Date: 20150109
Docket: A-92-14
Citation:
2015 FCA 3
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CORAM:
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DAWSON J.A.
STRATAS J.A.
NEAR J.A.
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BETWEEN:
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BRISTOL-MYERS SQUIBB & GILEAD SCIENCES, LLC AND MERCK SHARP
& DOHME CORP.
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Appellants
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and
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TEVA CANADA LIMITED AND THE MINISTER OF HEALTH
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Respondents
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REASONS
FOR JUDGMENT
NEAR J.A.
I.
Introduction
[1]
Bristol-Myers Squibb & Gilead Sciences, LLC
and Merck Sharp & Dohme Corp. (collectively, the appellants) appeal from
the January 13, 2014 judgment of the Federal Court (2014 FC 30) dismissing
their application made under s. 6 of the Patented Medicines (Notice of
Compliance) Regulations, SOR/93-133 (PMNOC Regulations). In the
application, the appellants sought an order prohibiting the Minister of Health
from issuing a Notice of Compliance to Teva Canada Limited for a generic
version of the appellants’ combination anti-retroviral medicine marketed under
the brand name Atripla.
[2]
The appellants’ application was made in response
to a Notice of Allegation (NOA) dated December 22, 2011, in which Teva asserted
that its proposed product would not infringe Canadian Letters Patent 2,279,198,
which is owned by Merck and licensed to the other appellants. Teva also alleged
that the Patent is invalid.
II.
Federal Court Decision
[3]
The Federal Court found that the appellants had
failed to prove on the balance of probabilities that the Teva tablets will
infringe the Patent. Based on its assessment of the expert evidence, the
Federal Court was not satisfied that the Teva tablets contain Form I efavirenz,
the compound claimed in the Patent.
[4]
In particular, the Federal Court found that the
appellants had failed to prove that the tests which they had conducted were a
reliable proxy for the process Teva used to manufacture its tablets. Among
other things, the Federal Court had concerns about: the lack of correspondence
between the grinding force applied in the appellants’ tests and the force
exerted by Teva’s process; the lack of particulars on the grinding force
applied in the tests; the failure of the appellants’ expert to observe the
tests; the addition of unnecessary heating steps into the tests; and the
failure to include excipients into the testing material. In finding these
facts, the Federal Court generally preferred the evidence of Teva’s expert over
that of the appellants.
III.
Issues
[5]
Before this Court, the appellants raise two
issues. First, they submit that the Federal Court failed to apply the proper
evidentiary standard. Second, they submit that the Federal Court failed to draw
an adverse inference against Teva for refusing to produce its tablets to the
appellants for testing.
IV.
Standard of Review
[6]
Contrary to the appellants’ submission, this
appeal does not raise extricable questions of law but, rather, questions of
mixed fact and law suffused by fact, and questions of fact. Therefore, the
appellants must demonstrate palpable and overriding error (Teva Canada
Limited v. Novartis Pharmaceuticals Canada Inc., 2013 FCA 244 at paras.
10-12, 451 N.R. 246, Housen v. Nikolaisen, 2002 SCC 33, at paras. 10,
36, [2002] 2 S.C.R. 235).
V.
Analysis
[7]
In my view, the Federal Court committed no
palpable and overriding error in concluding that the appellants’ testing
methods were not a reliable proxy for Teva’s manufacturing process, and that as
such, the appellants had not proven that the Teva tablets infringe.
[8]
As well, contrary to the appellants’ submission,
the Federal Court judge applied throughout the correct burden of proof, the balance
of probabilities (at para. 20). The Judge’s approach did not impose on the
appellants a burden that was impossible to meet.
[9]
At the hearing of this appeal, counsel for the
appellants placed significant emphasis on one alleged error of the Federal
Court in its application of the burden of proof. In particular, counsel
stressed that in applications brought under s. 6 of the PMNOC Regulations, the
second person (Teva) has an initial burden to put its allegations “into play” by presenting evidence sufficient to give
them an air of reality. Counsel argued that it is only after this burden is met
that the first person (the appellants) must prove, on the balance of
probabilities, that the allegations are not justified (at paras. 31-32,
appellants’ Memorandum of Fact and Law).
[10]
In support of this argument, the appellants
cited Pfizer Canada Inc. v. Apotex Inc., 2007 FC 26 at paragraphs 9, 12,
[2007] F.C.J. No. 36 (QL), aff’d 2007 FCA 195, 367 N.R. 98. However, in that
case, the Federal Court’s finding that the second person must present evidence
putting their allegations “into play” relates
solely to allegations of invalidity. It was necessary for the Federal Court to
make such a finding given the presumption of validity established by s. 43(2)
of the Patent Act, R.S.C. 1985, c. P-4 – without any evidence from the
second person, the legal position is that the patent is valid. However, in the
case at bar, the allegation is non-infringement, not invalidity. There is no
presumption in play and, thus, no initial onus on the second person to put
forward evidence.
[11]
Accordingly, I agree with Teva’s submission that
once it alleged in its NOA that “[t]he Teva Product will
not contain Form I nor is Form I used in the manufacture of the Teva Products”
(Appeal Book, p. 53), there was no further evidentiary burden on it; its
allegation of non-infringement was “in play.”
[12]
I also reject the appellants’ submission that
the Federal Court should have drawn an adverse inference against Teva for
failing to produce its tablets.
[13]
In declining to draw an adverse inference, the
Federal Court relied upon a number of facts before it. Among other things, it
found that the appellants were “better equipped than
most” to make the compound for testing purposes and could have done so
(footnote to para. 24). Also, Teva undertook not to assert that the material
obtained and tested by the appellants was different in character or composition
from Form Teva.
[14]
The decision of the Federal Court judge not to
draw an adverse inference is bolstered by the fact that production is not
required under s. 6(7) of the PMNOC Regulations.
[15]
In my view, the appellants have failed to
demonstrate any palpable and overriding error on the part of the Federal Court
judge on this point.
Conclusion
[16]
Therefore, for the foregoing reasons, I would
dismiss the appeal, with costs.
"David G. Near"
“I agree.
Eleanor
R. Dawson J.A.”
“I agree .
David Stratas J.A.”
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