Dockets: T-1056-16
T-998-16
Citation:
2016 FC 1099
Ottawa, Ontario, October 3, 2016
PRESENT: Madam Prothonotary Mireille Tabib
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Docket: T-1056-16
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BETWEEN:
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APOTEX INC.
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Plaintiff
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and
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SHIRE LLC AND
SHIRE PHARMA
CANADA ULC
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Defendants
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Docket: T-998-16
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AND BETWEEN:
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SHIRE PHARMA
CANADA ULC
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Applicant
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and
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APOTEX INC. AND
THE MINISTER OF
HEALTH
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Respondents
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and
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SHIRE LLC
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Respondent Patentee
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ORDER AND REASONS
I.
Background and overview
[1]
Shire LLC is the owner of Canadian Patent
2,547,646 (the ‘646 Patent) entitled “Abuse Resistant Amphetamine Compounds”,
said to cover Shire Pharma Canada ULC’s lisdexamfetamine dimesylate capsules
sold under the name Vyvanse. (Both Shire entities will collectively be referred
to below as “Shire”).
[2]
Apotex wishes to obtain a Notice of Compliance
to market and sell in Canada a generic version of Vyvanse. It therefore served
on Shire, in May 2016, a Notice of Allegation pursuant to the Patented
Medicines (Notice of Compliance) Regulations SOR/93-133 (the “PM (NOC) Regulations”)
alleging, inter alia, that the ‘646 Patent is invalid and that, in any
event, its proposed product would not infringe any claim of the Patent found to
be valid. In response to Apotex’s NOA, Shire filed an application for a
prohibition order pursuant to section 6 of the PM (NOC) Regulations in
Court file T-998-16 on June 24, 2016. Ten days later, Apotex commenced, in
Court file T-1056-16, an action against Shire seeking a declaration that the
‘646 Patent is invalid and that its proposed lisdexamfetamine dimesylate
tablets would not infringe any valid claim of the Patent.
[3]
Citing the need for the just, most expeditious
and least expensive determination of both proceedings on their merits, Shire
asks the Court to partially consolidate the proceedings, so that they are heard
at a common hearing, on common viva voce evidence, but subject to the
parties’ ability to argue the admissibility or relevance of evidence to one or
the other proceeding. Apotex opposes Shire’s motion.
[4]
Apotex has proposed another solution to Shire.
It proposes that Shire discontinue the prohibition application and that the
action continue to its conclusion, on the mutual understanding that, should
Apotex’s product become approvable, Apotex would remain out of the market until
a decision is rendered and Shire would give it an undertaking for damages
Apotex might thereby suffer. I will not further discuss Apotex’s proposal as
Shire has rejected it and as Apotex concedes that the Court does not have
jurisdiction to impose it without Shire’s consent. Apotex’s fallback position
is that both proceedings should continue to be litigated in parallel, to
separate hearings.
II.
Discussion
[5]
The grounds for invalidity and non-infringement
cited by Apotex in its NOA and in its action are the same and in that regard,
there is a substantial commonality between the facts at issue in both
proceedings. At the same time, it is common ground between the parties that
there are significant differences between the two proceedings in terms of the
causes of action, their effect, the burden of proof and the applicable
procedural rules.
[6]
In the normal course, the prohibition
application brought by Shire would proceed in a summary fashion, as an
application governed by Rules 300 and following of the Federal Court Rules
and by the particular regime of the PM (NOC) Regulations.
[7]
Under these rules, the commencement of the
prohibition proceedings operates as an interim injunction, preventing the
issuance of an NOC to Apotex for a period of up to 24 months; evidence is constituted
out of court by way of affidavits and cross examinations; typically, but not
always, Shire’s evidence would be constituted and served first; other than the
possibility of obtaining Apotex’s relevant ANDS filings, there are no
discoveries; there can be no amendments made by Apotex to the grounds for
invalidity or non-infringement cited in its NOA; unless an extension of time is
granted by the Court, either by consent or by reason of Apotex’s conduct, the
Court has 24 months in which to hear and determine the application; the burden
of proof rests on Shire, and requires it to establish that the allegations made
by Apotex in the NOA are not justified; the sufficiency of the NOA may be
contested, as can the validity of Shire’s listing of the’646 Patent in respect
of Vyvanse; the Court’s decision is not finally determinative of the validity
of the Patent or of whether it is infringed; either party may pursue a
different result in a subsequent action; finally, the dismissal or
discontinuance of the prohibition proceeding, for whatever reason, triggers a
right by Apotex pursuant to section 8 of the PM (NOC) Regulations to
seek damages for losses it has suffered as a result of the delay in obtaining
its NOC.
[8]
By contrast, in Apotex’s action for impeachment
or a declaration of non-infringement, Apotex bears the burden of proving that
the ‘646 Patent is invalid or would not be infringed; both parties have
extensive rights of discovery and Apotex may move to amend its statement of
claim to adapt its allegations to what it might learn on discovery; at trial,
each party can lead extensive viva voce evidence; Apotex as plaintiff
would typically lead its evidence first; the Court’s jurisdiction to determine
the action is not time-limited; while the Court endeavors to bring such actions
to trial within 24 months, a determination is rarely made before approximately
three years from the date of filing; subject to appeal, the results of the
action are final and binding on both parties; a finding that the Patent is
valid and infringed, if made subsequent to an unsuccessful prohibition
application, is not a complete defence to a claim for section 8 damages but may
substantially or completely reduce the damages awarded.
[9]
Even though they are summary proceedings,
prohibition proceedings conducted under the PM(NOC) Regulations require
significant time and expense. Substantial evidence from the inventors and from
numerous experts from both sides is typically marshaled, set out in lengthy and
voluminous affidavits and tested by cross-examination. Application Records,
often consisting of thousands of pages, are presented to the Court. The oral
argument alone routinely requires three to five hearing days, or almost as long
as the closing arguments in a full-fledged trial.
[10]
Conducting such proceedings in parallel with an
action involving the same patent and the same product represents a significant
challenge for both parties. Where the same parties, facts and science are
involved, using the same experts and counsel seems a logical and cost-saving
measure, but the task of coordinating the demands of two proceedings on the
time of counsel and experts can be onerous and lead to delays. Using different
counsel or experts facilitates coordination, but is duplicative of efforts and
costs. Whether the parties choose to use the same or different counsel and
experts, the evidence before me is to the effect that there are nine inventors
listed on the ‘646 Patent, none of whom are currently employed by Shire.
Coordinating their attendance and availabilities across two separate but
parallel proceedings is not a matter of choice.
[11]
Duplications and coordination issues arising
from the parallel proceedings affect the Court as well: it is the Court’s
practice to attempt to assign the same Judge to hear all proceedings involving
the same patent, as the Judge’s familiarity with the scientific background
greatly reduces the time needed for the Judge to learn and become familiar with
the basic, yet often extremely complex, scientific principles involved. Having
a three to five day prohibition application proceed in close proximity to a two
week trial on the same patent and the same drug either requires the Court to
block a single Judge’s time for several months or to assign two different
Judges to the hearings, with the attendant loss of efficiency.
[12]
Apotex does not disagree that running the two
proceedings in parallel is costly, onerous and duplicative for the parties and
the Court. It does not, however, agree that Shire’s proposal strikes an
appropriate balance between preserving all of the parties’ procedural and
strategic rights and avoiding duplication and waste.
[13]
The solution proposed by Shire through this
motion is one that was adopted in the case of Novartis Pharmaceuticals
Canada Inc. v Apotex Inc., 2013 FC 142 (“Gleevec”). In that case,
two actions and two prohibition applications involving two separate generics
but in relation to the same drug were commenced in close temporal proximity.
Pursuant to a case management order made on consent of the parties, the four
proceedings were partially consolidated so that instead of the applications
proceeding on the basis of affidavit evidence, they would be determined by the
same judge and on the basis of the evidence adduced at a joint trial of the
actions. Use of the viva voce evidence for determining the applications
was however subject to the parties’ arguments as to the evidence’s admissibility
and relevance for the purposes of each application, as defined and delineated
in the respective Notices of Allegations. All four proceedings were determined
after a single hearing consisting of only 14 days of evidence and five days of
argument.
[14]
It is very clear that proceeding in the same
manner here would equally significantly reduce duplications between the two
proceedings. The evidence would be adduced only once, viva voce, before
the Court. This would eliminate entirely the need for the parties to
prepare separate affidavits and to conduct cross-examinations for the purpose
of the application. It would also eliminate a significant source of potential
delay, in that the attendance of the inventors would need to be secured only
twice: once for discovery and once for an eventual trial.
[15]
This manner of proceeding does add an additional
layer of complexity. It can give rise to much debate as to whether parts of the
evidence adduced at trial falls outside the four corners of the Notice of
Allegation and must accordingly be ignored in determining the application. The
elimination of some portions of the evidence may result in different
evidentiary records being constituted, to which a different burden of proof
must be applied, resulting in potentially very complex arguments. The
difficulty and the time required of the parties and the Court to address this
added complexity however pales in comparison with the efficiencies and savings
gained from eliminating the parallel, written record.
[16]
Determining an application on the basis of
evidence adduced in open court also addresses a perennial source of frustration
on the part of the Court, who is being asked to consider, in so-called
“summary” proceedings, massive amounts of detailed and intricate technical
evidence in writing. In her judgment on the Gleevec applications,
Justice Snider had this to say about the process:
[33] The consolidation of the
Prohibition Applications with the Impeachment Actions meant that the
Prohibition Applications were dealt with somewhat differently than normally
would have been the case. Usually, an application under the PM (NOC)
Regulations proceeds as an application for judicial review in the Federal
Court. Expert and fact evidence is presented by way of affidavits with the
other side able to cross-examine on the affidavits. The Court is presented with
a mountain of expert and other affidavits, transcripts of cross-examination,
memoranda of fact and law and several days of oral arguments by lawyers.
Although the prohibition applications are considered to be summary proceedings,
the volume of material and the complexity of issues present great challenges to
the hearing judge (or, at least this judge). Because of the consolidation in
this case, most experts appeared in person to speak to their
"reports". The direct and cross-examinations of the experts and fact
witnesses, with the ability of the judge to clarify the evidence, was
invaluable. I am grateful to all parties and their counsel for their
cooperation and for their contributions to this process.
[17]
Apotex, who was one of the parties involved in Gleevec,
was less satisfied with its experience. It argues that the procedure was and
would be, if adopted again here, prejudicial to it as the generic party, for
the following reasons:
•
Hearing prohibition proceedings and impeachment
actions together has the effect of erasing the difference in the burden of
proof applicable to each proceeding, effectively robbing Apotex of the
advantage it enjoys in the prohibition proceeding, that it is Shire who has the
onus of showing that Apotex’s allegations are not justified. Apotex’s written
submissions argue that “the Court will devote less attention to the differing
burdens operative in the two proceedings and, instead, rely upon the standard
that governs actions for impeachment and infringement”.
•
Hearing the application and action together
deprives Apotex of the procedural advantages derived from the typical order of presenting
evidence in applications, whereby Shire would be required to serve its evidence
first and Apotex would be permitted to respond. The joint hearing would have
the effect of a reversal of the order of evidence (insofar as the issues in the
application are concerned), to Apotex’s prejudice.
•
Determining the prohibition application on the
basis of viva voce evidence rather than on a paper record and cross
examination out of court removes the tactical and strategic elements inherent
to the usual way of proceeding.
•
To the extent the prohibition application is
determined without due regard for the difference in the burden of proof, Apotex
loses the benefit of potential s. 8 damages that come from being successful on
an application, even when a subsequent action is determined in the innovator’s
favour.
[18]
I will consider each of these alleged causes of
prejudice in turn.
[19]
I do not accept Apotex’s argument that where the
Court is tasked with determining, on a common evidentiary record, the
respective rights of each party pursuant to two distinct legal processes
subject to different evidentiary burdens, it might be unable or unwilling to
properly apply the burden of proof, or that it might be unwilling or unable,
where the application of the evidentiary burden requires it, to reach a result
which is not uniform but is nevertheless appropriate to each process. Apotex
cited no evidence or authority to support its argument. It illustrated its fear
by referring to the case of Biovail Corporation v Canada (Minister of
Health) and Apotex Inc., 2010 FC 46, where Apotex succeeded in a
prohibition application specifically because of the application of the burden
of proof, the Court having expressly found the evidence to be evenly balanced.
That illustration does not assist Apotex. It seems to me that, were the Court
to find, on joint evidence adduced for the purposes of an impeachment action
and a prohibition application, that the evidence was equally balanced, it would
be particularly clear and easy for the Court to reach the correct result: the
generic would succeed on the application, but fail on the action.
[20]
The second form of prejudice cited by Apotex is
that the order sought by Shire would result in a de facto reversal of
the order of evidence. The Court, in the context of motions to reverse the
order of presenting evidence in PM(NOC) proceedings, has specifically
considered whether such orders cause prejudice or result in an injustice to the
generics. While the Court has recognized that the party who files its evidence
first enjoys a legitimate tactical advantage, it has also concluded that this
advantage is neither substantive nor procedural. Accordingly, the Court has
found that the loss of this tactical advantage is neither prejudicial nor
“unjust”, and that it is not a sufficient reason to defeat an order of reversal
where the Court was otherwise satisfied that reversal would be most likely to
achieve the most expeditious and least expensive determination of the issues. (see
Purdue Pharma v Pharmascience Inc., 2007 FC 1196, at para 19, Eli
Lilly Canada Inc. v Novopharm Ltd., 2002 FC 875 at para 13, Lundbeck
Canada Inc. v Ratiopharm Inc., 2008 FC 579 at para 20). I further note that
the tactical advantage of leading evidence first would be far less important in
the situation proposed by Shire, because evidence would be introduced viva
voce and the Court would be able to seek clarifications on any uncertain
points.
[21]
I concede that the strategies and tactics are
different when dealing with a paper record or evidence adduced orally at trial.
However, I fail to see, and Apotex has not explained, how the “loss” of these
elements represents a prejudice to Apotex and not to Shire. Apotex has
explained how it has found it challenging in Gleevec to keep in mind the
different strategies and tactics that might apply to the different uses and
burdens to which the evidence might be put, depending on the proceeding to
which it applies. However those challenges apply equally to both parties and it
has not been shown, through evidence or cogent argument, that Apotex would
stand to be disadvantaged in any way.
[22]
Finally, as I am not persuaded that a joint
evidentiary hearing would lead the Court to disregard the applicable burden of
proof, I cannot conclude that Shire’s proposal would deprive Apotex of any
potential section 8 rights.
[23]
Apotex’s argument, to the effect that Shire’s
proposal would cause it procedural or tactical prejudice, is unsubstantiated.
[24]
Apotex does not otherwise argue that proceeding
as suggested by Shire would prejudicially affect any of its substantive rights,
and I am satisfied that all of Apotex’s rights would be protected. In
particular, Shire acknowledges that if, for any reason, the joint proceedings
could not be heard and determined within 24 months, Shire would have no
automatic right to the extension of the 24 month period mandated by the PM
(NOC) Regulations. The Court could only grant an extension of time if the
conditions set out in the PM (NOC) Regulations were met.
[25]
I am satisfied that taking all circumstances
into account, Shire’s proposal would lead to very significant savings of time
and expense for both parties, represents the most efficient and judicious use
of the Court’s resources, eliminates wasteful duplication and generally leads
to the just, most expeditious and least expensive determination of both
proceedings on their merits.
[26]
The following three additional observations
should be made.
[27]
Apotex does have full control over the timing of
the two proceedings. It chose when to serve its NOA, and when to file its
action. It could still choose to withdraw its NOA and serve the same or a
different one at a later time. It could also, subject to a potential argument
of abuse of process, choose to discontinue its action and refile the same
statement of claim later on. It was Apotex’s decision to trigger both
proceedings at the same time that makes the litigations particularly taxing,
but it is also that decision which makes the partial joinder possible and
necessary to alleviate the burden. Apotex cannot impose its own schedule on
Shire and on the Court while at the same time resist reasonable and just means
to make the most efficient use of scarce judicial resources, all for the sake
of preserving its own perceived tactical advantage.
[28]
I noted earlier that the Court will likely
derive assistance in determining the application from hearing the viva voce evidence
of the experts. This, however, is only an interesting additional benefit to the
joinder; I have not given this factor any weight in coming to my decision.
[29]
Finally, just as I was not persuaded by Apotex’s
argument of procedural or tactical prejudice, I found no merit to Shire’s
argument that allowing both proceedings to continue in parallel would be unfair
because Apotex would be able to use discovery information for the purpose of
the application, because Apotex would have multiple chances to cross-examine
the same witnesses, or because the application would be determined first and an
unsuccessful innovator in a prohibition proceeding faces “an uphill battle” in
a subsequent trial.
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