Date: 20090619
Docket: T-651-08
Citation: 2009 FC 650
Toronto, Ontario, June 19, 2009
PRESENT: Kevin R. Aalto, Esquire, Prothonotary
BETWEEN:
JANSSEN-ORTHO INC. and
ORTHO-McNEIL
PHARMACEUTICAL, INC.
Applicants
and
APOTEX
INC. and THE MINISTER OF HEALTH
Respondents
REASONS FOR ORDER
Overview
[1]
This
motion has brought by Apotex Inc. (“Apotex”) pursuant to section 6(5)(b) of the
Patented Medicines (Notice of Compliance) Regulations (the
“Regulations”). It raises a unique issue which appears not to have been
decided in any prior proceeding under the Regulations. Simply put, the issue
is whether a generic manufacturer has to respond to claims in a patent which
changed as the result of a disclaimer by the innovator subsequent to the
generic’s notice of allegation and prior to the commencement of a notice of
application to prohibit the issuance of a notice of compliance. Using a
football analogy, does the field goal count if the goalposts are moved after
the ball is in the air?
[2]
In
this case, Apotex delivered a Notice of Allegation (“NOA”) in respect of Patent
No. 2,095,523 (the “‘523 Patent”). The NOA addressed the claim set of the ‘523
Patent as they then existed which was a set of 13 original claims.
Subsequently, the Applicants, Janssen-Ortho Inc. and Ortho-McNeil
Pharmaceutical, Inc. (collectively “Janssen”) requested a disclaimer in respect
of all 13 original claims of the ‘523 Patent and requested that they be
replaced with a new claim set. The disclaimer with respect to the ‘523 Patent
was filed and recorded on April 22, 2008. On April 25, 2008 this Notice of
Application was commenced. The Application does not deal with the allegations
contained in the NOA but asserts that Apotex’s NOA is deficient because it does
not address the claim set of the ‘523 Patent but which obviously did not exist
at the time of the NOA.
[3]
These
unusual facts raise the question of whether or not this application for
prohibition is bereft of any chance of success. At the time this motion was
initially argued there was a dearth of modern authority dealing with
disclaimers. Subsequent to the hearing, both Justice Hughes (Bristol-Myers
Squibb et al. v. Apotex Inc. et al. 2009 FC 137) and Justice Martineau (Hershkovitz
et al. v. Tyco Safety Products Canada Ltd. 2009 FC 256) have had occasion
to consider the effect of disclaimers in different contexts. The parties brought
these decisions to the attention of the Court and were invited to make further
submissions and did so.
Chronology of Events
[4]
The
following chronology puts this unique set of circumstances in perspective:
September
6, 1991 - Filing date of the United States application which was
issued as the ‘691 US Patent. This patent has two components and requested a
monopoly over a “Pharmaceutical composition comprising a tramadol material and
acetaminophen, wherein the ratio of the tramadol material to acetaminophen a
weight ratio from about 1:1 to about 1:1600”
September
3, 1992 - Canadian filing date for the ‘523 Patent. This Patent contains
a claim set of 13 original claims. It requests a Canadian monopoly over any
“Pharaceutical composition comprising a tramadol material and acetaminophen”
January
20, 2004 - Request for a reissuance of the ‘691 U.S. Patent.
This request was based upon the patentee’s acknowledgement that the claims as originally
drafted covered “more or less than the Patentee had the right to claim in the
Patent”. The reissued claims were narrowed by replacing the words “comprising”
with the words “comprising an active ingredient that consists essentially of”
June
22, 2004 - Issuance date of the Canadian ‘523 Patent. The claim
set included the 13 original claims
February
1, 2008 - Apotex files its ANDS
March
11, 2008 - Apotex delivers its NOA in respect of the ‘523 Patent.
The NOA
addresses the
claims set of the ‘523 Patent as they then existed. In its NOA Apotex alleges,
inter alia, anticipation and claims broader than covered by the ‘523
Patent
April
18, 2008 - Janssen requests a disclaimer in respect of the ‘523
Patent. The disclaimer requests that the entire original claims set be
disclaimed and be replaced with a new claim set. Further, Janssen requests
that the disclaimer be recorded by April 24, 2008, which was the day before the
45 day period provided by the Regulations in which to commence an application
for prohibition
April
22, 2008 - Disclaimer in respect of the ‘523 Patent is filed and
recorded. The original 13 claims have been disclaimed and replaced with 13 new
claims
April
25, 2008 - Janssen issued this Notice of Application in respect
of Apotex’s NOA
Overview of Motion and
Burden of Proof
[5]
Section
6(5)(b) of the Regulations permits a “second person” (in this case,
Apotex) to bring a motion to dismiss a prohibition application on the basis
that it is “redundant, scandalous, frivolous or vexatious or is otherwise an
abuse of process in respect of one or more patents.”
[6]
The
test to be applied, discussed in greater detail below, is that Apotex must
demonstrate that the application is “clearly futile” or that it is “plain and
abvious” that the proceeding cannot succeed [see Pfizer Canada Inc. v.
Apotex Inc. (1999), 1 C.P.R. (4th) 358, at para. 30].
[7]
The
Federal Court has held that a motion under section 6(5)(b) of the Regulations
is an “extraordinary remedy that should only be granted in limited
circumstances” [see Pfizer Canada Inc. v. Canada (Minister of
Health)(2007),
58 C.P.R. (4th) 21, aff’d (2007), 58 C.P.R. 177 at par. 10 (T.D.)].
The moving party has a heavy burden as is discussed further below. However, in
my view of these unusual circumstances, for the reasons that follow, Apotex has
met that burden and this is one of those extraordinary cases where the
application should be struck.
[8]
Apotex
argues that it has complied with all of the provisions of the Regulations.
They say that because they have made allegations of non-infringement and
invalidity in their NOA, Janssen cannot now succeed in this application as it
has not opposed any of Apotex’s allegations of invalidity or non-infringement
in the notice of application. Thus, the continuation of this proceeding
constitutes an abuse of process and is frivolous, vexatious and a waste of
judicial resources.
[9]
Janssen,
in turn, argues that as Apotex has not made any allegations of invalidity or
infingment in respect of the ‘523 Patent, as disclaimed, Apotex must commence
the process over again with a new NOA respecting the revised claims resulting
from the disclaimer.
[10]
Janssen
argues that as section 48 of the Patent Act is a recognized statutory
mechanism whereby a patentee may amend a patent to claim less than that was
claimed in the original patent. Thus, in order to succeed, Apotex must address
the new claims. Not having done so, Janssen says that Apotex cannot resist the
prohibition order.
Issues
[11]
This
unique circumstance raises a number of issues:
i)
What
is the effect of an NOA which deals with the claims of a patent at one point of
time and does not address subsequent claims resulting from a disclaimer?
ii)
Is
Apotex’s NOA only obliged to address the ‘523 patent as it stood at the time
that it filed its ANDS or at the latest, at the time that it served its NOA?
iii)
Are
the disclaimers of patent rights prospective in their effect?
iv)
Does
section 48(4) of the Patent Act apply to applications?
v)
Does
the “frozen register” provision of the regulations apply to the Apotex NOA?
vi)
Is
Apotex required to address the ‘523 Patent as disclaimed?
Law and Discussion
[12]
The
‘523 Patent is described in claim 1 as a pharmaceutical composition comprising
a tramadol material and acetaminophen. It is prescribed for the short term
management of acute pain. Each of the claims of the ‘523 Patent before
disclaimer, were either directly or indirectly dependent on claim 1.
[13]
In
its NOA, Apotex alleged that its product would not infringe the claims of the
‘523 Patent and that, in any event, the ‘523 Patent was invalid. The
invalidity allegation was founded on the claims of the ‘523 Patent being overly
broad. Apotex also alleged obviousness and anticipation.
[14]
Apotex’s
NOA was and could only be framed in respect of the ‘523 Patent as it existed on
March 11, 2008, the date of the NOA. The disclaimer for ‘523 Patent was filed on
April 18, 2008 by Janssen with the specific request that the disclaimer be
recorded by the Commissioner of Patents on or before April 24, 2008, the day
before the deadline for bringing this application in response to the NOA.
The Disclaimer
[15]
Janssen’s
disclaimer stated that the patentee had, by mistake, accident or inadvertence:
(a)
made the
specification too broad, claiming more than that of which the patentee or the
person through whom the patentee claims was the inventor;
(b)
in the
specification, claimed that the patentee or the person through whom the
patentee claims 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.
[16]
Janssen
disclaimed “the entirety of the subject matter of claims 1 to 13, with the
exception of the subject matter shown in the following claim set.” The new
claim 1 was revised to read:
1. A pharmaceutical composition
comprising a tremadol material and acetaminophen as its sole active
ingredient, wherein the ratio of the tremadol material to acetaminophen is a
weight ratio from about 1:1 to about 1:1600. [underlining added]
Apotex’s NOA
[17]
As
is obvious, as Apotex’s NOA pre-dates the disclaimer issued by Janssen, the NOA
could not possibly have dealt with the claims of ‘523 Patent as disclaimed.
[18]
The
NOA defines and limits the issues between the parties in any resulting notice
of application for a prohibition order. While the NOA is not a pleading per
se it nonetheless defines the scope of the issues over the notice of
application. As noted in the cases it “casts a long shadow” over the issues. The
Federal Court of Appeal in AB Hassle et al. v. Canada (Minister of
National Health and Welfare) (2000), 7 C.P.R. (4th) 272
observed:
[19] The detailed statement is not a
pleading per se but represent a pivotal step in the process leading up
to the issuance of an NOC. By taking that step the second person [here Apotex]
puts the patentee [here Janssen] on notice of the grounds on which he or she
considers that the making, constructing, using or selling of the drug will not
infringe the second person’s patent rights during the unexpired term of the
patent. In theory, this procedure ought to enable the patentee to
confidently decide within the 45-day period time limit whether to resist the
issuance of an NOC. It is to be noted that, subject to business exigencies,
the second person had no obligation to make its allegation and provide its
detailed statement by an imposed deadline. As much time as the second person
deems necessary is available under the scheme of the Regulations.
[20] While it is true that the
detailed statement is not filed in a section 6 proceeding, it nevertheless
casts a long shadow over that proceeding. Indeed, it is upon the content of
that statement that the patentee must decide whether or not to commence a
section 6 proceeding and to assess its chances of success or failure. In this
sense the allegation and detailed statement assist in an important way in
framing the issues and facts to be determined in the section 6 proceedings for
in seeking prohibition the patentee is obliged to show that, contrary to what
is stated in the detailed statement, the patentee’s patent right will be
infringed if an NOC for the drug is issued prior to the expiration of the
listed patent. [emphasis added]
[19]
It
defies logic that Apotex should have to respond to “claims” that were not in
existence at the time of either its ANDS or its NOA. Janssen was
required to respond to the NOA by commencing a prohibition application. For
whatever tactical reasons, it chose to disclaim the claims and then seek a
prohibition order. From a simple policy perspective and a consideration of the
way in which the Regulations operate, an innovator should not be able to change
the landscape after the patent has been put in play by the NOA.
[20]
The
allegations in the NOA do not relate to the patent as disclaimed. It is
effectively a new patent. It is no answer to say that Apotex should start the
process all over again. The rug has been pulled out from under Apotex in a
tactical move by Janssen which decided to disclaim all the claims in the ‘523
Patent. Janssen made the disclaimer on the basis that the ‘523 Patent claimed
more than what was invented and in this application alleges that the Apotex NOA
“has no legal effect” because it does not address the ‘523 Patent as
disclaimed. This argument does not withstand scrutiny for the reasons
discussed hereafter.
Frozen Register
[21]
Support
for the conclusion that Apotex need not address the claims as disclaimed can be
found in the “frozen register” concept. It is to be noted that a generic
manufacturer, such as Apotex, when filing a submission for an NOC pursuant to
section 5 of the Regulations, is only required to address the patents on the
register in respect of the innovative drug as of the filing date. This is
often referred to as the “frozen register”. In 2006 when the Regulations were
amended the “Regulatory Impact Analysis Statement” accompanying the proposed
amendments and published in the Canada Gazette Part II, Vol.
140, No. 21 described the frozen register requirement as follows:
These amendments are intended to restore
the balanced policy underlying the Patented Medicines (Notice of Compliance)
Regulations (“PM(NOC) Regulations”) by reaffirming the rules for listing
patents on the register and clarifying when listed patents must be addressed.
...
Under the amendments to section 5 a
generic manufacturer that files a submission or supplement for a NOC in respect
of a generic version of an innovative drug is only required to address the
patents on the register in respect of the innovative drug as of that filing
date. Patents added to the register thereafter will not give rise to any such
requirement. The register will thus be “frozen” in respect of that generic
manufacturer’s regulatory submission. Subsequent submissions originating from
additional generic manufacturers would each benefit from the same freezing
mechanism, as of their respective dates of filing with the Minister. As a
corollary to this frozen register concept, generic manufacturers will no longer
be permitted to initiate the process for challenging a patent under the PM(NOC)
Regulations (i.e. through the service of a notice of allegation – “NOA”) until
that same filing has occurred. The combined effect of these two new rules will
significantly curtail the incidence of repeat cases, whether due to multiple
NOAs on the part of generic manufacturers or multiple patent listings on the
part of the innovators.
[22]
It
is recognized that this explanatory statement is not part of the Regulations.
However, it assists in understanding the concept and policy behind the
amendments to the Regulations as well as the intention of the regulator. It
also puts in context the situation that Apotex faced when it delivered its
NOA. It was only required to respond to the patent as listed on the register
when it filed for its NOC and therefore its NOA was only required to address
the claims of the ‘523 Patent as it existed as of that date. If the generic is
confined to the allegations in the NOA, there is no good reason why the innovator
whose patent is in issue should not also be confined to those allegations. In
my view, the rights of the respective parties crystallized upon the receipt by
Janssen of the Apotex NOA. This fits the scheme of the Regulations.
Overbroad Patents
[23]
It
is an admission by Janssen that the ‘523 Patent as originally issued claims
more than what was invented. A patent which claims more than what has been
invented can be found to be invalid as being overly broad. Disclaimers may
salvage a finding of invalidity of such a patent if it has not been found to be
invalid. There is much authority for this proposition. In Biovail
Pharmaceuticals v. Canada (Minister of Health), [2005] F.C.J.
No. 7, Justice Harrington usefully summarized the principles of patent
construction. Number 8 on that list of principles is the following:
8. To overclaim is to lose
everything. If the inventor overclaims, the court will not broaden the
monopoly interest of the “spirit” thereof. This often, as in this case,
results in layers of claims, each limitation serving as a potential safety net
so that if the broadest claims fall, the monopoly may be saved in part by the
more modest claims.
[24]
A
more recent example of the effect of an overbroad claim is found in Bristol-Myers
Squibb et al. v. Apotex Inc. et al, 2009 FC 137, wherein Justice
Hughes summarized the law in this area as follows:
[42] A patent which claims more
than what was invented or disclosed can be found to be invalid for being overly
broad. As Nadon JA. for the Federal Court of Appeal wrote at paragraph 115 of Pfizer
Canada Inc. v. Canada (Minister of Health), (2007),
60 C.P.R. (4th) 81, 2007 FCA 209:
115. It is now settled law
that a patent which claims more than what was invented or disclosed can be
found invalid for being overly broad. As explained in Lovell Manufacturing Co.
and Maxwell Ltd. v. Beatty Brothers Ltd. (1962), 41 C.P.R. 18
(Ex. Ct.) at p. 66:
The other
attack was that the claims were too wide and that they claimed more than had
been invented. This repeats the central them to which I have
referred, namely, the contention that all that had been invented were the
specific wringer constructions described in the specification and that unless
the claims were limited in their application to inventions of the said specific
constructions they were too wide and, therefore, invalid. There is a
simple answer to the contention, If the claims read fairly on what has been
disclosed and illustrated in the specification and drawings, as they do, they
are not wider than the invention. The specific wringer constructions
described in the specification are simply embodiments or illustrations of the
invention. The claims embrace them and might well embrace similar other
embodiments or illustrations. There is nothing in any of the specifications
that would limit the claims to one of the specific wringer constructions or to
all of them.
[43] Thus a claim which is overly broad in
a patent that has not yet been adjudged to be invalid may be saved from a
finding of invalidity by a Court if a disclaimer is filed but only if filed in
a timely way.
[25]
Here,
it can reasonably be inferred, given the sequence of events, that Janssen was
facing a serious risk of having Apotex’s allegation of invalidity of the ‘523
Patent as originally issued declared invalid as being overbroad. Thus, the
disclaimer was requested. This leads to consideration of the effect of the
disclaimer.
Are Disclaimers
Retrospective or Prospective in Effect?
[26]
Until
recently there has been a dearth of modern jurisprudence dealing with
disclaimers generally and their impact. However, both Justice Hughes (Bristol-Myers
Squib, supra) and Justice Martineau (Shmuel Hershkovitz et al. v.
Shpater, 2009 FC 256) both have examined the impact of disclaimers in these
two recent cases. The Bristol Myers case offers insights which assist
in determining this case as it involved a PM(NOC) proceeding. It is discussed in
greater detail below.
[27]
A
key issue during argument was whether disclaimers have prospective or retrospective
effect. That they have prospective effect appears to find support in the jurisprudence.
It is a logical result. For example, in Standahl’s Patents Ltd. v. Swecan International
Ltd. (1998), 28 C.P.R. (3d) 261 a plaintiff had filed a disclaimer prior to
the commencement of an action for infringement. The trial judge held that the
“net effect of these disclaimers is to exclude the respective claims from
‘reading on’ the Lynch and the two Andrus patents.” The latter reference is to
the prior art. The patents as disclaimed were held valid. However, the trial
judge accepted the defendant’s argument that damages should only flow for the
period after the disclaimer. While not specifically stating that the effect of
a disclaimer is prospective, the implication of a damage award subsequent to
the disclaimer supports the proposition that indeed a disclaimer should be
considered to be prospective.
[28]
A
further case which bears on this issue is ICN Pharmaceuticals Inc. v. Canada (Patented
Medicine Prices Review Board) (1996), 68 C.P.R. (3d) 417 (FCA) in which
the court held that:
The other attack on the validity of the
disclaimer rests on subsection 48(4) of the Act, which states in part, “[n]o
disclaimer affects any action pending at the time when it is made…”. The
purpose of the subsection has been the subject of judicial comment. In Canadian
Celanese Ltd. v. B.V.D. Co. (1939), 56 R.P.C. 122, [1939] 2 D.L.R. 289
(P.C.) it was held that the rights and liabilities of the parties to a pending
action are to be ascertained on the footing that the party who disclaims can
obtain no advantage in the action from having obtained a disclaimer.
At first blush, I thought it
doubtful whether the word “action” used in subsection 48(4) of the Act could
embrace proceedings before the Board: see Nu-Pharm Inc. v. Eli Lilly and Co.,(A-101-94)
June 27, 1996, F.C.A. [summarized 64 A.C.W.S. (3d) 663]. On further refection,
I do not believe that the subsections of any assistance to the Board even if I
were to conclude otherwise. Subsection 48(4) does not purport to render
disclaimers invalid. It merely serves to confirm that a disclaimer cannot have
retroactive effect on proceedings previously begun. This accords with what I
understand is ICN’s position. ICN accepts that the Board will maintain
jurisdiction to examine the pricing of Virazole until at least December 6,
1995, the date the disclaimer was filed. At the same time, it asserts that the
disclaimer will have the prospective effect of termination the Board’s
jurisdiction. In my view, this position is consistent with the spirit and
intent of subsection 48(4). This leads me to consider the final argument on
this issue.
[29]
Notably,
the Federal Court of Appeal held that subsection 48 (4) of the Patent Act
cannot have retroactive effect on “proceedings” previously begun.
[30]
In
further support of the prospective effect of disclaimers, subsection 48(4) of
the Patent Act originally contained language to the effect that a
disclaimer “shall thereafter be deemed to be part of the original specification.”
In 1993, as a result of substantial amendments to the Patent Act,
this language was removed.
[31]
The Judicial Committee of the Privy Council on
appeal from the Supreme Court of Canada in Canadian Celanese Ltd. v. B.V.D.
Co. Ltd., [1939] 2 D.L.R. 289 also considered the effect of disclaimers.
In that case the Supreme Court held, in reasons delivered prior to the formal
judgment being entered, that the claims of the patent in suit were too broad
and hence the claims were invalid. However, the patentee filed a
disclaimer limiting the scope of the claims before the formal judgment was
entered and sought a rehearing on the basis that the disclaimer limiting the
claims validated the claims. The Supreme Court refused to rehear the
matter and an appeal was taken to the Privy Council which dismissed the appeal
primarily on the ground that the patentee had accepted the true construction of
the original claims as found by the Supreme Court and it was not open to appeal
against those findings (p. 294). The Privy Council also noted that a patentee
ought not to gain a benefit by virtue of the disclaimer. The Privy Council
observed:
The disclaimer is an unconditional disclaimer;
it must necessarily be unconditional. The statute does not contemplate or
authorize a contingent disclaimer. As soon as the disclaimer was filed and
recorded in the office of the Commissioner, it was made part of the Patent; the
only existing Claims are the Claims as amended by virtue of the disclaimer, and
the only invention protected by the Letters Patent is the invention a
description whereof is contained in the Specification as so amended. In
these circumstances the present Appellants, having filed a disclaimer for the
purpose of changing the construction which the Supreme Court had declared to be
the true construction of the original Claims, must be taken to have finally
accepted that construction as being the true construction of those claims; and
it is not open to them to appeal successfully against the Court’s declaration
of that construction …
Their Lordships, however, do feel able to
attribute a meaning to the words “no disclaimer shall affect any action pending
at the time when it is made.” These words, they think, must at least have this
effect, viz.:- that the rights and liabilities of the parties to a
pending action are to be ascertained and declared on the footing that the
person who disclaims obtains no advantage in the action from his disclaimer.
Upon this view the subsection can be of no assistance to the appellants, who in
effect ask that the pending action shall be affected (and to their advantage)
by the disclaimer. (p. 294) [emphasis added]
[32]
In
effect the Privy Council fixed the effective date of the disclaimer as being
the date of its filing. On this basis, the disclaimer in this case ought not
to benefit Janssen and should take effect prospectively.
[33]
In
addition, from a policy perspective to give retroactive effect would undermine
the certainty and predictability which courts have spoken of in the area of
patents. For example, the Supreme Court of Canada has described the patent
system as follows:
41. The
scope of patent protection must not only be fair, it must be reasonably
predictable. A patent is, after all, a public instrument issued under
statutory authority which may result in severe financial consequences for its
infringement. The scope of its prohibition should be made clear so that
members of the public may know where they can go with impunity. As was said in
another public law connection by Gonthier J. in R. v. Nova Scotia
Pharmaceutical Society, [1992] 2 S.C.R. 606, at p. 639, precision in public
enactments is required to “sufficiently delineate an area of risk”.
42. The
patent system is designed to advance research and development and to encourage
broader economic activity. Achievement of these objectives is undermined
however if competitors fear to tread in the vicinity of the patent because its
scope lacks a reasonable measure of precision and certainty. A patent of
uncertain scope becomes “a public nuisance” (R.C.A. Photophone, Ld. v.
Gaumont-British Picture Corp. (1936), 53 R.P.C. 167 (Eng. C.A.), at p.
195). Potential competitors are deterred from working in areas that are not in
fact covered by the patent even though costly and protracted litigation (which
in the case of patent disputes can be very costly and protracted indeed) might
confirm that what the competitors propose to do is entirely lawful. Potential
investment is lost or otherwise directed. Competition is “chilled”. The
patent owner is getting more of a monopoly than the public bargained for. There
is a high economic cost attached to uncertainty and it is the proper policy of
patent law to keep it to a minimum.
43. The
patent owner, competitors, potential infringers and the public generally are
thus entitled to clear and definite rules as to the extent of the monopoly
conferred.
[34]
In
the language of patent law, the claims of a patent are referred to as the
“fences” which delineate the extent of the monopoly granted by the patent. If
a disclaimer is given a retrospective effect it would create uncertainty and
unpredictability as the “fences” could be changed at any time by a disclaimer
leaving the public uncertain as to “where they can go with impunity”.
[35]
A
retrospective disclaimer creates an unintended mischief. What would stop any
innovator from disclaiming even a minor part of a patent after receiving a NOA
in order to make the NOA non-compliant with the Regulations. The NOA sets the
parameters of the prohibition application and thus Janssen ought not to be able
to shift those parameters by a disclaimer with a retrospective effect.
Crystallizing the Date
when the Disclaimer is Effective
[36]
If
disclaimers have a prospective effect at what date do the claims of the patent
have to be construed? Subsection 48(4) of the Patent Act provides that a
disclaimer does not affect “any action pending at the time it is made, unless
there is unreasonable neglect or delay in making it.” Janssen made much of the
fact that in this case there was no “action” pending and thus Apotex must deal
with the claims as disclaimed. Proceedings under the Regulations are not an
“action”, but that is not the end of the analysis. The case law as discussed
above regarding the prospective nature of disclaimers and based on the analysis
of Justice Hughes in Bristol-Myers Squibb, supra requires that a date be
established for construing the claims. As noted by Justice Hughes:
[48] … what is the effect of the
disclaimer? These proceedings are not an “action” as spoken of in
subsection 48(4) of the Patent Act, supra. These
proceedings are not the kind in which the Court may expunge a patent or claims
for invalidity. In these proceedings under the NOC Regulations all
that a Court may do is determine whether the allegations made, in this case by
Apotex in its Notice of Allegation, are justified.
[49] The Commissioner of Patents has no
discretion to exercise upon a disclaimer as filed, it must be accepted as is.
However the patentee must accept the possibilities afforded by litigation as to
the effect of such disclaimer. . . .
[52] Justice Stone in the Federal Court of
Appeal has held that a Notice of Allegation is a document beyond the reach of a
Court’s jurisdiction. The Court cannot strike such a document as it is
not a document filed with the Court. In Pharmacia Inc. v. Canada (Minister
of National Health and Welfare) (1994), 58 C.P.R. (3d) 207 (FCA) he wrote at
paragraph 6:
6. It seems
to us that while a notice of allegation does play an important role in the
ultimate outcome of litigation of this nature, is not a document by which the
judicial review application may be launched under section 6 of the Regulations.
That document was put in as a piece of evidence by the appellants; it
originated with the application filed before the Minister. Because it is not a
document that was filed with the Court but with the Minister, in our view the
notice of allegation is beyond the reach of the Court's jurisdiction in a
judicial review proceeding. That being so, the Court, in our opinion, lacks
jurisdiction to strike out the notice of allegation.
. . .
[54] Therefore the Court must consider the
various possibilities since the Court cannot amend a Notice of Allegation. If
the patentee disclaimed certain claims but did not commence proceedings in the
court, the generic would get its Notice of Compliance as soon as the 45 day
period provide by subsection 7(1)(d) of the NOC Regulations.
If the patentee commenced proceedings and the generic did not defend, the
patentee would get judgment prohibiting the generic from receiving a Notice of
Compliance until the patent expired. If a generic wishes to attack the
validity of the claims as reformulated by the disclaimer, it cannot revise its
Notice of Application 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.
[55] 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. The Privy Council fixed that date as the date of the Supreme Court
decision even though formal judgment had not yet been entered. Here that date
must be April 2, 2007, the date that the Notice of Allegation was served...
... A disclaimed claim does not disappear if the disclaimer
is invalid. One returns to the original claim. In the present proceeding
we are dealing with the original claim as it stood as of the date the Notice of
Allegation was served. [emphasis added]
[37]
As
in Canadian Celanese and in Bristol-Myers Squibb the date that is
most appropriate to crystallize the claims is as of the date the NOA was
delivered by Apotex to Janssen.
Position of Janssen
[38]
Many
of Janssen’s arguments in support of its position have been dealt with in the
discussion above. However, there are several specific points which should be
dealt with.
[39]
First,
Janssen argues that Apotex will not suffer any “hardship” if the application is
allowed to proceed as there is nothing that prevents Apotex from withdrawing
its NOA and re-filing in respect of the disclaimed patent. Janssen notes that
they are prepared to consent to this relief on a without costs basis. This
approach does not reflect the reality of the circumstances nor the law as
discussed above.
[40]
Apotex
is significantly prejudiced as it has filed its NOA on the basis of the patent
register as it found it. It has incurred significant cost in so doing. It is
through the tactic of Janssen in delaying its disclaimer until the receipt of
the NOA that has precipitated these proceedings. As noted above, the scheme of
the Regulations is such that the innovator is given a 45 day window after the
receipt of a NOA to determine if it should seek an order of prohibition. That
decision is and should be made on the basis of the allegations in the NOA. Obviously,
based on Janssen’s admission in the disclaimer that the original claims were
overbroad, if the decision were made on the basis of the allegations in the NOA
this proceeding would not have been brought. Thus, Apotex suffers a hardship if
this proceeding is permitted to continue or if it is compelled to effectively
restart the clock with a new NOA.
[41]
Second,
Janssen argues that disclaimed claims are deemed in law to have been in effect
since the date of issue. For the reasons set out above, this argument is
without merit. As far back as 1939, the Judicial Committee of the Privy
Council declared that a party that disclaims ought not to gain any advantage.
Further, the claims must be construed as of the date of the NOA (Bristol-Myers
Squibb, supra.). Janssen is 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.
[42]
Third,
as noted above, Janssen makes much of the fact that subsection 48(4) of the Patent
Act refers to “action”. They argue that as this is not an action but a
proceeding under the Regulations, then the disclaimer is not affected. It is
true, and the many authorities which Janssen cites, supports an interpretation
that the word action in the Patent Act must be construed in its ordinary
meaning within the Federal Courts Rules which means that its
interpretation does not include a proceeding under the Regulations. However,
the date when a party responds to the claims is the controlling factor which in
this case is the date of the NOA.
[43]
Fourth,
Janssen argues that the “frozen register” concept discussed above does not
apply. They argue that as the ‘523 Patent was added to the register before Apotex
filed its ANDS, Apotex is required to make an allegation of infringement and/or
invalidity pursuant to paragraph 5(1)(b) of the Regulations. Apotex have done
so in response to the patent as it appeared on the register as of the date of
its ANDS and the NOA. In my view, for the reasons discussed herein, the
“frozen register” concept applies and Apotex has properly delivered its NOA to
the claims in the ‘523 Patent.
[44]
Finally,
Janssen argues that the issue on this motion is not whether the disclaimer will
have a retrospective application but whether Apotex will infringe the ‘523
Patent by making, constructing, using or selling the Apotex Product if it
receives a notice of compliance. Janssen argues that this issue can only be
determined on a full evidentiary record and cannot be resolved on “a
theoretical or temporal basis”. Temporal is defined in the Shorter Oxford
English Dictionary (3rd ed.) as meaning, inter alia, “lasting
or existing only for a time” or “pertaining to time as the sphere of life”. This
argument also fails. It is difficult to understand what additional evidence is
required to decide the issue before the Court. The essential facts to decide
the issue are undisputed. The date of issuance of the ‘523 Patent is known;
the claims of the ‘523 Patent as of the date of the NOA are known; the contents
and date of the NOA are known; the contents and date of the disclaimer are
known; and, the heads of relief and grounds in the Notice of Application are
known. The evidentiary record on this motion is sufficiently comprehensive to
decide. There will be nothing in the way of additional evidence to be adduced
which will assist in deciding the issue. Permitting this matter to exist for a
further time is an abuse of process.
The Test to Be Applied
on this Motion
[45]
As noted above, a motion to strike an
application puts a very high onus on the moving party [see, for example, David
Bull Laboratories v. Pharmacia Inc. et al., [1995] 1 FC 588].
Recently, the principles governing motions to strike applications for judicial
review have very usefully been analyzed in depth and summarized by Justice Mactavish
in the case of Amnesty International Canada et al. v. Chief of the
Defence Staff et al., [2007] FC 1147 [see particularly paras. 22 through
33].
[46]
Apotex brings this motion under section 6(5)(b)
of the Regulations. That section provides specifically that “on the motion of
a second person, [Apotex] dismiss the application in whole or in part (b) on
the ground that it is redundant, scandalous, frivolous or vexatious or is
otherwise an abuse of process in respect of one or more patents.” It is a very
wide provision. The Federal Court of Appeal in Sanofi-Aventis v. Novopharm
Ltd. 2007 FCA 163 had occasion to consider the ambit of this section of the
Regulations and observed as follows:
[33] Paragraph
6(5)(b) was added to the NOC Regulations in 1998 bearing similar
language to that employed in the former Rule 419 of the Federal Court Rules
and that in Rule 221 of the current Federal Courts Rules, SOR/98-106.
Accordingly, the Federal Court adopted the principles that had been developed
under Rule 419 for striking out pleadings in an action, as explained by Lemieux
J. in Pfizer Canada Inc. v. Apotex Inc. (1999), 1 C.P.R. (4th)
358 at paragraphs 29-30 (F.C.T.D.):
[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, SOR/98-106, which
themselves were based on similar paragraphs of Rule 419 of the old Federal
Court Rules, C.R.C. 1978, c. 663, 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
R. v. Creaghan, [1972] F.C. 732 (T.D.), 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
in original.]
[34] Likewise, the Federal Court has on
several occasions invoked the following principle from the Supreme Court of
Canada’s decision in Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, to
strike out a notice of application under paragraph 6(5)(b) where it is
“plain and obvious” the patentee has no chance of success:
Thus, the test in Canada governing the
application of provisions like Rule 19(24)(a) of the British Columbia Rules
of Court is the same as the one that governs an application under R.S.C. O.
18, r. 19: assuming that the facts as stated in the statement of claim can be
proved, is it "plain and obvious" that the plaintiff's statement of
claim discloses no reasonable cause of action? As in England, if there
is a chance that the plaintiff might succeed, then the plaintiff should not be
"driven from the judgment seat". Neither the length and complexity of
the issues, the novelty of the cause of action, nor the potential for the
defendant to present a strong defence should prevent the plaintiff from
proceeding with his or her case. Only if the action is certain to fail
because it contains a radical defect ranking with the others listed in Rule
19(24) of the British Columbia Rules of Court should the relevant
portions of a plaintiff's statement of claim be struck out under Rule
19(24)(a). [Emphasis added.]
(See e.g. Bayer Inc. v. Apotex Inc.
(1998), 85 C.P.R. (3d) 334 at paragraph 23; Hoffman-La Roche Ltd. v. Canada
(Minister of Health and Welfare) (1999), 87 C.P.R. (3d) 251 at paragraph 2;
GlaxoSmithKline Inc. v. Apotex Inc. (2003), 29 C.P.R. (4th) 350
at paragraphs 12-13)
[35] Despite these authorities, this
Court’s analysis with respect to abuse of process must now be informed by the
principles enunciated by the Supreme Court of Canada in Toronto (City) v.
C.U.P.E., Local 79, [2003] 3 S.C.R. 77, 2003 SCC 63 (“C.U.P.E.”). In
C.U.P.E., Arbour J. provided a thorough explanation of the doctrine of
abuse of process as it relates to attempts by parties to relitigate issues
already adjudicated. She held that relitigation of an issue can constitute
abuse of process and stressed that the key concern motivating the doctrine of
abuse of process is preserving the integrity of the adjudicative process:
In the context that interests us here, the
doctrine of abuse of process engages “the inherent power of the court to
prevent the misuse of its procedure, in a way that would . . . bring the
administration of justice into disrepute” (Canam Enterprises Inc. v. Coles (2000),
51 O.R. (3d) 481 (C.A.), at para. 55, per Goudge J.A., dissenting (approved
[2002] 3 S.C.R. 307, 2002 SCC 63)). Goudge J.A. expanded on that concept
in the following terms at paras. 55-56:
The doctrine of abuse of process engages the
inherent power of the court to prevent the misuse of its procedure, in a way
that would be manifestly unfair to a party to the litigation before it or would
in some other way bring the administration of justice into disrepute. It is a
flexible doctrine unencumbered by the specific requirements of concepts such as
issue estoppel. See House of Spring Gardens Ltd. v. Waite, [1990] 3 W.L.R. 347
at p. 358, [1990] 2 All E.R. 990 (C.A.).
One circumstance in which abuse of process has
been applied is where the litigation before the court is found to be in essence
an attempt to relitigate a claim which the court has already determined.
[36] Proceedings in which the case for the
patent holder is clearly futile or plainly has no chance of success because of
an earlier, binding authority continue to be impermissible as abuses of process
because such proceedings will waste judicial resources and impose hardship on
generic drug manufacturers without any corresponding benefit such as a more
accurate result. However, applying the principles outlined by Arbour J., it is
evident that the types of proceedings that constitute abuses of process go
beyond those that are clearly futile to include cases such as the one at
present. Many of the concerns raised by Arbour J. are applicable to this
appeal. Allowing Sanofi-Aventis to proceed with its application will
give rise to the possibility of inconsistent judicial decisions, with one judge
holding that the inventors of the ’206 patent lacked a sound basis for
predicting the utility of their invention and another holding that there was
sound prediction. Thus one generic would receive an NOC because of invalidity
based on lack of sound prediction while another would be refused an NOC even
though its NOA raised the same allegation. As Arbour J. identified, permitting
that type of inconsistency would threaten the credibility of the adjudicative
process. Likewise, as Arbour J. noted, there is no reason to think that a
second proceeding under section 6 of the NOC Regulations will lead to a
more accurate result than the first. This scenario is in contrast to an action
for a declaration of patent invalidity, where because the parties have the
benefit of a full trial and all the attendant procedural safeguards, a more
accurate result may arise. That is why the courts have on numerous occasions
stated the principle that decisions rendered under the NOC Regulations
are not binding on actions for patent infringement or to declare a patent
invalid (see e.g. Pharmacia Inc. v. Canada (Minister of National
Health and Welfare) (1994), 58 C.P.R. (3d) 209; Novartis A.G. v.
Apotex Inc., 2002 FCA 440 at paragraph 9; Pfizer Canada Inc. et al. v.
Apotex Inc. et al. (2001), 11 C.P.R. (4th) 245 at paragraph 25).
[47]
Arising from this analysis by the Federal Court
of Appeal, it is apparent that there are many bases upon which an application
can be dismissed. Of note is the observation that in cases which are clearly
futile or plainly have no chance of success such proceedings should be struck
as they will waste judicial resources and “impose hardship on generic drug
manufacturers without any corresponding benefit …”. This is such a case.
Janssen’s application is an abuse of process. It does not respond to the allegations
in the NOA dealing with non-infringement and invalidity. To take Janssen’s
view requires that this proceeding be recast and waste judicial resources.
[48]
Keeping in mind the admonition of Justice
Mactavish in Amnesty International regarding the heavy onus on the
moving party and the need to read the notice of application as generously as
possible, I am not persuaded that this case can succeed.
[49]
Further,
Janssen’s Notice of Application is bereft of any chance of success as the NOA
complies with the Regulations by providing allegations regarding the claims as
they stood at the time. The Notice of Application does not oppose any of those
allegations but rather seeks a declaration that Apotex is 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”. As Janssen does not oppose the
allegations of infringement and invalidity, this application amounts to a waste
of judicial resources, is an abuse of process, is frivolous and vexatious and
must be struck pursuant to paragraph 6(5)(b) of the Regulations.
[50]
While this is a novel set of circumstances, it
was nonetheless brought about by Janssen’s changing the landscape after the NOA
was received. Thus, they should be liable for the costs of Apotex of both
this motion and the application.
Conclusion
[51]
In
answer to the issues as posed during the hearing:
i)
What
is the effect of an NOA which deals with the claims of a patent at one point of
time and does not address subsequent claims resulting from a disclaimer?
The NOA is
valid and responds to the claims of the ‘523 Patent as it existed on the
register at the time the NOA was delivered.
ii)
Is
Apotex’s NOA only obliged to address the ‘523 patent as it stood at the time
that it filed its ANDS or at the latest, at the time that it served its NOA?
Yes.
iii)
Are
the disclaimers of patent rights prospective in their effect?
Yes
iv)
Does
section 48(4) of the Patent Act apply to applications?
No
v)
Does
the “frozen register” provision of the regulations apply to the Apotex NOA?
Yes
vi)
Is
Apotex required to address the ‘523 Patent as disclaimed?
No
[52]
The
Court issued an order on June 12, 2009 striking the application and awarding
costs to Apotex. That order inadvertently failed to include a stay of the effect
of the order pending the release of these reasons in order to preserve the status
quo among the parties. A further order was made correcting that oversight
and staying the effect of the order of June 12, 2009 pending the release of
these reasons. The June 12, 2009 order remains in effect and the stay in the
subsequent order of June 17, 2009 comes to an end on the release of these
reasons.
[53]
With
respect to the costs of this motion and application, if the parties cannot
agree on the quantum of costs, the parties shall submit a brief summary of
their position on costs limited to three pages within 30 days of the date of
these reasons or the final disposition of any appeal taken from the order of
June 12, 2009 which ever is later.
“Kevin
R. Aalto”
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