Date: 20100610
Docket: A-238-09
Citation: 2010 FCA 155
CORAM: EVANS
J.A.
DAWSON J.A.
STRATAS
J.A.
BETWEEN:
APOTEX INC.
Appellant
and
SYNTEX PHARMACEUTICALS INTERNATIONAL INC.
and HOFFMANN LAROCHE LIMITED
Respondents
REASONS FOR JUDGMENT
DAWSON J.A.
[1] The appellant, Apotex Inc. (Apotex), sued the
respondents, Syntex Pharmaceuticals International Inc. and Hoffmann LaRoche
Limited (together Roche), for damages under section 8 of the Patented
Medicines (Notice of Compliance) Regulations, SOR/93-133 (Regulations). A
judge of the Federal Court dismissed the action (2009 FC 494) finding that:
i.
In
all the circumstances, the 1993 version of the Regulations applied to the
action;
ii.
However,
section 8 of the Regulations as then in force was not triggered by the events
in the action.
[2] At
issue in this appeal is the correctness of those findings. In my view, the
Judge correctly answered the legal questions before him. I would, therefore,
dismiss the appeal.
The Facts
[3] The
facts are undisputed and were carefully and comprehensively set out in the
reasons for the judgment under appeal. A summary of the facts is sufficient
for this appeal.
[4] On
March 20, 1996, Madam Justice Reed of the Federal Court of Canada Trial
Division, as it then was, issued an order under the Regulations in proceedings
brought by Hoffmann LaRoche Limited and Syntex Pharmaceuticals International
Limited against the Minister of National Health and Welfare (Minister) and
Apotex (prohibition proceeding). The order prohibited the Minister from
issuing a Notice of Compliance to Apotex with respect to naproxen slow release
tablets until after the expiration of Canadian Patent No. 1, 204, 671 (‘671
patent). In the prohibition proceeding, the Court was not required to consider
the validity of the ‘671 patent because Apotex had made no allegation of invalidity.
[5] An
appeal and cross-appeal of Justice Reed’s decision were dismissed.
[6] Later,
Apotex commenced an action seeking a declaration that the ‘671 patent was
invalid. On April 19, 1999, Justice Reed pronounced a judgment declaring the
Apotex formulation of naproxen slow release tablets to be non-infringing and
further declaring the ‘671 patent to be invalid. No appeal was taken from that
judgment.
[7] Notwithstanding
the April 19, 1999 judgment, the Minister did not issue a Notice of Compliance
to Apotex. The Minister took the position the prohibition order continued in
effect and prevented her from issuing a Notice of Compliance. Apotex then
brought a motion in the prohibition proceeding seeking an order setting aside
the prohibition order and dismissing the proceeding.
[8] On
April 30, 1999, Justice Reed made an order “for greater certainty” setting
aside the March 20, 1996 prohibition order and dismissing the application. No
appeal was taken from this decision. This order is the foundation for Apotex’
claim for damages under section 8 of the Regulations.
[9] Following
the dismissal of the prohibition proceeding, the Minister issued to Apotex a
Notice of Compliance for naproxen slow release tablets. The Minister has
certified that, but for the prohibition order, the Notice of Compliance would
have issued to Apotex on July 21, 1995.
Decision of the Federal
Court
[10] The
Judge began by briefly reviewing the history of the Regulations. They were
first enacted effective March 12, 1993, and first amended on March 11, 1998
(SOR/98-166). As the Judge did, I will refer to these as the 1993 and 1998
versions of the Regulations.
[11] The
1998 version effected a number of changes to the Regulations, including
amendments to section 8 of the Regulations. Subsection 9(6) of the 1998
version was a transitional provision governing the applicability of the
amendments to section 8 of the Regulations.
[12] Subsection
9(6) of the 1998 version of the Regulations provided:
|
TRANSITIONAL
PROVISIONS
9(6) Section 8 of
the Regulations, as enacted by section 8, applies to an application pending
on the coming into force of these Regulations. [Emphasis added.]
|
DISPOSITIONS
TRANSITOIRES
9(6) L’article 8 du
même règlement, édicté par l’article 8, s’applique aux demandes qui sont pendantes
à la date d’entrée en vigueur du présent règlement. [Non souligné dans
l’original.]
|
[13] To
determine whether the 1993 or 1998 version of the Regulations applied to
Apotex’ damage claim, the Judge began by considering whether the prohibition
proceeding was “pending” or, in the French language version, “pendantes” as of
March 11, 1998, the date the 1998 version of the Regulations came into force.
[14] The
Judge considered the meaning of the words “pending” and “pendantes” in light of
several legal dictionary definitions and found that their plain and ordinary
meaning “is a proceeding that is not yet finished, one in which there is no
final judgment.” He acknowledged there were unusual situations where a final
judgment could be varied or set aside and referred to this Court’s decision in AB
Hassle v. Apotex Inc., 2008 FCA 416 at paragraph 30 which confirmed
that a prohibition order can be set aside if an action determines invalidity or
non-infringement. In light of a line of English cases dealing with patent
infringement and the finality of damage awards even where the patent is later
invalidated, and the final quality of Justice Reed’s decision and the appeal
therefrom, the Judge determined the prohibition proceeding was not pending at
the relevant time within the meaning of the transitional provisions.
Therefore, it followed that the 1993 Regulations applied.
[15] The
Judge went on to examine and interpret section 8 of the 1993 version of the
Regulations which provided:
|
8(1) The first
person is liable to the second person for all damage suffered by the second
person where, because of an application of paragraph 7(1)(e), the
Minister delays issuing a notice of compliance beyond the expiration of all
patents that are the subject of an order pursuant to subsection 6(1).
(2) The court may
make such order for relief by way of damages or profits as the circumstances
require in respect of any damage referred to in subsection (1).
|
8(1) La première
personne est responsable envers la seconde personne de tout préjudice subi
par cette dernière lorsque, en application de l’alinéa 7(1)e), le
ministre reporte la délivrance de l’avis de conformité au-delà de la date
d’expiration de tous les brevets visés par une ordonnance rendue aux termes
du paragraphe 6(1).
(2) Le tribunal peut
rendre toute ordonnance de redressement par voie de dommages-intérêts ou de
profits que les circonstances exigent à l’égard de tout préjudice subi du
fait de l’application du paragraphe (1).
|
[16] Fundamental
to the Judge’s analysis was the meaning of “expire” which was defined at section
2 of the Regulations to mean to “expire, lapse or terminate by operation of
law”. The Judge observed that a patent could expire by the natural end of its
term, lapse due to the failure to pay maintenance fees or terminate by
operation of law, for instance, by a declaration of invalidity. He noted that paragraph
7(1)(e) of the Regulations required the Minister to wait 30 months
before issuing a Notice of Compliance if an application for prohibition had
been made. The Judge found the Minister, because of paragraph 7(1)(f)
and subsection 7(2) of the Regulations, did not have to delay in granting a
Notice of Compliance where a patent had expired.
[18] He
went on to reason at paragraphs 71 to 73 and 76 that:
71. A reasonable interpretation
of section 8 would be to impose a liability on a first person if the cause of
the delay in issuing a Notice of Compliance to a second person was that the
patent that was the subject of the proceeding had "expired", that is
by the natural end of its term, or by lapse such as failure to pay maintenance
fees, or by operation of law such as a declaration of invalidity. If, for
instance, the patent was declared invalid in the context of the relevant NOC
application itself, then it can be said that the Minister had delayed in
issuing the Notice of Compliance because the patent must be considered to have
"expired". The extent of the delay could reasonably be considered to
be the later of the day upon which the Minister says that the Notice of
Compliance would otherwise have been issued if it were not for the application
of the Court, or the filing date of that application with the Court. The end
date would be the date that the Notice of Compliance was actually issued. In
the present case the Minister has provided a letter (Trial Exhibit 2-13)
stating that the Notice of Compliance would have issued on July 21, 1995 were
it not for the application in this Court which was filed August 3, 1993 (Trial
Exhibit 2-5). The Notice of Compliance was actually issued May 4, 1999 (Trial
Exhibit 2-12). Thus the period would be between July 21, 1995 and May 4, 1999.
72. However, in this case the
Judgment holding the '671 patent to be invalid did not occur in the context of
the PMNOC Regulations application but in the context of a separate
action. That Judgment issued on April 23, 1999, only a few days before May
4, 1999. The Order varying the prohibition Order and dismissing the PMNOC
application was made April 30, 1999. There is no evidence as to the dates when
the Minister was actually made aware of the Judgment or the Order. I find that
there was no unreasonable delay by the Minister in issuing a Notice of
Compliance to Apotex.
73. Given the circumstances
Apotex was, as of May 4, 1999, free to sell the drug in question. Can it also
reach back and apply the finding of invalidity in the action so as to argue
that the '671 patent had "expired" within the meaning of section 8 of
the 1993 PMNOC Regulations such that it can make a claim under that
provision? I find that Apotex cannot.
[…]
76. At
no time during the period when the prohibition Order was made, including the
period where that Order was affirmed on appeal, was the '671 patent held to be
invalid by the Court in that proceeding or any other Court in any other
proceeding. The patent had not "expired" when the Order was made or
affirmed on appeal. Immediately upon the "expiry" of the patent by a
finding of invalidity in another proceeding the Minister issued a Notice of
Compliance. There was no delay. I find,
therefore, that section 8 of the 1993 version of the PMNOC Regulations
is not triggered in the circumstances of this action. [Underlining added.]
[19] In
view of his findings, it was unnecessary for the Judge to rule on the other
issues raised by Apotex. He did so for the “almost inevitable” appeal. One
such issue was whether Roche would be liable for damages if the 1998 version of
the Regulations applied. On this appeal it is not necessary to consider the
Judge’s interpretation of section 8 of the 1998 version of the Regulations.
Therefore, no comment is made about the correctness of that interpretation.
The Asserted Errors
[20] Apotex
asserts the Judge erred as follows in reaching the above conclusions:
1.
Given
Justice Reed’s order of April 30, 1999 dismissing the prohibition proceeding,
the Judge erred by failing to find that Roche was estopped from arguing the prohibition
proceeding was not pending as at March 11, 1998.
2.
If
Roche was not estopped, the Judge nonetheless erred by finding the prohibition
proceeding was not pending as at March 11, 1998.
3.
The
Judge erred by construing the 1993 version of the Regulations to prevent it
from recovering damages.
The Standard of
Appellate Review
[21] The
parties agree the questions raised on this appeal are questions of law the
Judge was required to answer correctly. I agree.
Analysis
Did the Judge err by
failing to find that Roche was estopped from arguing the prohibition proceeding
was not pending as at March 11, 1998?
[22] Apotex
argues that, in her 1999 decision to set aside the prohibition order, Justice
Reed heard submissions that she had no jurisdiction to grant the requested
order because the proceeding was no longer extant. Justice Reed disagreed, and
found the Court had continuing jurisdiction over a prohibition order made under
the Regulations. Since this decision was not appealed, Apotex says the matter
is res judicata and Roche is estopped by the principles of issue
estoppel from reopening the issue.
[23] In
my respectful view, there is no merit in this submission. As a matter of law,
issue estoppel only operates where the same question has been conclusively determined
between the parties. The estoppel extends to the
material facts and the conclusions of law or of mixed fact and law that were
necessarily, even if not explicitly, determined in the earlier proceedings.
See: Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460 at
page 481. Justice Reed neither explicitly nor necessarily decided whether the
prohibition proceeding was pending for the purpose of subsection 9(6) of the
1998 version of the Regulations. Rather, Justice Reed based her decision on
the Court’s inherent continuing jurisdiction to amend or annul the prohibition
order in response to changed circumstances. She also expressed the view the
prohibition order had, by its own terms, ceased to have any operative effect
with the issuance of the April 19, 1999 order that had declared the ‘671 patent
to be invalid. Thus, she granted the order dismissing the prohibition
proceeding “for greater certainty.” See: (1999) 167 F.T.R. 111 at paragraphs 8, 14 and 15.
[24] Without a prior determination of whether
the prohibition proceeding was pending for the purpose of subsection 9(6) of
the 1998 version of the Regulations, Apotex’ argument of issue estoppel must
fail.
Did the Judge err by
finding the prohibition proceeding was not pending as at March 11, 1998?
[25] Apotex
argues that to properly interpret the word “pending” as used in subsection 9(6)
of the 1998 version of the Regulations, it is necessary to consider the context
in which it is used. This includes the scheme and object of the 1998 version
of the Regulations, the purpose of the 1993 amendments to the Patent Act,
R.S.C. 1985, c. P-4, the Regulations as enacted and the 1998 amendments to the
Regulations. Apotex notes the Regulatory Impact Analysis Statement (RIAS)
which accompanied the original version of the Regulations showed an intention
to mitigate the automatic stay under the Regulations through the mechanism of section
8. This is said to evidence an attempt to balance the rights of the patentee
with the generic. The purpose of the 1998 amendments was to clarify and
streamline the Regulations. The RIAS accompanying the 1998 amendments also
commented on the need for balance between the patentee’s rights and the public
interest in ensuring that generic drug products enter the market as soon as
possible. The RIAS stated that a clearer indication was given to the Court
about the circumstances where damages could be awarded. The transitional
provision showed the intent that the new regulations were to apply to
applications commenced prior to the coming into force of the amendments:
applications that were still pending.
[26] Apotex
relies on Stroud’s Judicial Dictionary of Words and Phrases for the
proposition that a proceeding is pending “so long as the Court having original
cognizance of it can make an order on the matters in issue, or to be dealt
with, therein.” It also relies on a statement of Jessel M.R. from an 1882
insolvency case (In re Clagett’s Estate; Fordham v. Clagett
(1882), 20 Ch D 637 at 653) that a pending insolvency “includes every
insolvency in which any proceeding can by any possibility be taken. […] A cause
is said to be pending in a Court of justice when any proceeding can be taken in
it.” Apotex also points out that in a fraudulent conveyance action, litigation
remains pending after judgment until all acts necessary to make assets
available to creditors have been performed.
[27] Apotex
asserts that a broad interpretation of “pending” is consistent with Justice
Reed’s finding that the Court has continuing jurisdiction in prohibition
proceedings and with the intent behind the remedial amendments. Refusing to
apply the 1998 Regulations would, it argues, defeat that remedial intent.
[28] In
my view, the Judge correctly interpreted the transitional provision. In the
context of a legal proceeding, the plain and ordinary meaning of the words
“pending” or “pendantes” is a proceeding that is not yet finished. Here, at
the time of the 1998 amendments a final order had been pronounced in the
prohibition proceeding. Apotex had made two allegations in respect of the ‘671
patent. They were, first, that the patent did not fall within the scope of the
Regulations and, second, that its product would not infringe the patent. The
Court had found both allegations to be unjustified. That decision was affirmed
on appeal. The Judge’s decision properly gives effect to the dismissal on the
merits of the prohibition proceeding.
[29] With
respect to the definitions relied upon by Apotex, the Court’s inherent
jurisdiction to vary or set aside an order on the basis of changed
circumstances cannot have been intended to make prohibition proceedings
permanently pending. This would mean that all prohibition proceedings brought
under the Regulations would be perpetually pending under the transitional
provision, with the consequence that an innovator would be exposed to
unforeseen liability years after successfully prosecuting prohibition
proceedings. Clearer language would be required to effect that result.
Did the Judge err by
construing the 1993 version of the Regulations to prevent Apotex from
recovering damages?
[30] Apotex
does not take issue with the Judge’s synthesis of the applicable principles of
statutory interpretation. It says, however, that his interpretation was faulty
for the following reasons.
[31] First,
Apotex argues there are several issues the Judge’s interpretation fails to
resolve. They are:
·
He
recognized the Minister need not delay in granting a Notice of Compliance if
the patent has expired, but he did not resolve the quandary created by the fact
that section 8 appears to impose liability only where the minister delays in
issuing a Notice of Compliance “beyond the expiration of all patents”.
·
He
did not resolve why there would be liability if a prohibition order has been
issued (as section 8 incorporates subsection 6(1)). This leads to the absurd
result that a generic could only recover damages if it fails in a prohibition
application.
·
The
Judge’s interpretation only allows liability where there is an inexplicable
delay by the Minister after the expiry of a patent. The Judge did not explain
why the first person and not the Minister would be liable for such a delay.
[32] Beyond
this, Apotex argues the Judge also found that “expiry” of a patent could
include a declaration of invalidity in the context of prohibition proceedings.
However, summary proceedings under the Regulations cannot result in a finding
of invalidity. This also leads to an inconsistency whereby damages would be
available for invalidity, but not for non-infringement.
[33] Apotex
submits that its own interpretation of section 8 avoids these absurdities. It
says the language in section 8 of the 1993 Regulations refers to a situation in
which more than one patent is on the patent list and prohibition orders have
issued for one or more of the other patents, not the one in which the generic
brings the section 8 action. In the present case, since there are no other
relevant patents or prohibition orders, the Notice of Compliance would have
issued on July 21, 1995 had the statutory freeze not been in effect at that
point. Until April 30, 1999, the Minister was prevented from issuing a Notice
of Compliance by the prohibition proceeding. Apotex therefore states that it
is entitled to damages throughout that period.
[34] This
Court has previously observed that section 8 as contained in the 1993 version
of the Regulations is particularly obscure in its meaning. See: Merck
Frosst Canada Inc. v. Canada (Minister of National
Health and Welfare) (1994), 169 N.R. 342 (F.C.A.). It may well not
be possible to find an interpretation that resolves all the contingencies that
may be posed.
[35] I
agree with Apotex that the Judge’s reference to a patent being “declared
invalid in the context of the relevant NOC application itself” was not an
accurate statement because no such declaration may be made in a prohibition
proceeding. That said, I am satisfied the Judge’s language was inadvertent and
not a material error. The situation the Judge was addressing was where, in a
prohibition proceeding under the Regulations, the Court found an allegation of
invalidity to be justified. With that clarification, in my view, the Judge
correctly interpreted section 8 of the 1993 version of the Regulations in the
context of the unique facts before him.
[36] Under the 1993 version of the Regulations,
when an innovator commenced a proceeding seeking a prohibition order it
obtained the equivalent of an interlocutory injunction prohibiting the issuance
of a notice of compliance for up to 30 months. The innovator need not have
satisfied the criteria for obtaining injunctive relief and no undertaking for
damages was required. In that circumstance, section 8 of the Regulations was
intended to provide redress to the generic where the innovator failed to
establish that the generic’s allegations of invalidity or non-infringement were
not justified. In my view, section 8 was not intended to provide redress where
the innovator prevailed in the prohibition proceeding, even if the generic was
later successful in patent litigation. It follows that I agree with the Judge
that Apotex can not “reach back and apply the finding of invalidity in the
action so as to argue that the ‘671 patent had ‘expired’ within the
meaning of section 8” of the 1993 version of the Regulations.
[37] I
do not find the interpretation of the Regulations advanced by Apotex to be
correct because it would require extensive judicial re-writing of section 8.
Further, as noted by Apotex at paragraph 62 of its memorandum of fact and
law, Apotex’ interpretation requires that no prohibition order issue on the
patent in respect of which the section 8 action is brought. Here a prohibition
order did issue with respect to the patent which forms the basis of the section
8 action.
Conclusion
[38] For these
reasons, I would dismiss the appeal with costs payable by Apotex to Roche.
“Eleanor
R. Dawson”
“I
agree.
John M. Evans J.A.”
“I
agree.
David
Stratas J.A.”
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