taking place just before the infringement began, in which the parties would only have had information available to the parties at that time (“ex ante information”) That DuPont ultimately did not actually sell any infringing product was ignored as being information that would not have been available to the parties at the time of the negotiation (“ex post information”).

Professor Tom Cotter and I have just posted a draft paper on SSRN, "A New Framework for Determining Reasonable Royalty Damages in Patent Litigation," arguing that this result is wrong. More generally, we argue that the hypothetical negotiation used for assessing a reasonable royalty should be assumed to take place at the time of first infringement (or, more precisely, first reliance), but the parties should be assumed to have available to them all the information that was available at trial. We call this the “contingent ex ante” approach; the hypothetical negotiation takes place ex ante, but it is contingent on all information available ex post. We apply our analysis to a variety of contexts, including standard essential patents; unexpected exogenous events (the market value of the invention changes because of unforeseen factors); separate and distinct infringements (when should damages be assessed on the basis of two distinct hypothetical negotiations, rather than one); regulatory uncertainty (when the patented invention received regulatory approach after the time of the first infringement); non-infringing alternatives (when a patent covering an NIA is held to be invalid after the time of the first infringement, but prior to trial), as well as in the context of lump-sum versus running royalties (which raises considerations of risk-shifting, strategic considerations in licensing and the time value of money).

While our discussion focuses entirely on US law, in my view the principles we discuss are equally applicable to Canadian law. Indeed, I suggest the argument is even stronger in Canadian law, for two reasons.

First, our basic argument is that using all available information, including ex post information, better serves the purpose of the Patent Act, which is to provide an incentive to develop inventions for the benefit of the public. Using ex post information allows more accurate determination of the true value of the invention, and so better aligns the patent incentive with the purpose of the Act. While patent damages are often analogized to a species of tort, they are ultimately statutory, and under the modern Canadian approach to statutory interpretation, the statutory provisions should be interpreted in a manner that it consistent with the purpose of the Act. (This makes our argument stronger than in the US, which has not yet fully embraced a purposive approach to statutory interpretation.)

Secondly, our argument is fully consistent with the Canadian approach to tort damages. In Athey v Leonati [1996] 3 SCR 458, the SCC said “past events must be proven, and once proven they are treated as certainties” [28]. This refers to all event prior to trial: “In this case, the disc herniation occurred prior to trial. It was a past event, which cannot be addressed in terms of probabilities” [30]. Most obviously, special damages are assessed on the basis of reasonable expenses that were actually incurred prior to trial, not what expenses the parties might have anticipated would be incurred. The fact that the plaintiff had not in fact suffered any harm as a result of a tort, perhaps because of a miraculously quick recovery, or that she had suffered unusually severe harm (the thin-skull rule), would certainly be considered in a Canadian tort case; we argue that in a case like Monsanto v DuPont, the fact that the infringer had not in fact made any sales should also be taken into account, for essentially the same reasons.

Here is the abstract:

Conventional analysis often assumes that there are only two theoretical options for calculating a reasonable royalty in patent disputes: a "pure ex ante" approach, under which a court reconstructs the hypothetical bargain the parties would have struck prior to infringement, based on the information available to them at that time; and a "pure ex post" approach, under which the court considers the bargain the parties might have reached as of some later date such as the date of judgment. The first approach avoids patent holdup - basing the royalty partly on the infringer's ex post switching costs - but cannot easily explain other longstanding features of how royalties are calculated, and can lead to awards that reflect the parties' erroneous ex ante expectations. By contrast, the pure ex post approach uses more accurate information about the invention's actual value, but it also enables the patentee to capture some of the patent's ex post holdup value. In this Article, we show that a "contingent ex ante" framework, under which the court reconstructs the bargain the parties would have reached ex ante, based on all relevant information that is available ex post, is superior to both of the conventional approaches. More specifically, our framework enables courts to base the royalty on the most accurate information available of patent value while avoiding the holdup risk arising from the pure ex post approach. We analyze how courts can apply our approach in various settings, including cases involving SEPs, sequential infringement, regulatory uncertainty, and unexpected exogenous events.

The paper is available at SSRN. It is a draft, so comments are welcome.

“The reasonable person thinks in terms of economics, not principle"

Apotex Inc v Canada 2014 FC 1087 Hughes J
            Trazodone

This decision emerged from a test case in which Apotex and Health Canada battled over the question of whether a generic could apply for an NOC on the basis of a foreign reference product. The case settled on terms favourable to Apotex, but HPB did not live up to the settlement agreement. In this decision Hughes J held Canada liable for breaching that agreement (though because of quirks in the pleadings, the formal ground of liability was in tort rather than contract). In an interesting part of the decision, Hughes J held that Apotex was subject to a duty to mitigate, which would essentially have required it to abandon its test case and leave the question of legal principle unanswered. Hughes J held that the duty to mitigate was nonetheless applicable, because “the reasonable person thinks in terms of economics, not principle” [159].

In the late 1980s, the attitude of what was then the Health Protection Branch (HPB) of Health Canada towards the use of a foreign drug product as the reference product in a generic’s application for an NOC was uncertain. It was the usual practice to use a product approved in Canada as a reference product, but occasionally an NOC would be granted on the basis of a foreign reference product. Apotex wanted a test case to establish whether it was entitled to use a foreign reference product [105]. It picked trazodone, and in January 1988 Apotex filed a New Drug Submission comparing its Apo-Trazad product to the innovator’s US product. On the particular facts, the use of a foreign reference product was scientifically sound, but HPB was concerned that allowing the use of a foreign reference product might set a precedent for circumstances in which the comparison was not appropriate [39]. Consequently, HPB “insisted on a Canadian standard, unless the United States reference product could be ‘conclusively proven to be identical’ to the Canadian product” [44]. The requirement of identicality made it effectively impossible to use a foreign reference product [44]. In other words, both Apotex and HPB were treating this as a test case. In light of this impasse, in 1990 Apotex sought judicial review of the Minister’s position. That litigation was settled on terms favourable to Apotex by a Settlement Agreement in November of 1990 in which HPB agreed to assess the application on the basis of “equivalency” rather than identicality [51].

No New Cases for the Week of 10 November

No new patent / NOC / data protection cases were released for the week of 10 November 2014.

It Is Not Necessarily an Abuse of Process for an Innovator to Switch Positions Across NOC Proceedings

Apotex Inc v Pfizer Canada Inc and G.D. Searle & Co / celecoxib (NOC) 2014 FCA 250 Noël CJ: Trudel, Boivin JJA aff’g ) 2014 FC 38 and NOC) 2014 FC 314 Harrington J
            2,177,576 / celecoxib / CELEBREX

The decisions under appeal, Mylan / celecoxib (NOC) 2014 FC 38 and Apotex / celecoxib (NOC) 2014 FC 314 (blogged here and here, respectively), turned primarily on the construction of the promised utility of the ‘576 patent. In both cases Harrington J interpreted the promise of the patent modestly and granted an order of prohibition to Pfizer. In a decision which is primarily an application of Plavix FCA 2013 FCA 186 (blogged here), the FCA has now affirmed both of Harrington J’s decisions. (While Harrington J’s decisions were separate, the reasoning was common, and the appeals were heard together [3].) While the FCA decision elaborates on some points relating to the promise of the patent, it is perhaps more noteworthy in its treatment of abuse of process, particularly the holding that it is not necessarily an abuse of process for an innovator to switch positions across NOC proceedings.

Ex Turpi Causa Not Relevant to Patent Litigation

Les Laboratoires Servier & Anor v Apotex Inc & Ors [2014] UKSC 55 aff’g [2012] EWCA Civ 593 (IPKat) rev’g [2011] EWHC 730 (Pat) (here and IPKat)
            perindopril; Ex turpi causa

Patent protection is national, but trade and innovation incentives are international. This case begins to address that tension. The UKSC held that ex turpi causa is not applicable in the patent context, and so will not affect litigation where goods sold in one country were infringing in another country. Instead of using the blunt hammer of ex turpi causa, the tension should be resolved with the finer sword of damages. The result is to make Canadian damages law more relevant to foreign disputes; the damages portion of the bifurcated Canadian Perindopril, 2008 FC 825 aff’d 2009 FCA 222 litigation, in particular, has taken on added significance.

In 2006 Servier commenced an action in the UK against Apotex for infringement of its European patent for a crystalline form of perindopril. Servier obtained an interlocutory injunction, subject to the usual undertaking in damages. Servier's action was ultimately dismissed, as the patent was declared invalid, and Apotex sought damages on the undertaking for the loss of UK sales. However, the perindopril which Apotex would have sold in the UK would have been manufactured by Apotex in Canada, and Servier also held a Canadian patent for the compound perindopril itself. In proceedings paralleling the UK litigation, Servier sued Apotex in Canada for infringement of the Canadian compound patent. An interlocutory injunction was denied, but Servier was ultimately successful. Thus it became clear that manufacture in Canada of the product which Apotex would have sold in the UK but for the interlocutory injunction, would have infringed the Canadian patent. In the UK proceedings on the undertaking, Apotex conceded that the award on the undertaking should be reduced by an amount equal to the liability that Apotex would (hypothetically) have faced under Canadian law for manufacturing the perindopril which it would (hypothetically) have sold in the UK had the interlocutory injunction not been in place [EWCA 22]. Servier, on the other hand, argued that Apotex should be entirely precluded from collecting on the undertaking because the Canadian infringement constituted sufficient "turpitude" to engage the doctrine of ex turpi causa. (This summarizes a somewhat complex procedural history, described in more detail at [2]-[8]; and see also my IPKat post on the EWCA decision.)