Section 4 of the Patented Medicines (Notice of Compliance) Regulations (Re), 2002 FCT 1000

Date: 20020925

Docket: T-139-02

Neutral citation: 2002 FCT 1000

BETWEEN:

                             In the Matter of a Reference by the Minister of Health under

                          Subsection 18.3(1) of the Federal Court Act, R.S.C. 1985, c. F-7,

                              regarding a Question as to the Application of Section 4 of the

                                 Patented Medicines (Notice of Compliance) Regulations,

                                                            S.O.R. 93-133 as amended

                                                            REASONS FOR ORDER

GIBSON J.:

INTRODUCTION

[1]                 These reasons arise out of a motion brought on behalf of the Minister of Health (the "Minister"), pursuant to Rule 51 of the Federal Court Rules, 1998^[1], by which the Minister seeks an Order setting aside that part of an Order of Prothonotary Aronovitch dated the 7^th of May, 2002, which struck, with leave to amend, the Notice of Application for a Reference that instituted this proceeding. The Minister's motion constitutes, in effect, an appeal from the relevant portion of the Order of Prothonotary Aronovitch. Rule 51 of the Federal Court Rules, 1998, (the "Rules") reads as follows:

51. (1) An order of a prothonotary may be appealed by a motion to a judge of the Trial Division.

(2) Notice of a motion under subsection (1) shall be

(a) served within 10 days after the day on which the order under appeal was made and at least four days before the day fixed for hearing the motion; and

(b) filed not later than two days before the day fixed for the hearing of the motion.

51. (1) L'ordonnance du protonotaire peut être portée en appel par voie de requête présentée à un juge de la Section de première instance

(2) L'avis de la requête visée au paragraphe (1) est :

a) signifié dans les 10 jours suivant la date de l'ordonnance visée par l'appel et au moins quatre jours avant la date prévue pour l'audition de la requête;

b) déposé au moins deux jours avant la date de l'audition de la requête.

The Order of Prothonotary Aronovitch, which includes a reasonably extensive endorsement constituting her Reasons for Order, is reproduced as Schedule "A".

[2]                 By cross-motion filed the 1^st of August, 2002, Eli-Lilly Canada Inc. ("Lilly") asks that, in the event the Minister is successful on her appeal, the Order of Prothonotary Aronovitch, to the extent that it denied Lilly's request to file evidence, be overturned and that Lilly be granted leave to file evidence, in particular an affidavit of Mr. Peter Stringer, sworn the 28^th of February, 2002^[2].

BACKGROUND

[3]                 The background to this proceeding is well summarized in the first thirty-six (36) paragraphs of a document entitled "Record of Decision to Apply for a Reference To the Federal Court of Canada, Trial Division, Under Subsection 18.3(1) of the Federal Court Act, R.s.c. 1985, C. F-7"^[3]. The whole of that document, with the exception of quite voluminous appendices, is reproduced as Schedule "B" to these reasons but, for ease of reference, the first five (5) paragraphs and the last paragraph, paragraph 36, are quoted here. Paragraph 36 reflects the question that the Minister determined to submit to this Court.

1.             Under cover of a letter dated July 27, 2001, Eli Lilly Canada submitted to the Minister of Health a "patent list", as referred to in section 4 of the Patented Medicines (Notice of Compliance) Regulations, (the "PM(NOC) Regulations").

2.             The "patent list" was submitted in respect of the drug ZYPREXA, and listed Canadian Patent No. 2,214,005 (the " '005 patent").

3.             Submitting the patent list initiated a process by which the Minister of Health was to decide whether to add the information to the Patent Register maintained under section 3 of the PM(NOC) Regulations. If the information satisfied the requirements of section 4, the Minister would be required to add it. If it did not, the Minister would have the discretion to refuse to add it.

4.             Thus, in this instance, before the Minister can decide whether she has discretion to refuse to add the information to the Patent Register, a question of law or jurisdiction must be answered.

5.             The circumstances of this case, though not routine, raise an increasingly common issue. They make unusually difficult the determination of whether the requirements of section 4 are met. In view of the complexity of the question, the degree of its impact on interested parties, and its potential application to a number of similar cases, it has been decided to apply to refer the question to the Federal Court, Trial Division, under section 18.3 of the Federal Court Act.

...

36.           Does a patent list submitted with a supplemental new drug submission meet the requirements of section 4 of the Patented Medicines (Notice of Compliance) Regulations where:

                 (a) the patent had not been applied for at the time of the original new drug submission;

                 (b) the timing requirements of subsection 4(4) are not met in respect of the original new drug submission; and,

                 (c) the patent is not directed to the subject matter of the supplemental new drug submission?                                                                   [emphasis added]

THE LEGISLATIVE SCHEME AND THE PROCEDURE ADOPTED

[4]                 This proceeding was initiated by a "Notice of Application For a Reference" dated and filed the 28^th of January, 2002. As earlier noted, the authority for initiation of a reference is subsection 18.3(1) of the Federal Court Act^[4] (the "Act"). That subsection reads as follows:

18.3 (1) A federal board, commission or other tribunal may at any stage of its proceedings refer any question or issue of law, of jurisdiction or of practice and procedure to the Trial Division for hearing and determination.

18.3 (1) Les offices fédéraux peuvent, à tout stade de leurs procédures, renvoyer devant la Section de première instance pour audition et jugement toute question de droit, de compétence ou de pratique et procédure.

Subsection 18.4(1) of the Act provides that, subject to an exception that is not applicable here, a reference such as that which initiated this proceeding shall be heard and determined "...without delay and in a summary way".

[5]                 It was not in dispute before me that, on the facts of this matter, the Minister is a "tribunal" within the scope of the definition "federal board, commission or other tribunal" in subsection 2(1) of the Act. Rules 320 to 323, under the heading "References from a Tribunal", are material. Those Rules read as follows:

320. (1) In rules 321 to 323, "reference" means a reference to the Court made by a tribunal or by the Attorney General of Canada under section 18.3 of the Act.

(2) Subject to rules 321 to 323, rules 309 to 311 apply to references.

321. A notice of application in respect of a reference shall set out

(a) the division of the Court to which the application is addressed;

(b) the name of the applicant; and

(c) the question being referred.

322. Where the Attorney General of Canada or a tribunal makes a reference, the Attorney General or tribunal shall bring an ex parte motion for directions as to

(a) which persons shall be given notice of the reference;

(b) the material that will constitute the case to be determined on the reference;

(c) the preparation, filing and service of copies of the material;

(d) the preparation, filing and service of memoranda of fact and law;

(e) the procedure for the hearing of the reference;

(f) the time and place for the hearing of the reference; and

(g) the role, if any, of the tribunal in question.

323. Any of the following persons may become a party to a reference by serving and filing a notice of intention to participate in Form 323:

(a) the Attorney General of Canada;

(b) the attorney general of a province, for the purpose of adducing evidence or making submissions to the Court under subsection 57(4) of the Act; and

(c) a person who participated in the proceeding before the tribunal in respect of which the reference is made.

320.1) Dans les règles 321 à 323, « _renvoi_ » s'entend d'un renvoi fait à la Cour par un office fédéral ou le procureur général du Canada en vertu de l'article 18.3 de la Loi.

(2) Sous réserve des règles 321 à 323, les règles 309 à 311 s'appliquent aux renvois.

Contenu de l'avis de demande

321. L'avis de demande concernant un renvoi contient les renseignements suivants :

a) la section de la Cour à laquelle la demande est adressée;

b) le nom du demandeur;

c) la question qui est l'objet du renvoi.

322. Le procureur général du Canada ou l'office fédéral qui fait un renvoi demande à la Cour, par voie de requête ex parte, des directives sur :

a) l'identité des personnes qui doivent recevoir signification de l'avis de demande;

b) la composition du dossier sur lequel le renvoi sera jugé;

c) la préparation, le dépôt et la signification de copies du dossier;

d) la préparation, le dépôt et la signification des mémoires exposant les faits et le droit;

e) la procédure à suivre lors de l'audition du renvoi;

f) les date, heure et lieu de l'audition;

g) le rôle de l'office fédéral dans l'instance, s'il y a lieu.

323. Les personnes suivantes peuvent devenir parties au renvoi en signifiant et en déposant un avis d'intention à cet effet, établi selon la formule 323 :

a) le procureur général du Canada;

b) un procureur général d'une province qui a l'intention de présenter une preuve ou des observations à la Cour conformément au paragraphe 57(4) de la Loi;

c) les personnes qui ont participé à l'instance devant l'office fédéral visé par le renvoi.

• The ex parte motion for directions procedure provided by Rule 322 was introduced by the Federal Court Rules, 1998. The earlier procedure was not ex parte. A cursory search of the record of proceedings leading to adoption of the new Rules disclosed no explanation for the change.
•         The Minister applied ex parte for directions in accordance with Rule 322. Prothonotary Aronovitch provided directions dated the 31^st of January, 2002^[5]. The first five (5) paragraphs of those directions are in the following terms:

1.             Eli Lilly Canada Inc., and the associations known as Canada's Research-Based Pharmaceutical Companies and the Canadian Drug Manufacturers Association shall be given notice of this reference.

2.             To effect such notice, counsel for the Minister of Health will within 10 days of this direction, serve on the solicitors for these parties the direction, the Notice of Application for a Reference, filed, and the Record of Decision to Apply for a Reference, filed in support of the motion.

3.             Upon serving on each other party and filing a notice of intention to participate, within 10 days of service of notice of the reference, each of these parties shall become parties to the reference.

4.             The Minister of Health shall be a party to the reference.

5.             The Record of Decision to Apply for a Reference executed by Robert Peterson January_25, 2002, particularly the matters set out therein under the heading "The Facts", shall constitute the case to be determined on the reference.                                                                                                                                        [emphasis added]

...

The essence of the dispute giving rise to these reasons and the related Order centers around paragraph 5 quoted immediately above. Further paragraphs of the directions deal with the exchange of Memoranda of Fact and Law, procedure relating to the hearing of the Reference, the procedure for fixing the time and place of hearing of the Reference and the role of counsel for the Minister at the hearing of the Reference.

[7]                 Each of the entities named in paragraph 1 of the directions, as quoted above, filed a notice of intention to participate in accordance with paragraph 3 of the directions and are thus parties to the Reference.

[8]                 By Notice of Motion dated and filed the 28^th of February, 2002^[6], Lilly applied pursuant to Rule 399 to vary the ex parte Order of Directions of Prothonotary Aronovitch, quoted in part above, to replace the facts constituting the case to be determined on the Reference with facts scheduled to its motion, in the alternative, directing that Lilly be permitted to file evidence to correct and complete the factual record, in the further alternative for an order striking out the Notice of Application for a Reference, for modified directions as to further steps and a modified schedule, removing the Minister as a party, and its costs of the motion. It was this motion that resulted in the Order here under appeal.

[9]                 The relevant portions of Rules 399(1) read as follows:

399. (1) On motion, the Court may set aside or vary an order that was made

(a) ex parte; or

...

if the party against whom the order is made discloses a prima facie case why the order should not have been made.

...

(3) Unless the Court orders otherwise, the setting aside or variance of an order under subsection (1) or (2) does not affect the validity or character of anything done or not done before the order was set aside or varied.

399. (1) La Cour peut, sur requête, annuler ou modifier l'une des ordonnances suivantes, si la partie contre laquelle elle a été rendue présente une preuve prima facie démontrant pourquoi elle n'aurait pas dû être rendue :

a) toute ordonnance rendue sur requête ex parte;

...

(3) Sauf ordonnance contraire de la Cour, l'annulation ou la modification d'une ordonnance en vertu des paragraphes (1) ou (2) ne porte pas atteinte à la validité ou à la nature des actes ou omissions antérieurs à cette annulation ou modification.

[10]            Certain other entities have been made interveners in this proceeding with strictly limited roles. Not all issues surrounding the interveners, including at least one issue regarding the addition of another intervener, have been settled. However, those issues are irrelevant for the purposes of these reasons. No intervener took any part in the hearing leading to the Order of Prothonotary Aronovitch that is under appeal and no intervener took any part in the hearing of this appeal.

THE PARTIES

[11]            The Minister is responsible for the administration of the Patented Medicines (Notice of Compliance) Regulations^[7] (the "PM(NOC) Regulations"). It is in this capacity that the Minister, as a "tribunal", initiated this proceeding.

[12]            Eli Lilly Canada Inc. is a Canadian research-based pharmaceutical company. As earlier noted, under cover of a letter dated the 27^th of July, 2001, it submitted to the Minister a "patent list" as referred to in section 4 of PM(NOC) Regulations that led to the initiation of this proceeding.

[13]            Canada's Research-Based Pharmaceutical Companies ("Rx & D") is a national association representing Canada's sixty-one (61) research-based pharmaceutical companies. One of its missions is to promote a competitive intellectual property protection and regulatory framework that encourages the discovery and development of new medicines in Canada.

[14]            The Canadian Drug Manufacturers Association (the "CDMA") is a national association representing Canada's pharmaceutical companies engaged in the manufacture and sale of generic drugs and Canadian chemical manufacturers and suppliers which supply the active ingredients needed for drug manufacturing.

THE ISSUES

[15]            The first issue on any appeal such as this of an order of a Prothonotary is the appropriate standard of review. In her written representations on this appeal, the Minister identified two further issues, as follows: first, whether or when this Court may strike, on a preliminary motion, a reference under subsection 18.3(1) of the Act that was properly initiated with appropriate materials; and secondly, whether any of the material constituting the case for this Reference, including the question to be put to the Court, is so irregular as to require or permit the Notice of Application to be struck on a preliminary motion. On its cross-appeal, Lilly raised the issue of whether, if the Minister's appeal is allowed, the affidavit of Peter Stringer should be allowed to form part of the Reference materials.

ANALYSIS

a)         Standard of Review

[16]            In Canada v. Aqua-Gem Investments Ltd.^[8], Mr. Justice MacGuigan, for the majority, wrote at page 463:

...discretionary orders of prothonotaries ought not to be disturbed on appeal to a judge unless:

(a)    they are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts, or                                                                                                                                                                                                                                                                                                 (b)     they raise questions vital to the final issue of the case.

Where such discretionary orders are clearly wrong in that the prothonotary has fallen into error of law (a concept in which I include a discretion based upon a wrong principle or upon a misapprehension of the facts), or where they raise questions vital to the final issue of the case, a judge ought to exercise his own discretion de novo.

[17]            Before me, counsel for the Minister urged that, while the decision of the prothonotary to strike the Notice of Application for a Reference, with leave to amend, might not raise a question vital to the final issue of the case in light of the discretion left to the Minister to amend, it nonetheless represented an exercise of discretion by the prothonotary that was based upon a wrong principle, and thus the prothonotary had fallen into error of law. Counsel for the other parties appearing before me did not dispute that the prothonotary's decision was reviewable. I will review the prothonotary's determination to strike the Notice of Application for a Reference, de novo.

[18]            By contrast, I am satisfied that the implicit determination by the prothonotary to not permit Lilly to "...file evidence to correct and complete the factual record", given the prothonotary's determination to strike the Reference with leave to amend, represented an exercise of discretion that could not be said to be clearly wrong in the total context. That being said, since I will determine to uphold the prothonotary's order striking the Reference and to delete the provision for leave to amend, I am satisfied that I must, against the foregoing guidance from Aqua-Gem, review the implied determination to not permit Lilly to file evidence to correct and complete the factual record de novo, although that review will indeed be brief.

[19]            In summary then, I will, in all aspects of this appeal, exercise my own discretion de novo.

b)         The Authority of this Court to Strike this Reference on a Preliminary Motion

[20]            The explicit authority given to this Court to strike a pleading on limited grounds, in particular a statement of claim, is found in Rule 221. It is trite that, even where this Court's jurisdiction is explicit, a Statement of Claim will be struck only in plain and obvious cases, where it is beyond doubt that the claim discloses no cause of action.^[9] Much the same might be said of applications and references where there is no explicit provision in the Rules for striking out.

[21]            In relation to applications, in David Bull Laboratories (Canada) Inc. v. Pharmacia Inc.^[10], Mr. Justice Strayer wrote at pages 596-7:

...the disposition of an application commenced by originating notice of motion does not involve discovery and trial, matters which can be avoided in actions by a decision to strike. In fact, the disposition of an originating notice proceeds in much the same way that an application to strike the notice of motion would proceed: on the basis of affidavit evidence and argument before a single judge of the Court. Thus, the direct and proper way to contest an originating notice of motion which the respondent thinks to be without merit is to appear and argue at the hearing of the motion itself.   

[22]            In Air Canada v. Canada (Commissioner of Official Languages)^[11], my colleague Justice Tremblay-Lamer extended the foregoing reasoning to a reference. At paragraphs [10] and [11] of her reasons, she wrote:

Contrary to what was argued by counsel for the applicants, the reference procedure set out in section 18.3 [of the Act] is not, in my view, an exception to the rule set out in David Bull Laboratories (Canada) Inc. ...since it is in the nature more of proceedings instituted by originating notice of motion than of an action. Another factor that militates in support of applying the principle established by the Federal Court of Appeal in David Bull Laboratories (Canada) Inc. ... is the fact that, under section 18.4 of the Federal Court Act, an application for a reference under section 18.3 shall be heard and determined in a summary way. Lastly, in such a reference, evidence is given by way of affidavit and a single judge decides the application on the merits.

Accordingly, I am of the view that it would not be appropriate to summarily dismiss the Commissioner's reference at this stage, unless this were an exceptional case in which it was plain and obvious that the impugned pleading was without merit.                                                                                                                                [citations omitted]

[23]            I am satisfied that the foregoing decisions, particularly the Air Canada decision, are distinguishable, for the reasons that follow.

[24]            This is not a case where there is no statutory or regulatory authority to strike. Rather, it is, I am satisfied, more akin to Rosen (Re)^[12], where the Court of Appeal dismissed on a preliminary motion a reference made under subsection 28(4) of the Act, now repealed, on the explicit authority of section 52 of the Act, as it then read. In Air Canada (supra), Justice Tremblay-Lamer distinguished Re Rosen, at paragraph [9] of her reasons in the following words:

On this point, the applicants fail to note that section 52 of the Federal Court Act gives the Court of Appeal the power to quash any proceeding it considers to be an abuse of process or obviously without merit. While it is settled, under Rule 419 of the Federal Court Rules [the predecessor of current Rule 221] that the Trial Division has similar power in respect of proceedings in the nature of an action, the situation is different in respect of proceedings instituted by originating notice of motion. [And as I have earlier noted, Justice Tremblay-Lamer concluded in respect of proceedings instituted as a reference under section 18.3 of the Act.]

[25]            Here, as in Rosen, Rule 399, quoted in part earlier in these reasons and the authority under which the motion before Prothonotary Aronovitch was brought, constitutes explicit authority in the Court to set aside or vary an order that was made ex parte if the party against whom the order is made discloses a prima facie case why the order should not have been made.

[26]            Thus, I am satisfied that this Court has authority to strike a reference the substance of which is established on ex parte motion, and that that authority is not as limited as that established by David Bull, supra, for applications, and by Air Canada, supra, for references the substance of which is not established ex parte.

            c)         Should this Reference be struck?

[27]            I am satisfied on the material that was before Prothonotary Aronovitch and that is before me that Lilly has disclosed a prima facie case why the ex parte order of directions should not have been made, that prima facie case being adequately described in the endorsements incorporated in Prothonotary Aronovitch's Order that is reproduced as Schedule "A".

[28]            Rule 322 provides explicit authority for a tribunal, such as the Minister, that initiates a reference to bring an ex parte motion for directions. But where a tribunal brings such a motion ex parte, and without consultation with a party such as Lilly that would clearly be directly affected by the outcome of the Reference, the tribunal undertakes a risk. The factual basis underpinning a reference is critical to a directly affected party. Thus, it should be anticipated that a directly affected party, concerned about an established factual basis, will subsequently, as happened here, attack that factual basis. Where that attack has merit, the party instituting the Reference runs the risk that if the factual underpinning is not modified so there is some consensus regarding the factual underpinning, the Reference may be struck on the ground that the order for directions establishing the factual basis should never have been made in the first place. Clearly, Prothonotary Aronovitch concluded that Lilly's attack had merit. De novo, I reach the same conclusion.

[29]            On the background and procedure in this matter, I am satisfied that it was open to the learned Prothonotary to reach a conclusion that, in the words of Justice Tremblay-Lamer in Air Canada (supra), there existed: "...an exceptional case in which it was plain and obvious that the impugned [Reference] was without merit." That was the conclusion reached by the learned Prothonotary. Acting de novo, I reach the same conclusion. While Justice Tremblay-Lamer's quoted words set a very high threshold for striking a reference, much higher than I consider appropriate on a motion under Rule 399, I am satisfied that even that high threshold is met.

[30]            To summarize then and putting the matter another way, I am satisfied that it is plain and obvious that it would be an abuse of the process of this Court to allow the Minister's Reference to proceed on the basis of a factual underpinning that is clearly in dispute, that could not be rationalized without full presentation of evidence and an opportunity for cross-examination, and that would thus be essentially incapable of eliciting an informed response from this Court.

[31]            In now reaching my own conclusion to strike the Reference, now without leave to amend, I derive substantial satisfaction from the fact that Prothonotary Aronovitch provided the Minister an opportunity to amend and, for whatever reason, the Minister failed to avail herself of that opportunity or even to provide any explanation to the Court on this appeal as to why she did not avail herself of it.

[32]            Proceedings, and thus uncertainty, should not be unduly prolonged, particularly where, as here, the proceedings are found to be flawed. Alternative recourses are available. The Minister can reach a decision, without guidance from this Court on Lilly's patent list. If Lily finds that decision unacceptable, judicial review can follow and guidance can then be provided by this Court. Alternatively, the Minister can seek other reference on different but analogous circumstances.

d)         Supplementation of the Reference case with the affidavit of Peter Stringer

[33]            In light of my conclusions to this point, I need not address this issue since the Reference will be struck without leave to amend. That being said, I would simply observe that I find it difficult to contemplate a reference procedure that would allow entities made parties to the Reference to supplement the Reference materials in such a manner that the end result might well be Reference materials that are internally contradictory.

[34]            I am satisfied that a referring party, either the Attorney General of Canada under subsection 18.3(2) of the Act, or a tribunal, should have absolute control over the Reference materials underpinning a reference instituted by that Minister or tribunal. At the same time, I am satisfied that a reference procedure cannot work effectively unless the originating Minister or tribunal is in a position to assure the Court that there is, essentially, no dispute as to the facts underlying the Reference. That is not to say that parties to a reference should somehow be precluded from putting their own interpretation on the facts underlying the Reference. It is simply to say that a Court, given the nature of a reference procedure, simply should not be put into the position of attempting to adjudicate on the basis of disparate facts that simply cannot be tested so that one set of the facts can be adopted and another or others can be rejected.

[35]            Thus, if I had determined to allow this Reference to proceed, I would not have granted Lilly's cross-application for leave to supplement the factual basis of the Reference.

e)         Other considerations

[36]            Counsel for Rx & D submitted that this appeal should be dismissed, or if the appeal were to be allowed, that it should be allowed on the basis that Lilly be permitted to file such evidence as it considers necessary to correct and complete the factual record with the supplemented record to be remitted to the Court hearing the Reference. What I took to be the preferred position of Rx & D is essentially achieved by the conclusions that I have arrived at to this point.

[37]            Counsel for CDMA took no position as to whether "...the Reference should be revived" by which I take it that CDMA took no position as to whether the appeal should be allowed. That being said, counsel for CDMA did urge that Lilly's cross-appeal should be dismissed and if not dismissed, and if the Reference were allowed to continue, that CDMA should be permitted to file its own evidence and to cross-examine, thus, at least in this judge's opinion, converting the Reference procedure to something very different than what is intended by the Act and Rules. Counsel for CDMA expressed grave concern about the uncertainty and delay arising out of Lilly's motion under Rule 399 and this appeal. Once again, given my conclusions to this point, I am satisfied that the CDMA's concerns are addressed.

CONCLUSION

[38]            In the result, this appeal and cross-appeal will be dismissed subject only to the following:

My Order will amend the Order of Prothonotary Aronovitch that is under appeal to substitute for the second term thereof, namely:

The within Notice of Application for a Reference made by the Minister of Health under subsection 18.3(1) of the Federal Court Act is hereby struck with leave to amend.

the following:

The within Notice of Application for a Reference made by the Minister of Health under subsection 18.3(1) of the Federal Court Act is hereby struck without leave to amend.

COSTS

[39]            Following discussion with counsel at the close of the hearing of this matter, I agreed to further reserve on the issue of costs. That issue will be dealt with by supplementary order reflecting any agreement among the parties or, failing agreement, following written submissions of the parties to the Court on a schedule to be determined by the Court on application of any party.

____________________________

      J.F.C.C.

Ottawa, Ontario

September 25, 2002

                                           SCHEDULE "A"

Date: 20020507                                                                                                                                                                                                                                                                 Docket: T-139-02

Ottawa, Ontario, this 7^th day of May, 2002

Present:                 Madam Prothonotary Aronovitch

BETWEEN:

In the Matter of a Reference by the Minister of Health under

             Subsection 18.3(1) of the Federal Court Act, R.S.C. 1985, c. F-7,                                  regarding a Question as to the Application of Section 4 of                                        the Patented Medicines (Notice of Compliance) Regulations,                                                                     S.O.R. 93-133 as amended

[Seal]

                                                                      ORDER

UPON motion on behalf of Eli Lily Canada Inc. ("Lily") for an order pursuant to Rule 399 of the Federal Court Rules, 1998, to vary the ex parte order of Prothonotary Aronovitch for:

                 1.             An order directing that the facts in Schedule "A", attached to the notice of motion, replace the current set of facts constituting the case to be determined on the Reference;

                 2.             In the alternative, an order directing that Lilly be permitted to file evidence to correct and complete the factual record;

3.             In the further alternative, an order for striking out the notice of application for a Reference made by the Minister of Health under subsection 18.3(1) of the Federal Court Act, R.S.C. 1985, c. F-7.

                 4.             In any event:

                                  a.             directions as to all future steps in this proceeding;

                                  b.             Amending paragraph 4 of the order, to remove the tribunal (the Minister of Health) as a party; and

                                  c.             Setting a new schedule.

                 5.             The applicant's costs of this motion.

UPON motion on behalf of Canada's Research-Based Pharmaceutical Companies (Rx & D) in the event that the facts upon which the Reference is to be based remain in dispute, an order striking the Notice of Application for a Reference made by the Ministry of Health under subsection 18.3(1) of the Federal Court Act, R.S.C. 1985, c. F-7.

ENDORSEMENT

As I understand it, at its utmost, a "proceeding" before, the "tribunal" involving the exercise of the Minister's discretion under section 3 of the Regulations would involve, an expression of doubt by the Minister that a patent sought to be listed meets the requirements of section 4 of the Regulations, representations made in response and an ultimate decision of the Minister to add or not to add the patent to the Patent Register.

Here, the Minister, qua tribunal moved for a Reference prior to making her decision as she was entitled to do, and moved ex parte as she is obliged to do. All of the materials that would have been before the tribunal for the purposes of the "proceeding" including, the 005' Patent, and relevant NOCs have been tendered by the tribunal and comprise part of the record for the purposes of the Reference.

When the Minister's representatives, albeit after the fact, met with Lilly to receive Lilly's comments on the facts constituting the case to be determined on the Reference, Lilly's response was to suggest substitution of the present facts and questions with the substance of Lilly's "Schedule A", now before me for consideration.

In my view , "Schedule A" overreaches both the facts and the questions at issue in the Reference. It alternately seeks to place evidence before the Reference that is already comprised in the materials filed, seeks to adduce as evidence, matters more properly left to legal argument, and raises issues that are extraneous, or that the Minister has not seen fit to raise. Most notable in that connection, is the question of the "priority" filing date of the patent, that Lilly suggests as a further question to be put to the Court in the Reference.

I take it that the questions to be answered on a Reference are within the sole purview and discretion of the tribunal. It is not for Lilly to suggest questions that it would wish to see determined or indeed to tinker with the questions posed, as Lilly would do, most notably in respect of the last of the questions put to the Court. I will therefore deny the motion in respect of Schedule "A" and on the above grounds, deny Lilly's application in respect of much of the affidavit evidence Lilly seeks to adduce.

That said, the issues raised by Lilly with respect to paragraphs 30 and 31 of the case before Reference, is of concern and goes to the essence of the questions for determination in the Reference. Paragraph 30 essentially states that the 005' patent does not contain claims for strengthens or new dosage forms specified in the supplemental new drug submission filed for ZYPREXA or ZYPREXA ZYDIS (Submission #050618 and 062058 respectively). Paragraph 31, speaks of the "relevance" of the patent to the above submissions. The final question submitted to the Reference speaks of a patent that "is not directed to the subject matter" of the submissions. Lily takes the position that it disagrees with the Minister's position as to relevance or as to whether the 005' patent may be said to be directed to the supplemental new drug submissions, and, in particular, to the medicine in the two supplemental new drug submissions. Lilly wishes therefore to adduce its own evidence on point, in particular the affidavit of Peter Stringer.

I am not satisfied that there are facts here that are in dispute or indeed an interpretation of the facts that is inconsistent. However, Lilly's submissions regarding paragraphs 30 and 31 of the case as stated underscore the fact that the Minister uses terms interchangeably which are ambiguous and ill defined. This ambiguity and lack of precision, in turn, taint the ultimate question on the Reference. Indeed, the lack of clarity on what is the fundamental question at issue avails no one. Lilly is prejudiced and ought not to have to make its case in argument on the basis of facts that are not clearly articulated and Lilly does not accede to. The Minister is not served by placing before the Court a question which is imprecise and that the Court may well be unable to answer on the basis of the case as it is presently stated.

That said, I do not propose to substitute my own discretion for that of the tribunal in respect of either the evidence which will constitute the case before the Court or the questions to be put be put to the Court for determination. I will instead strike the application for Reference with leave to the tribunal to amend the facts that constitute the case for the Reference and if need be, the questions that, on that basis, are referred to the Court.

At the least, amendments are required to be made, to paragraph 30 to 31 of the present case such the facts and issues are set out fully, precisely and in a manner to incorporate, to the extent possible, the Minister's common ground with Lilly. This, to be followed by such consequential amendment as maybe necessary, including to one or more of the questions put to the Court on the Reference.

As to the status of the Minister, it is in my view properly a party in the particular circumstances of this case, being that the Minister is the applicant in the context of the Reference, the tribunal has not made a decision and has itself limited its participation in the Reference to making submissions, "if any". That said, if the tribunal chooses to amend, it may wish to specify the nature of its submissions, if any, that it may have.

THIS COURT ORDERS THAT:

1.             The motion is granted as follows and otherwise denied.

2.             The within Notice of Application for a Reference made by the Minister of

Health under subsection 18.3(1) of the Federal Court Act is hereby struck

with leave to amend.

3.             As success is divided, each party shall bear its own costs of the motion.

                                                                                      "Roza Aronovitch"

                                                                                                              Prothonotary

                                           SCHEDULE "B"

SUMMARY

1.             Under cover of a letter dated July 27, 2001, Eli Lilly Canada submitted to the Minister of Health a "patent list", as referred to in section 4 of the Patented Medicines (Notice of Compliance) Regulations, (the "PM(NOC) Regulations").

2.             The "patent list" was submitted in respect of the drug ZYPREXA, and listed Canadian Patent No. 2,214,005 (the " '005 patent").

3.             Submitting the patent list initiated a process by which the Minister of Health was to decide whether to add the information to the Patent Register maintained under section 3 of the PM(NOC) Regulations. If the information satisfied the requirements of section 4, the Minister would be required to add it. If it did not, the Minister would have the discretion to refuse to add it.

4.             Thus, in this instance, before the Minister can decide whether she has discretion to refuse to add the information to the Patent Register, a question of law or jurisdiction must be answered.

5.             The circumstances of this case, though not routine, raise an increasingly common issue. They make unusually difficult the determination of whether the requirements of section 4 are met. In view of the complexity of the question, the degree of its impact on interested parties, and its potential application to a number of similar cases, it has been decided to apply to refer the question to the Federal Court, Trial Division, under section 18.3 of the Federal Court Act.

THE LEGAL CONTEXT

6.             The administration of the Patented Medicines (Notice of Compliance) Regulations, (the "PM(NOC) Regulations"), has been delegated by the Minister of Health (the "Minister") to the Director General of the Therapeutic Products Directorate. Included in the administration of the PM(NOC) Regulations is the ongoing maintenance of the Patent Register.

7.             The PM(NOC) Regulations provide a scheme whereby a "first person" (as defined in the Regulations) may list certain patents on the Patent Register. Whether a particular patent appears on the Patent Register is important to a first person, because the various protective rights afforded to a first person under the PM(NOC) Regulations apply only to patents listed on the Register.

8.             A first person may, pursuant to subsection 4(1) of the PM(NOC) Regulations, submit a list of granted patents at the time it files a submission for a notice of compliance ("NOC").

9.             Alternatively, if a first person files a submission for a NOC after it has applied for a patent but before the patent has been granted, subsections 4(4) and 4(5) of the PM(NOC) Regulations apply. Pursuant to those subsections, a first person may file a patent list (or an amendment to a patent list) within thirty days of the grant of the patent, based on a previously filed new drug submission.

10.           In any case, when both the NOC has been issued for that new drug submission, and the patent has been granted, the patent list is added to the Patent Register.

11.           Under the Food and Drug Regulations a first person can file several types of drug submissions which result in the issuance of a NOC. Most importantly, the initial approval of a new drug is confirmed by the issuance of a NOC, sought by means of a "new drug submission" pursuant to section C.08.002 of the Food and Drug Regulations.

12.           Once initially approved, subsequent changes to a drug can be introduced through the filing of a supplemental new drug submission pursuant to section C.08.003 of the Food and Drug Regulations. Section C.08.003 requires a supplemental new drug submission to be filed for various kinds of changes to a new drug. These changes include a change in the strength, dosage form, route of administration, or claim for the use of the new drug. They also include, among other things, a change to the brand name, or a change to the information in the Product Monograph (for example, an update of safety information or conditions of use of the new drug).

13.           A supplemental new drug submission, when approved, results in the issuance of a NOC.

14.           According to the decision in Apotex Inc. v. Canada (Attorney General)^[13], in the same way that filing an original new drug submission may entitle a first person to submit a patent list, so may filing a supplemental new drug submission.

15.           However, other developing jurisprudence suggests that further limitations apply to listing a patent on the basis of a supplemental new drug submission, which differentiate between types of supplemental new drug submissions. In Bristol Myers Squibb v. Canada (Attorney General)^[14], the first person was prevented from maintaining a patent on the Patent Register on the basis of a supplemental new drug submission for a name change, since it would allow brand name companies to circumvent the timing requirements in section 4.

THE FACTS

a.            The Minister's Practice

16.           Patents that have been listed against the original new drug submission are typically re-listed against a supplemental new drug submission to ensure coverage of newer versions of a drug, including new strengths, dosage forms, and routes of administration.

17.           The Minister currently requires a second person to address each of the patents listed on the patent register for a drug in the same strength, dosage form and route of administration pursuant to section 5 of the PM(NOC) Regulations. This requirement applies notwithstanding that the drug to which the second person is making a comparison or reference predates any changes made by the first person to the drug through a supplemental new drug submission for which patents have been listed on the Patent Register. The Minister's practice is described in Appendix A, "Guidelines for Industry".

b.             Submission History of ZYPREXA

18.           On October 3, 1995, Eli Lilly Canada ("Eli Lilly") filed a new drug submission (submission #040088) for ZYPREXA, a drug containing the medicine olanzapine, in 2.5,5,7.5 and 10 mg tablets, used for the acute and maintenance treatment of schizophrenia and related psychotic disorders.

19.           In respect of this submission, Eli Lilly had already listed Canadian Patent No. 2,041,113 (the " '113 patent"). The '113 patent contains both claims to the medicine, olanzapine and the use of the medicine. It is currently on the Patent Register for each of Eli Lilly's ZYPREXA products.

20.           After filing the new drug submission for ZYPREXA, Eli Lilly filed a patent application on March 22, 1996, which resulted in the grant of Canadian Patent No. 2,214,005 (the "'005 patent"). A copy of '005 patent is attached to this Record of Decision as Appendix B.

21.           The '005 patent contains claims for a polymorphic form of olanzapine, and as such contains a claim to the medicine specified in the original new drug submission for ZYPREXA.

22.           Subsequent to the filing of the application for the '005 patent, on April 24, 1997, Eli Lilly filed a supplemental new drug submission (submission #050618) to add two new strengths, namely a 15 and 20 mg tablet.

23.           On July 2, 1999, Eli Lilly filed a supplemental new drug submission (submission #062065) for a new dosage form, namely 5, 10, 15 and 20 mg oral disintegrating tablets. This new dosage form is marketed under the brand name ZYPREXA ZYDIS.

24.           The '005 patent was granted on July 3, 2001. Under cover of a letter dated July 27, 2001, within 30 days of the grant of '005 patent, patent lists were filed to list the '005 patent against all of the above drug submissions, including the original new drug submission for ZYPREXA. The patent lists and covering letter are attached to this Record of Decision as Appendix C.

25.           This chronology can be summarized as follows. Copies of the various NOCs are attached to this Record of Decision of Appendix D.

October 3, 1995                        - NDS for ZYPREXA filed with Minister

March 22, 1996                       - New patent application filed with Canadian      Patent Office

April 24, 1997                         - SNDS filed with Minister, re: new strengths

July 2, 1999                              - SNDS filed with Minister, re: new dosage    forms

July 3, 2001                               - '005 patent (filed March 22, 1995) granted

July 27, 2001                           - Patent lists re: '005 patent submitted

26.          To date, the '005 patent has not been added to the Patent Register but remains in "pending" status.

THE ISSUE

27.           Submitting the patent list initiated the process by which the Minister was ultimately to decide whether to add the patent to the Patent Register. First, a determination would be required as to whether the requirements of section 4 of the PM(NOC) Regulations were met. If they were the Minister would be required to add it. If they were not, the Minister would have the discretion to refuse to add it.

28.           The '005 patent claims a polymorphic form of olanzapine, and as such is directed to the medicine as specified in the original new drug submission. Had the application for the '005 patent been filed before that new drug submission, the patent would clearly have been eligible to list against the new drug submission for ZYPREXA under subsection 4(1).

29.           However, the '005 patent was applied for after the filing of the original new drug submission for ZYPREXA.

30.           Further, had the '005 patent contained claims for new strengths or new dosage forms as specified in the supplemental new drug submissions filed for ZYPREXA or ZYPREXA ZYDIS, it would clearly have been eligible to be listed against those submissions, as they were filed after the patent application. However, it does not.

31.           In summary, the '005 patent is relevant to the subject matter of the NDS for which a NOC was originally issued for ZYPREXA on October 3, 1995, but is out of time to list against that submission, since the patent was applied for after the submission was filed. In attempting to list the '005 patent against a supplemental new drug submission to which the patent is not relevant, Eli Lilly would appear to have avoided the original timing requirements under section 4. Although it has been clarified that first persons can list a patent against a supplemental new drug submission in Apotex Inc. v. Canada (Attorney General), supra, where relevance is not required, other developing jurisprudence may suggest there must be relevance between the claims of the patent and the subject matter of the supplemental new drug submission, where the patent is out of time for listing against the original new drug submission.

32.           Thus, the Minister cannot determine without clarification whether the requirements of section 4 are met, and cannot now proceed to decide whether to add the patent to the Register. On that basis, and in light of at least five other drugs for which patent lists are being sought to be listed on the Patent Register by other first persons in similar circumstances, it has been decided to submit an application for a reference to the Federal Court under subsection 18(3) of the Federal Court Act.

INTERESTED PARTIES

33.           Eli Lilly Canada Inc. will clearly be directly affected by the decision at issue.

34.           Canada's Research-based Pharmaceutical Companies (Rx & D) is the national association representing Canada's 61 research-based pharmaceutical companies. One of its missions is to promote a competitive intellectual property protection and regulatory framework that encourages the discovery and development of new medicines in Canada. A decision on the question at issue will be seen to have an impact on the association's members' ability to protect their patents under the PM(NOC) Regulations. It can be expected that the association will wish to make legal representations on the question, arguing that the requirements of section 4 are met in this case.

35.           The Canadian Drug Manufacturers Association (CDMA) represents Canadian pharmaceutical companies engaged in the manufacture and sale of generic drugs and Canadian chemical manufacturers and suppliers which supply the active ingredients needed for drug manufacturing. The CDMA participates actively in consultations regarding the Canadian health care system and patent issues relating to generic drugs. A decision on the question at issue will be seen to have an impact on the association's members' ability to bring their products to market expeditiously. It can be expected that the association will wish to make legal representations on the question, arguing that the requirements of section 4 are not met in this case.

QUESTION TO BE SUBMITTED TO THE COURT

36.           Does a patent list submitted with a supplemental new drug submission meet the requirements of section 4 of the Patented Medicines (Notice of Compliance) Regulations where:

                 (a) the patent had not been applied for at the time of the original new drug submission;

                 (b) the timing requirements of subsection 4(4) are not met in respect of the original new drug submission; and,

                 (c) the patent is not directed to the subject matter of the supplemental new drug submitted.                                                                                                                                                         [emphasis added in paragraphs 30, 31 and 36]

                          FEDERAL COURT OF CANADA

                                       TRIAL DIVISION

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:       T-139-02

STYLE OF CAUSE: In the Matter of a Reference by the Minister of Health under Subsection 18.3(1) of the Federal Court Act, R.S.C. 1985, c. F-7, regarding a Question as to the Application of Section 4 of the Patented Medicines (Notice of Compliance) Regulations, S.O.R. 93-133 as amended

PLACE OF HEARING:         Ottawa, Ontario

DATE OF HEARING:            September 3, 2002

REASONS FOR : THE HONOURABLE MR. JUSTICE GIBSON

DATED:                                   September 25, 2002

APPEARANCES:

Mr. F.C. Woyiwada                   FOR APPLICANT,     MINISTER OF HEALTH

Mr. Anthony G. Creber

Ms. Cristin Wagner                    FOR RESPONDENT, ELI LILLY CANADA INC

Mr. David Scott Q.C.

Mr. Kevin LaRoche                   FOR RESPONDENT, CANADA'S RESEARCH-BASED     

PHARMACEUTICAL COMPANIES (Rx & D)

Mr. Edward Hore                       FOR RESPONDENT CANADIAN    DRUG

MANUFACTURERS ASSOCIATION (CDMA)

SOLICITORS OF RECORD:

Morris Rosenberg

Deputy Attorney General of Canada      FOR APPLICANT, MINISTER OF HEALTH

Gowling Lafleur Henderson LLP

Ottawa, ON                                             FOR RESPONDENT, ELI LILLY CANADA INC.

Borden Ladner Gervais LLP

Ottawa, ON                                             FOR RESPONDENT, CANADA'S RESEARCH-BASED PHARMACEUTICAL COMPANIES (Rx & D)

Hazzard & Hore

Barristers and Solicitors

Toronto, ON                                            FOR RESPONDENT CANADIAN    DRUG

MANUFACTURERS ASSOCIATION (CDMA)

Smart & Biggar

Toronto, ON                                            FOR INTERVENERS, ASTRAZENECA CANADA INC. and HOFFMAN-LAROCHE LIMITED

Ogilvy Renault

Toronto, ON                                            FOR INTERVENER, GLAXOSMITHKLINE INC.

Torys LLP

Toronto, ON                                            FOR INTERVENER, PFIZER CANADA INC.