Date: 20010606
Docket: A-410-00
Neutral citation: 2001 FCA 192
CORAM: STONE J.A.
ROTHSTEIN J.A.
SEXTON J.A.
BETWEEN:
MERCK FROSST CANADA INC. and MERCK & CO. INC.
Appellant(s)
(Applicants)
- and -
THE MINISTER OF HEALTH and ALCON CANADA INC.
Respondent(s)
(Respondents)
HEARD at Ottawa, Ontario, Wednesday, May 23, 2001
Judgment rendered at Ottawa on Wednesday, June 6, 2001
REASONS FOR JUDGMENT BY: STONE J.A.
CONCURRED IN BY: ROTHSTEIN J.A.
SEXTON J.A.
Date: 20010606
Docket: A-410-00
Neutral citation: 2001 FCA 192
CORAM: STONE J.A.
ROTHSTEIN J.A.
SEXTON J.A.
BETWEEN:
MERCK FROSST CANADA INC. and MERCK & CO. INC.
Appellant(s)
(Applicants)
- and -
THE MINISTER OF HEALTH and ALCON CANADA INC.
Respondent(s)
(Respondents)
REASONS FOR JUDGMENT
STONE J.A.
[1] This is an appeal from an order of Muldoon J. dated May 30, 2000 dismissing the appellants' application for a prohibition order made pursuant to section 6 of the Patented Medicines (Notice of Compliance) Regulations which were adopted in 1993 (P.C. 1993-502) and amended in 1998 (P.C. 1998-366) (the "Regulations").
BACKGROUND
[2] The appellants are the licensee and owner, respectively, of Canadian Patent No. 1,280,367 (the "Patent") issued February 19, 1991 and entitled "Pharmaceutical Composition of the Type Which Undergoes Liquid-Gel Phase Transition". The Patent expires in 2008.
[3] Claim 1 of the Patent reads as follows:
1. Pharmaceutical composition intended for contacting with a physiological liquid characterized in that said composition is intended to be administered as a non-gelled liquid form and is intended to gel in situ, this composition containing at least one polysaccharide in aqueous solution, of the type which undergoes liquid-gel phase transition gelling in situ under the effect of an increase in the ionic strength of the said physiological liquid.
[4] On June 21, 1995, the respondent Minister granted a Notice of Compliance to the appellant for TIMOPTIC-XE® Ophthalmic gel forming solution 0.25% and 0.5%. The first appellant filed the Form IV Patent Lists pertaining to the patented medicines and identified the Patent thereon pursuant to section 4 of the Regulations.
[5] By letter dated June 10, 1998, containing a Notice of Allegation made pursuant to paragraph 5(3)(b) of the Regulations, the first appellant was notified by Alcon that Alcon had submitted to Health Canada an Abbreviated New Drug Submission for Timolol Maleate Ophthalmic Gel Forming Solution 0.25% and 0.5%. It was alleged in the notice that, with respect to the Patent, "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 Alcon of Timolol Maleate Ophthalmic Gel Forming Solution 0.25% and 0.5%" and that the Patent "is invalid".
[6] The letter of June 10, 1998 also included a "Detailed Statement" which was said to contain "the legal and factual basis for the allegation". Among the reasons given in this document of why the Alcon composition did not infringe the claims of the Patent were the following:
Alcon's proposed Timolol Maleate Ophthalmic Gel Forming Solution 0.25% and 0.5% contains xanthan gum. Xanthan gum is not a polysaccharide of the type which undergoes liquid-gel phase transition gelling in situ under the effect of an increase in ionic strength. Accordingly, Alcon's proposed Timolol Maleate Ophthalmic Gel Forming Solution 0.25% and 0.5% do not infringe Claim 1 of the ‘387 patent.
Merck has in fact admitted that xanthan gum is not a polysaccharide of the type which undergoes liquid-gel phase transition gelling in situ under the effect of an increase in ionic strength. During prosecution of the U.S. counterpart application (now United States Patent No. 4,861,760) and in order to overcome rejections based upon references that disclosed ophthalmic compositions containing xanthan gum, Merck argued to the U.S. Patent Office that xanthan gum is not a polysaccharide of the type which undergoes a liquid to gel phase transition upon the effect of an increase in the ionic strength. Specifically, Merck stated "but xanthan gum solutions do not change phase from liquid to gel or gel to liquid when applied to the eye" (Merck"s amendment under 37 CFR 61.111 dated December 7, 1988, p. 5). Merck further argued:
Lin et al. purports to disclose advantages for employing the gelling gum xanthan, but any advantage is remote from the fact that the gum is gelable. Viscosity is a function of the concentration of the gum in the liquid, and no phase change from liquid to gum is possible with xanthan gum. What you start with is what you get.
(Id., p. 7-8. (Emphasis added)
The position of Merck as stated above lends clear and unequivocal support to Alcon's position that its proposed ophthalmic solution does not infringe Claim 1 of the ‘367 patent because it contains xanthan gum which is not a polysaccharide of the type which undergoes liquid-gel phase transition gelling in situ under the effect of an increase in strength.
Moreover, Alcon's proposed Timolol Maleate Ophthalmic Gel Forming Solution 0.25% and 0.5% do not infringe Claim 1 of the ‘367 patent as Claim 1 cannot be validly construed as having a scope broad enough to include xanthan gum without also including prior ophthalmic compositions. For example, U.S. Patent No. 4,136,177, which issued on January 23, 1979, discloses ophthalmic compositions containing any ophthalmic drug and about 0.1 to about 2.5% weight by volume of xanthan gum. Alcon's proposed Timolol Maleate Ophthalmic Gel Forming Solution 0.25% and 0.5% products contain xanthan gum in an amount between about 0.1 and 2.5% weight by volume.
[7] The Detailed Statement went on to set forth the basis for the allegation of invalidity. This portion of the statement reads in part:
In the event that Claim 1 is interpreted to include xanthan gum, an interpretation that is specifically denied, all claims of the ‘367 are invalid. As indicated above, ophthalmic compositions containing an ophthalmic drug and xanthan gum were known prior to the filing date of the ‘367 patent. Timolol and timolol maleate and their use as a beta blocker to reduce ophthalmic hypertension were also know prior to the filing date of the ‘367 patent. Accordingly, insofar as the claims of the ‘367 patent include xanthan gum, such claims are obvious in view of the prior art.
Moreover, insofar as the claims of the ‘367 patent include xanthan gum, such claims are invalid for inoperability/lack of utility. Xanthan gum does not undergo liquid-gel phase transition gelling in situ under the effect of an increase in the iconic strength of the physiological liquid as claimed.
[8] On August 7, 1998, the appellants commenced the section 6 proceeding which was supported by affidavit evidence. The relief sought in the Notice of Application reads as follows:
An Order prohibiting the Respondent The Minister of Health (the "Minister") from issuing the Respondent Alcon Canada Inc. ("Alcon") a notice of compliance for Timolol Maleate Ophthalmic Gel Forming Solution 0.25% and 0.5% until after the expiry of Canadian Letters Patent No. 1,280,367.
THE ORDER BELOW
[9] Muldoon J. found it unnecessary to consider the allegation of invalidity. He was of the view that Alcon's Notice of Allegation was sufficient and that the appellants had failed to discharge the burden of establishing that the allegation of non-infringement was not justified. With an obvious eye to the legal and factual basis outlined in the Detailed Statement, Muldoon J. concluded that Alcon had not by its evidence added to the factual basis contained in the Detailed Statement in any material way. Muldoon J. had some regard, however, to an admission made by the first appellant in a foreign patent application of April 30, 1998 which was alluded to in the opinion evidence of Alcon's expert witness.
MOOTNESS
[10] On June 3, 2000, Muldoon J. granted an interim stay of the May 30, 2000 order until a motion for an interlocutory stay could be heard. That motion was heard and dismissed by Campbell J. on June 12, 2000. An appeal from that order was immediately launched but was dismissed on technical grounds by this Court on March 8, 2001. At the hearing before Campbell J., Alcon undertook not to advance an argument on this appeal to the effect that the appeal was now moot on the ground that a Notice of Compliance was granted to Alcon by the Minister on June 13, 2000 and, having been granted, there was no basis for this Court to intervene.
[11] The appellants contend that the right to bring the appeal and the jurisdiction to hear it is conferred by paragraph 27(1)(a) of the Federal Court Act and that, notwithstanding the very recent decision of this Court in Pfizer Canada Inc. v. Apotex Inc., [2001] F.C.J. No. 17 (QL), this appeal is not moot They contend that Pfizer, supra, is distinguishable in that it was based upon an earlier and quite different decision of this Court in Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1999), 240 N.R. 195, leave to appeal to the Supreme Court of Canada dismissed, [1999] 1 S.C.R. xi. In Merck Frosst, supra, this Court upheld the decision of Rothstein J. (as he then was) determining that a section 6 prohibition application was moot on the ground that the notice of allegation had been withdrawn some time after the prohibition application was launched. Moreover, the then 30 month statutory stay period provided for in paragraph 7(1)(e) of the Regulations had expired. In upholding that decision this Court noted that following Rothstein J.'s decision dismissing the prohibition application for mootness, the Minister had in fact issued the Notice of Compliance. Décary J.A. therefore concluded, at paragraph 5:
The appeal is obviously moot, the Minister having done what he is empowered to do under subsection 7(1) of the Regulations, i.e. he issued a Notice of Compliance.
[12] The appellants submit that the circumstances in this appeal are materially different in that the now reduced statutory stay period of 24 months as specified in paragraph 7(1)(e) of the amended Regulations, unlike the one that was before the Court in Merck Frosst, supra, had not expired at the time when this appeal was launched. The appellants contend, moreover, that the suggestion in Pfizer, supra, that the section 6 proceeding and any appeal therefrom must be completed within the statutory stay period is simply wrong and that we ought not to be guided by it. They contend that the 24 month statutory period is intended to apply to the section 6 proceeding per se and was never intended to include the time needed to prosecute any appeal brought from the disposition of that proceeding within the 24 month period.
[13] The appellant argues, in any event, that if we were to conclude that the appeal is moot, this Court should nevertheless exercise its discretion to hear it so as to enable the appellants to avoid the automatic application of subsection 8(1) of the Regulations. That subsection renders a party in the position of the appellants liable to a party in the position of Alcon "for any loss suffered" by the latter party during the period described in paragraphs 8(1)(a) and (b) of the Regulations. The appellants draw attention to the present language of subsection 8(1) as compared with the language of the subsection as it stood at the time of this Court's decision in Pfizer, supra, and argues that the possibility of an appeal, whenever it may be heard, is now clearly contemplated before liability to pay any loss will arise. It is thus argued that this appeal ought to be heard even though the 24 month statutory stay period has already expired because the appellants ought not to be liable for loss under subsection 8(1) until after this Court is able to decide whether the Detailed Statement was sufficient and whether Alcon has by its "evidence" in the section 6 proceeding added to the facts relied upon in its Detailed Statement. According to the appellants, paragraph 7(1)(b) of the Regulations prohibits the Minister from issuing a notice of compliance "before...the day on which the second person complies with section 5". It argues from this that unless this Court finds that the Detailed Statement complied with paragraph 5(3)(a) of the Regulations, it cannot be said that Alcon has complied with the requirement of that paragraph and, accordingly, that the Minister validly issued the Notice of Compliance.
[14] In the view that I take of this appeal it is not necessary to consider the issue of mootness. That issue as argued before us should be left to another day when it is appropriately raised for the Court's decision. For the purposes of this appeal I shall assume without deciding that the appeal is not moot. The merits were fully argued by the parties.
.
MERITS
[15] The appellants raise several issues in their written argument. They presented oral argument on the first two of these, namely:
1. Did the Trial Judge err in law in finding that the purported Notice of Allegation ("NOA") meets the requirements of s. 5(3)(a) of the Regulations? 2. Did the Trial Judge err in law in failing to limit the allegations advanced by Alcon on the application to those allegations detailed in the NOA?
The remaining issues - which were not abandoned - are concerned with alleged errors on the part of the Motions Judge with respect to the admissibility of expert evidence on the issue of non- infringement, the admissibility of admissions made by the second appellant in foreign patent applications, the proper test for infringement and expert evidence applicable thereto, and the interpretation of the Patent itself. In my view no basis has been shown for interfering with the decision of Muldoon J. to admit the late filed evidence including the admissions contained in the foreign patent applications. These were matters that fell well within his discretion as the Motions Judge, and it has not been shown that he exercised that discretion erroneously. Nor in my view did Muldoon J. err in construing the Patent.
[16] I turn then to the two issues to which the appellant limited their oral argument. They may be conveniently considered together. I am satisfied that Muldoon J. did not err in upholding the sufficiency of the Notice of Allegation and respectfully agree with his conclusion that the claim of non-infringement contained therein "is not a bald assertion."
[17] The second issue amounts to an attack of the contents of the Detailed Statement and on the alleged addition of new facts subsequent to June 10, 1998. The authorities are clear that the detailed statement required by paragraph 5(3)(a) of the Regulations must contain all of the facts that a second person is relying upon in support of its paragraph 5(1)(b) allegations and must be such as will make the patentee fully aware of the ground for which it is alleged that the patent will not be infringed: AB Hassle v. Canada (Minister of National Health & Welfare) (2000), 256 N.R. 172 (F.C.A.); SmithKline Beecham Pharma Inc. v. Apotex Inc. (2001), 10 C.P.R. (4th) 338 (F.C.A.). As was held in AB Hassle, supra, at paragraph 23, "the intent [of paragraph 5(3)(a)] appears to be that the entire factual basis be set forth in the statement rather than be revealed piecemeal when some need happens to arise in a section 6 proceeding."
[18] It is to be noted that a factual basis for the allegation of non-infringement as set forth in Alcon's Detailed Statement is that its composition contains xanthan gum and that "Xanthan gum is not a polysaccaraide of the type which undergoes liquid-gel phase transition gelling in situ under the effect of an increase in ionic strength." The allegation of non-infringement in the June 10, 1998 letter must be assumed to be true unless proven otherwise by the appellants: Merck Frosst Canada Inc. v. Canada (Minister of National Health & Welfare) (1994), 55 C.P.R. (3d) 302 (F.C.A.), at 319. According to Claim 1 of the Patent the composition therein referred to is said to contain "one polysaccaraide in aqueous solution of the type which undergoes liquid-gel phase transition gelling in situ under the effect of an increase in the ionic strength of the said psychological liquid."
[19] In paragraph 12 of his reasons Muldoon J. intimated that a certain degree of latitude is permitted to supplement broad allegations with "further, detailed allegations", and found that those of Alcon had not exceeded this bound. If, as appears, Muldoon J. was here referring to some evidence adduced by Alcon to support the broad statement of fact contained in its Detailed Statement that its xanthan gum polysaccaraide was not a polysaccaraide of the type which undergoes a liquid to gel transition gelling in situ under the effect of an increase in the ionic strength, it is unexceptional. As mentioned already, the authorities in this Court are to the clear effect that a second person must not, in a section 6 proceeding, rely on facts that exceed those laid out in the detailed statement.
[20] I can find no basis for interfering with Muldoon J.'s order as a whole. It is clear from a reading of his reasons that he had regard to the record before him and that he paid particular attention to the Notice of Allegation, the Detailed Statement and the evidence adduced on both sides of the controversy. In the end he concluded that Alcon's claims to non-infringement "have not been proven to be unjustified". It seems to me that this is a clear reference to the fact that whatever the mechanism may be that triggers Alcon's composition to gel in situ it had not been proven to be the mechanism claimed in Claim 1 of the Patent i.e. the "effect of an increase in the ionic strength of the said psychological liquid."
[21] Moreover, while Muldoon J. would not admit the statement made during the prosecution of the U.S. counterpart application that is referred to in the Detailed Statement, he found some assistance in the admission made in the Chastaing foreign patent application of April 30, 1998 which was made by a company affiliated with the appellants. According to Alcon's expert witness, that application pertained to "ophthalmic compositions containing a carbonic anhydrase inhibitor and xanthan gum and states at page 50, lines 20-25:
....xanthan gum viscosity is relatively insensitive...to differences in ionic strength and pH xanthan gum solutions do not therefore have any liquid-gel phase transition properties, hence xanthan gum is not suitable for use in the formulation of in situ gelling solutions."
[22] The appellants contend that this portion of the expert's evidence is not evidence going to support an allegation of non-infringement but rather that it constitutes a new fact not specifically relied upon in the Detailed Statement. As I have already stated, the statement of April 30, 1998, quoted above, was properly admitted by Muldoon J. Moreover, in my view it does not constitute a new fact but, rather, is evidence supporting the allegation that "Xanthan gum is not a polysaccharide of the type which undergoes liquid-gel transition in situ under the effect of an increase in ionic strength."
[23] In view of my analysis with respect to the issue of non-infringement and the conclusion I have reached in that regard, it becomes unnecessary to take up the appellants' attack on the allegation of invalidity.
DISPOSITION
[24] I would dismiss the appeal with costs.
"A.J. STONE"
J.A.
"I agree
Marshall Rothstein J.A."
"I agree
J. Edgar Sexton J.A."
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