Pfizer Canada Inc. v. Apotex Inc., docket T-1745-98

Date: 19990615

Docket: T-1745-98

BETWEEN:

     PFIZER CANADA INC.

     and PFIZER INC.

     Applicants

     - and -

     APOTEX INC. and

     THE MINISTER OF HEALTH & WELFARE CANADA

     Respondents

     REASONS FOR ORDER

LEMIEUX J.:

A. INTRODUCTION

[1]      The respondent Apotex Inc, ("Apotex") appeals from an order of Associate Senior Prothonotary Giles dated December 21, 1998. By his order, Giles A.S.P. denied Apotex"s motion under subsection 6(5) of the Patented Medicines Notice of Compliance Regulations , SOR/93-133, as amended, ("Regulations") dated October

     Page: 2

2, 1998, to have the applicants" application dismissed on the grounds that it is "frivolous, vexatious and otherwise constitutes an abuse of process". The application, filed September 4, 1998, by the applicants pursuant to subsection 6(1) of the Regulations seeks, inter alia , an order prohibiting the respondent Minister of Health and Welfare from issuing a notice of compliance to Apotex in respect of 25mg, 50mg, and 100mg strengths of the drug sertraline hydrochloride until after the expiration of Canadian Patent 1,130,815.

B. BACKGROUND

[2]      The applicants, Pfizer Inc. and Pfizer Canada Inc. (collectively "Pfizer") are the owners of patent 1,130,815 (the ""815 patent") which claims pharmaceutical compounds containing sertraline hydrochloride said to be useful in the treatment of depression. The '815 patent was issued to the applicants by the Patent Office in 1982 and is set to expire on August 31, 1999.

[3]      In 1992, Pfizer was issued four other patents relating to sertraline hydrochloride. Patents 2,011,428, 2,024,181, 2,024,188, and 2,029,065 claim sertraline hydrochloride for its usefulness in the treatment of depression related disorders such as obsessive-compulsive behaviour and anxiety.

[4]      Before a new drug may be marketed in Canada it must first meet certain health and safety standards pursuant to the Food and Drugs Act, R.S.C. 1985, c. F-27, as amended, and the Food and Drug Regulations, C.R.C. 1978, c. 870, as amended. A notice of compliance ("NOC") is issued by the Minister of Health and Welfare ("Minister") in respect of a drug when satisfied that it meets those standards.

[5]      Pfizer, by virtue of its having obtained an NOC from the Minister for its patented formulations of sertraline hydrochloride is authorized to sell this drug in Canada, which it does in all ten Provinces under the brand name Zoloft.

[6]      For the purposes of the present motion I do not think it worthwhile to reproduce the Regulations in their entirety, or discuss in detail their operation. However, before delving further into the facts it is useful at this point to at least touch upon those parts of the Regulations of relevance to the circumstances surrounding this appeal.

[7]      Section 4 of the Regulations enables the holder of an NOC for a patented drug, such as Pfizer, (referred to in the Regulations as the "first person") to file with the Minister a "patent list" composed of the patents it retains in respect of that drug.

[8]      Section 5 of the Regulations stipulates that any other person (referred to in the Regulations as the "second person") who applies to the Minister for an NOC in respect of a drug and who seeks to expedite the application by comparing that drug with one for which a patent list has been issued (and for which an NOC therefore already exists), must, unless he accepts to await the expiry of the patent(s) on the patent list before the NOC is issued, make one of the allegations referred in paragraph 5(1)(b ), below:

5. (1) Where a person files or has filed a submission for a notice of compliance in respect of a drug and wishes to compare that drug with, or make reference to, another drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the register in respect of the other drug,      . . . (b) allege that      (i) the statement made by the first person pursuant to paragraph 4(2)(c) is false,      (ii) the patent has expired,      (iii) the patent is not valid, or      (iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed.

5. (1) Lorsqu'une personne dépose ou a déposé une demande d'avis de conformité pour une drogue et souhaite en faire la comparaison, ou faire renvoi, à une autre drogue qui a été commercialisée au Canada aux termes d'un avis de conformité délivré à la première personne et à l'égard de laquelle une liste de brevets a été soumise, elle doit inclure dans la demande, à l'égard de chaque brevet inscrit au registre qui se rapporte à cette autre drogue :          . . . b) soit une allégation portant que, selon le cas :      (i) la déclaration faite par la première personne aux termes de l'alinéa 4(2)c) est fausse,      (ii) le brevet est expiré,      (iii) le brevet n'est pas valide,      (iv) aucune revendication pour le médicament en soi ni aucune revendication pour l'utilisation du médicament ne seraient contrefaites advenant l'utilisation, la fabrication, la construction ou la vente par elle de la drogue faisant l'objet de la demande d'avis de conformité.

    

[9]      Subsection 6(1) in turn, enables the first person to apply to the Federal Court, within 45 days of being served with the second person"s notice of allegation, for an order prohibiting the Minister from issuing an NOC until after the expiration of the patent. In the event that the first person avails itself of subsection 6(1), subsections 7(1) and (2) then operate to prohibit the Minister from issuing an NOC during the 24-month period following the receipt of proof of the making of the application, or until the court has made a declaration of non-infringement. Should the application be withdrawn or dismissed, however, subsection 7(4) of the Regulations provides that the automatic 24-month prohibition period set in motion by subsection 7(1) is no longer in effect.

[10]      In 1994, Pfizer filed a patent list with the Minister in respect of sertraline hydrochloride, in accordance with the aforementioned section 4 of the Regulations. Pfizer"s patent list was composed of the '815 patent and the other four patents mentioned at paragraph 3 above.

[11]      By letter dated January 14, 1997, Apotex served Pfizer with the first of two notices of allegation in respect of sertraline hydrochloride. The material parts of this letter read as follows:

This is a Notice of Allegation pursuant to Section 5(3)(b) of the Patented Medicines (Notice of Compliance) Regulations.

We allege that no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling, by us of capsules containing sertraline hydrochloride as the medicine.

Patent 113815 has claims for the medicine itself. However, we accept that our Notice of Compliance will not issue and we will not commence sales until after patent 113815 expires, so that this patent is not relevant.

Patents 2011428, 2024181, 2024188 and 2029065 relate to use of sertraline hydrochloride for and to compositions of sertraline hydrochloride useful for treatments of disorders other than depression.

We will not make, construct, use or sell sertraline hydrochloride or compositions containing same for any use covered by the claims of these patents. Our product monograph and labelling will make no mention of any such use. Hence, no claim for the use of the medicine in any of these patents will be infringed. [emphasis added]

[12]      In light of Apotex"s professed acceptance to await the expiry of the '815 patent before obtaining an NOC from the Minister for sertraline hydrochloride, the above letter did not incite Pfizer to undertake legal action under the Regulations.

[13]      What precipitated matters before the Court was a second letter from Apotex to Pfizer, this one dated July 20, 1998. In its entirety, it reads as follows:

This is a Notice of Allegation pursuant to the Patented Medicines (Notice of Compliance) Regulations.

This is further to our Notice of Allegation dated July 14, 1997, and more specifically is a further allegation in relation to patent 1130815.

With respect to patent 1130815, we allege that no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by us of capsules for oral administration containing sertraline hydrochloride as the medicine, in strengths of 25, 50 and 100 mg.

In our Notice of Allegation dated July 14, 1997, we stated that we would accept that a Notice of Compliance will not be issued and we will not commence sales until after patent 1130815 expires.

However, we now wish to have a Notice of Compliance issued before the patent expires on the basis that, despite the issuance of a Notice of Compliance, no claim will be infringed by the making, using or selling by us of the capsules.

The factual and legal basis for this assertion is that we hereby undertake that, notwithstanding the issuance of a Notice of Compliance, we will not make, construct, use or sell the capsules other than as deemed to be non infringing pursuant to Section 55.2(1) and (2) of the Patent Act.

More specifically, we wish to submit our capsules to the Ministers of Health of the various provinces of Canada, so as to be listed under the drug programs of the provinces effective upon patent expiry. To have a listing effective upon patent expiry, it is necessary to submit months in advance, and as part of the submission it is necessary to issue a Notice of Compliance from the federal Minister of Health.

We thus need to have a Notice of Compliance issued ahead of patent expiry in order to be able to submit to the provinces, so as to enable sales under the provincial programs to commence promptly upon patent expiry.

As aforesaid, you have our unequivocal undertaking that we will not, prior to patent expiry, make any commercial sales or do anything else not deemed to be not infringing pursuant to Section 55.2(1) and (2) of the Patent Act.

Yours very truly,

Apotex Inc.

Bernard C. Sherman, Ph.d, P.Eng., Chairman and C.E.O.

[14]      On September 4, 1998, Pfizer responded to the above letter by filing the within application against the respondents pursuant to subsection 6(1) of the Regulations. By this application, Pfizer seeks to have Apotex"s second letter declared invalid and the proceedings stayed. In the alternative, Pfizer seeks a prohibition order enjoining the Minister from issuing an NOC to Apotex in respect of 25mg, 50mg, and 100mg strengths of the drug sertraline hydrochloride until after the expiration of the "815 patent.

[15]      On October 28, 1998, Apotex filed a motion to have Pfizer"s application dismissed. In doing so, Apotex relied on subsection 6(5) of the Regulations, the significance of which will be discussed further below.

[16]      Following a number of adjournments, Apotex's motion was heard December 7 and 21, 1998, before Giles A.S.P. who, in declining to grant the relief sought, endorsed the record in the following manner:

It is not plain and obvious that the case of an N.O.C. to obtain

a listing in a province such as Ontario is permitted by s. 55.2(1) of the Patent Act.

[17]      Apotex appeals from Giles A.S.P."s order to this Court pursuant to rule 51 of the Federal Court Rules , 1998.

[18]      In both its motion below and in its appeal to this Court Apotex"s argument that Pfizer's application should be dismissed reposes on the proper interpretation to be given subsections 55.2(1) and (2) of the Patent Act, R.S.C. 1985, c. P-4. Section 55.2 was grafted on to the Patent Act in 1993 with the coming into force of the Patent Act Amendment Act, 1992, S.C. 1993, c. 2, s. 4. The effect of subsections 55.2(1) and (2) is to create two exceptions to acts which might otherwise constitute infringement:

55.2 (1) It is not an infringement of a patent for any person to make, construct, use or sell the patented invention solely for uses reasonably related to the development and submission of information required under any law of Canada, a province or a country other than Canada that regulates the manufacture, construction, use or sale of any product. (2) It is not an infringement of a patent for any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) to make, construct or use the invention, during the applicable period provided for by the regulations, for the manufacture and storage of articles intended for sale after the date on which the term of the patent expires.

55.2 (1) Il n'y a pas contrefaçon de brevet lorsque l'utilisation, la fabrication, la construction ou la vente d'une invention brevetée se justifie dans la seule mesure nécessaire à la préparation et à la production du dossier d'information qu'oblige à fournir une loi fédérale, provinciale ou étrangère réglementant la fabrication, la construction, l'utilisation ou la vente d'un produit. (2) Il n'y a pas contrefaçon de brevet si l'utilisation, la fabrication, la construction ou la vente d'une invention brevetée, au sens du paragraphe (1), a lieu dans la période prévue par règlement et qu'elle a pour but la production et l'emmagasinage d'articles déterminés destinés à être vendus après la date d'expiration du brevet.

[19]      Hence, by virtue of subsections 55.2(1) and (2) it is not infringement to construct, use or sell a patented invention "solely" for uses "reasonably related" to the "development and submission of information" which is "required" by a law which "regulates the manufacture, construction, use or sale" of a product. Nor is it infringement to stockpile the invention before the expiry date of the patent. I should add that subsection 55.2(4) gives the Governor in Council authority to make regulations to prevent infringement when a patented invention is used in accordance with the above cited subsections. The Regulations are of course the product of that authority.

[20]      Apotex contends that Pfizer's application should be dismissed on the ground that the purpose for which it presently seeks to obtain a NOC, i.e. to have its generic version of sertraline hydrochloride listed on provincial formularies, clearly constitutes regulatory approval as contemplated by subsections 55.2(1) and (2) of the Act. According to Apotex, unless a new generic product has been designated as interchangeable and added to a provincial formulary, a pharmacist in that province may not lawfully use and sell the generic brand to fill prescriptions written specifically for another product. Moreover, that pharmacist will not be reimbursed under the province's drug benefit program if the drug product is not listed. In Apotex"s view, since very few prescriptions are written specifically for the generic product, provincial listing is the "sine qua non" of meaningful competition.

[21]      Apotex explains that all the provincial Ministries of Health publishing formularies require generic manufacturers seeking a listing for their product to submit samples and proof that the product has been approved by the federal Minister of Health and Welfare. Accordingly, in order to make its submissions to the provincial governments for a formulary listing of its sertraline hydrochloride capsules effective upon or soon after expiry of the "815 patent, Apotex maintains that it is necessary to use the invention claimed in the "815 patent, and to receive its NOC from the federal Minister of Health many months before the expiry of the "815 patent.

[22]      Apotex adds that given its undertaking in its letter not to make commercial sales and to do only those things specifically deemed to be non-infringing by subsections 55.2(1) and (2), it follows that it will not infringe any of the applicants" claims. Apotex therefore contends that under the circumstances the applicants" application for a prohibition order is frivolous, vexatious and designed solely to abuse the statutory injunction available under the Regulations, and that Giles A.S.P. erred in finding otherwise.

C.      DISCUSSION

     (a)      Standard of Review

[23]      Before proceeding further I think it advisable to first set out the standard of review to which the decision of Giles A.S.P. is to be subject on this appeal. Whereas Apotex is silent on this issue, Pfizer in its memorandum insists that the Court should not disturb the decision on the mere ground that it might have come to a different decision. According to Pfizer, the decision of Giles A.S.P. is a discretionary one and should not be reversed lest it be established by Apotex to be "clearly wrong".¹

[24]      Upon review of the relevant jurisprudence I am unable to share Pfizer"s view of the matter. The seminal case on the question of standard of review of a prothonotary"s order is Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425, wherein MacGuigan J.A. set forth the following test at page 463:

...discretionary orders of prothonotaries ought not to be disturbed on appeal to a judge unless:

(a) they 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, or

(b) they raise questions vital to the final issue of the case.

[25]      In Aqua-Gem, the Court was divided over whether a prothonotary"s order not to dismiss an action for want of prosecution decided a question "vital to the final issue of the case". In writing for the majority, MacGuigan J.A. concluded that it did, for the following very compelling reasons (at pages 464-465):

The question before the prothonotary in the case at bar can be considered interlocutory only because the prothonotary decided it in favour of the appellant. If he had decided it for the respondent, it would itself have been a final decision of the case: ... . It seems to me that a decision which can thus be either interlocutory or final depending on how it is decided, even if interlocutory because of the result, must nevertheless be considered vital to the final resolution of the case. Another way of putting the matter would be to say that for the test as to relevance to the final issue of the case, the issue to be decided should be looked to before the question is answered by the prothonotary, whereas that as to whether it is interlocutory or final (which is purely a pro forma matter) should be put after the prothonotary's decision. Any other approach, it seems to me, would reduce the more substantial question of "vital to the issue of the case" to the merely procedural issue of interlocutory or final, and preserve all interlocutory rulings from attack (except in relation to errors of law).

[26]      In the present instance, had Mr. Giles dismissed Pfizer"s application as he was invited to do by Apotex, his order would certainly have had the effect of finally disposing of the matter. Based on the analysis formulated by MacGuigan J.A. above, I must conclude that the order I am now called upon to review did in fact decide a question vital to the final issue of the case. In the result, I will deal with Apotex"s motion on the basis that it should be adjudicated on the exercise of my discretion, de novo .

     (b)      The frivolous and vexatious test

[27]      In seeking to have the applicants" application dismissed Apotex relies on the aforementioned paragraph 6(5)(b ) of the Regulations, a provision which reads as follows:

6. (5) In a proceeding in respect of an application under subsection (1), the court may, on the motion of a second person, dismiss the application      ...      (b) on the ground that the application is redundant, scandalous, frivolous or vexatious or is otherwise an abuse of process.

6. (5) Lors de l'instance relative à la demande visée au paragraphe (1), le tribunal peut, sur requête de la seconde personne, rejeter la demande si, selon le cas :      . . .      b) il conclut qu'elle est inutile, scandaleuse, frivole ou vexatoire ou constitue autrement un abus de procédure.

[28]      Paragraph 6(5)(b) of the Regulations has its source in paragraphs (b), (c) and (f) of rule 221 of the Federal Court Rules, 1998 which themselves were based on similar paragraphs of rule 419 of the old Federal Court Rules which concerned actions rather than applications.

[29]      Counsel for Apotex argued Pfizer's application was scandalous, frivolous and vexatious within the meaning of those words in paragraph 6(5)(b) of the Regulations. The test Apotex had to meet has been set out in a consistent line of cases interpreting former rule 419(1)(c).

[30]      In Creaghan Estate v. The Queen, [1972] F.C. 732, Pratte J. (as he then was), said this about that aspect of rule 419 (page 736):

Finally, in my view, a statement of claim should not be ordered to be struck out on the ground that it is vexatious, frivolous or an abuse of the process of the Court, for the sole reason that in the opinion of the presiding judge, plaintiff's action should be dismissed. In my opinion, a presiding judge should not make such an order unless it be obvious that the plaintiff's action is so clearly futile that it has not the slightest chance of succeeding, whoever the judge may be before whom the case could be tried. It is only in such a situation that the plaintiff should be deprived of the opportunity of having "his day in Court". [emphasis added]

[31]      In the particular case before him, Pratte J. refused to strike out the plaintiff's statement of claim holding at page 738:

...the contention put forward on behalf of the suppliant does not appear to be devoid of merit as to warrant my striking out his petition of right....

The Creaghan case has consistently been followed. See for example Blackfoot Indian Band v. Canada (1986), 7 F.T.R. 133 and Apotex Inc. v. Merck Frosst Canada Inc. et al., A-215-98, February 4, 1999, (F.C.A.), referring to the order of Pinard J.

[32]      In Waterside Ocean Navigation Company Inc. v. International Navigation Ltd. et al., [1977] 2 F.C. 257, Thurlow A.C.J. (as he then was), said this at page 259 about the interrelationship between rule 419(1)(a), (no reasonable cause of action) and rule 419(1)(c) (frivolous and vexatious):

With respect to (1), [no reasonable cause of action], the determination must be made on the basis of the allegations of the statement of claim. For the purposes of (2), [frivolous and vexatious], whether the application is made under Rule 419(1)(c) or (f) or under the inherent jurisdiction of the Court, evidence is admissible. In neither case, however, is the onus on the applicant an easy one to discharge. The Court is also slow to strike out a statement of claim and dismiss an action under Rule 419(1)(a) and will do so only when it is clear that by no proper amendment can the statement of claim be revised so as to disclose a reasonable cause of action. The test is just as stringent, if not more so, when dismissal is sought on the ground that the proceeding is frivolous or vexatious or an abuse of the process of the Court. The Court will not stop a proceeding and deny a plaintiff the right to have a case heard unless it is clear that the action is frivolous or vexatious or that the plaintiff has no reasonable cause of action and that to permit the action to proceed is an abuse of its process.

[33]      In the context of issues relating to statutory interpretation, Reed J. in R. v. Amway, [1986] 2 F.C. 312 at 326 was of the view that where there exists a contentious legal issue of a statutory interpretation to be resolved, that issue, not being clear and obvious, should be left for argument at trial and should not be disposed of by a motions judge in a preliminary proceeding.

[34]      In Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, Wilson J., for the Court, canvassed the applicable principles governing the determination of a motion to strike on the basis of no reasonable claim. She canvassed the origins of the provision now incorporated in rules of practice and considered its application in English and Canadian jurisprudence.

[35]      As I see it, Wilson J. endorsed the principle where arguments as to law and fact are intricate and complex, they should be dealt with at trial after all of the evidence is adduced because in such circumstances it is impossible to reach the conclusion that there is no cause of action in fact or law.

[36]      Wilson J., for the Court, adopted the view a pleading should not be struck unless it is plain and obvious. The Court must be satisfied beyond doubt there is no reasonable cause of action. The power to strike must be exercised with great care and only in cases where the plaintiff or defendant could not possibly succeed.

D.      DISPOSITION

[37]      With the above jurisprudence in mind I have determined that this is not an appropriate instance to grant the relief sought by Apotex, counsel for Pfizer having raised a number of issues which cannot be said to be so futile, so devoid of merit that the application deserves to be struck.

[38]      Pfizer's primary arguments in resisting Apotex's motion to strike are legal in nature focussing on the scope of section 55.2 of the Act which is the basis for Apotex's allegation of non-infringement and justification. Pfizer maintains that as a matter of statutory construction Apotex's notice of allegation to obtain an NOC for provincial formulary listings does not meet the several preconditions of subsection 55.2(1) of the Act, namely, Apotex's purpose is not solely for uses reasonably related; the grant and use of an NOC does not qualify as development and submission of information; provincial listing is not required because Apotex may market its product without listing and perhaps more importantly, in the context of the constitutional division of powers, the provinces do not regulate the sale of pharmaceuticals within the meaning of that word in subsection 55.2(1) of the Act. In my view, all of these issues of statutory interpretation raise genuine questions which are required to be determined on the merits and not on a motion to strike.

[39]      I find confirmation for this view in a recent Federal Court of Appeal decision in the matter of Visx Inc. v. Nidek Co., [1998] F.C.J. No. 871, court file A-673-97. That case involved the appeal of a decision of a trial judge who had also been called upon to set aside a decision of Giles A.S.P. who in turn, had refused to strike out a paragraph in the defendant Nidek"s statement of defence to an infringement action.

[40]      In Visx the defendant alleged the delivery of two laser machines for eye surgery purposes to two Canadian doctors was solely for uses reasonably related to the development and submission of information required under the laws of Canada and the United States that regulate the manufacture, construction, use or sale of medical devices under the Food and Drugs Act, (supra), and the Medical Devices Regulations, SOR/98-282, and under the United States Food, Drug and Cosmetic Act, Medical Device Amendment, May 1976, 21 CFR 812. The defendant alleged this activity did not constitute infringement of a patent in Canada; the defendants specifically pleading and relying upon the provisions of section 55.2 of the Act.

[41]      The plaintiff Visx, on cross-examination, obtained from the defendant admissions the defendant charged an ordinary commercial price for the two machines it sold in Canada and did not provide a discount from what would otherwise be demanded to reflect the fact that some kind of testing was being conducted. Based on these admissions, the plaintiff sought an order striking out paragraph 14 of Nidek's statement of defence on the grounds Nidek's sale of its lasers in Canada was not solely for the statutory purpose of subsection 55.2(1) of the Act in that Nidek made a profit from such sales and accordingly subsection 55.2(1) had no application.

[42]      Visx's motion to strike was heard by Giles A.S.P.² who dismissed it in the following terms:

Paragraph 14 of the defence pleads a reliance on s. 55.2 of the Patent Act. In my view, on a motion to strike under Rule 419 is not the appropriate occasion to determine whether a machine which is sold for the going commercial price is sold solely for uses reasonably related to the development and submission of information required under any law of Canada, etc.

[43]      The plaintiff Visx appealed to the Trial Division. Wetston J. allowed the appeal on this issue stating in his reasons³:

The appeal with respect to paragraph 14 shall be allowed. As section 55.2(1) of the Patent Act generally operates as an exception to infringement, I am of the opinion that the provision does not apply in this circumstance. Section 55.2(1) applies to pharmaceutical patents and does not apply to a medical apparatus. This finding is in accord with the reasons of MacKay J. in Apotex Inc. v. Canada (A.G.) (1996), 71 C.P.R. (3d) 166 (T.D.).

In this regard, I am of the view that the Associate Senior Prothonotary was wrong, in that he erred in his construction of the statute, and that I should exercise my jurisdiction de novo to set aside his decision with respect to that provision. Paragraph 14 of the Statement of Defence shall be struck.

Nidek appealed to the Federal Court of Appeal which rendered a decision on June 17, 1998, allowing the appeal. The judgment of the Court was delivered by Strayer J.A. who said this:

We are all of the view that this appeal should be allowed. In our opinion the Associate Senior Prothonotary correctly concluded that whether subsection 55.2(1) of the Patent Act would provide a defence in the circumstances of this case, as alleged in paragraph 14 of the Third Amended Statement of Defence and Counterclaim, is a matter for trial. We can see no error of principle or misapprehension of the facts in his conclusion. It appears to us that there are arguable issues of mixed fact and law arising out of paragraph 14 which are appropriate for trial and not for determination on a motion to strike.

It follows that we believe the learned motions judge erred in setting aside the decision of the Associate Senior Prothonotary on a matter of construction of the statute. The authority which he relied on, the decision of the Trial Division in Apotex Inc. v. Canada (Attorney General) (1996), 71 C.P.R. (3d) 166 did not, in our view, directly deal with the issue involved in the present case. It involved a pharmaceutical patent and it did not purport to determine the scope of subsection 55.2(1) upon which the defendant relies here. The scope to be given subsection 55.2(1) remains in our view an arguable issue and, as applied here, potentially one of mixed law and fact. In the circumstances we believe it was not open to the motions judge to set aside the decision of the Associate Senior Prothonotary on a question of law and exercise de novo his own discretion.

In so concluding we should not be taken as determining the scope of subsection 55.2(1) nor its potential application in the present case. Those matters are best left for trial. [emphasis added]

        

[44]      I should add that quite apart from the questions of law relating to the scope and meaning of section 55.2, the Pfizer application raises a number of factual issues. As counsel for Pfizer rightly observed, there is conflicting affidavit material on the requirements for formulary listing (evidence of commercial sale and capability of meeting immediate demand), the depth of provincial regulation and the purpose of those requirements. Apotex has not sought to put into evidence all of the provincial drug regimes which is necessary as an NOC has Canada-wide application. Clearly, the resolution of conflicting factual situations necessary to properly understand the factual context for statutory interpretation should not be undertaken at the motion to strike stage, or in this case, to dismiss.

[45]      In addition, Pfizer alleges Apotex's second letter to Pfizer is not a notice of allegation which conforms with the Regulations particularly after Apotex having previously stated that it accepted that its NOC would not issue until the patent expired. The issue raised here is the contextual relationship between paragraphs 5(1)(a) and 5(1)(b) of the Regulations and its significance. That issue has sufficient merit necessitating full debate on the hearing of the application; it is another reason for dismissing the appeal.

[46]      Pfizer raised other issues which, given the conclusions expressed, I need not consider.

[47]      For all of these reasons, the appeal is dismissed with costs.

            

     "François Lemieux"

    

     J U D G E

OTTAWA, ONTARIO

JUNE 15, 1999

__________________

     ¹      Applicants' motion record, Vol. 2, tab 33, p. 336.

     ²      T-195-94, August 7, 1997.

     ³      T-195-97, September 22, 1997.