Docket: T-365-14
Citation:
2016 FC 1091
Ottawa, Ontario, September 28, 2016
PRESENT: Madam Prothonotary Mireille Tabib
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BETWEEN:
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NOVARTIS
PHARMACEUTICALS CANADA INC.
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Applicant
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and
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MYLAN
PHARMACEUTICALS ULC AND
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THE MINISTER OF
HEALTH
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Respondents
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and
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NOVARTIS AG AND
LTS LOHMANN THERAPIE-SYSTEME AG
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Interveners
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ORDER AND REASONS
[1]
A protective order was issued on consent of the
parties in the context of this application for a prohibition order, brought
pursuant to the Patented Medicines (Notice of Compliance) Regulations
SOR/93-133 (the “PM(NOC) Regulations”). This order covers Mylan’s
information concerning its proposed rivastigmine transdermal patch, including
any samples that may be provided voluntarily or by compulsion of a Court order,
and any testing or analysis performed on or with such samples. It provides that
Mylan’s information “shall be used solely for this
proceeding as well as any appeal or other proceeding related thereto”.
[2]
This application was resolved on consent of the
parties in August 2015. Novartis now moves for an order amending the protective
order so that it may use the samples it obtained from Mylan and the expert
affidavits setting out the results and analysis of tests performed on those
samples for the purposes of litigation taking place in Portugal between it and
a company related to Mylan, involving the same rivastigmine transdermal
patches. Mylan opposes the motion.
[3]
One of the key factual issues in this
application was whether Mylan’s patch contains an antioxidant. Mylan alleged
that it does not. Novartis sought production of samples so that it could test
them for the presence of antioxidants. Mylan initially refused. It is well
known that under the PM (NOC) Regulations, production of samples can
only be compelled if the generic has submitted samples of its product to the
Minister of Health as part of its application for an NOC. Novartis did not
attempt to compel production of samples under the PM (NOC) Regulations.
Rather, it deduced from publicly available information that Mylan’s patches
were manufactured in the United States, and it applied to the courts of that
jurisdiction for a show cause order as to why a subpoena for production of
samples should not be issued in aid of the Canadian proceedings. In the materials
filed in support of that request, Novartis states that: “Novartis Canada intends to use the information obtained in
response to the subpoenas solely to assist the Canadian Federal Court in
resolving the Canadian Litigation”. The show cause hearing did not take
place. Mylan consented to producing the samples in the PM(NOC) proceedings,
subject to the existing protective order.
[4]
It is worth noting that the Portuguese
proceedings, for the purposes of which Novartis seeks to use the samples, were
already pending at that time.
[5]
I understand from the evidence filed by the
parties on this motion that the Portuguese proceeding is a statutorily mandated
arbitration between Novartis and a corporation related to Mylan, and that its
purpose is similar to that of Canadian PM(NOC) proceedings: it is a proceeding
designed to determine whether the patch which the Mylan entity seeks to market
in Europe would infringe Novartis’ European patent. One of the key factual
issues in dispute in the Portuguese proceeding is whether the patch at issue
contains an antioxidant.
[6]
The evidence before me shows that that is it is
very likely that the patch at issue in the Portuguese proceeding is
manufactured by the same facility and with the same process and formula as the
patch that was at issue in this application. The evidence led by Novartis on
this issue is not conclusive because most of the evidence from the Portuguese
proceeding is covered by a strict confidentiality order. However, Mylan has
access to all of the evidence and is free to use it as it wishes, but it chose
not to adduce any evidence to contradict the circumstantial evidence led by
Novartis as to the identity of the patches. I draw from this an adverse
inference and conclude that the patches at issue in both proceedings are the
same.
[7]
The evidence before me shows that samples of
Mylan’s patch were produced in the Portuguese arbitration, but that under the
applicable procedural rules, testing is conducted by an independent laboratory,
according to a protocol designed by a jointly selected expert. Novartis is
dissatisfied with the protocol that was adopted and has tried several times to
have the joint expert authorize tests similar to those Novartis conducted in
the Canadian PM(NOC) proceedings. Its request has been refused every time and
that is why Novartis wants to introduce the testing evidence constituted in
this matter directly in the Portuguese proceeding. There is no guarantee that
the Portuguese arbitration panel will permit that evidence to be adduced. In
the end, the question of the relevance and admissibility of the Canadian
testing evidence for the purposes of the Portuguese proceeding would be a
matter to be determined by the Portuguese arbitrators. The question, however,
does not arise so long as Novartis is precluded by the terms of the protective
order from using the Canadian testing evidence for the purposes of the
Portuguese proceeding, hence the present motion.
[8]
Novartis submits that the test to be applied to
this motion is the test applicable to motions to be relieved from the implied
undertaking rule, as set out in Juman v Doucette, 2008 SCC 8. According
to Mylan, the applicable test is the test that was developed in Smith, Kline
and French Laboratories Ltd v Canada (Attorney General) (1989) 24 CPR (3d)
484, aff’d 74 CPR (3d) 165, and subsequently applied in Faulding (Canada)
Inc. v Pharmacia Italia & Upjohn S.P.A. 2004 FC 1273 and Astrazeneca
Canada Inc. v Canada (Minister of Health), 2004 FCA 226. Under this test,
Novartis has to establish a change in circumstances or a compelling reason not
directly considered when the order was given.
[9]
I am satisfied that the appropriate test to
apply here is the strict test of Smith, Kline and French. That is
because the production of the samples in this case was entirely voluntary.
Absent evidence that Mylan had submitted samples to the Minister of Health (and
none has been submitted), Novartis could not have compelled Mylan to produce
samples. The implied undertaking rule is designed to protect from use for other
purposes information disclosed during discoveries. The implied undertaking rule
is meant, in part, to encourage parties to provide full and frank disclosure of
all relevant evidence. Parties are, however, obliged by the rules of the court
to produce on discovery all relevant evidence and information. The implied
undertaking rule therefore is not intended as an incentive for parties to
produce information that they could otherwise choose to withhold: it is there
to facilitate and foster compliance by the parties with their disclosure
obligations. It is accordingly appropriate that the test for lifting the
implied undertaking rule be more liberal than the test for modifying protective
orders negotiated by parties and issued by the Court in circumstances where
parties might have been entitled to withhold production of information. My
determination might have been quite different if the information at issue had
been contained in documents that could have been compelled, such as Mylan’s
ANDS; I do not, however, need to make that determination here.
[10]
The protective order negotiated by the parties
in this case stipulated that Mylan’s information could not be used otherwise
than for the purposes of this application, any appeals therefrom or proceedings
related thereto. It is clear that the Portuguese litigation is not a proceeding
related to this application. If that was the case, Novartis would not need to
apply for a variation of the protective order. The words “proceedings related thereto”, as used in the
protective order, clearly mean litigation or proceedings that are related to
the prohibition application and not litigation or proceedings that relate to
the same product, to a related or corresponding patent or to similar factual
issues. The Portuguese arbitration may concern the same product, related
parties and a related patent but it is not a litigation that is related to the
prohibition proceeding: It is completely independent from the prohibition
application; it proceeds independently; the determination of this application
does not affect the Portuguese litigation and the determination of the
Portuguese litigation does not affect this application; the two proceedings
have no consequences on each other nor do they give rise to rights that may be
recognized, enforced or contested through the other proceeding.
[11]
At the time the protective order was negotiated
between the parties in this proceeding, Novartis was aware of the existence of
the Portuguese proceedings; the potential relevance of the samples obtained for
the purpose of the Canadian proceeding to the issues raised in the Portuguese
proceedings might not have been as clear as it is now, but it was conceivable.
Accordingly, there is no change in circumstances that could justify a variation
of the protective order.
[12]
Novartis argues that it could not have known at
the time that the samples it obtained from Mylan were in fact relevant to the
Portuguese proceedings because it had not been able to confirm that the patches
were the same until recently. I am not persuaded that this is the case.
Novartis applied for a show cause order in the United States on the basis of
the same public information that Novartis now tenders before this Court to show
that the patches at issue are likely to be the same because they are
manufactured in the same facility. Novartis could equally have used that
information at the time to reach the same conclusion in respect of the European
product. Obtaining additional information to corroborate or even confirm a
deduction that could have been made at the time does not constitute a change in
circumstances. I am satisfied that Novartis has not met the strict test in Smith,
Kline and French.
[13]
Novartis submits that Mylan’s production of the
samples was not truly voluntary. It argues that “the writing was on the wall”
as to whether Mylan would be compelled to produce samples of its patches,
because it had been successful in obtaining a show cause order in the United
States and that there was little Mylan could do to avoid the issuance of a
subpoena. That argument does not assist Novartis. Had the samples been
compelled through completion of the US subpoena process, rather than
voluntarily and subject to the protective order already issued in the Canadian
proceedings, the statement of intention contained in Novartis’ submissions to
the US court would have been equally restrictive: Novartis had represented to
the US court that it intended to use the samples solely to assist the Canadian
court in determining the prohibition proceeding pending before it.
[14]
If I am wrong and the strict test of Smith,
Kline and French is not applicable or has been displaced in favour of the
test in Juman v Doucette, I still conclude that this is not a case where
the protective order ought to be varied to permit the use of the Canadian evidence
in the Portuguese litigation.
[15]
Juman v Doucette
does not set out a list of criteria to be considered. Rather, it requires
careful weighting of the public interest asserted by the person seeking relief
against the public interest in maintaining the confidentiality of the
information. “What is important is the identification
of the competing values, and the weighting of one in light of the others,
rather than setting up an absolute barrier to occasioning “any injustice to the
person giving discovery”” (at para 33).
[16]
There is a public interest in ensuring that
when, as here, parties arrive at an agreement on disclosure to avoid
litigation, such that disclosure is volunteered on terms that include a
protective order, the terms of the protective order not be modified unless
there is a compelling reason to do so. The parties negotiated the terms of this
protective order to include appeals from the application and litigation related
to it. Extending those exceptions to any litigation between the same or related
parties on the same or related facts, merely on the basis that there can be no
prejudice to the producing party, would cause parties to lose confidence in
their ability to rely on the negotiated terms of protective orders. It would
either lead to protracted and sterile debates as to more restrictive wordings
for protective orders, or discourage parties from volunteering information in
one litigation unless they have completed a full analysis of the risk to which
disclosure might expose them in other unrelated litigation.
[17]
I am not satisfied that there is, on the other
hand, a genuine public interest in allowing Novartis to use the evidence for
the purposes of the Portuguese proceedings. This is not a case where the
maintenance of confidentiality would allow Mylan to be less than truthful in
another litigation or to present different facts or different versions of the
same facts to different courts. Novartis does not simply want to use the
evidence for the purpose investigating the facts or to get at the truth by
verification or cross-examination. It wants to use the Canadian evidence as
part of its evidence in the Portuguese proceedings.
[18]
Novartis argues that the interest of justice
would be served by allowing it to use the evidence for the purpose of the Portuguese
litigation because without it, the Portuguese arbitrators would be deprived of
complete and relevant evidence. The evidence shows, however, that the
Portuguese tribunal had access to samples and could have, under its own rules,
authorized the tests suggested by Novartis. While it is not for this Court to
comment on whether the Portuguese arbitrators should permit the use of the
Canadian evidence before them, it is not obvious how the public interest would
be served by assisting Novartis’ attempts to shoehorn the expert evidence
constituted in this application into another proceeding where the processes for
adducing expert evidence did not contemplate it.
[19]
Finally, the interest of justice is not served
by encouraging the collateral use of evidence constituted under the rules and
for the specific purposes of one proceeding in a different proceeding governed
by different rules where it would have been possible for a party to proceed by
direct means. Novartis obtained the samples it tested for this proceeding by
leveraging a specific US court process. At that time, Novartis clearly declared
to the US court its intended use for the samples. There is no indication on the
record before me that Novartis could not have used the same process to obtain
from the US court an order for production of samples for the direct and
declared purpose of the Portuguese proceedings, and that it could not then have
tested the samples and constituted the evidentiary record it needs in
compliance with any applicable rules of the Portuguese arbitration. Novartis
has not explained why it did not use that route. In the circumstances, I am not
satisfied that what Novartis proposes to do is a particularly fair use of this
Court’s process and I find that the public interest is better served by
dismissing Novartis’ motion to vary the terms of the protective order.
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