Date: 20081229
Docket: T-118-08
Citation: 2008FC1162
Toronto, Ontario, December 29, 2008
PRESENT: Kevin R. Aalto, Esquire, Prothonotary
BETWEEN:
BIOVAIL
CORPORATION and DEPOMED, INC.
Applicants
and
THE
MINISTER OF HEALTH and APOTEX INC.
Respondents
AMENDED REASONS FOR ORDER AND ORDER
[1]
In
what circumstances is it appropriate to require the generic in Patented Medicine
(Notice of Compliance) Regulations (the Regulations) to deliver its evidence
in support of its invalidity allegation first and thereby reversing the order
of evidence? This contentious issue is being raised more frequently in
proceedings under the Regulations. The Regulations themselves do
not contemplate specifically the reversal of evidence in this way. However,
the Court, in some circumstances, has made orders that such a reversal of
evidence is appropriate and in its recent Practice Direction has made the issue
a matter for consideration at the outset of any proceeding under the
Regulations.
[2]
On
this motion, the Applicants, Biovail Corporation and Depomed Inc. (collectively
“Biovail”) seek disclosure pursuant to section 6(7) of the Regulations
and a schedule for the remaining pre-hearing steps in the proceeding including
a reversal in the ordering of evidence. Biovail has commenced this proceeding
to prohibit the Minister from issuing a Notice of Compliance to Apotex for its
drug Apo-Metformin ER.
I. Reversal
of Evidence
[3]
Biovail
argues that the principal issue raised in the Notice of Allegation filed by
Apotex Inc. (“Apotex”) is one of validity. Apotex asserts the so-called Gillette
defence, which Biovail categorizes as an invalidity attack made in the guise of
non-infringement allegations. Biovail also seeks information relating to
various aspects of the release rate profile of the Apotex product, which is an
issue in the proceeding. Because it is invalidity that is an issue, Biovail
argues that this proceeding is the “quintessential case” to reverse the order
of evidence on invalidity.
[4]
In
several recent cases, the Court has ordered that evidence on invalidity be
reversed and in the Court’s Practice Direction dated December 7, 2007, such a
reversal of evidence is contemplated.
[5]
The
Court’s approach to ordering a reversal of evidence is to streamline
proceedings, narrow issues, and expedite proceedings. All of this within the
context that a reversal of evidence will in all likelihood lead to the least
expensive and most expeditious determination of the issues on the merits in a
manner that remains just [see Pharma v. Pharmascience Inc., [2007] FCJ
1568].
[6]
In
the ordinary course of an application, Rule 306 mandates that the Applicant’s
affidavits and documentary exhibits shall be served and filed within 30 days
after issuance of a Notice of Application. Rule 307 stipulates that within 30
days after service of the Applicant’s affidavits a Respondent shall serve and
file any supporting affidavits and documentary exhibits. These are the usual
procedural rights afforded to parties to an application.
[7]
However,
those rights are merely procedural, and in this new era of case management of
proceedings under the Regulations, it is recognized that traditional procedural
rights do not always lead to the just, most expeditious and least expensive
hearing. Slavishly following the provisions of Rules 306 and 307 can often
result in motions seeking the right to adduce reply or even sur-reply
evidence. Such motions do not result in the just, most least expensive and
most expeditious hearing of the matter. Rather, they frequently delay the
proceedings even further and cause additional expense. They also use an
inordinate amount of judicial resources which can be more usefully put to the
hearing of matters on their merits.
[8]
Thus,
the interplay of case management, the Practice Direction, and the flexibility
incorporated into the Federal Courts Rules, permit
procedural rights to be varied so as to ensure that not only is a level playing
field maintained but that the matter moves forward in the most expeditious and
least expensive way. One of the objectives of case management is to provide
the flexibility necessary to respond to the needs of a case without all of the
procedural formality that so often delays proceedings.
[9]
Whether
this is a quintessential case to direct the reversal of evidence need not be determined.
What is important is whether or not requiring Apotex to lead its evidence
first on invalidity will narrow issues, lead to a more streamlined proceeding,
reduce judicial intervention and the use of judicial resources, and result in
fairness to the parties.
[10]
The
Practice Direction which came into force on January 7, 2008 provides as
follows:
Practice Direction – NOC Proceedings
Pursuant to Rule 384, the Court may order
that a proceeding commenced under the provisions of the Patented Medicines
(Notice of Compliance) Regulations, SOR/93-133 as amended, (NOC proceeding)
shall forthwith continue as a specially managed proceeding.
A judge or prothonotary will be assigned
as case management judge to each newly instituted NOC proceeding. The case
management judge or prothonotary will convene a conference with counsel for the
parties shortly after all parties have appeared in the proceeding or the time
for appearance has expired. At that conference, counsel for the parties will be
expected to address:
1. whether it is
appropriate to reverse the order in which some or all of evidence is submitted,
that is, the respondent (generic) would file some or all of its evidence first
and the applicant (brand) file some or all its evidence in response;
2. fixing a schedule
for filing evidence, conducting cross-examination and dealing with any other
matters such as section 6(5) motions;
3.
fixing
a date for the filing of a requisition for hearing; and
4.
any other
matters useful to ensure the just, most expeditious and least expensive
disposition of the proceeding.
[11]
In
the developing line of cases dealing with the reversal of evidence, the
principles noted above have been applied. The cases included Lundbeck
Canada Inc. v. Ratiopharm Inc., 2008 FC 579; Astrazeneca Canada Inc. v.
Apotex Inc., 2008 FC 537, [2008] F.C.J. No. 681 (QL); Abbot Laboratories
v. Canada (Minister of Health), 2007 FC 1291, [2007] F.C.J. No. 1660 (QL); Pharma
v. Pharmascience Inc., 2007 FC 1196, [2007] F.C.J. No. 1568 (QL)). In Pharma,
Madam Prothonotary Tabib made the following observations:
7. I am satisfied that the Court
has, in the context of case management, discretion to vary the order in which
evidence of the parties on an application is to be served and filed if it is
satisfied that it is necessary for the just, most expeditious and least
expensive determination of the proceedings on its merits. That discretion is contemplated
in Rule 385(1)(a). Additional support for this proposition, if needed, can be
found in Rule 55, which allows the Court to vary a rule or dispense with compliance
in special circumstances. An analogy may also be drawn with Rule 274, which
sets out the order in which evidence is to be led at a trial, but specifically
provides that the Court may direct otherwise.
19. I recognize that there is an
undeniable tactical advantage accruing to the party, whoever it might be, who
files its evidence second. That party not only gets to file its evidence in
substantially the way it had anticipated to present and shape it, but has the added
advantage of having the opportunity to adapt it so that it best opposes its
opponent’s; in the absence of any independent evidence of its own, that party
also has the opportunity of weakening and attacking directly its opponent’s
evidence and mining its credibility. These are tactical advantages, which
although legitimate, are neither substantive nor procedural. Such tactical
advantages, it is hoped at least, should not in the end determine the outcome
of the proceedings.
20. For better or for worse, the
procedure contemplated by the Rules for dealing with applications under the
Regulations results in the respondent having this tactical advantage and it
seems to me that in order to deprive it of this advantage without its consent,
substantial savings in time, expense and resources, both of the Court and of
the parties would have to be expected.
21. As mentioned above, this matter
involves issues of infringement, lack of sound prediction and inutility for
which evidence should be adduced in the normal order; reversal would therefore
apply to only part of the evidence, a procedure which is, as yet, unfamiliar to
the Court and the parties and might for that reason and absent exemplary
cooperation between the parties, require more interlocutory interventions by
the Court.
[12]
Madam
Prothonotary Tabib refused to exercise her discretion in favour of reversing
the ordering of evidence. The overriding factor in the exercise of that
discretion appears to be the fact that reversal would apply to only one part of
the evidence and given that there were many issues in play, it did not make
sense in that context to order the reversal of evidence.
[13]
That
case is distinguishable from the current case, as it appears that there are not
only fewer issues but the case is focused on the implication of the Gillette
defence.
[14]
In
Lundbeck, Madam Prothonotary Aronovitch exercised her discretion in
directing the reversal of evidence. In that case, the Applicants sought to
have the Respondents deliver their evidence on issues of invalidity before the
Applicants. There was agreement among the parties that the Applicant should
file their evidence first on infringement. The parties were divided over
whether the evidence on the allegations of invalidity should result in the
Respondent leading its evidence first. At issue, was a consideration of
whether there should be partial reversal on invalidity or full reversal on
invalidity issues. In coming to the conclusion the partial reversal would not
provide any economies in the action and potentially create a greater complexity
and procedural wrangling, Madam Prothonotary Aronovitch observed as follows:
27. Having considered these
factors, I am not persuaded that a partial reversal will provide any economies
in the circumstances. As Prothonotary Tabib observed a partial reversal is a
procedure which is as yet unfamiliar to the Court and requires great
cooperation. More compelling is that in this instance, neither counsel
advocates this method of proceeding or has any enthusiasm for it. I agree with
counsel who are ad idem that a partial reversal, in this instance,
offers no efficiencies over the status quo.
28. I would add that the dissection
of the grounds of invalidity in the manner discussed above presupposes that it
is possible to identify and separate out the evidence and argument on sound
prediction, overbreadth and section 53, of the Patent Act from the
evidence and argument in respect of the other allegations raised in
Ratiopharm’s NOA. In practice, there is likely considerable overlap both of
evidence and argument among the different allegations of invalidity. Requiring
each party’s experts to address only certain issues in their initial affidavits
and other related issues in reply, may create unnecessary duplication and
complexity, as it is foreseeable that parties may bring additional motions for
clarification requiring time consuming intervention by the Court in the
management of the proceeding.
29. Full inversion on invalidity is
also not without complexity. Where, as is the case, the grounds of invalidity
include sound prediction, overbreadth, and bad faith, and where the applicant
may wish to file factual and expert evidence thereon that is new, it will
likely require the adjudication of motions to file reply evidence thereby
adding a layer of complexity. However these proceedings in the ordinary
course, are rarely immune from motions to adduce reply evidence and in this
case, there are obvious and substantial benefits to be gained by having the
respondent put in all of its evidence on invalidity issues first that outweigh
any complexity engendered by the possibility of having to provide some reply to
new facts that may be in the applicants’ possession.
30. The substantial narrowing of
the issues on invalidity that are in play, along with the likely commensurate
limits on the number of experts cannot but offer substantial economies
including in respect of the likelihood of the need for reply evidence. I am
satisfied that full reversal on issues of invalidity, in the circumstances of
this case, is fair, and will result in a trimmer and more expeditious
proceeding.
[15]
In
Abbott Laboratories, Justice Phelan was faced with a motion by the
Applicants seeking an ordering requiring the Respondent to serve its evidence
prior to that of the Applicant. This was a second proceeding under the
Regulations respecting the same patent and was effectively the re-litigation of
the infringement issue. In his decision, Justice Phelan determined that
notwithstanding the argument of the Respondent that the Court had no
jurisdiction to make an Order reversing the evidence, that indeed there was
such jurisdiction which arose “in special circumstances” and under the auspices
of “case management”. He framed the issue as “whether this is an appropriate
case or are there special circumstances to make an order reversing the order of
filing evidence in the making of submissions”.
[16]
Justice
Phelan denied the motion in so far as it sought a reversal of evidence. It is
to be noted however, that Justice Phelan’s decision pre-dated the Courts
Practice Direction of December 7, 2007, which came into force on January 8,
2008 and in his decision directed that the case be specially managed.
[17]
Finally,
in the Astrazeneca cases, the unique circumstances of that series of
cases militated against the reversal of evidence. As was observed in that
case:
5. It is to be noted that one
fundamental aspect of the Practice Direction is to incorporate the general
principle of both Rules 3 and 385 of the Federal Courts Rules into the
case management of NOC proceedings. That principle is that NOC proceedings are
to be case managed “to ensure the just, most expeditious and least expensive
disposition of the proceeding”.
6. Thus, in the specific
circumstances of these seven applications, the issue is whether it is
“appropriate” that Apotex file its evidence first on the issue of validity in
three of the seven Applications. It should be noted that Counsel for the
Applicants argues that two of the three patents in issue in the three applications
have not been litigated before while there has been litigation involving the
remaining one and as well as, apparently, the four other Applications where the
reversal of filing evidence is not sought.
7. While the Practice Direction
launches a new era of case management for NOC proceedings to ensure they move
to a hearing in a just and timely manner, it is my view that reversing the
filing of evidence in this series of Applications will not achieve that
result. Thus, the ordinary approach should be followed and the Applicants will
file their evidence first in accordance with the schedule the parties have
agreed to.
8. In reaching this conclusion, I
have carefully considered the submissions of counsel for the Applicants and the
objectives of the Practice Direction. Counsel for the Applicants argues that
reversing the evidence will meet the policy objectives of the Practice
Direction by not only refining the issues but also reducing the volume of
evidence thus ensuring the “just, most expeditious and least expensive”
determination of these Applications. In particular, counsel points to the fact
that there are 60 items of prior art cited by Apotex in Schedule E to the
Notices of Allegation (“NOA”). Counsel argues that the Applicants are compelled
to deal with all of them as there is no indication whether all or any of these
will be the subject of Apotex’ evidence. Thus, it is argued, it makes good
sense to reverse the evidence as this will result in cost saving and be more
expeditious. However, if it were only three cases and not seven this argument
would be more persuasive. Here, the NOA’S are very detailed and outline with
great specificity exactly what the issues are and what evidence supports
Apotex’ invalidity argument. It can hardly be said that given the history of
litigation and the detailed information contained in the NOA’s that the
Applicants do not know nor have reasonably detailed insight into the position
of Apotex on invalidity. Further, in reviewing Schedule E it is apparent that
many of the references to monographs and texts is limited to but a few pages of
each reference. Thus, while the 60 items, at first blush, may seem like a
large number of items to respond to, the actual pages referred to do not appear
to be that significant especially where there has been a prior litigation
history involving these drugs although perhaps not specifically to two of the
patents.
9. The NOC proceeding is a flawed
procedure in that a party with the onus on a particular issue does not have to
file their evidence first. This approach to some extent encourages parties to
engage in a “cat and mouse” game of what precise grounds and evidence they rely
upon in support of their respective positions until the hearing. The process
does little to narrow the issues.
10. One approach to clarifying the
positions at an early stage is to provide for the reversing of the filing of
evidence on validity issues. This approach meets the objective of moving the
matter forward in a more cost effective and expeditious way. It is being
ordered more frequently notwithstanding that it removes a “tactical advantage”
from the generic that is advancing the position of invalidity of the patent.
However, to do so there must be a reasonable prospect that there will be a
savings in time and expense [see, for example, Purdue Pharma v. Pharmascience
Inc., 2007 FC 1196]. In my view of this specific series of cases, no such
savings in time and expense will be achieved by requiring Apotex to lead its
evidence first on validity. Indeed, as these cases will be heard by the same
Judge, there is a real possibility of confusion developing during the course of
the hearing over who has the onus on certain issues. This group of NOC
proceedings is complex enough without adding further complications and possible
confusion over the reversal of evidence in three of them.
11. If the Applicants are
prejudiced by virtue of having to lead their evidence first and do not, for
example, lead evidence on an unexpected point that is raised by Apotex, there
is ample flexibility within the case management regime as contemplated by the
Practice Direction, to counteract such prejudice by, for example, allowing the
filing of reply evidence. Thus, the objectives of “just, least expensive, most
expeditious” can be easily met within the case management regime. In the
circumstances, the motion will be dismissed insofar as it relates to the
reversal of the filing of evidence.
[18]
In
that case the fact that were some seven cases proceeding together. It was not
the most expeditious and least expensive approach to have a reversal of
evidence in three of them as it could lead to confusion and delays.
[19]
Here,
there is only one proceeding and contrary to the argument of Apotex invalidity
is clearly the main issue. Apotex alleges six grounds of invalidity including
insufficiency, improper selection and overbreadth. Apotex argues that the Gillette
defence is both an invalidity attack and an invalidity attack. It
is not necessary to determine this point. Suffice it to say that invalidity is
a dominant focus of Apotex’ attack on the patent in issue. Thus, if the
reversal of evidence will lead to a more streamlined proceeding and result in a
more expeditious and less expensive proceeding then the reversal of evidence
should be ordered. In my view, this case will benefit from a reversal of
evidence. Biovail will know the case it has to meet on validity. It will
avoid splitting of the case. If there are issues which Apotex may need to
respond to they will be more sharply defined. It will define more specifically
exactly what Apotex is alleging as its six grounds of invalidity and perhaps
Apotex may decide that only a few of those grounds will be pursued. It will avoid
the filing of evidence by Biovail in a vacuum and filing evidence on every
possible point of alleged invalidity. Thus, the purpose of the reversal of
evidence will be met.
[20]
There
is no comprehensive list of factors to consider for ordering a reversal of
evidence, nor can there be, as cases vary from one to another. It may be that the
complexity of the NOC, the level of detail provided in the grounds in the
Notice of Application or whether the allegation of invalidity in the NOC is the
primary allegation are factors which may come into play. However, the dominant
consideration for the reversal of evidence will be whether it will result in
the streamlining of the proceeding or result in delay and increased expense by further
motions seeking to file reply evidence.
[21]
In
this case the reversal of evidence should result in the streamlining of the
proceedings and meet the objectives noted above.
II. Section
6 (7) Disclosure
[22]
Biovail
also seeks disclosure pursuant to section 6 (7) of the Regulations which
provides as follows:
6 (7) On the motion of a first person,
the court may, at any time during a proceeding,
(a) order a second person to produce
any portion of the submission or supplement filed by the second person for a
notice of compliance that is relevant to the disposition of the issues in the
proceeding and may order that any change made to the portion during the
proceeding be produced by the second person as it is made;
[23]
In
Biovail Corp. v. Canada (Minister of National Health and
Welfare), [2002] F.C.J. No. 1539, the Court set out a three part test
for disclosure pursuant to this section summarized as follows:
1. that request for disclosure is
timely;
2.
that the
information already provided is insufficient; and
3.
that the
disclosure of the sought after information is necessary and relevant to the disposition
of the issues in the proceeding.
[24]
Apotex
has already provided substantial disclosure including dissolution data, release
rate profiles and swell-ability information. Indeed, the sought after
information does not exist, i.e. section 2.7.1 of Apotex’s ANDS. Biovail’s
evidence states that the evidence should exist. It is, however, not part of
the ANDS. Apotex has already provided extensive disclosure which, based on the
material before me, should be more than sufficient for Biovail to respond to the
issues at stake. Thus, Biovail’s request does not meet all the tests required
for a section 6 (7) order to be made in this case.
ORDER
THIS
COURT ORDERS that:
1.
That
the present application shall proceed according to the following schedule:
a)
Apotex’
evidence shall be served within 90 days from the date of this Order;
b)
The
Applicants’ evidence shall be served within 90 days after the service of
Apotex’s evidence;
c)
Cross-examinations
thereon shall be completed within 90 days after the service of the Applicants’
evidence;
d)
A
requisition for hearing may be served and filed as soon as cross-examinations
have been completed, and, in any event, shall be served and filed within 20
days after cross-examinations have been completed;
e)
The
Applicants’ Application Record shall be served and filed within 45 days after
cross-examinations have been completed; and
f)
Apotex’s
Responding Record shall be served and filed within 45 days after the
Applicants’ Application Record has been served and filed.
2.
In
the event any of the parties require a variation to the timetable herein, they
may seek the variation by writing to the Court if on consent. If the variation
is not on consent the party seeking the variation shall arrange a case
conference with the Court.
3.
No
party shall bring any motions without first arranging a case conference with
the Court to review the proposed issue(s) on the motion.
4.
The
motion is otherwise dismissed.
5.
As
success has been divided, there are no costs of this motion.
“Kevin
R. Aalto”
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