Mayne Pharma (Canada) Inc. v. Aventis Pharma Inc., 2005 FCA 50

Date: 20050204

Docket: A-372-04

Citation: 2005 FCA 50

CORAM:        Desjardins J.A.

Nadon J.A.

Pelletier J.A.

BETWEEN:

                                               MAYNE PHARMA (CANADA) INC.

                                                                                                                                            Appellant

                                                                           and

                                                        AVENTIS PHARMA INC.

                                                                           and

                                                    THE MINISTER OF HEALTH

                                                                                                                                      Respondents

                                       Heard at Ottawa, Ontario, on December 14, 2004.

                                Judgment delivered at Ottawa, Ontario, on February 4, 2005.

REASONS FOR JUDGMENT BY:                                                                                NADON J.A.

CONCURRED IN BY:                                                                                          DESJARDINS J.A.

                                                                                                                                 PELLETIER J.A.

Date: 20050204

Docket: A-372-04

Citation: 2005 FCA 50

CORAM:        Desjardins J.A.

Nadon J.A.

Pelletier J.A.

BETWEEN:

                                               MAYNE PHARMA (CANADA) INC.

                                                                                                                                            Appellant

                                                                           and

                                                        AVENTIS PHARMA INC.

                                                                           and

                                                    THE MINISTER OF HEALTH

                                                                                                                                      Respondents

                                                    REASONS FOR JUDGMENT

Nadon J.A.

[1]                This is an appeal from an order of Mr. Justice Simon Noël of the Federal Court, dated July 5, 2004, made in the context of an application for prohibition under section 6 of the Patented Medicines (Notice of Compliance) Regulations, SOR-133 as amended (the "Regulations"). Noël J. allowed a motion of the respondent Aventis Pharma Inc. (the "respondent") to strike paragraphs 22 to 25 and paragraphs 71 to 75 of the June 7, 2004 affidavit of Professor Tony Durst, an affiant for the appellant Mayne Pharma (Canada) Inc. (the "appellant").

[2]                At issue between the parties on the merits of the case is whether the Minister of Health should be prohibited from granting to the appellant a notice of compliance under section C.08.004 of the Food and Drug Regulations, which would allow it to market the drug cefotaxime sodium. More particularly, the question is whether the appellant's process for preparing cefotaxime sodium infringes the respondent's Canadian patent 1,319,682 (the " '682 patent") and/or whether the '682 patent is invalid.

[3]                Following the procedure established under the Regulations, Mayne Pharma, the "second person", submitted a Notice of Allegation ("NOA") alleging non-infringement and invalidity of the '682 patent. Under paragraph 5(3)(a) of the Regulations, a person filing an NOA shall "provide a detailed statement of the legal and factual basis for the allegation". This detailed statement frames the issues in debate and allows the applicant patent holder, the first person, to prepare its application for prohibition under s.6 of the Regulations. The prohibition proceedings under s.6 are summary in nature, and proceed on the basis of affidavit evidence.

[4]                Noël J. concluded that the impugned paragraphs of Dr. Durst's affidavit ought to be struck on the basis of this Court's decision in A.B. Hassle v. Canada (Minister of National Health and Welfare) (2000), 7 CPR (4^th) 272. In his view, since the impugned paragraphs of Professor Durst's affidavit were not directed to factual issues which had been divulged in the applicant's detailed statement accompanying its NOA, they could not be relied on.

[5]                At paragraphs 22 to 25 of his affidavit, Professor Durst deals with the question of whether the compound cefotaxime sodium, as described in paragraph 6 of the appellant's NOA, is defined by the claims of Canadian patent 1,216,284 (the " '284 patent"), and concludes that it is.

[6]                At paragraphs 71 to 75 of his affidavit, Professor Durst opines that the appellant's process for preparing the compound cefotaxime sodium is distinguishable from the process claimed in claim 49 of the respondent's '682 patent by reason, inter alia, of the use of the compound DAMA in an acylation reaction, thus alleviating the need for a protective group. In Professor Durst's opinion, since this reaction scheme is disclosed in a patent that issued approximately 15 years after the '682 patent, namely U.S. patent 5,567,813 (" U.S. patent '813"), it cannot be said that the reaction scheme is a functional derivative within the scope of the process defined in claim 49 of the '682 patent.

[7]                There are therefore two issues before this Court. First, what is the proper standard of review of Noël J.'s decision? Second, on that standard, did Noël J. err in striking paragraphs 22 to 25 and 71 to 75 of the Durst affidavit on the grounds that they contained new facts not supported by Mayne's detailed statement?

Relevant Legislation

[8]                Sections 5 and 6 of the Regulations read as follows:

[9]                There can be no doubt that the standard of review of discretionary decisions of a Motions Judge is that set out by this Court in Jansen Pharmaceutica v. Apotex Inc. (1998), 82 C.P.R. (3d) 574, where Décary J.A., writing for the Court, stated as follows:

[2]           In order to succeed in matters such the present one, the appellants must establish that the judge has proceeded on some wrong principle of law or has seriously misapprehended the facts, or that an obvious injustice would otherwise result (see Pharmacia Inc. v. Canada (Minister of National Health and Welfare) (1994), 58 C.P.R. (3d) 209 (F.C.A.) at 213).

[10]            The appellant accepts this standard, but submits that the Motions Judge erred in law in refusing to defer the motion before him to the judge who will hear the respondent's application for an order of prohibition on the merits. The appellant argues that affidavits, or portions thereof, should not normally be struck out on an interlocutory motion, since it is now settled jurisprudence in this Court that questions of admissibility and relevance of affidavit evidence must be left to the judge who will ultimately hear the judicial review application on the merits. For that proposition, the appellant relies on a number of Federal Court decisions and on two decisions of this Court, namely, Pharmacia Inc. v. Canada (Minister of National Health and Welfare), 58 C.P.R. (3d) 209, and P.S. Partsource Inc. v. Canadian Tire Corp. (2001), 11 C.P.R. (4^th) 386.

[11]            Before the Court in Pharmacia, supra, was an appeal from a judgment of Mr. Justice Marc Noël (as he then was), who had dismissed an application to strike out an originating notice of motion. In dismissing the appeal, Strayer J.A., writing for the Court, made it clear that we should not interfere with a Motions Judge's exercise of discretion, such as in a refusal to strike, unless he had proceeded on a wrong principle of law or had seriously misapprehended the facts, or unless an obvious injustice would result.

[12]            After having disposed of the matter before the Court, Strayer J.A. strongly suggested that the proper way of contesting an originating notice of application was to appear and argue the case at the hearing on the merits. In his view, as judicial review applications provide strict timetables leading to a hearing on the merits, the role of the Court in those proceedings is to ensure that there are no undue delays. More so in the case of applications for prohibition under the Regulations, where there is a clear indication that the matters brought thereunder should be disposed of expeditiously.

[13]            In Partsource, supra, the issue before the Court was the dismissal by a prothonotary of a motion seeking to strike out a paragraph in an affidavit on the ground that the statement contained therein was not based on personal knowledge. In allowing the appeal and in reversing the Motions Judge's dismissal of the appeal from the prothonotary's decision, the Court, at paragraph 18 of its Reasons, made the following statement:

[18]         Nonetheless, I would emphasize that motions to strike all or parts of affidavits are not to become routine at any level of this Court. This is especially the case where the question is one of relevancy. Only in exceptional cases where prejudice is demonstrated and the evidence is obviously irrelevant will such motions be justified. In the case of motions to strike based on hearsay, the motion should only be brought where the hearsay goes to a controversial issue, where the hearsay can be clearly be shown and where prejudice by leaving the matter for disposition at trial can be demonstrated.

[14]            In Jansen, supra and in Pharmacia, supra, our Court reviewed discretionary decisions of Motions Judges on the basis that these decisions should not be interfered with unless the judge had proceeded on a wrong principle, or had misapprehended the facts, or that an obvious injustice would result from his decision. In both cases, after having disposed of the issue before it on the aforesaid standard, the Court reminded litigants that because proceedings brought under the Regulations were summary in nature and raised complex and technical questions of fact, Motions Judges had the discretion to defer such motions to the hearing judge "whenever he or she is of the view that the motion would be more efficiently dealt with at that stage" (Jansen, supra, at paragraph 6).

[15]            Neither case stands, as the appellant submits, for the proposition that a judge must defer such a motion to the hearing judge. If the Motions Judge disposes of the motion before him, as Noël J. did in the present matter, that decision will be reviewed on the basis of the applicable standard. The same comments can be made of our decision in Partsource, supra. Indeed, in that case, in allowing the appeal, the Court overturned the prothonotary who had refused to strike a paragraph in an affidavit. At paragraph 18 of its reasons, on which the appellant relies, the Court offers the same words of caution to litigants as those that were offered in Jansen, supra and in Pharmacia, supra.

[16]            Although this Court has stated in unequivocal terms that this type of motion should preferably be deferred to the hearing judge, it has not held, as a matter of principle, that Motions Judges must defer such motions to the hearing judge. Thus, a Motions Judge will not be found to have erred in law if he or she decides to deal with the motion. Whether or not, in a given case, the Motions Judge has made a reviewable error will be dealt with on the basis of the applicable standard of review. I should add that this Court has also made it clear that it will rarely interfere with a Motions Judge's decision to defer the matter to the hearing judge.

[17]            Consequently, I must conclude that Noël J. made no error of law in refusing to defer the motion to the judge who will hear the matter on the merits.

[18]            The appellant also argues that Noël J. misapprehended the evidence when he concluded that the impugned paragraphs constituted new facts. In its submission, this over extension of the rationale of A.B. Hassle, supra, effectively precludes the ability of a second person to reply to the case advanced by the first person. The appellant submits that unlike A.B. Hassle, supra, this is not a case where the second person is seeking to supplement its Rule 307 evidence, leading to prejudice against the first person. Rather, in the appellant's view, paragraphs 22 to 25 of Professor Durst's affidavit pertain to a factual element (the '284 patent) specifically raised in its NOA and paragraphs 71 to 75 constitute a reply to the respondent's expert, Dr. Wuest.

[19]            As I indicated at the outset, Noël J., in concluding as he did, relied on this Court's decision in A.B. Hassle, supra. In that case, the respondent generic drug manufacturer, in responding to the patentee's evidence in support of its application for an order of prohibition, filed expert evidence on the issue of obviousness and relied on references to prior art, most of which had not been listed in the detailed statement and which did not refer to the main reference relied on therein. In allowing the patentee's appeal from the Motions Judge's refusal to prevent the respondent from relying on prior art references not indicated in the detailed statement, Stone J.A. , for the Court, at paragraphs 16, 17, 19, 20, 21, 23 and 24 of his reasons, explained the nature and purpose of the detailed statement accompanying the NOA in the following terms:

[16]         It seems to me that a key to the determination of this appeal is an appreciation of the role played by a detailed statement within the scheme of the Regulations. As has been indicated, that statement is to be provided before a section 6 prohibition proceeding can be contemplated by the affected patentee. It serves the purpose of notifying the patentee that, in the view of a second person, a patent listed by the first person pursuant to section 4 of the Regulations will not be infringed or, alternatively, that the patent is invalid. [...]

[17]         Indeed, this Court has recognized that the detailed statement must be such as to make the patentee fully aware of the grounds for claiming that the issuance of an NOC would not lead to infringement of a listed patent for, otherwise, the patentee would be unable to decide whether or not to initiate a section 6 proceeding. Thus in Bayer AG, supra, at 337-338, Mahoney J.A. stated:

One further matter warrants comment. Section 5(3)(a) of the Regulations requires that the applicant for the NOC provide a detailed statement of the basis in fact and law of his statement of allegation. It seems intended that the patentee be fully aware of the grounds on which the applicant says issuance of a NOC will not lead to infringement of the patent before the patentee decides whether or not to apply to a court for a determination. Such disclosure would define the issues at a very early stage.

[...]

[19]         The detailed statement is not a pleading per se but represents a pivotal step in the process leading up to the issuance of an NOC. [...]

[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.

[21]         In my view, all of these considerations suggest that a second person must do what, in fact, paragraph 5(3)(a) requires, i.e. set forth in the detailed statement "the legal and factual basis" for the paragraph 5(1)(b ) allegation and to do so in a sufficiently complete manner as to enable the patentee to assess its course of action in response to the allegation. [...]

[23]         The respondent suggests that the list of prior art in the detailed statement was not intended to be exhaustive, hence the presence of the word "including", so that the way was left open to add to that list in the section 6 proceeding. I am of the view, however, that paragraph 5(3)(a ) does not contemplate such possibility. The intent 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. This Court has cautioned persons in the position of the respondent that they assume a risk that a particular allegation may not be in compliance with the Regulations and that the deficiency cannot be cured by the Court in a section 6 proceeding. [...]

[24]         [...] This Court decided in Hoffmann-LaRoche Ltd. v. Canada (Minister of National Health and Welfare) (1996), 70 C.P.R. (3d) 1, that a second person could not in a section 6 proceeding add to the facts that were set forth in its detailed statement. [...]

                                                                                                                   [Emphasis added]

[20]            The scheme established by the Regulations is unusual. Section 6(2) of the Regulations provides that the Court "shall make an order... in respect of a patent which is the subject of one or more allegations if it finds that none of those allegations is justified". The allegations are framed by the respondent (the second person) but the application for prohibition is brought by the first person, the patent holder. Consequently, the patent holder must frame its application so as to demonstrate that none of the allegations made by the second person is justified. It may be that there are other grounds for holding that the sale of the subject medicine would infringe the patent(s) but the first person is forced to deal with the allegations made in the detailed statement.

[21]            If the applicant patent holder must plead to the grounds raised in the detailed statement, even though other grounds of infringement may exist, it is patently unfair to allow the respondent to raise different grounds of infringement in its evidence in reply to the application for prohibition. The respondent, the second person, sets the parameters of the dispute in its detailed statement. It cannot then change those parameters after the applicant for prohibition, the first person, has framed its application to address the issues raised by the detailed statement.

[22]            Whether, in a given case, the detailed statement of the legal and factual basis of a second person's NOA is "sufficiently complete ... as to enable the patentee to assess its course of action in response to the allegation ..." falls to be decided by the Motions Judge or the hearing judge, as the case may be. Unless the decision made in regard thereto is made on a wrong principle of law or by reason of a misapprehension of the evidence, it will not be interfered with.

[23]            I now turn to that issue. I commence with paragraphs 71 to 75 of Professor Durst's affidavit. With respect to these paragraphs, Noël J.'s order reads, in part, as follows:

Considering that the respondent Mayne did not include in the Notice of Application [sic], any factual reference or comments on US patent 5,563,813 as being similar to the Mayne process and that Professor Durst refers and comments on this new fact at paragraphs 71 to 75 of the Affidavit dated June 7, 2004;

[24]            In the paragraphs which precede paragraphs 71 to 75 of his affidavit, Professor Durst discusses the process used by the appellant to make cefotaxime sodium, specifically the choice of a protective group during the reaction scheme. He disagrees with the conclusion reached by the respondent's expert, Dr. Wuest, that the protective group used by the appellant's process would have been contemplated by the inventors of the '682 patent as an obvious equivalent. At paragraphs 71 to 75, Professor Durst opines that the appellant's process is taught by U.S. patent '813, including the selection of DAMA as an acylation reaction, and that, consequently, the appellant's process (including the selection of DAMA as an acylation reaction) was novel at a later date and could not have been contemplated by the inventors of the '682 patent.

[25]            I cannot conclude that Noël J. erred in concluding that the appellant could not rely on paragraphs 71 to 75 of Professor Durst's affidavit. U.S. patent '813 is a fact which should have been disclosed in the appellant's NOA, if the intention was to use it as a basis on which to argue non-infringement. This is not a question of replying to a new fact raised by the first person; it is, rather, an attempt by the appellant to provide an additional basis of non-infringement in the section 6 proceeding. In my view, this is precisely the kind of affidavit evidence to be struck pursuant to our decision in AB Hassle, supra: the existence of U.S. patent '813 could or should have been known to the appellant earlier and included in its NOA. To permit a new factual basis for the allegation of non-infringement at this stage would be to allow the appellant second person to improve its case in a "piecemeal fashion", an unfair result for the respondent first person. If the appellant intended to rely on U.S. patent '813 to argue that the protective group used by its process could not have been contemplated by the inventors of the '682 patent as an obvious equivalent, it was obligated, as per AB Hassle, supra, to disclose its position in the detailed statement. Consequently, I cannot find any error in the conclusion reached by Noël J.

[26]            I now turn to paragraphs 22 to 25 of the Durst affidavit. With respect to these paragraphs, Noël J.'s order reads, in part, as follows:

Considering that the respondent Mayne did not include the information in the Notice of Application [sic] that the compound cefotaxime sodium, as described at paragraph 6 of the said Notice, had been disclosed in the '284 patent and that Professor Durst includes this new fact at paragraphs 22 to 25 of the affidavit dated June 7, 2004. [...]

[27]            Paragraphs 22 to 25 of Professor Durst's affidavit respond to the question: "Is the compound cefotaxime sodium, as described in paragraph 6 of the NOA, defined by the claims of the '284 patent?" The appellant submits that the '284 patent is placed squarely in issue by the detailed statement. Specifically, at paragraphs 124 and 127 thereof, the appellant states an alternative to its allegation of non-infringement, namely that claims 49 and 50 of the '682 patent are not infringed by reason of being invalid, unenforceable or void, "having regard to processes for production of cefotaxime (and its salts) that have been disclosed and claimed in previously granted Canadian patent 1,216,284 and 1,121,343".

[28]            Claim 49 of the '682 patent is a process claim and claim 50 thereof is a compound claim. The respondent submits that the appellant did not allege the invalidity of the compound claims of the '682 patent and that if it intended to make such an allegation, it was bound to detail the specific factual and legal bases of that allegation in its detailed statement.

[29]            Noël J. concluded as he did because he was of the view that the appellant had not divulged in its detailed statement that the compound cefotaxime sodium had been disclosed in prior art, i.e. the '284 patent. In my view, that conclusion cannot stand. For the reasons that follow, I conclude that Noël J. misapprehended the evidence in concluding that the appellant could not rely on paragraphs 22 to 25 of Professor Durst's affidavit.

[30]            The issue of patent '284 arises out of the alternative plea made by the appellant in relation to a number of claims, namely 1 to 49, 50, 66 and 73 of the '682 patent. The allegation in relation to claim 1 (which is repeated with respect to the other claims) is found at paragraph 13(b) of the appellant's detailed statement, and reads as follows:

13. [...]

(b)           In the alternative, if it is contended that the Mayne process is within the scope of claim 1, then claim 1 is not infringed by reason is [sic] of being invalid, unenforceable or void, having regard to processes for production of cefotaxime and its salts that have been disclosed and claimed in previously granted Canadian patent 1,216,284 and 1,121,343.

[31]            If the appellant's argument is to have any force, there must be some proof that cefotaxime sodium is in fact produced by the processes described in the '284 and '343 patents. In my view, the respondent cannot claim to be taken by surprise if such proof was found in Professor Durst's affidavit. If one looks at his affidavit, the first three questions addressed are:

1.         Is the compound cefotaxime sodium, as described in paragraph 6 of the notice of allegation, defined by the claims of the '682 patent?

2.         Is the compound cefotaxime sodium, as described in paragraph 6 of the notice of allegation, defined by the claims of the '284 patent?

3.         Is the compound cefotaxime sodium, as described in paragraph 6 of the notice of allegation, defined by the claims of the '343 patent?

[32]            The affidavit methodically lays the foundation for the allegation found at paragraph 13(b) of the detailed statement by establishing that the process claims in the '682 patent produce cefotaxime sodium as described in paragraph 6 of the detailed statement, as do the processes claimed in both the '284 and '343 patent. This sets up the argument found at paragraph 13(b) of the detailed statement. None of this involves recourse to new facts which do not appear in the detailed statement.

[33]            When Professor Durst's comments at paragraphs 22 to 25 of his affidavit are read in their proper context, they cannot be found, as the Motions Judge did, to raise new facts, i.e. which are not found in the detailed statement. I understand Professor Durst to be saying in the impugned paragraphs that cefotaxime sodium, as described in claim 20 of the '284 patent, when prepared by the process of claim 1 of that patent, defines the cefotaxime sodium described in paragraph 6 of the NOA. In other words, Professor Durst's comments are there to support the challenge which the appellant makes in its detailed statement to the processes by which cefotaxime sodium is prepared.

[34]            Consequently, I am satisfied that there was clear evidence to support the appellant's contention that Professor Durst, at paragraphs 22 to 25 of his affidavit, does not raise facts which have not been disclosed in the detailed statement. I therefore conclude that the appellant's detailed statement was sufficiently complete so as to allow the respondent to respond fully to the appellant's allegations with regard to the possible invalidity of the '682 patent. As a result, the learned Motions Judge erred in concluding as he did.

[35]            I would therefore allow the appeal in part, set aside Noël J.'s order insofar as it allows the respondent's motion to strike paragraphs 22 to 25 of Professor Durst's affidavit and I would dismiss the respondent's motion to strike paragraphs 22 to 25 of that affidavit. As the appellant has succeeded in part only, I would make no order as to costs.

                                                                                         "M. Nadon"

                                                                                                       J.A

"I concur.

Alice Desjardins J.A."

"I agree.

J.D. Denis Pelletier J.A."

.

                          FEDERAL COURT OF APPEAL

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                       A-372-04

APPEAL FROM AN ORDER OF THE FEDERAL COURT OF CANADA DATED JULY 5, 2004, NO. T-2437-03.

STYLE OF CAUSE:                                       Mayne Pharma (Canada) Inc. v. Aventis Pharma Inc. et al.

PLACE OF HEARING:                                             Ottawa, Ontario

DATE OF HEARING:                                               December 14, 2004

REASONS FOR JUDGMENT:                                NADON J.A.

CONCURRED IN BY:                                              DESJARDINS, PELLETIER JJ.A.

DATED:                                                          February 4, 2005

APPEARANCES:

SOLICITORS OF RECORD: