Federal Court opines on precedential value of prior PM(NOC) proceedings and scope of experimental use exception to public disclosure

Ryan Sheahan and Jessica Rutledge - 

The Federal Court’s decision in the consolidated proceedings of Bayer Inc. v Cobalt Pharmaceuticals Company  offers useful guidance as to the precedential value of proceedings under the Patented Medicines (Notice of Compliance) Regulations (PM(NOC)) in the context of subsequent infringement actions involving the same patent.  It also provides helpful direction in respect of the scope of the Canadian experimental use exception to anticipatory public disclosure.  

Background:  Patent at Issue

Both the PM(NOC) proceedings and the Federal Court infringement action concerned Bayer’s Canadian Patent No. 2,383,426 (the ‘426 Patent).  The ‘426 Patent relates to a pharmaceutical combination of ethinylestradiol and drospirenone for their use as a contraceptive.  Ethinylestradiol functions as an estrogen, and drospirenone as a progestogen, and both were known to inhibit ovulation when used in combination.  The ‘426 Patent contemplated a novel formulation using rapidly-dissolving drospirenone particles, which delivered unexpectedly consistent bioavailability.  This was unexpected because drospirenone was known to be inactive at an acidic pH of 1 when tested in a laboratory setting, and the normal pH range of the stomach is 1.0 to 3.0.  However, traditional coatings that would protect the drospirenone from the stomach environment released the drospirenone at variable rates, resulting in irregular effectiveness in different people.  Bayer tested a rapidly-dissolving particulate version of drospirenone in clinical trials with women, and discovered it was effective as a contraceptive in the ethinylestradiol combination, and did not degrade or require any coating.  Bayer patented this formulation of the contraceptive in the ‘426 Patent, with an effective Canadian filing date of August 31, 2000, and currently markets two products known as “Yaz” and “Yasmin”, which incorporate the patented invention, with different doses of ethinylestradiol .

Background:  Previous PM(NOC) Proceedings and New Infringement Action

In Canada, a generic drug manufacturer can seek approval to market (a “Notice of Compliance” or NOC) a generic version of a brand name drug by filing an Abbreviated New Drug Submission (ANDS) with Health Canada.   An ANDS cross-references the submissions for the approved brand name drug and includes bioequivalence studies and data to establish that the generic product is pharmaceutically equivalent.  Such bioequivalence studies generally cost less and take less time than the clinical trials required to be conducted to obtain the initial approval for the brand name drug.

The PM(NOC) allow brand name manufacturers to list one or more patents it may have that claim any aspect of the brand name drug (e.g. the medicinal ingredients, the dosage form, formulation, and/or uses) on Health Canada’s Patent Register.  Pursuant to the PM(NOC) Health Canada cannot approve a generic drug product until the expiry of the last listed patent, unless the generic manufacturer has served a notice of allegations on the brand manufacturer challenging the validity of one or more listed patents and/or alleging that the generic product does not infringe such patents.  The brand manufacturer has the option to bring an application to the Federal Court seeking an order to prohibit Health Canada from approving the generic drug product on the basis that the allegations of invalidity or non-infringement are not justified.  If the Court concludes that the allegations of invalidity or non-infringement are justified, Health Canada can approve the generic drug product.

Bayer listed its ‘426 Patent on the Patent Register against its Yaz tablets.  Both Apotex and Cobalt sought regulatory approval of their generic versions by comparison to the Yaz tablets and serving notices of allegations on Bayer with respect to the ‘426 Patent, in two PM(NOC) proceedings:

  • In December 2011, Cobalt sought approval for its proposed generic version of the Yaz tablet.  In seeking a Notice of Compliance, Cobalt alleged both that its drug did not infringe Bayer’s ‘426 Patent, and that the ‘426 Patent was invalid.  Bayer was successful in its application to prohibit the Minster of Health from issuing a Notice of Compliance in Bayer Inc v Cobalt Pharmaceuticals Company (Bayer v Cobalt), which was then upheld by the Federal Court of Appeal. [Cobalt Pharmaceuticals Company v Bayer Inc (Cobalt v Bayer)].
  • In July 2012, Apotex initiated similar proceedings for approval of its generic version of Yaz, claiming both non-infringement and invalidity of the ‘426 Patent.  On Bayer’s application to prevent Apotex’s Notice of Compliance, the Federal Court again upheld the validity of the ‘426 Patent, but found Bayer had not met its burden of proving that Apotex’s product fell within the scope of the ‘426 Patent’s claims (i.e., the allegations of non-infringement were found to be justified).  [Bayer Inc v Apotex Inc ] (Bayer v Apotex) Apotex subsequently obtained approval of its generic Yaz, and was able to bring the product to market.

Following these PM(NOC) proceedings, Bayer commenced three separate actions for infringement, one against Cobalt for the manufacture and sale of its Yasmin generic, and the other two against Apotex for the manufacture and sale of its Yaz and Yasmin generics, all of which were consolidated by the Federal Court.  Both Cobalt and Apotex denied the infringement allegations and, by counterclaim, alleged the ‘426 Patent’s claims were invalid for obviousness, anticipation, disclosure, overbreadth, insufficiency and lack of utility.  Bayer was successful in upholding the validity of the ‘426 Patent, and the Federal Court found infringement in all three cases. 

Federal Court Decision:  Precedential Value of the Prior PM(NOC) Proceedings

In coming to its decision in respect of the infringement claims and counterclaims for invalidity, the Federal Court provided a detailed analysis of the precedential value of prior PM(NOC) proceedings involving the same patent.  At the outset, the Court confirmed that the principles of stare decisis and comity apply where courts are exercising the same jurisdiction, for instance in PM(NOC) proceedings involving a patent previously considered in the PM(NOC) context.  However, courts considering a subsequent action for infringement are not exercising the same jurisdiction as courts that made findings in the PM(NOC) context.

The Federal Court noted that PM(NOC) proceedings are summary in nature, address different issues than trials, and use only affidavit evidence.  As such, they cannot result in a final determination of validity or infringement.  However, certain findings will be either prima facie binding, or potentially persuasive:

  • Questions of law:  pronouncements of higher courts on questions of law are binding on lower courts.  In the patent context, the construction of claims is treated as a question of law, and therefore the principle of stare decisis applies.  In this case, the Court found that the Federal Court of Appeal’s prior construction of the ‘426 Patent in Cobalt v Bayer was prima facie binding, but did note that the construction could be revisited if warranted by new evidence.  Claims construction includes the definition of the patent’s “inventive concept” and its “promise”.
  • Questions of fact or mixed fact and law: previous findings involving fact-based inquiries are potentially persuasive, but should be determined anew based on the evidence adduced at trial.  The Court confirmed that the determination of the person of ordinary skill in the art, as well as assessments of obviousness, ambiguity, overbreadth, utility and insufficiency were all questions of mixed fact and law. 

In this particular case, the Federal Court did not choose to depart from the Federal Court of Appeal’s construction of the claims.  Nor did it depart from any of the Federal Court of Appeal’s findings regarding the validity of the ‘426 Patent, in respect of the three grounds for invalidity (of the six argued at trial by the defendants) that were previously argued in the PM(NOC) proceedings.

As noted above, the Federal Court found infringement in all three of the joined cases.  In doing so, the Court agreed with the Federal Court of Appeal’s infringement analysis in the Cobalt v Bayer case, but the result differed from the Federal Court’s decision in the Bayer v Apotex case.  Essentially, the infringement claims turned on which expert evidence the Court accepted, in the context of a far more extensive inquiry at trial than was undertaken in the PM(NOC) context.

Federal Court Decision:  Regulatory Approval Trials Constitute Experimental Use

The case also provides useful analysis of the experimental use exception to anticipatory public disclosure.  Pursuant to s. 28.2 of the Patent Act, if a patentee discloses the subject matter of a patent to the public over a year before the patent’s filing date, to a degree that would enable the skilled person to practice the invention, the patent is invalid for anticipation. 

More than one year before the filing date, Bayer conducted clinical studies of oral contraceptives as indicated by the ‘426 Patent.  Apotex and Cobalt argued that these clinical studies constituted an enabling disclosure.  The Federal Court did not find these trials constituted an enabling disclosure, holding that reverse-engineering the tablets would have required inventive insight to discover the inventive concept.  In addition, the Court noted that even if the trials did constitute disclosure, the experimental use exception would apply.  Though not codified in the Patent Act, Canadian law has long held that there is no anticipatory disclosure where a prior use is experimental, and that an inventor may use any means of testing available to him or her that is reasonable and necessary, and done in good faith for the purposes of perfecting or testing the merits of an invention.

In this case, the Federal Court agreed with the application of the experimental use exception as applied in Bayer v Apotex,which noted the exception’s particular applicability in cases where public testing is a necessity.  In the case of oral contraceptives, clinical studies are necessary to prove a drug is safe and effective, and to gain government approval for sale, and both are compulsory steps for commercialization of the drug.  Apotex argued that the last round of clinical trials could not be experimental as they were undertaken for governmental approval and not to prove the drug was safe and effective.  However, the Federal Court found that such a purpose did not bring the trials outside the experimental use exception, as one of the purposes of regulatory approval is to confirm the safety and efficacy of a drug.

Next Steps

The issue of appropriate relief was bifurcated from the issues of validity and infringement.  On October 27, 2016 in Bayer Inc v Cobalt Pharmaceuticals Company,the Federal Court ordered that Bayer could was entitled to elect between an accounting of the profits of Apotex and Cobalt, or all the damages sustained by their infringement of the ‘426 Patent.  

Both Cobalt and Apotex have appealed the Federal Court’s decision.  

Applicants face significant hurdles in registering flavour and scent trademarks in the U.S.

Justine Whitehead  -

In a recent blog post, we noted that the new Bill C-56 would significantly expand the scope of a registrable trade-mark in Canada.  If passed, the list of items that could potentially be registered a trade-mark would include “a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign.”

However, the nature of the evidence required to prove registrability is deliberately left vague in the proposed revisions, and a revised s. 32 would allow the Registrar to ask for any evidence deemed necessary to establish that a trade-mark is distinctive at the date of the filing of the application for registration. While Canadian standards would, of course, have to be developed, a recent precedential decision of the United States Patent and Trademark Office’s Trademark Trial and Appeal Board (TTAB) is of interest, as an illustration of the difficulties in proving the requisite acquired distinctiveness to register a scent or flavour trademark.

On February 25, 2013, in its decision in Re Pohl-Boskamp GmbH & Co. KG, the TTAB upheld the Examiner’s initial decisions to reject applications to register “a distinctive flavour of peppermint” and a “peppermint scent” as trademarks for use in association with pharmaceutical formulations of nitroglycerin.  The peppermint flavour application was rejected on the grounds that the flavour served a functional purpose. Both applications were rejected on the grounds that the claimed flavour and the claimed scent failed to function as a trademark.  


U.S. jurisprudence has held that a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article. The reason for refusing trademark protection for functional features is to prevent trademark law from inhibiting legitimate competition by allowing a producer to control a useful product feature.

In this case, the evidence included an issued U.S. patent which claimed that menthol-containing substances (which include peppermint) not only reduced the necessary dosage of nitroglycerin required to be effective, but also reduced the headache and fainting sides effects of the drug. Accordingly, the TTAB determined that peppermint oil could be used as a therapeutic agent. 

Despite the fact that the peppermint oil in the applicant’s product was expressly declared to be a “non-medicinal” or “inactive” ingredient, the TTAB rejected the application on the grounds of functionality, reasoning that “to allow applicant the exclusive right to market nitroglycerine formulations having the flavor of peppermint oil would impermissibly prevent the future use of therapeutic peppermint oil by others in applicant’s field.”

Distinctiveness - Failure to Function as a Mark

Each application was also refused on the basis that the flavour and scent did not serve as a trademark. The TTAB confirmed that neither flavours nor scents can be considered inherently distinctive, because each of those (like colour) is generally seen as a characteristic of the relevant goods, rather than as a trademark. Therefore, “a substantial showing of acquired distinctiveness is required to demonstrate that a flavor or scent functions as a mark”.

In considering whether a flavour or scent should be registered as a trademark, the critical question becomes whether the flavor or scent would be perceived as source indicators or merely physical attributes of the relevant product. The evidence required to prove sufficient acquired distinctiveness in relation to scents and flavours is significant, and the TTAB noted that an “applicant’s burden of showing acquired distinctiveness is a heavy one”.

Nitrolingual Pumpspray

In this case, the applicant’s product had been marketed and used in the United States for over two decades, on a “substantially exclusive” basis. However, the applicant was not the only user of a peppermint flavour and scent in association with nitroglycerin pharmaceuticals. Moreover, several other heart-related pharmaceutical products (such as other angina remedies) also used a peppermint flavour and scent. 

While the applicant submitted the testimonials of 23 physicians and pharmacists which appeared to support the distinctive nature of the flavour and scent of the applicant’s product, the Board assigned such affidavits little weight because the wording in each declaration was essentially identical, and such statements are less persuasive than those in the declarant’s own words. Moreover, in the TTAB’s view, the declarations stopped short of answering a key question: if the declarant encountered the scent of peppermint in association with a different heart remedy, would he or she associate it with the applicant?

Noting that “consumers are not predisposed to equate either flavour or scent with the source of the product ingested”, the TTAB found that the applicant had not met the heavy burden required to prove acquired distinctiveness, and rejected the scent and flavour trademark applications.

Federal Court prevents Minister of Health from allowing sale of generic version of immunosuppressive drug MMF

Geoffrey North & Lindsay Gwyer -

In an application pursuant to the Patented Medicines (Notice of Compliance) Regulations, Hoffman-La Roche sought an order preventing the Minister of Health from issuing a notice of compliance to Apotex for the drug mycophenolate mofetil (MMF), an immunosuppressive drug used primarily in organ transplants, until after the expiry of Canadian Patent No. 1,333,285. Seeking early market entry, Apotex on the other hand alleged that the ‘285 patent was invalid on the grounds of lack of utility and obviousness.

Construction of the ‘285 Patent

The first consideration of the Court was to construe the ‘285 patent. In this respect, the Honourable Mr. Justice O’Reilly provided useful guidelines:

[T]he task of construing a patent does not simply involve a search for that morsel of utility on which the patent holder hopes to rely. The Court must review the patent’s specification with an eye to the essence of the invention, appreciating how a skilled person would interpret the words the inventor used to describe it.

As Justice Roger Hughes put it, “in construing the specification of a patent, in particular the ‘promise’, the Court is to look at the specification through the eyes of a person skilled in the art, bearing in mind commercial realities, being neither benevolent nor harsh, in order to determine fairly the true intent”.

… In my view, construction of the patent is a preliminary step which precedes the analysis of

the grounds of potential invalidity. It should be carried out without regard for the impact of the construction on utility or obviousness, or whatever other issues arise in the case … As Apotex argued, where advantages form part of the stated invention, it would be unfair to allow the patent holder to rely on those advantages to show that the invention was unobvious and, at the same time, dismiss those advantages as being irrelevant to utility. A patent holder cannot read up the invention for obviousness and read it down for utility.

With these principles in mind, the Court found that the essence of the invention lay in the identification of a useful prodrug (i.e. MMF) of the known immunosuppressant mycophenolic acid (MPA), which itself unfortunately suffered from poor solubility and bioavailability. In particular, as a prodrug with advantageous pharmacokinetic properties, MMF was found to be absorbed and metabolized in the body to yield MPA with greater bioavailability (translating into greater activity) following ingestion, making it useful as an immunosuppressive agent.


The Court noted that the ‘285 patent did not disclose any tests on humans, instead providing in vitro or in vivo studies in rats and monkeys. However, because MMF’s sole mission was to deliver MPA (and MPA was already well-known to be useful in the treatment of a number of conditions in humans), an example in the patent that showed that MMF produced higher concentrations of MPA in the bloodstream than oral dosing with an equal amount of MPA itself, was sufficient for demonstrating MMF’s utility in humans.


The Court found that the evidence merely showed that there was a possibility that an ester derivative of MPA might deliver enhanced bioavailability. Although the measures that were taken to find a solution to the bioavailability problems with MPA may not have been inventive in themselves, the inventors showed persistence in continuing to explore a field of inquiry in which the prior art suggested that success was doubtful. MMF was therefore found to be neither obvious to try, nor was it self-evident that it would work.

Consequently, the validity of the ‘285 patent was upheld and the application was granted, which precludes Apotex from obtaining a notice of compliance at this time to market its generic version of MMF.

For more information, please see: Hoffman-La Roche Limited v. Apotex Inc.

Federal Court of Appeal confirms that Eli Lilly's patent to atomoxetine is invalid for lack of utility

Geoffrey North and Edwin Mok

The Federal Court of Appeal recently released its decision in Eli Lilly and Company v Teva Canada Ltd, confirming the trial court’s finding that Canadian Patent No. 2,209,735 (the 735 patent), which claims a new use for an old medicine that has long been in the public domain (the use of atomoxetine for treating attention deficit hyperactivity disorder (ADHD) in three of its manifestations among all age groups), is invalid. We reported the lower Court’s ruling in a previous blog.

This appeal raised three principle legal issues. Namely, did the Judge err by: (i) misconstruing the patent’s promise by finding an implicit promise that atomoxetine “will work in the longer term”; (ii) requiring too high a standard of proof for utility; and (iii) deciding that Lilly could not rely on the sound prediction of the utility of the invention because Lilly had not disclosed the factual foundation for that prediction in the 735 patent?

The Court rejected all of Lilly’s arguments. As to the patent’s promise, the Court found that the trial judge did not construe the patent as promising more than its explicit promise that it will treat ADHD in some people. The trial judge had simply interpreted what “treatment” meant in the 735 patent in the context of ADHD, a chronic disorder requiring sustained treatment. He was therefore not adding any promise above and beyond that already expressed in the words of the 735 patent itself. Moreover, this argument could not assist Lilly in any event. The trial judge found that the evidence was insufficient to demonstrate that atomoxetine was an effective clinical treatment, regardless of the length of time for which it was taken.

As to the standard of proof for utility, Lilly argued that only a low level or scintilla of utility is required for the purpose of patentability. As such, Lilly argued that the trial judge erred by requiring evidence that was “sufficiently compelling to independently support the [patent’s] inventive promise.” The Court found that this argument could not succeed however, because the 735 patent specifically promised that atomoxetine is a clinically effective treatment of ADHD. Utility was therefore not to be measured against a hypothetical or theoretical standard lower than that promised in the patent. Although data from a pilot study was promising and “indicated a clinically and statistically significant response rate for atomoxetine over placebo”, it was proper for the trial judge not to infer from the limited experimental data that there was sufficient evidence that atomoxetine was a clinically effective treatment of ADHD.

Lastly, as to the issue of proper disclosure for sound prediction, Lilly argued that neither the Patent Act nor the Supreme Court’s jurisprudence requires disclosure of study results in a patent as a condition precedent to successfully invoking sound prediction as the basis of the utility of the claimed invention. The Court noted in response, however, that the Federal Court of Appeal has previously affirmed that a patentee must disclose in a patent a study that provides the factual basis for the sound prediction. In addition, the Court stated:

[I]f disclosure in the patent of the factual basis of the prediction of utility was not required for sound prediction, it would be difficult to see what Lilly could be said to have given to the public, in exchange for the grant of the monopoly, that it did not already have. When utility is based on sound prediction, disclosure of its factual foundation goes to the essence of the bargain with the public underlying patentability.

We look forward to the Supreme Court’s decision in the sildenafil citrate (Viagra) case, where we will be provided with further guidance on the issue of sound prediction.

Apotex denied damages for the delay it experienced in bringing its generic version of the medicine lovastatin to market

In a recent decision in Apotex Inc. v. Merck & Co., Inc., 2010 FC 1264, the Federal Court denied Apotex damages resulting from the delay it experienced in bringing its generic version of the drug lovastatin to market as a result of Merck’s prohibition application.  This is an important decision which resolves an action commenced nearly 10 years ago and will provide other pharmaceutical companies involved in similarly long-lasting litigation with insight into the scope of section 8 in the 1993 version of the Patented Medicines (Notice of Compliance) Regulations (NOC Regulations).

Both current and past versions of section 8 of the NOC Regulations purport to permit a company whose product has been kept off of the market due to a prohibition application to recover damages from the applicant for any loss resulting from the delay. Although Apotex’s statement of claim was filed in 2001, subsequent to significant amendments in 1998, the Court determined that the 1993 version of the NOC Regulations would apply. Section 8 was amended again in 2006 and 2010 and, as a result, will remain ripe for further litigation as to its interpretation. In any future disputes, it will be useful to note the preference demonstrated by the Court in this case for textual interpretations of the NOC Regulations’ technical provisions.

This case was heard contemporaneously with another case which we have discussed here


Merck held rights to Canadian Patent No. 1,161,380 (the ‘380 Patent), which related to a process for manufacturing the drug lovastatin.  The ‘380 Patent issued in 1984 and expired in 2001.

In 1993, Apotex desired to enter the market with a generic version of lovastatin and, to that end, applied to the Minister of Health (Minister) for a Notice of Compliance (NOC).  In accordance with the NOC Regulations, Apotex alleged that the manufacture of its product would not infringe the ‘380 Patent, as its process for producing lovastatin would allegedly not fall within the scope of the claims of the ‘380 Patent.

Shortly thereafter, Merck commenced an application seeking an order prohibiting the Minister from issuing a NOC to Apotex.  According to the NOC Regulations in place at that time, as a result of the commencement of the prohibition application, the Minister was automatically prohibited from issuing a NOC to Apotex for up to 30 months or until such earlier time as a determination could be made as to whether Apotex was justified in its claim that its generic drug would not infringe the ‘380 Patent. 

The 30-month statutory stay expired on December 1, 1996 without a decision being rendered, and the Minister subsequently issued a NOC to Apotex allowing it to market its generic version of lovastatin.

Following this sequence of events, two actions were commenced: one by Merck against Apotex for patent infringement, and the other by Apotex against Merck for damages under section 8 of the NOC Regulations as a result of its delayed entry into the lovastatin market.

The Decision respecting s. 8 of the NOC Regulations

The Court’s decision turned on two main issues: (1) whether the 1993 or the 1998 version of the NOC Regulations applied; and (2) whether Apotex was entitled to compensation under s. 8 of the applicable version of the NOC Regulations.

The 1993 NOC Regulations Applied
In determining which version of the NOC Regulations applied, the Court looked to the transitional provisions in s. 9 of the NOC Regulations as amended in 1998.  Section 9(6) stated that the 1998 version of the NOC Regulations would apply to “an application pending on the coming into force of these Regulations.”

The Court found that it was arguable that the expiry of the 30-month statutory stay period on December 1, 1996, which extinguished any further right of application, was the determinative date.  Given that this event was prior to the coming into force of the 1998 version of the NOC Regulations on March 11, 1998, the 1993 version of the NOC Regulations applied (i.e. the application was clearly not “pending”).

Apotex is Not Entitled to Damages

The 1993 version of the NOC Regulations stipulated that an innovator pharmaceutical company would be liable under s. 8 for all damage suffered by a generic pharmaceutical company where, because of a prohibition application commenced by the innovator, the Minister delays issuing a NOC “beyond the expiration of all patents that are the subject of an order pursuant to subsection 6(1).”

Merck submitted that the ‘380 Patent, which did not expire until 2001, was extant during the full period in which Apotex claimed it was kept off the market as a result of Merck’s prohibition application (April 1996 to March 1997). As such, Merck argued that Apotex had no valid claim for damages.

Apotex asserted that Merck’s interpretation of s. 8 would be inconsistent with the intent of the Governor-in-Council, as reflected in the Regulatory Impact Assessment Statement (RIAS) that accompanied the 1993 version of the NOC Regulations. The RIAS specified that the costs of delays arising from the NOC Regulations would be minimized by the fact that “a patentee will be liable for all damage suffered from the delay.” According to Apotex, any interpretation of s. 8 that accorded with the RIAS would necessarily permit Apotex to recover its damages for being wrongly kept off the market.

The Court disagreed with Apotex’s position, however, and found that as of the date of its NOC, the ‘380 Patent had not “expired” as that term would be understood, i.e. by the natural end of its term, by lapse such as failure to pay maintenance fees, or by operation of law such as a declaration of invalidity.  In the result, because of the wording employed in s. 8 of the 1993 version of the NOC Regulations, Apotex was unable to recover damages.

Federal Court finds Apotex infringed Merck's product-by-process patent for Lovastatin

In Merck & Co. Inc. v. Apotex Inc., the Federal Court found Apotex to have infringed Merck’s Canadian Patent No. 1,161,380 (‘380 Patent), a product-by-process patent for the medicine lovastatin.

In arriving at its decision, the Court addressed key questions regarding standing, infringement and patent validity. The decision provides an interesting example of a plaintiff’s successful use of DNA and circumstantial evidence in establishing two separate sources of infringement. In addition, readers should take note of the Court’s finding that a pre-existing process will invalidate a product-by-process patent only where it necessarily produces the relevant product.  

This case was heard contemporaneously with another case which we will be discussing on this blog shortly.


Lovastatin, sold under the brand name Mevacor, was the first commercially-available medicine in a class of drugs known as “statins”. It is used in the treatment of cardiovascular disease because it reduces the production of cholesterol in the liver, thereby minimizing plaque build-up in arterial blood vessels. The ‘380 Patent claims the product lovastatin when made by a process of fermentation using a micro-organism known as Aspergillus terreus.

Apotex began selling its generic version of lovastatin in 1997, and employed a production process which allegedly would not infringe the ‘380 Patent, as its process entailed use of a micro-organism known as Coniothyrium fuckelii. Apotex first manufactured its version of lovastatin using facilities in Winnipeg. It then transferred its C. fuckelii technology to a facility in China (Blue Treasure) in order to produce lovastatin under a joint venture agreement, subject to specific instructions that Aspergillus terreus not be used in the process.

The Allegations

Merck alleged that Apotex infringed the ‘380 Patent by: (1) using infringing lovastatin imported from Blue Treasure in China; (2) “salting” non-infringing lovastatin with infringing lovastatin; (3) manufacturing one batch of infringing product in Winnipeg; and (4) producing other small amounts of infringing product in Winnipeg.

Apotex’s primary argument was that there had been no infringement of the ‘380 Patent, and that, in any event, the ‘380 Patent was invalid. Apotex also argued that Merck had no standing to bring its action, having allegedly assigned all its interest in the ‘380 Patent to an affiliate company.

After a lengthy 40-day trial and thorough consideration of the issues, the Court concluded that Merck had standing to bring the action, that the ‘380 Patent was valid, and that Merck’s infringement allegations should succeed in part.


Relying on jurisprudence from the United States and the United Kingdom, Apotex submitted that although Merck allegedly only “licensed” the right to use the invention disclosed in the ‘380 Patent to an affiliate, a review of the actual words used in the agreement demonstrated that the intent and effect of the agreement was to convey the entire right, title and interest in the ‘380 Patent – meaning that Merck had no right to bring the action.  The Court, however, found the foreign jurisprudence relied upon by Apotex to be of little assistance, and instead relied upon Canadian contract law for the proposition that where words are clear and unambiguous, a term such as “license” should be interpreted in its normal sense to mean that no interest or property in the patent was conveyed. Merck therefore had standing to bring the action.


In order to establish infringement, Merck was required to prove on a balance of probabilities that certain volumes of lovastatin were manufactured from, or contained (through salting), Aspergillus terreus.

Merck was unable to prove its theory of “salting” by Blue Treasure. However, the Court was convinced, based upon circumstantial evidence, that Blue Treasure actually used Aspergillus terreus to produce lovastatin.  In particular, a combination of factors, including the questionable credibility of the Blue Treasure witnesses, the unreliable batch records they provided, inconsistencies in fermentation data and production levels, financial motivation to use the infringing process, and the opportunity to infringe without proper oversight, was held to support a reasonable conclusion that Blue Treasure employed a process to produce lovastatin that infringed the ‘380 Patent.

The Court also found, based on DNA evidence, that a single batch of lovastatin produced in Winnipeg was made using Aspergillus terreus. In making such a finding, the Court rejected Apotex’s argument that the results were somehow contaminated. 

Validity of the Patent

Apotex had the burden to convince the Court, on a balance of probabilities, that the ‘380 Patent was invalid. In this respect, Apotex asserted that the claims of the ‘380 Patent were invalid for: 1) being overly broad; 2) lacking demonstrated and/or soundly predicted utility; 3) lacking novelty based on the existence of lovastatin in a traditional Asian product known as “Red Yeast Rice” (anticipation); and 4) Merck not being the first to invent lovastatin.  Each of these allegations were, however, dismissed by the Court. 

Of particular interest, the Court noted that Red Yeast Rice would only satisfy the disclosure requirement of the test for anticipation if it could be said that it necessarily produced lovastatin. Based on the evidence, this was not the case. Instead, the evidence was that, given the significant differences in the traditional methods of producing Red Yeast Rice, the existence of lovastatin therein would be a very rare event. As such, there was no anticipation of the subject matter of the claims of the ‘380 Patent.

In the result, given that there was an order bifurcating the liability related issues from the remedies portion of the trial, Merck’s damages are to be determined in a subsequent proceeding. 

Supreme Court of Canada finds Patented Medicine Prices Review Board has jurisdiction over price of Thalomid in Canada

Geoffrey North & Catherine Newnham

The Supreme Court of Canada released a decision on January 20, 2011 in Celgene Corp. v. Canada (Attorney General), 2011 SCC 1 that may have a chilling effect on the availability of medicines under Health Canada’s Special Access Program (SAP).


Most medicines are sold in Canada after Health Canada has satisfied itself as to the medicine’s safety and effectiveness, and has issued a notice of compliance (NOC) to the drug’s manufacturer. However, where Health Canada has not granted a NOC for a medicine, or where a manufacturer has not yet applied for one, medicines may in certain cases be sold to medical practitioners through an alternate route – the SAP – a program that allows access to drugs for the treatment of “serious or life-threatening conditions where conventional therapies have failed, are unsuitable, or are unavailable either as marketed products or through enrolment in clinical trials”.There is no limit on the period of time that a manufacturer may supply a medicine under the SAP, nor is there a limit on the volume of sales that can be made pursuant to the SAP.The manufacturer is simply authorized to sell the medicine for use by the specific patient or clinical trial identified in a special request, if Health Canada approves the request for sales pursuant to the SAP.

Use of Thalomid under the SAP

In the case at hand, Celgene, a New Jersey based corporation, is the seller and distributor of a pharmaceutical sold under the brand name Thalomid. This drug contains the active ingredient thalidomide, which has proven to be effective in the treatment of multiple myeloma and leprosy, and is approved for those uses in the United States.

Celgene did not obtain a NOC for Thalomid. However, it is the most frequently sourced drug under the SAP, and has been sold in Canada in this manner since 1995.

When a Canadian doctor orders Thalomid under the SAP, the medicine is packaged in Celgene’s facilities in the U.S., and shipped Free on Board (FOB) to the doctor in Canada. The sale of the medicine therefore takes place in New Jersey for purposes of commercial law. Payment is made in U.S. dollars and mailed back to Celgene in New Jersey. No Canadian taxes are paid on these transactions, and the drug is never redistributed in Canada – any unused portions must be returned to a Celgene facility in Pennsylvania.

The Patented Medicine Prices Review Board

The Patented Medicine Prices Review Board (PMPRB) has the authority under ss. 80(1)(b) and 81(1)(a) of the Patent Act to require the patentee of a medicine to provide it with information so it can investigate the price at which the medicine “is being or has been sold in any market in Canada”.  If the PMPRB finds that the price charged is excessive, it can order that the price be reduced under under s. 83(1) of the Patent Act.

On the other hand, if a drug manufacturer does not hold a patent that pertains to the medicine at issue, then the PMPRB has no jurisdiction to investigate the price at which the medicine “is being or has been sold in any market in Canada”.

The PMPRB’s interest in Thalomid

Celgene had no interaction with the PMPRB over Thalomid between 1995 and 2006 – that is, until Celgene obtained a Canadian patent in relation to Thalomid on April 4, 2006.  Just seven days later, the PMPRB advised Celgene that in view of this patent, it now had jurisdiction to request pricing information from Celgene from the time it first sold Thalomid in 1995 through the SAP.

Celgene provided some initial pricing information, but eventually refused. Celgene argued that because the medicine was sold in New Jersey, it was outside the PMPRB’s authority which extended only to medicine “sold … in Canada”.

The PMPRB argued that because its mandate included protecting Canadians from excessive prices that could be charged for patented medicines, it concluded that sales “in any market in Canada” included sales of medicine that was regulated by Canadian law, would be delivered and used in Canada, and where the cost of the medicine would be borne by Canadians.  Since the SAP was a Canadian law, the PMPRB argued that Celgene’s sales under this programme were included within the PMPRB’s mandate.

The Federal Court overturned the PMPRB’s conclusion that it had jurisdiction, but this decision was overturned by the Federal Court of Appeal, and the PMPRB’s decision was restored. The matter was then appealed by Celgene to the Supreme Court of Canada.

The Supreme Court’s decision

In a unanimous decision, the Supreme Court found that the PMPRB did not misinterpret its jurisdiction as provided by the Patent Act. In rejecting the technical commercial law definition of “sold” and “selling”, the Board was guided by the consumer protection goals of its mandate, and rightfully concluded that Celgene’s approach would undercut these objectives by preventing the PMPRB from protecting Canadian purchasers of Thalomid and other foreign-sold SAP patented medicines. As a result, sales “in any market in Canada” for the purposes of the relevant provisions, should be interpreted  to“include sales of medicines that are regulated by the public laws of Canada, that will be delivered in Canada, to be dispensed in Canada, and where, in particular, the cost of the medicine will be borne by Canadians — patients or taxpayers, as the case may be”. Such an interpretation was supported by the legislative history.

The PMPRB therefore had authority over Celgene’s sales of Thalomid to Canadians through the SAP.

As a result of this decision, the manufacturers of pharmaceutical products not sold in Canada may nonetheless have to provide pricing information and subject themselves to the PMPRB’s “excessive price” jurisdiction for products made available under the SAP. It will be interesting to see if the decision impacts the approach of manufacturers such as Celgene to providing medicines under the SAP program to Canadian patients who are in serious need of medicines not otherwise available in Canada.

Federal Court of Appeal upholds the Data Protection Regulations and its guaranteed eight-year period of market exclusivity for "innovative drugs"

The Federal Court of Appeal has upheld the validity of section 30(3) of the Food and Drugs Act and section C.08.004.1 of the Food and Drug Regulations (known as the Data Protection Regulations) in its decision in Apotex Inc. v. The Minister of Health, 2010 FCA 334

The Data Protection Regulations (DPR) were designed to clarify and implement Canada’s obligations under the data protection provisions of the North American Free Trade Agreement (NAFTA) and the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). The DPR introduced a guaranteed period of market exclusivity of at least eight years for manufacturers of “innovative drug[s]”.  More particularly, the DPR prohibits a generic manufacturer seeking a notice of compliance (NOC) for a new drug “on the basis of a direct or indirect comparison  between the new drug and an innovative drug” from filing a New Drug Submission (NDS) “before the end of a period of six years after the day on which the first notice of compliance was issued to the innovator in respect of the innovative drug”.  In addition, the DPR prohibits the Minister of Health from issuing a NOC to a generic drug manufacturer “before the end of a period of eight years after the day on which the first notice of compliance was issued to the innovator in respect of the innovative drug”. Thus, generic drug manufacturers cannot obtain approval for their generic drug until the period of market exclusivity of the innovative drug has expired, even where there is no patent protection for that drug.

The Federal Court of Appeal found that the Governor in Council’s use of innovator market exclusivity was rationally connected to subsection 30(3) of the Food and Drugs Act in order to give effect to the relevant provisions of NAFTA and TRIPS and to ensure that data is protected against unfair commercial use. 

The Federal Court of Appeal also upheld the Federal Court’s finding that the DPR is constitutionally valid but ultimately relied on a different head of federal power to justify its findings. In particular, while the Federal Court found that the DRP was intra vires the federal trade and commerce power under subsection 91(2) of the Constitution Act, 1867, the three judges of the Federal Court of Appeal unanimously agreed that the DPR in fact constitutes a valid exercise of the federal criminal law power under subsection 91(27) of the Constitution Act, 1867.

Health Canada has released its statistical report for 2009 on the Patented Medicines (Notice of Compliance) Regulations and Data Protection provisions of the Food and Drug Regulations

Geoffrey North

Health Canada has released its statistical report for 2009 in respect of the administration of the Patented Medicines (Notice of Compliance) Regulations (the PM(NOC) Regulations) and data protection provisions of the Food and Drug Regulations. These statistics provide interested parties and policy makers alike with information concerning the effects of Canada’s IP regime on therapeutic medicines.

The PM(NOC) Regulations are designed to balance the competing interests of effective patent enforcement over new and innovative medicinal drugs against the timely entry of lower priced generic competitors. The Food and Drug Regulations prescribe that innovative drugs are to receive an eight year guaranteed minimum period of market exclusivity (data protection provisions). Together, these measures ensure a minimum period of protection for medicinal drugs while maintaining a reasonable ceiling on the maximum protection available.

The 2009 report shows that there were sixty-five (65) applications commenced by innovative pharmaceutical companies under the PM(NOC) Regulations seeking to prohibit the Minister of Health from issuing notices of compliance to generic pharmaceutical companies that would otherwise allow them to enter the Canadian market with lower priced drugs. Twenty-four (24) of these applications were discontinued, one (1) was granted, one (1) was dismissed, and thirty-eight (38) remain pending. While the number of applications discontinued, granted or dismissed is well down from the previous five years, the number of cases still pending is at its highest peak. This would tend to suggest that fewer lower priced generic drugs entered the market in 2009 than normal.

As for the data protection provisions of the Food and Drug Regulations, twenty-one (21) new human innovative drugs were added to the register of innovative drugs (the highest recorded other than 2007), while five (5) new veterinary innovative drugs were added to the register (the highest to date). This suggests that innovative drug companies continue to allocate significant resources on research and clinical studies to bring new drugs to market.

Federal Court of Appeal refuses a patent to a compound already the subject matter of product-by-process patent

On October 20, the Federal Court of Appeal put an end to the disparity in the jurisprudence surrounding whether a patentee could obtain a patent to a medicine subsequent to obtaining a patent to a process for producing the medicine by dismissing Bayer’s appeal in the case of Bayer Schering Pharma Aktiengesellschaft v. The Attorney General of Canada. The case stems from May 2008, when the Commissioner of Patents refused to grant Bayer a patent to a pharmaceutical compound per se because a previous patent had already been issued to it for the same compound when made by a particular process (product-by-process patent).  After Bayer’s appeal to the Federal Court was dismissed, it appealed to the Federal Court of Appeal.

Bayer argued that “obviousness-type” double-patenting didn’t apply to the situation at hand.  However, the Federal Court of Appeal disagreed and dismissed the appeal, stating that:

[T]here is nothing inventive or “patentably distinct” in a claim for a product that is the subject of a previous process-dependent patent. On the other hand, a process-dependent patent may be granted, even though a patent has already been issued for the product itself, if the process claimed and described for making the product exhibits inventive ingenuity.

… Consequently, the Commissioner correctly denied the Application on the ground of “obviousness” double patenting because the patent would have disclosed no new invention.  For her to have granted a patent for the compound would have improperly “evergreened” the parent patent, now expired, by creating a second monopoly in the use of the compound running from the date when the Application was approved.

This decision puts an end to any disparity in the jurisprudence, as the Federal Court of Appeal effectively overruled the decision in Aventis Pharma Inc. v. Mayne Pharma (Canada) Inc., 2005 FC 1183, 42 C.P.R. (4th) 481, rev’d. on other grounds, 2008 FCA 21, 380 N.R. 35.

Dedication of Merck Patent Insufficient to Defeat Allegation of Double Patenting

A recent decision of the Federal Court expounded on the harm that can occur if two patents issue for the same invention.  The Honourable Mr. Justice O'Reilly effectively quashed any suggestion in prior case law that patentees could use public dedications to overcome the effects of double patenting, which would otherwise allow them to extend their monopoly.

In Merck & Co. Inc. v. Canada (Health), Merck brought an application under the Patented Medicines (Notice of Compliance) Regulations (SOR/93-133) (the NOC Regulations) seeking an order prohibiting the Minister of Health (the Minister) from issuing a notice of compliance (NOC) to Apotex Inc. (Apotex) for the medicine dorzolamide, used in the treatment of glaucoma, until after the expiry of Canadian Patent No. 1,329,211 (the ‘211 Patent). 

Apotex argued that the ‘211 Patent was invalid for double-patenting. In particular, before it obtained the ‘211 Patent, Merck had already received a patent (known as the ‘262 Patent) for a family of compounds that included dorzolamide. Apotex therefore contended that Merck was not entitled to a second patent for the same invention. Merck, on the other hand, maintained that Apotex’s allegation of invalidity was unjustified because Merck had voluntarily relinquished its rights under the earlier ‘262 Patent by dedicating it to the public in 2007. In particular, Merck alleged that once it dedicated the ‘262 Patent, it no longer had two patents for the same invention, so the later patent could not be invalid on grounds of double-patenting . The Court determined that Merck had not met its burden of proof to demonstrate that Apotex’s allegation of invalidity was unjustified, and accordingly dismissed Merck’s application.


Merck applied for the ‘262 Patent before the 1989 amendments to the Patent Act came into force, and the application was thus governed by the “old Act” (R.S.C. 1985, c. P-4). The ‘211 Patent was a “divisional” of the ‘262 Patent, so it was deemed to have the same application date. Both patents were therefore subject to the old Act and set to expire 17 years after issuance, with the ‘211 Patent expiring 28 days after the ‘262 Patent.

Apotex served a first NOA in respect of the ‘211 Patent on May 19, 2007. Merck responded by applying to the Court to prohibit the Minister from issuing a NOC to Apotex. Then Merck, on October 3, 2007, served its notice of dedication in respect of the ‘262 Patent. In turn, Apotex withdrew its original NOA and served a new one specifically alleging that both the ‘211 Patent and the ‘262 Patent claimed a monopoly for dorzolamide. As both parties agreed that the ‘262 and ‘211 Patents included claims to dorzolamide, the case turned solely on the effect of Merck’s dedication of the ‘262 Patent to the public.

Effect of the Dedication

The Patent Act contains two mechanisms for correcting faulty patents: reissue (s. 47) and disclaimer (s. 48). These procedures allow patentees to correct inadvertent errors:

47. Whenever any patent is deemed defective or inoperative by reason of insufficient description and specification, or by reason of the patentee’s claiming more or less than he had a right to claim as new, but at the same time it appears that the error arose from inadvertence, accident or mistake, without any fraudulent or deceptive intention, the Commissioner may … cause a new patent, in accordance with an amended description and specification … to be issued to [the patentee] for the same invention for the then unexpired term for which the original patent was granted.

48. Whenever, by any mistake, accident or inadvertence, and without any wilful intent to defraud or mislead the public, a patent has (a) made a specification too broad … or (b) in the specification, claimed that the patentee … was the inventor of any material or substantial part of the invention patented of which the patentee was not the inventor, and to which the patentee had no lawful right, the patentee may … make a disclaimer of such parts as the patentee does not claim to hold by virtue of the patent …

Dedications, on the other hand, are a creature of common law, and allow a patentee to publicly declare that it will not enforce its monopoly.

Earlier decisions had determined that public dedications had the effect of a removing the evidentiary basis for allegations of double patenting. The Court of Appeal distinguished these cases on the basis that in those cases the dedication would not have conferred an advantage on the patentee. In the case at hand, however, the Court found that if it were to accept this argument, Merck would have achieved an extended monopoly over its invention for a period of 17 years and 28 days, more than the 17-year statutory period.

The Court found that if Merck had made a good faith mistake when it acquired the ‘211 Patent as a divisional, it had available to it the remedies of reissuance or disclaimer under the Patent Act to rectify any error. The legal effect of these remedies would have been to sever off the overlapping claims of the ‘211 Patent. In a case such as the present, where a patentee obtained a divisional patent that did not conform to the Patent Act, the remedy was provided by the prohibition against double-patenting. The Court noted:

From a global perspective, when considering the harm that may result from an improper divisional, it becomes clear that the principle of double patenting provides a sufficient remedy. The harm is that two patents might issue for the same invention, giving the patentee differing monopolies.

In the result, Apotex’s allegation of invalidity for double-patenting was justified, and Merck’s application for prohibition was dismissed.

Apotex succeeds in getting a NOC despite itself

Geoffrey North

A recent Federal Court decision highlighted the differences in prohibition proceedings under the Patented Medicines (Notice of Compliance) Regulations (the NOC Regulations) and impeachment actions under the Patent Act.  It is yet another example of how every case is to be determined on the specific evidence adduced before the Court.

In Eli Lilly Canada Inc. v. Apotex Inc, the Court dismissed Eli Lilly’s application under the NOC Regulations for an order prohibiting the Minister of Health (the Minister) from issuing a notice of compliance (NOC) to Apotex in respect of the medicine atomoxetine until after the expiry of the ‘735 Patent.  However, the dismissal was based on mootness alone, as the Court would have allowed the application had it not invalidated the ‘735 Patent entirely in a related impeachment action brought by Novopharm.

Proceedings under the NOC Regulations vs. Actions under the Patent Act

In Canada, in order for a generic manufacturer to get approval to market a generic version of an existing drug product, it must file an abbreviated new drug submission (ANDS) with Health Canada demonstrating that its product is bioequivalent to the innovator’s previously approved drug product.  If the Minister of Health (the Minister) is satisfied with the submission, she  must issue a NOC allowing the generic drug to be marketed, but only if the generic manufacturer has first “jumped the hurdles” of the NOC Regulations.  In particular, the Minister is prohibited from issuing a NOC to a generic manufacturer, even if it has satisfied Health Canada as to the safety and efficacy of its drug, until the generic has addressed all of the patents listed against the innovator’s drug product under the NOC Regulations.  With respect to each patent listed on this “patent register”, the generic must either accept that a NOC will not issue for its drug until the patent expires, or, if it seeks to enter the market before the patent expires, it must allege that the patent is not valid or that no product, use, dosage form or formulation claim of the patent will be infringed by the making, constructing, using or selling of its generic drug.  Such allegations must be contained in a notice of allegation (NOA), which is served on the innovator, and includes a detailed statement of the legal and factual basis for the allegations.  NOAs are required to be very detailed and are often well over 100 pages in length.

The innovator may apply to a Court within 45 days after being served with a NOA for an Order prohibiting the Minister from issuing a NOC until after the expiration of the patent(s) that are the subject of the NOA.  This effectively freezes Ministerial action for 24 months unless the application is disposed of by the Court earlier.  Such applications are supposed to be summary in nature, as they proceed by way of affidavits and out-of-court cross-examinations, and hearings occur by way of lawyers presenting the evidence to a single judge of the Court.  The innovator has the burden of proving that each of the generic’s allegations of invalidity and non-infringement are not justified on a balance of probabilities.  If the innovator does not meet its burden, the application is dismissed and the Minister is free to issue a NOC to the generic for its drug product.  If the innovator successfully argues that the generic’s allegations are not justified, then the Minister is prohibited from issuing a NOC until the latest expiry date of the patents at issue.

What is particularly interesting about this procedure is that (because of the supposed “summary nature” of such applications) the innovator’s remedies under the NOC Regulations are in addition to its usual remedies for patent infringement under the Patent Act.  In other words, a final decision on an application under the NOC Regulations does not prevent a subsequent action for infringement under the Patent Act, and the doctrine of res judicata does not apply.  Thus, the innovator is free (if its application was dismissed under the NOC Regulations) to effectively re-litigate the patent(s) at issue, meaning that the innovator gets a second “kick at the can” regarding the issues of infringement and validity.  Similarly, a generic is free to commence an action under the Patent Act seeking impeachment of the patent(s) and/or a declaration of non-infringement even if the prohibition application was allowed.

Unlike applications under the NOC Regulations, final determinations as to validity of a patent in the course of an action under the Patent Act are in rem,  meaning the decision is applicable to the patent itself rather than just the parties in the litigation.  Moreover, unlike applications under the NOC Regulations, actions under the Patent Act are subject to the full array of legal procedures, including documentary and oral discovery, expert reports, and live fact and expert witnesses before the Court.  This generally means that much more significant evidence is placed before the Court in the trial of an action.

Novopharm’s action against Eli Lilly to impeach the ‘735 Patent

As previously reported in our  blog post of October 19, Novopharm was successful in impeaching the ‘735 Patent, which claimed the use of the medicine atomoxetine for treating attention deficit hyperactivity disorder (ADHD) in three of its manifestations among all age groups (children, adolescents and adults).  In particular, the judge accepted the evidence of Novopharm’s experts going to the significant limitations of a study relied upon by Eli Lilly to establish utility.  The study’s most critical shortcomings were related to its small sample size, the potential for imperfect patient blinding, and the limited study duration.  The Court found that the study’s reported results failed to demonstrate the critical utility of atomoxetine to treat ADHD in adults or children, and that utility had therefore not been demonstrated.  Moreover, the Court found that the alleged invention in the ‘735 Patent was also not soundly predicted on the basis that the patent failed to disclose reference to the findings in the study in the patent disclosure.

Although the two cases were heard back-to-back by the same Federal Court judge, the decision in Novopharm’s action was released before a decision was rendered in the Apotex application (discussed below).

Eli Lilly’s application against Apotex under the NOC Regulations

Apotex had alleged in its NOA that the disclosure of the ‘735 Patent failed to provide any information, data or test results purporting to show that the administration of atomoxetine was safe and effective in the sense that treatment of ADHD would result.  Apotex further alleged that the first clinical trials or experiments assessing the safety and efficacy of atomoxetine for treating ADHD were not conducted until after the filing of the priority application.  As a result, Apotex asserted that any results or data obtained from those trials could not have formed a sufficient factual basis or sound line of reasoning upon which a sound prediction could be made of the safety and efficacy of atomoxetine for treating ADHD.  Alternatively, if the trials were sufficient for these purposes, Apotex alleged that Eli Lilly failed to disclose the results and data from those trials and experiments in the ‘735 Patent.  Eli Lilly answered the NOA with a notice of application that alleged that it had established by virtue of studies that atomoxetine was useful for the treatment of ADHD (i.e. that it had demonstrated utility).

When it came to presenting evidence, Apotex only framed its case around the issue of sound prediction and failed to provide any evidence contesting Eli Lilly’s assertions of demonstrated utility.  Eli Lilly responded by producing the study report that was the subject of the Novopharm action.  Apotex elected not to challenge this evidence on matters of substance.  In particular, Apotex chose not to seek to file reply evidence or to cross-examine Eli Lilly’s witnesses to challenge the study’s reliability or sufficiency.  The only evidence that Apotex put forward in response to the study was that the study and its data were not referenced in the ‘735 Patent.  Apotex asserted that this was enough to put the issue of utility into play

The Court, however, disagreed.

Where a patentee relies on demonstrated utility, its disclosure obligation is limited to the provision of a full description of the invention and the means to work it.  It is only where the patentee relies upon a sound prediction of utility that it is required to disclose in the patent both the factual data on which the prediction is based and the line of reasoning to support it.  Therefore, because Eli Lilly was relying upon an assertion of demonstrated utility, it was under no obligation to disclose the study or its findings in the ‘735 Patent.  As a result, Apotex’s evidence, which simply pointed to the absence of proper disclosure in the ‘735 Patent, was not even capable of rebutting the statutory presumption of validity.  As stated by the Court:

I am accordingly bound on this record to reject Apotex’s allegation of inutility because it has failed to satisfy its initial evidentiary burden … For this issue, the statutory presumption of validity prevails.

This is, of course, a surprising result in the face of my earlier finding in Novopharm Limited v. Eli Lilly and Company, 2010 FC 915, that the MGH Study was not sufficient to demonstrate utility. But in that case the issue was addressed by the parties on the strength of considerable evidence that went to the merits of the MGH Study. Here, Apotex took a different approach and elected not to meet Lilly’s assertion of demonstrated utility head-on. In the result, its allegation of inutility fails.

In the result, the Court would have allowed Eli Lilly’s application to prohibit the Minister from issuing a NOC to Apotex since Apotex’s allegations were not justified.  However, because of the intervening determination that the ‘735 Patent was invalid in the Novopharm action (an in rem decision), Eli Lilly’s application against Apotex was dismissed on the basis of mootness.  Apotex was therefore still able to receive a NOC to market its generic version of atomoxetine.

CEPLENE® not an "innovative drug" under the Data Protection Provisions of the Food and Drug Regulations

Epicept Corporation v. The Minister of Health and Canadian Generic Pharmaceutical Association (Intervener)

The Federal Court recently dismissed Epicept Corporation’s (Epicept) application for judicial review of a decision of the Minister of Health (the Minister).  The Minister had decided that Epicept’s drug product CEPLENE® (histamine dihydrochloride), which is used for remission maintenance therapy in the treatment of acute myeloid leukemia, was not an “innovative drug” pursuant to subsection C.08.004.1(1) of the Food and Drug Regulations (the Regulations).  This meant that the drug was therefore not able to receive the benefit of a period of market exclusivity under the data protection provisions of the Regulations.  Epicept’s application sought to reverse the Minister’s decision.

The drug approval process in Canada

It is important to understand several aspects of the way drugs are regulated in Canada.  Under s. 2 of the Food and Drugs Act, a “drug” includes any substance or mixture of substances manufactured, sold or represented for use in (a) the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or its symptoms, in human beings or animals, (b) restoring, correcting or modifying organic functions in human beings or animals, or (c) disinfection in premises in which food is manufactured, prepared or kept.

“New drugs” are defined as drugs that contain a substance, combination of substances, or use which has not been sold in Canada for sufficient time and in sufficient quantity to establish in Canada the safety and effectiveness of that substance, combination, proportion, use or condition of use, for use as a drug. 

A manufacturer must obtain a notice of compliance (NOC) to market a “new drug” in Canada.  To obtain a NOC, a manufacturer must file a new drug submission (NDS) containing sufficient information to enable the Minister to assess the safety and effectiveness of the “new drug”, including substantial evidence from clinical trials.

In addition, to market a “new drug” or a “drug” in Canada, a manufacturer must obtain a drug identification number (DIN), which is an eight digit numerical code that identifies drug product characteristics, including manufacturer, brand name, medicinal ingredient, dosing, pharmaceutical form, and route of administration.  DINs are used to track or recall a drug in the event of an adverse drug reaction in a population.  To receive a DIN, the manufacturer must file sufficient data to allow the Minister to evaluate the safety and efficacy of the drug for its intended use. A DIN submission does not, however, require substantial evidence of clinical effectiveness, or voluminous clinical trial data.

Therefore, a manufacturer requires both a NOC and a DIN to market a “new drug” in Canada, whereas a manufacturer requires a DIN, but not a NOC, to market a “drug” in Canada.

Histamine dihydrochloride and CEPLENE®

The medicinal ingredient histamine dihydrochloride is an old ingredient and had been previously approved in several “drugs”, all of which were approved using the DIN process.  Health Canada, however, deemed that CEPLENE® was a “new drug” because the old medicinal ingredient histamine dihydrochloride was being employed for a new use.  Epicept accordingly filed a 124-volume NDS with extensive material and data from comprehensive clinical trials. 

Since Epicept held only one patent relating to CEPLENE® (which expires in 2010), Epicept desired a period of market exclusivity by seeking to rely on the data protection provisions of the Regulations upon issuance of a NOC by requesting that CEPLENE® be added to the register of “innovative drugs”.

Whether CEPLENE® is an “innovative drug”

An “innovative drug” is defined in the Regulations as “a drug that contains a medicinal ingredient not previously approved in a drug by the Minister and that is not a variation of a previously approved medicinal ingredient such as a salt, ester, enantiomer, solvate or polymorph.”  The data protection provisions provide for a period of eight years of market exclusivity after the first NOC is issued to drugs registered on the “innovative drug” list.

At the heart of this issue was the meaning to be ascribed to the term “drug” as it is referred to the second time in the definition of “innovative drug”. In particular, the issue was whether the second reference to a “drug” was to be read down to be limited to approved “new drugs” or whether it included all approved “drugs”.  Epicept took the position that the second reference to “drug” was a reference to “new drug”, while the Minister took the position that the second reference to “drug” was a reference to “any drug”.

The Court agreed with the Minister’s position.  Epicept’s position was based on the argument that the data protection regime was to protect the extensive clinical data performed to gain approval for a “new drug”.  However, as set out in the relevant NAFTA and TRIPS provisions (from which the data protection provisions were derived), the Regulations were to protect “new chemical entities” – not all “new drugs” are “new chemical entities”.  In fact, section 30(3) of the Food and Drugs Act, the Regulatory Impact Assessment Statement to the Regulations, along with the relevant NAFTA and TRIPS provisions, all suggested that one of the intents of the data protection provisions was to “prohibit innovators from obtaining additional terms of data protection for variations of previously approved medicinal ingredients. This exclusion was introduced to avoid the granting of an additional eight years of protection where an innovator seeks approval for a minor change to a drug”.  As such, a drug that has been merely approved by the DIN process could not be said to be a “new chemical entity” that has not been approved.  The period of exclusivity under the data protection provisions was therefore not available to Epicept for its drug CEPLENE®.

Eli Lilly patent for atomoxetine for use in treating ADHD invalid for lack of utility

Novopharm Ltd. v. Eli Lilly and Company 2010 FC 915

Novopharm Limited (now known as Teva Canada Limited but hereafter referred to as Novopharm) sought a declaration under s. 60(1) of the Patent Act, R.S.C. 1985, c. P-4 that Eli Lilly and Company’s (Lilly’s) Canadian Patent No. 2,209,735 (the ‘735 Patent) was invalid and void. The ‘735 Patent claimed the use of the medicine atomoxetine for treating attention deficit hyperactivity disorder (ADHD) in three of its manifestations among all age groups (children, adolescents and adults). The ‘735 Patent did not claim the compound atomoxetine but only its use to treat ADHD.

In its Statement of Claim, Novopharm asserted that each of the 16 claims of the ‘735 Patent were invalid on the grounds of obviousness, anticipation, inutility, and incomplete disclosure concerning the selection of atomoxetine from an earlier genus patent.  Lilly’s Statement of Defence asserted the validity of the ‘735 Patent and argued that the invention was neither obvious nor anticipated by the prior art, that the ‘735 Patent was not a selection patent but rather claimed a new and inventive use for atomoxetine, and that Lilly had established the utility of atomoxetine by virtue of studies that had been conducted. In the alternative, although denying that any issue of sound prediction of utility arose, Lilly asserted that “there was a factual basis for the alleged predictions” and that “there was an articulable and sound line of reasoning from which the desired result could be inferred”.

The Federal Court considered each of the grounds raised in the Statement of Claim, as well as the applicable standard of proof, and ultimately found the ‘735 Patent to be invalid on the basis of lack of utility. The Court granted a declaration of invalidity under s. 60(1) of the Patent Act, and declared that Novopharm was not required to address the ‘735 Patent for the purposes of the Patented Medicines (Notice of Compliance) Regulations (SOR/93-133).


Atomoxetine was originally studied by Lilly as early as 1979 for use as an antidepressant, however this research was terminated in 1991 due to an inability to establish efficacy. Considering its uneventful use in depression research and its known profile as a selective norepinephrine reuptake inhibitor (NRI), atomoxetine was soon proposed for use as an ADHD medication. By 1994, Lilly and the Massachusetts General Hospital had agreed to co-sponsor a clinical trial of atomoxetine as a treatment for ADHD (the MGH Study).

At trial, testimony was received from three experts on behalf of Novopharm and one on behalf of Lilly. In arriving at its decision, the Court noted that Lilly was unable to secure the voluntary attendance of any witness with direct knowledge of the MGH Study which constituted Lilly’s evidence of utility. As such, the Court was required to assess the evidence on the basis of incomplete information contained in the study report.

Standard of Proof, Obviousness, Anticipation and Selection Patents

Although Lilly attempted to rely on the Supreme Court decision in Apotex Inc. v. Wellcome Foundation Ltd., 2002 SCC 77, 21 C.P.R. (4th) 499 (“AZT”) in support of the argument that the decision of the Patent Commissioner to approve the ‘735 Patent should be entitled to a degree of deference, the Court disagreed.  Novopharm had the onus of establishing invalidity on the usual balance of probabilities standard.

With respect to the question of obviousness, the point of particular evidentiary controversy was whether, in 1995, it was obvious that atomoxetine ought to work to treat ADHD based on the established efficacy of several medications with arguably similar selectivity profiles.  After a thorough consideration of the prior art, as well as the evidence presented by the various experts, the Court, in dismissing Novopharm’s argument, stated, “My own review of the prior art evidence indicates that the profiles of the drugs that worked to treat ADHD were simply too diverse, and their mechanism of presumed action within the highly complex neurological systems involved were too uncertain to draw any firm conclusion about the efficacy of atomoxetine.”

With respect to anticipation, one prior art patent simply referred to some of its claimed compounds (none of which were atomoxetine) as NRIs, while another referred to atomoxetine as an NRI, but only to treat depression.  These prior art patents clearly failed to anticipate the ‘735 Patent as the use of atomoxetine to treat ADHD was not disclosed in either patent.  Novopharm further argued that two oral conversations that fell outside the one year grace period anticipated disclosure of the invention.  The Court dismissed Novopharm’s allegation, however, on the basis that the first such conversation was not corroborated, while the second conversation was confidential in nature.

As for the argument that the ‘735 Patent was an invalid selection patent, the fact that atomoxetine was claimed in a prior patent did not render the ‘735 Patent a selection.  The ‘735 Patent claimed a new use for atomoxetine and did not attempt to reclaim the compound itself. As a result, there was no requirement that Lilly disclose any special advantage that atomoxetine enjoyed over compounds claimed in the prior patent.  It was sufficient to assert an inventive new use without any additional disclosure requirements.

Utility, Sound Prediction and Disclosure

Utility is not established on the basis of a mere hypothesis, an unproven idea or sheer speculation, even if later established.  Lilly argued that it need only show that atomoxetine had a mere “scintilla of utility” to uphold the patent.  The Court noted, however, that “the requirement of utility would be met if, at the Canadian filing date of the ’735 Patent, there was sufficient evidence that atomoxetine was clinically useful in treating some patients with ADHD or, alternatively, that such efficacy could be soundly predicted.” 

The judge ultimately accepted the evidence of Novopharm’s experts going to the significant limitations of the MGH Study relied upon by Lilly. The study’s most critical shortcomings were related to its small sample size, the potential for imperfect patient blinding, and the limited study duration. The Court found that the study’s reported results failed to demonstrate the clinical utility of atomoxetine to treat ADHD in adults or children. The results of the study were promising but only preliminary.  Utility therefore had not been demonstrated.

With respect to the question of sound prediction, Lilly made the highly strained argument that the statement in the ’735 Patent that atomoxetine is useful to treat ADHD is sufficient disclosure because “by stating that the compound works, the patentee is also telling the world why it works”.  In a case involving a claimed sound prediction of utility, however, it is beyond debate that an additional disclosure obligation arises.  This obligation is met by disclosing in the patent both the factual data on which the prediction is based and the line of reasoning followed to enable the prediction to be made.  This requirement to disclose the basis of the prediction in the patent specification is said to be the quid pro quo the patentee offers in exchange for the patent monopoly.  The ‘735 Patent failed for want of disclosure because some reference to the findings in the MGH Study that atomoxetine was useful in the treatment of ADHD was required to be set out in the patent.  The invention in the ‘735 Patent therefore was also not soundly predicted.  As a result, the Court concluded that the ‘735 Patent was invalid for lack of utility.

Quia timet counterclaim allowed in the context of an action for a declaration of non-infringement

Apotex Inc. v. H. Lundbeck A/S, 2010 FC 807

The generic pharmaceutical manufacturer Apotex Inc. (Apotex) commenced an action seeking declarations of invalidity and non-infringement with respect to Canadian patent no. 1,339,452 (the ‘452 patent), owned by H. Lundbeck A/S (Lundbeck),  relating to the medicine escitalopram.  During the course of these proceedings, Apotex brought a motion for an order striking Lundbeck’s counterclaim, or, in the alternative, requiring that Lundbeck provide security for costs.

Lundbeck’s counterclaim was in the nature of a quia timet action on infringement (essentially an injunction to restrain threatened and imminent patent infringement that has not yet commenced). While Lundbeck admitted that such action would be improper and subject to being struck if brought as an independent action, it argued that its counterclaim should be saved and allowed to proceed on the basis that it was brought in response to an action seeking a declaration of non-infringement. If the counterclaim was permitted to proceed, Lundbeck further argued that it should not be required to post security for costs or, in the alternative, that the amount requested by Apotex was unreasonable.


Wishing to sell its generic version of the antidepressant escitalopram in Canada, Apotex filed an abbreviated new drug submission with Health Canada to receive the necessary notice of compliance (NOC), along with serving Lundbeck with a notice of allegations (NOA) pursuant to the Patented Medicines (Notice of Compliance) Regulations (SOR/93-133) (Regulations). Lundbeck thereafter sought and was granted a prohibition order preventing the Minister of Health from issuing a NOC, thereby preventing Apotex from selling its drug in Canada until after expiry of the ‘452 patent. Apotex commenced the current action notwithstanding that an appeal from the prohibition order has been scheduled for hearing on September 14, 2010.

Quia timet actions on infringement

The Court has consistently held, as demonstrated in Connaught Laboratories Ltd. v. Smithkline Beecham Pharma Inc., (1998) 86 C.P.R. (3d) 36 (Connaught), that the actions of a “second person” (or generic pharmaceutical company) in pursuing a NOC under the mechanism set out in the Regulations, will not, without more, justify the bringing of a quia timet action by a “first person” (or innovator pharmaceutical company). The Court, however, accepted Lundbeck’s argument that the criteria applied in Connaught should be applied flexibly in a situation where a quia timet proceeding is brought in response to an action for a declaration of non-infringement. 

The fundamental concern in regulating the use of quia timet proceedings is to prevent abuses of process and the avoidance of wasting judicial resources on matters that will have no practical effect. While an abuse of process might arise in situations where a counterclaim was used to launch a fishing expedition at discovery, in the present case Apotex would itself be putting sufficient particulars before the Court relating to use of its generic product, including revealing its formulation and method of manufacture, in seeking a declaration of non-infringement. Given that Lundbeck’s counterclaim relied on the same facts as those put forward by Apotex, the Court found that Lundbeck’s counterclaim would not constitute an abuse of process and would instead avoid a potential waste of judicial resources by ensuring that all issues between the parties were finally resolved.  As a result, Apotex’s motion to strike was refused.

Security for costs

Given that Lundbeck’s counterclaim was allowed to proceed and that Lundbeck was not ordinarily resident in Canada, Apotex was prima facie entitled to an order for security for costs. Lundbeck, however, argued that the amount requested by Apotex was excessive and, further, that the Court should exercise its discretion to dispense with the requirement as Lundbeck had substantial foreign assets sufficient to cover any award of costs.

The Court concluded that Lundbeck should only be required to post security for costs if Apotex’s expected costs in defending the counterclaim could be shown to exceed its costs in pursuing the main action.  The Court used Tariff rates to determine that Apotex’s initial request was clearly excessive and that any additional costs in defending the counterclaim would be minimal. Upon considering a variety of factors and finding the counterclaim to be dependent on the main action, the Court decided that Lundbeck should be exempted from the requirement to post security for costs.

"Grave consequences" defence may be asserted against a generic in a section 8 action under the PM(NOC) Regulations

Apotex Inc. v. Shire Canada Inc., 2010 FC 828

In an action brought by Apotex Inc. (Apotex) to recover damages under section 8 of the Patented Medicines (Notice of Compliance) Regulations (SOR/93-133) (Regulations) in respect of the medicine modafinil, Shire Canada Inc. (Shire) brought this motion for leave to amend its statement of defence, alleging two new defences. Apotex opposed Shire’s motion, arguing that the proposed amendments did not disclose a reasonable defence and ought not to be permitted. The prothonotary struck out the first proposed amendment, finding that a defence based on the outcome of a separate infringement action to which Shire was not a party would be speculative and hypothetical, but permitted the second proposed amendment which alleged a “grave consequences” defence.


Apotex filed an abbreviated new drug submission (ANDS), seeking a notice of compliance (NOC) that would allow it to market its generic Apo-modafinil tablets, by comparing its tablets to Shire’s modafinil product.  Shire had listed Canadian patent no. 2,201,967 (the ‘967 patent) on the patent register in respect of its modafinil tablets.  On March 16, 2006, Apotex served a notice of allegation (NOA) on Shire, alleging that the claims of its ‘967 patent were invalid, void and of no effect. In response, Shire commenced an application for an order prohibiting the issuance of a NOC to Apotex. This application was dismissed two years later, on April 25, 2008. Apotex obtained a NOC shortly after the judgment was released and now seeks damages under section 8 of the Regulations for the delay in issuance of the NOC resulting from Shire’s unsuccessful application for a prohibition order.

Defence based on a separate action by Cephalon Inc.

For its first proposed new defence, Shire proposed to rely on the outcome of a separate infringement action against Apotex commenced by the owner of the ‘967 patent, Cephalon Inc. (Cephalon). Shire argued that, should the ‘967 patent be found to be valid and infringed in that other action, Apotex should not be entitled to recover any damages in the present proceeding based on the loss of infringing sales.
The prothonotary struck this proposed defence, finding that the outcome of the Cephalon action was an uncertain future event which was not susceptible of being determined or even influenced in the context of the present action.  This was the essence of a speculative and hypothetical pleading that ought to be struck.  Moreover, these issues could not be determined unless and until the proceedings by Cephalon in the other court file were resolved.  This would unreasonably delay, embarrass and prejudice the trial of the present action by Apotex againt Shire.

Defence based on the “Grave Consequences” Doctrine

For its second proposed new defence, Shire sought to rely on the existence of Canadian patent no. 2,165,824 (the ‘824 patent), a second patent listed on the patent register against Shire’s modafinil tablets. In particular, in a NOA served on Shire by Apotex, dated August 30, 2005, Apotex alleged that it would not infringe the ‘824 patent on the basis of its draft product monograph and gave an undertaking that it would not make, use or sell its tablets for the patented use of treatment of sleep apnea or ventilation problems of central origin.  However, according to Shire, Apotex’s product monograph does include the patented indication, and Apotex has sold its modafinil tablets for such use in breach of its undertaking.  Shire therefore seeks to allege that Apotex breached this undertaking, giving rise to the possible finding of “grave consequences”, alluded to by the Federal Court of Appeal, in the form of a denial of any remedy for delayed entry into the market pursuant to section 8 of the Regulations.
Apotex argued that subsection 8(5) of the Regulations, which requires the court to take into account “all matters that it considers relevant to the assessment of the amount, including any conduct [of the parties] which contributed to delay the disposition of the application”, should be interpreted as any valid defence arising exclusively in the context of the very prohibition proceeding that was dismissed or discontinued.

The prothonotary, however, found that Apotex’s argument raised a difficult question that should not be determined on a motion to strike.  It was reasonably arguable that the Court could conclude that Apotex’s breach of an undertaking, if established, could affect the assessment of damages.  Apotex therefore did not meet the very heavy onus of showing that this proposed defence was plainly and obviously devoid of any merit and stood no chance of success whatsoever.

"Frozen Register" concept renders Janssen's disclaimer irrelevant

Janssen-Ortho Inc. v. Apotex Inc. , 2009 FC 650

This was a motion brought by Apotex pursuant to section 6(5)(b) of the Patented Medicines (Notice of Compliance) Regulations (Regulations) to dismiss Janssen’s prohibition application on the basis that it was “redundant, scandalous, frivolous, or vexatious or otherwise an abuse of process”.   The motion raised a unique issue which appears not to have been decided in any prior proceeding under the Regulations.   In particular, the issue was whether a generic manufacturer was required to respond to claims in a patent which changed as a result of a disclaimer filed by the innovator subsequent to service of the generic’s notice of allegation (NOA) and prior to the commencement of an application to prohibit the issuance of a notice of compliance (NOC).  Or, in the words of the prothonotary hearing the motion, “using a football analogy, does the field goal count if the goalposts are moved after the ball is in the air?”

For background, Janssen filed Canadian patent application no. 2,095,523 (the ‘523 patent) for a “Pharmaceutical composition comprising a tramadol material and acetaminophen” on September 3, 1992.  Well after the ‘523 patent issued on June 22, 2004, Apotex filed its abbreviated new drug submission (ANDS) on February 1, 2008 and delivered a NOA in respect of the ‘523 Patent on March 11, 2008.  The NOA addressed the claim set of the ‘523 patent as it then existed, alleging invalidity of the claims on the basis of anticipation and over-breadth.  Janssen, on April 22, 2008, filed a disclaimer in respect of the ‘523 patent, disclaiming all 13 of the original claims, and replacing them with a narrower set of 13 new claims.  Three days later, Janssen commenced the application at issue in response to Apotex’s NOA. 

Although it has been held that a motion under s. 6(5)(b) of the Regulations is an “extraordinary remedy that should only be granted in limited circumstances”, the prothonotary sided with Apotex and concluded that “this is one of the extraordinary cases where the application should be struck”.    

Relying on the “frozen register” concept, it was noted that a generic manufacturer, such as Apotex, when filing a submission for a NOC, was only required to address those patents on the register in respect of the innovative drug as of the filing date of the submission.  In the result, “the rights of the respective parties crystallized upon the receipt by Janssen of the Apotex NOA.”  This principle is grounded in fairness.

If a generic wishes to attack the validity of the claims as reformulated by the disclaimer, it cannot revise its Notice of [Allegation] since proceedings, as in this case, have already been commenced. Apotex cannot raise new grounds for invalidity nor allege non-infringement since the proceedings in this Court were initiated immediately after the filing of the Disclaimer thus, in effect, locking in the Notice of Allegation.

The only proper way to approach the matter is to do so in the way that the Privy Council did in BVD namely fix a date prior to the disclaimer for the purpose of construing the claims.

Unfortunately for Janssen, instead of opposing any of Apotex’s allegations as contained in its NOA, Janssen incorrectly declared in the notice of application that Apotex was required to “address the claims of the ‘523 Patent as they now stand and as they are deemed in law to have stood from the date of issue”.  But, by not opposing any of Apotex’s allegations of infringement and invalidity, the application amounted to a waste of judicial resources since it was bereft of any chance of success.  As stated by the prothonotary, “Janssen [was] not entitled to have filed a patent that is overbroad and after being found out, seek to retroactively bootstrap its position by disclaiming the claims and thereby obtain an advantage that it otherwise would not have”.  Accordingly, the application was dismissed with costs throughout to Apotex.

Court of Appeal rejects Pfizer's alleged factual and legal errors and upholds invalidity of Pfizer's patent to NORVASC

Pfizer Limited V. Ratiopharm Inc. (2010 FCA 204)

Pfizer appealed from a decision of the Federal Court declaring Pfizer’s Canadian Patent No. 1,321,393 ( ‘393 Patent) relating to the medicine amlodipine besylate (NORVASC) invalid for obviousness. 

Amlodipine is a calcium channel blocker and anti-hypertensive compound, but had originally been formulated in the form of the maleate salt.  However, when problems with stability and processability arose during the regulatory approval process, Pfizer began to search for a different salt through an accepted process known as salt screening.  During this process, Pfizer tested seven other salts, and decided to proceed with the besylate salt.  Pfizer then filed a patent application directed to the besylate salt of amlodipine based on its alleged unique combination of properties that made it particularly suitable for preparing formulations of amlodipine.  This application subsequently issued as the ‘393 Patent. 

In his decision, the trial judge discussed the development of pharmaceutical products in the 1980’s (particularly the salt screening stage), detailed both the development of amlodipine besylate and the patenting thereof, and thoroughly summarized all expert evidence in relation thereto.  The trial judge concluded that the ‘393 patent was invalid for obviousness, as well as finding, in obiter, that it was invalid on a number of other grounds, including: lack of utility; insufficient disclosure; misleading under s. 53 of the Patent Act; and that it failed to meet the criteria for a valid selection patent.  Pfizer appealed the decision on both factual and legal grounds.

Regarding the alleged factual error, Pfizer asserted that the trial judge erred in finding that a person skilled in the art “would have had every reason to test the besylate salt.”  Specifically, Pfizer argued that the trial judge erred by focussing on the process the inventors used in developing the invention rather than the outcome or result of the process. Pfizer submitted that, when an invention is arrived at through testing, it is not necessarily obvious merely because the utilized tests were within the knowledge and capacity of the person skilled in the art.  Instead, according to Pfizer, the invention is obvious only if its result was obvious.  In this respect, Pfizer complained that its cross-examination of one of ratiopharm’s experts demonstrated that the result was not obvious.  The Court of Appeal summarily dismissed Pfizer’s argument, characterizing it as “a complaint that the trial judge was insufficiently persuaded by Pfizer’s cross-examination”.  This did not demonstrate palpable and overriding error.       

Regarding the alleged legal error, Pfizer argued that the trial judge misapplied the “obvious to try test” in an obviousness inquiry.  Specifically, Pfizer maintained that the trial judge asked whether the process was more or less self-evident (or predictable) when the appropriate question was whether the result was self-evident (or predictable). Accordingly, in Pfizer’s view, the trial judge misdirected himself as to the law.  Furthermore, Pfizer argued that the trial judge erroneously relied upon and adopted similar reasoning from U.S. authority on the same issue.  Again, the Court of Appeal rejected Pfizer’s position, stating that it was “a disguised attempt to challenge factual determinations by characterizing them as errors of law.”  Statements made by the trial judge regarding the U.S. decision were in obiter, and the trial judge  had explicitly recognized that somewhat different principles applied in Canada.  Consequently, no legal or factual errors had been committed, and the appeal was dismissed with costs.           

Conditions for a valid selection patent does not constitute an independent basis for attacking validity

Eli Lilly Canada Inc., Eli Lilly and Company, Eli Lilly and Company Limited and Eli Lilly SA v. Novopharm Limited (2010 FCA 197)

Eli Lilly, the plaintiff in a patent infringement action, was successful in appealing a decision of the Federal Court which had found Eli Lilly’s Canadian Letters Patent No. 2,041,113 (the ‘113 Patent) relating to the medicine olanzapine (Zyprexa) invalid on the basis that it was not a proper selection patent.  The core issue on appeal raised a single question: do the conditions for a valid selection patent constitute an independent basis upon which to attack the validity of a patent?

Eli Lilly had previously received a patent (the ‘687 Patent) in 1980 covering approximately 15 trillion thienobenzodiazapine compounds, the properties of which were said to be useful for treating mild anxiety and certain psychotic conditions.  Although olanzapine was encompassed within the scope of the ‘687 Patent, it was not specifically disclosed.  Following the issuance of the ‘687 Patent, Eli Lilly eventually ceased its studies on the compounds specifically identified in that patent, but began to synthesize seven new compounds, of which olanzapine was the most promising.

Eli Lilly filed the application for the ‘113 Patent in April 1991, and it was subsequently issued in July 1998.  The ‘113 Patent disclosed that Lilly “discovered a compound [olanzapine] which possesses surprising and unexpected properties by comparison with flumezapine and other related compounds.”  It also referred to other perceived advantages of olanzapine over prior-known antipsychotic agents not included in the genus ‘687 Patent.

The Court of Appeal noted that a valid selection patent may be issued where “a property, quality or use in relation to one or more members of the genus is subsequently discovered … Selection patents exist to encourage researchers to further use their inventive skills so as to discover new advantages for compounds within the known class.”  The Court of Appeal, however, asserted that selection patents must be assessed in the same way as any other patent:

[A] challenge directed to a determination that the conditions for a selection patent have not been met does not constitute an independent basis upon which to attack the validity of a patent. Rather, the conditions for a valid selection patent serve to characterize the patent and accordingly inform the analysis for the grounds of validity set out in the Act – novelty, obviousness,sufficiency and utility. In short, a selection patent is vulnerable to attack on any of the grounds set out in the Act.

In this respect, according to the Court of Appeal, the trial judge committed an overriding error when he essentially merged the doctrines of utility, obviousness and sufficiency, and concluded right from the outset that the ‘113 Patent was not a valid selection patent.  The trial judge’s initial conclusions coloured his analysis throughout the remainder of his judgment, and led the Court of Appeal to overturn numerous findings as to anticipation and obviousness.

In addition, the Court of Appeal remitted the issues of utility and sufficiency back to the Federal Court as there was insufficient evidence on record relating to the patent’s promise: “The failure to provide any foundation for the construction of the patent’s promise leaves this Court without any basis upon which to conduct a meaningful review. In the absence of an accurate articulation or ascertainment of the promise, review of the analysis of the alleged advantages is not possible because they cannot be viewed in relation to the overarching promise of the patent.”

Given this remittance, the patent bar eagerly awaits the trial judge’s findings, as clarification of disclosure requirements in the area of selection patents is undoubtedly needed.

Federal court confirms requirement of patent specificity for listing patents on the patent register

Purdue Pharma v. The Minister of Health, 2010 FC 738

Purdue Pharma sought judicial review of a decision of the Office of Patented Medicines and Liaison (OPML) in which the OPML determined that one of Purdue’s patents (the 738 Patent) was not eligible for listing on the Patent Register maintained in accordance with the Patented Medicines (Notice of Compliance) Regulations (Regulations) in respect of the drug TARGIN.  TARGIN is a controlled-release drug in tablet form that contains two medicinal ingredients: oxycodone hydrochloride (a painkiller), and naloxone hydrochloride, which counteracts certain side effects of oxycodone.  The 738 Patent contemplates a controlled-release technology for delivering oxycodone, and contains 28 claims, none of which mention naloxone.  Claim 5 was particularly at issue, and claims, “A solid controlled release oral dosage form, comprising oxycodone or a salt thereof … an effective amount of a controlled release matrix … and … a suitable amount of a suitable pharmaceutical diluent …”

Purdue claimed that the OPML erred by misinterpreting paragraph 4(2)(c) of the Regulations, which provides that, “A patent on a patent list in relation to a new drug submission is eligible to be added to the register if the patent contains … a claim for the dosage form and the dosage form has been approved through the issuance of a notice of compliance in respect of the submission.”  The phrase “claim for the dosage form” is defined at section 2 of the Regulations as meaning “a claim for a delivery system for administering a medicinal ingredient in a drug or a formulation of a drug that includes within its scope that medicinal ingredient or formulation.”  Purdue asserted that the word “comprising” in claim 5 of the 738 Patent contemplated that medicinal and non-medicinal ingredients not specifically mentioned could be included within the scope of that claim.  In particular, Purdue submitted that a product containing all the ingredients in the dosage form as described in claim 5, along with one or more other active ingredients, would still be included within the scope of claim 5 for the purposes of section 4(2)(c) of the Regulations, so long as one of those active ingredients was oxycodone or a salt thereof.

Justice Crampton disagreed with Purdue’s position, however, and found that the OPML correctly determined that the dosage form contemplated by claim 5 of the 738 Patent related to a formulation containing oxycodone as the sole medicinal ingredient, and that naloxone was therefore not within the scope of the claim for the purposes of the Regulations.  A construction of claim 5 that would include within its scope a potentially unlimited number of other unnamed medicinal ingredients would be inconsistent with the objective of product specificity that was enshrined in section 4 of the Regulations by the 2006 amendments thereto.  As a consequence, where a patent relates to a delivery system for administering medicinal ingredient(s) in a drug or formulation of a drug, in order to be eligible for listing on the Patent Register against an approved combination drug, the patent must contain a claim that includes within its scope each of the medicinal ingredients  contained in the approved combination.  Here, because naloxone did not fall within the scope of claim 5, the 738 Patent was not eligible to be listed on the patent register against the combination drug product TARGIN. 

Federal court confirms decision to withhold designating notice of allegation as a confidential document

Pfizer Canada Inc. et al. v. Novopharm Limited et al., 2010 FC 668

Even though generic pharmaceutical companies invest significant time and funds into the preparation of notices of allegations (“NOA”s), the Federal Court has confirmed that such documents should remain available to the public and not be designated as confidential information under the terms of a protective order.

In an application under the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”) in relation to the drug pregabalin, the Honourable Mr. Justice Crampton dismissed an appeal from a decision of Madam Prothonotary Milczynski dismissing a motion by Novopharm Limited (“Novopharm”), which sought a protective order designating, among other things, its NOA as confidential pursuant to Rule 151 of the Federal Courts Rules.

Novopharm had unilaterally marked its NOA as confidential upon service to Pfizer and submitted that such designation was appropriate in the circumstances because:

    a) it had made a substantial investment in the preparation of the NOA (approximately $200,000) and had consistently treated and maintained the NOA as confidential;

    b) the investment was made to assist Novopharm “to be a very close second [to ratiopharm], if not the first, generic [drug manufacturer] to obtain a NOC for its pregabalin product”;

    c) there is no public benefit to disclosing the NOA; and

    d) if Novopharm prevails in the litigation and its NOA has been made available, competitors could use the NOA to “springboard” onto the pregabalin market at considerably less expense than that incurred by Novopharm.

The test applicable to a motion for an order of confidentiality was established by the Supreme Court of Canada in  Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, [2002] 2 S.C.R. 522, at 543-544.  Such an order should only be granted when:

(i) such an order is necessary to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonable alternative measures will not prevent the risk; and

(ii) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings.

There are three elements to the first part of the Sierra Club test:

(i) the risk in question must be real and substantial, in that the risk is well grounded in the evidence, and poses a serious threat to the commercial interest in question;
(ii)   in order to qualify as an “important commercial interest”, the interest in question cannot merely be specific to the party requesting the confidentiality order, the interest must be one which can be expressed in terms of a public interest in maintaining confidentiality; and

(iii)  the Court must consider not only whether reasonable alternatives to a confidentiality order are available, but must also restrict the order as much as is reasonably possible while preserving the commercial interest in question.

Justice Crampton found that Prothonotary Milczynski was not “clearly wrong” in her assessment of the motion.  First of all, there is no provision in the Regulations relating to whether or not NOA’s are confidential, unlike other pieces of information or documents that are treated as confidential, such as Abbreviated New Drug Submissions.   This tended to suggest that the Regulations do not contemplate that entire NOAs should be treated as confidential in proceedings thereunder.  In addition, there is no precedent in the Federal Court for designating an NOA as confidential in the manner and for the purpose that Novopharm sought.  Another significant factor that weighed against Novopharm’s position was that a patent effectively confers a statutory monopoly on the patent holder, in the sense that the patent holder is shielded from competition for the life of the patent. This provides the basis for a strong public interest in transparency and openness with respect to (i) the allegations contained in an NOA, (ii) the basis for those allegations, and (iii) the proceedings involving those allegations.

Moreover, the evidence adduced by Novopharm was entirely speculative and based on “bald assertions and unsupported assumptions”.  No evidence was adduced that ratiopharm’s NOA (dealing with the same patents) had attracted the type of attention from rival generic drug companies that Novopharm claimed its NOA would attract.  There was also no persuasive evidence to demonstrate that Novopharm’s NOA would be of greater value to those rivals than ratiopharm’s.  Instead, if the NOA was designated as confidential, there was a very real prospect that substantial portions of the proceedings would have to be held in camera, that additional court documents would have to be designated as confidential, and that there would be a consequential adverse impact on the right to free expression.

In view of the foregoing, the court was satisfied that the motion should not have been brought by Novopharm – it was improper and vexatious.  Novopharm’s refusal to accept the orders issued below forced the applicants to incur substantial additional costs.  Justice Crampton accordingly awarded significant costs payable forthwith by Novopharm. 

Double patenting issue must be considered at time of Hearing of Application under the PM(NOC) Regulations

Sandoz Canada Inc. v. Abbott Laboratories, 2010 FCA 168

The Federal Court of Appeal rendered a decision that will have important implications on the litigation strategy of pharmaceutical companies.

Although the Federal Court issued an order under the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”) prohibiting the Minister of Health from issuing a notice of compliance (“NOC”) to Sandoz for its clarithromycin extended release 500 mg tablets until after expiry of the 266 patent (a decision appealed by Sandoz), Abbott also cross-appealed from this decision.  The court found that Abbott had failed to adequately respond to Sandoz’ allegation of invalidity with respect to double patenting of claim 22 of the 395 patent over the 541 patent.  Accordingly, Abbott sought that the court’s decision dismissing an order of prohibition in relation to the 395 patent be set aside.

In particular, Abbott argued that the application judge erred in law by assessing the allegations in the notice of allegations (“NOA”) as of the wrong date (i.e. the date the NOA was served) instead of the date of the hearing of the application.  Because of this alleged error, Abbott argued the application judge did not give effect to the dedication of the 541 patent to the public subsequent to service of the NOA and just prior to the hearing.  Had the application judge given effect to this dedication, which Abbott argued had the effect of re-writing the patent as if the dedicated claims had never issued, there was no basis for Sandoz’ argument of double patenting.

The Federal Court of Appeal agreed with Abbott and overturned the application judge’s decision in this respect:

In my view, the purpose of the Regulations is not served in the present case by considering the allegation of double patenting as at the date the NOA was served.  To do so ignores the fact and the effect of the dedication of the ‘541 patent.  The result is that the Minister of Health may issue a NOC to Sandoz, yet at the time of such issuance its allegation of double patenting is unjustified.

The purpose of the Regulations is served in the present case by considering the effect of the dedication as of the date of the hearing.  This result is consistent with the language of subsection 6(2) of the Regulations which allows the issuance of an order of prohibition if the Court finds that none of the allegations made by a generic “is justified”.  It is also consistent with decisions such as Glaxo Wellcome which was cited with approval by the Supreme Court of Canada in Merck.  It follows that, in my respectful view, the Judge erred by considering the status of the ‘541 patent as of the date of the NOA was issued.  The status of the ‘541 and ‘395 patents should have been considered as of the date of the hearing.

As noted above, the Judge accepted that had the dedication taken place prior to the service of the NOA, the effect of the dedication would have been to remove the evidentiary basis for the allegation of double patenting.  Had she taken cognizance of the dedication by considering the ‘541 patent as of the date of the hearing she would have concluded that the allegation of double patenting was not justified.  In my view, that is the correct result.

The court ultimately dismissed Sandoz’ appeal with respect to the 266 patent, and allowed Abbott’s cross-appeal for an order of prohibition in respect of the 395 patent.  It is unknown at this time whether Sandoz has or will seek leave to appeal to the Supreme Court of Canada.

Prothonotary dismisses Motion to Strike Res Judicita Pleadings from Statement of Defence in Impeachment Action

Apotex Inc. v. Pfizer Ireland Pharmaceuticals, 2010 FC 633

In an action commenced by Apotex to impeach Pfizer’s ‘446 patent relating to the drug Viagra (medicinal ingredient sildenafil citrate), Apotex brought a motion seeking to strike those portions of Pfizer’s statement of defence pleading res judicata and abuse of process.  The motion was surprisingly dismissed by the court.


Apotex had previously sought to invalidate Pfizer’s ‘446 patent in proceedings commenced by Pfizer under the Patented Medicines (Notice of Compliance) Regulations (“Regulations”).  On September 27, 2007, however, Mr. Justice Mosley upheld the ‘446 patent, and granted an order prohibiting the Minister of Health from issuing a notice of compliance to Apotex.  This decision was upheld by the Federal Court of Appeal on January 16, 2009, and leave to appeal to the Supreme Court of Canada was not sought.

The within action was commenced in May 2009.  Apotex raised all of the allegations of invalidity (adding one additional argument) that were found to be unsuccessful during the proceedings under the Regulations.  The jurisprudence is replete, however, with statements by the court that proceedings under the Regulations are summary in nature and have no precedential effect on subsequent actions.  Nonetheless, Pfizer pleaded that “[b]y reason of res judicata, issue estoppel, collateral estoppel, comity and abuse of process Apotex should be precluded from contesting the validity of the ‘446 Patent in the present proceeding”.

The Court’s Decision on the motion

The approach of the court is well known on motions to strike:

  • No evidence is considered on a motion to strike;
  • The pleading must be considered true and provable in evidence;
  • It must be “plain and obvious” that the allegations ought to be struck as bereft of any chance of success”; and
  • If there is any doubt as to the propriety of a pleading, it should be left to the trial judge to make a determination based on the evidence.

The prothonotary found that Pfizer was not pleading res judicata to have the matter determined on that basis per se, but rather that the pleading was directed toward evidence and witnesses who make the same statements in this proceeding and to that extent it should be open to the trial judge to determine if res judicata principles can be applied to that evidence.  As a result, he found that it could not be said that the pleading was bereft of any chance of success.  Moreover, according to the prothonotary, while the Regulations are designed to be a summary process,  “parties ought not to be able to have endless ‘kicks at the can’ and use up more and more judicial resources because they do not like the prior result and are sufficiently well-heeled to pursue more and more litigation.”  At a minimum, the prothonotary found that the res judicata argument may affect the disposition of costs.

Although discretionary orders of prothonotaries are not disturbed on appeal to a judge unless: (a) the questions raised in the motion are vital to the final issue of the case, or (b) the orders are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts, a judge will likely take a hard look at this decision should Apotex decide to appeal.

Revatio patent ruled invalid for lack of sound prediction and obviousness

Pfizer Canada Inc.  v. Ratiopharm Inc. and The Minister Of Health, 2010 FC 612

In an application under the Patented Medicines (Notice of Compliance) Regulations (“Regulations”), Pfizer sought an order prohibiting the Minister of Health (“Minister”) from issuing a notice of compliance (“NOC”) to Ratiopharm for a generic version of the drug REVATIO (containing the medicine sildenafil citrate (“sildenafil”) – the same medicinal ingredient contained in VIAGRA) until after the expiry of the 324 patent.  Ratiopharm alleged that the 324 patent was invalid for lack of soundly predicted utility, obviousness, and anticipation, and therefore that a generic version of REVATIO should immediately be allowed on the Canadian market for use in the treatment of pulmonary hypertension.  Ratiopharm was ultimately successful on the first two grounds.

The doctrine of sound prediction requires the following three components to be satisfied where it is relied upon by a patentee to predict utility of a substance in advance of actual testing:

1. there must be a factual basis for the prediction;
2. the inventor must have at the date of the patent application an articulable and sound line of reasoning from which the desired result can be inferred from the factual basis; and
3. there must be proper disclosure, although it is not necessary to provide a theory of why the invention works.  The soundness of the prediction is a question of fact.

In this case, all the experts unanimously agreed that the study disclosed in the 324 patent in support of sildenafil’s alleged ability to treat pulmonary hypertension (the 1024 Study) failed to provide enough information about the methodology of how the study was performed or conducted, and failed to provide any practical results that would enable a person skilled in the art to soundly predict sildenafil’s alleged utility.  The 324 patent claimed to soundly predict the use of sildenafil in treating all types of chronic pulmonary hypertension by relying on a limited set of data from a few patients in one group.  Although Pfizer had been studying the effect of sildenafil on patients suffering from important secondary forms of pulmonary hypertension, it did not wait for the results before filing the application for the 324 patent.  Accordingly, the court found that Pfizer had not proven on a balance of probabilities that Ratiopharm’s allegation of lack of sound prediction was unjustified, and the 324 patent was therefore invalid on this ground.

With respect to obviousness, the main difference between the prior art and the 324 patent claims was that the prior art focused on rebound pulmonary hypertension in animals, whereas the 324 patent dealt with all forms of pulmonary hypertension.  Pfizer submitted that while the mechanism of action for sildenafil had been understood for some time before the claim date, persons skilled in the art understood that just because it was biologically plausible that sildenafil could work didn’t mean that it was predictable that it would work to treat pulmonary hypertension in humans.  The court found that this was therefore an appropriate case for applying the “obvious to try” test.  It was self-evident that sildenafil would at least be effective in treating rebound pulmonary hypertension, a use explicitly included within the scope of the 324 patent.  As such, there was a fair expectation of success that sildenafil would treat pulmonary hypertension, and it was therefore “obvious to try” sildenafil for this use.  The 324 patent was accordingly also invalid on the ground of obviousness.

Section 8 Damages under the PM(NOC) Regulations not available when patent subsequently invalidated in Impeachment Action

Apotex Inc. v. Syntex Pharmaceuticals International Inc. and Hoffman LaRoche Limited, 2010 FCA 155

Apotex was unsuccessful in its attempt to recover damages under section 8 of the 1993 version of the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”) in relation to its naproxen slow release tablets. 


In 1996, Syntex Pharmaceuticals International Inc. (“Syntex”) and Hoffman LaRoche Limited (“Roche”) were successful in obtaining an order under the Regulations prohibiting the Minister of Health (“Minister”) from issuing a notice of compliance (“NOC”) to Apotex with respect its naproxen slow release tablets until after the expiration of the 671 patent.  Apotex did not challenge the validity of the 671 patent at that time.  An appeal and cross-appeal from this decision was dismissed.  Apotex subsequently commenced an action seeking to impeach (invalidate) the 671 patent, and on April 19, 1999, the court found that Apotex’s formulation was non-infringing and that the 671 patent was invalid.  No appeal was taken from that judgment.

However, notwithstanding that the 671 patent had been invalidated, the Minister did not immediately issue a NOC to Apotex on the basis that the Minister was of the opinion the original prohibition order remained in effect.  On motion by Apotex, the court set aside the 1996 prohibition order and dismissed the application “for greater certainty” to ensure that Apotex received its NOC.  No appeal was taken from this decision.  This order formed the basis for Apotex’s claim for damages under section 8 of the Regulations.  Specifically, the Minister had certified that, but for the prohibition order, a NOC would have issued to Apotex years earlier on July 21, 1995.

The Court was first required to determine whether section 8 as it read in the 1993 or 1998 version of the Regulations applied.  The transitional provisions of the 1998 Regulations provided that section 8, as amended, applied to an application “pending” on the coming into force of the new Regulations.  Since “pending” generally referred to “a proceeding that is not yet finished, one in which there is no final judgment”, the court found that, given the final original decision and appeal therefrom, the prohibition proceeding was not pending at the relevant time.  Therefore, it followed that the 1993 Regulations applied.

Section 8 as it read in the 1993 Regulations provided that an innovator pharmaceutical company (“first person”) is liable to a generic pharmaceutical company (“second person”) where, because of a prohibition application, the Minister delays issuing a NOC beyond the “expiration” of all patents that are the subject of an order prohibiting issuance of a NOC.

In the court’s view, section 8 was not intended to provide redress where the innovator prevailed in the prohibition proceeding, even if the generic was later successful in an impeachment action: Apotex could not “reach back and apply the finding of invalidity in the action so as to argue that the ‘671 patent had ‘expired’ within the meaning of section 8” of the 1993 version of the Regulations.  As a result, Apotex was unable to recover its losses between 1995 and 1999.   


Confidentiality Order Appropriate to Conceal Subject-Matter of Novopharm's Abbreviated New Drug Submission

Novopharm Limited v. The Minister of Health, 2010 FC 566

Novopharm filed an abbreviated new drug submission (ANDS) for a generic version of a drug, and represented to the Minister of Health that the ANDS did not attract the application of the Patented Medicines (Notice of Compliance) Regulations (and therefore the requirement to address patents listed on the patent register thereunder), since the patents were added after Novopharm had purchased the Canadian Reference Products and completed its clinical studies.  The Minister disagreed however, and required Novopharm to address a specific patent listed on the patent register before it would issue a notice of compliance (NOC) allowing Novopharm to commence marketing its drug.  Novopharm took issue with this decision, and accordingly commenced an application for judicial review of the Minister’s decision.  The application identifies the patents and drugs at issue by letter (i.e. Drugs A and B and Patents X and Y) in order to maintain confidentiality over the drug submission.

In the context of this application, Novopharm brought a motion for a confidentiality order pursuant to Rule 151 of the Federal Courts Rules in order to ensure that all of its dealings with the Minister relating to the review of its ANDS would be maintained in the strictest confidence.   Novopharm argued that disclosure of any details relating to its ANDS would entail disclosure of Novopharm’s legal and business strategy which would result in serious prejudice to its commercial interest.  The Minister opposed this motion, arguing that the innovator of drugs A and B had a right to participate as a party to the proceeding, and that it should be named as a respondent. 

Prothonotary Aalto agreed with Novopharm and granted a confidentiality order.  Novopharm’s commercial interests were clearly at stake.  It was only the Minister’s decision that was at issue, and that decision only affected Novopharm.  The patentee currently had no direct interest at stake giving it the right to be added as a party.  The Minister was, in part, seeking to abdicate the responsibility of substantiating its decision by inviting the innovator to assist in supporting its decision on grounds that would be directed primarily to protecting the interests of the innovator and not the integrity of the Minister’s own internal decision-making process and record.  In order to do so, the Minister would be revealing the record upon which the Minister’s decision was made, thereby revealing confidential information of Novopharm in the context of the ANDS procedure.  This would have been improper.

Drug-related patent held invalid for double patenting and anticipation, but not obviousness

Merck v. Pharmascience, 2010 FC 510 (Federal Court).

In a decision rendered May 11, 2010 under the Patented Medicines (Notice of Compliance) Regulations, Justice Hughes of the Federal Court of Canada found Canadian Patent No. 2,173,457 (the ’457 Patent) to be invalid, and accordingly dismissed an application by Merck which sought to prohibit the Minister of Health from issuing a notice of compliance to Pharmascience, allowing Pharmascience to market its generic version of the medicine finasteride for treating male pattern baldness.

Claim 5, a “Swiss-type” claim, was the only claim at issue and was construed by the court as claiming “the use of finasteride for the preparation of a medicament adapted for oral administration useful for the treatment of male pattern baldness in a person and wherein the daily dosage is about 1.0mg.”Although this claim in the corresponding European patent had been upheld by the UK Court of Appeal, counsel for Pharmascience, Stikeman Elliott LLP, was successful in invalidating claim 5 on two grounds: double patenting and anticipation.

Under a double patenting analysis, the court is simply required to compare the claims of an earlier patent owned by the same patentee with the claims of the patent at issue to determine whether they are “identical or co-terminus” or “obvious” (and thus invalid in either case).This is to prevent so-called patent “evergreening”. In this respect, Merck already held a first patent – Canadian Patent No. 1,302,277 (the ’277 patent) – directed to a range of compounds, including finasteride, that were stated to be useful for the treatment of androgenic alopecia, including male pattern baldness. Claim 15 of the ‘277 Patent, for instance, claimed “the use of finasteride for treating male pattern baldness” while claim 19 claimed “the use of finasteride for the manufacture of a medicament for the treatment of androgenic alopecia”. Of importance, these claims were not limited to any particular dosage or dosage range, even though the disclosure stated that “the daily dosage of the products may be varied over a wide range varying from 5 to 2,000 mg, preferably from 5 to 200 mg.” As a result, the only difference between claim 5 of the ‘457 Patent and claims 15 and 19 of the ‘277 Patent was that claim 5 specified a dosage of 1 mg/day. With the earlier claims not being limited by dosage, Justice Hughes found that the claims of the two patents were both “identical or co-terminous” and “not patentably distinct”, meaning claim 5 of the ‘457 Patent was invalid.

As for the test of anticipation or lack of novelty, the law requires that the prior art must both disclose and enable that which is claimed in the patent under consideration. In this case, the court found it was clear that if one were to make a medicament in accordance with claim 5 of the ’457 Patent, a number of claims of the ’277 Patent would be infringed.In addition, it would have been within the expected skill of a person skilled in the art, as the ’457 Patent itself acknowledged, to determine an appropriate dosage for a given person. There was therefore no “undue burden” in determining an appropriate dosage,and the ’277 Patent therefore clearly both disclosed and enabled that which was claimed in claim 5 of the ’457 Patent.

Of note, this was one of those rare situations where a patent was held invalid for lack of novelty but not obviousness. In light of two research papers published after the relevant prior art, but before the filing of the application for the ‘457 Patent, Justice Hughes found that a researcher would have been sufficiently discouraged from pursuing research with finasteride for treating male pattern baldness that the subject matter of claim 5 became inventive for the relevant period of time.

Court disallows expert disbursements in patent case

Counsel should be prudent in determining when it is appropriate to retain experts and have them incur costs on your client’s behalf.

In a decision determining allowable costs of the respondent Pharmascience in a proceeding discontinued by the applicant Sanofi-Aventis under the Patented Medicines (Notice of Compliance) Regulations, an assessment officer sought to determine whether expert witness disbursements totalling $17,000 could be claimed in the circumstances.

The three part test for the allowance of expert disbursements requires that:

(1) The disbursement for an expert must be prudent and reasonable in the circumstances existing at the time it was incurred;

(2) The terms of engagement must not constitute a blank cheque; and

(3) The extent of reliance on the expert by the trial judge should be a factor.

As per the third part of the test, disbursements cannot be disallowed based solely on the fact that a matter is discontinued (and thus never heard by a judge), as this would require hindsight. However, they must be reasonably incurred in the circumstances.In this case, a majority of the experts’ fees were incurred prior to the initial case management conference to set a schedule for the exchange of evidence, and were not even alleged to have been incurred in support of an early motion to dismiss. As a result, given that the ultimate burden of proof rested with the applicant Sanofi, the experts’ fees were found to be premature and therefore not allowed.