Bayer Ag v. Canada (Minister of National Health and Welfare), docket T-2948-93

Date: 19971218

Docket: T-2948-93

BETWEEN:

     BAYER AG and MILES CANADA INC.

     Applicants

     - and -

     THE MINISTER OF NATIONAL HEALTH AND WELFARE

     and NOVOPHARM LIMITED

     Respondents

     REASONS FOR ORDER

REED, J.:

[1]      The only issue to be decided is the appropriate form of order to be issued by the Court in view of Novopharm's withdrawal of its notice of allegation in respect of the medicine ciprofloxacin hydrochloride ("ciprofloxacin").

[2]      The respondent, Novopharm, sent a notice of allegation to the applicant, Miles Canada Inc., on October 29, 1993. The notice was sent pursuant to the Patented Medicines (Notice of Compliance) Regulations, SOR/93 - 133 ("Regulations"). It alleged, with respect to Canadian Letters Patent 1,218,067 that:

No claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling of this drug by Novopharm Limited. Novopharm's suppliers use a process ["Novopharm's process"] which is outside the broadest claim of this patent. The starting materials and the intermediates to the synthesis are entirely different from those described in the broadest claim in this patent.

[3]      The notice of allegation relates to ciprofloxacin hydrochloride tablets 250, 500 and 750 mg. No further details were provided by Novopharm of the alleged non-infringing process it proposed to use.

[4]      On March 21, 1995, Novopharm wrote to the respondent Minister:

We are withdrawing our Notice of Allegation filed on or about November 1, 1993, pertaining to the above cited patent and Court file number T-2948-93 ...

Therefore, at this time, there is no outstanding Notice of Allegation or Form V Declaration with respect to this Drug for the patents registered on the HPB Patent List. Novopharm reserves its right to re-serve another Notice of Allegation and Form V Declarations at a later date when appropriate.

[5]      The applicants propose that the Court dispose of the within application by an order in the following form:

1.      The Minister is prohibited from issuing a Notice of Compliance to Novopharm in respect of ciprofloxacin until

(a)      Novopharm files a new NDS or amends its present NDS to make reference to another process used to make ciprofloxacin ("Second Process"), the provisions in Sections 5 and 6 of the Patented Medicines (Notice of Compliance) Regulations have been complied with and Novopharm establishes to this Court that the Second Process is materially different from the First Process, or

(c)      after the expiry of Canadian Patent No. 1,218,067,

whichever comes first.

     (underlining added)

[6]      The respondent, Novopharm, proposes that the Court dispose of the within application by an order in the following form:

1.      The Minister is prohibited from issuing a Notice of Compliance to Novopharm in respect of ciprofloxacin until

(a)      Novopharm files a new NDS or amends its present NDS to make reference to another process used to make ciprofloxacin and the provisions in Sections 5 and 6 of the Patented Medicines (Notice of Compliance) Regulations have been complied with or

(b)      after the expiry of Canadian patent No. 1,218,.067,

whichever comes first.

[7]      Counsel for Novopharm, on behalf of his client, agreed, in late 1995, that an order of prohibition should issue consequent on the withdrawal of the notice of allegation. This was after the decision in AB Hassle v. Minister of National Health and Welfare (1995), 62 C.P.R. (3d) 3 (F.C.T.D.) but before the decision in AB Hassle v. Minister of National Health and Welfare (1997), 72 C.P.R. (3d) 318 (F.C.T.D.).

[8]      The 1995 Hassle decision held that even though the respondent's notice of allegation had been withdrawn, the new drug submission remained with the Minister and the applicants were therefore entitled to an order prohibiting the Minister from issuing a notice of compliance. The order that issued pursuant to that decision reads:

1)      The application for prohibition be allowed;

2)      The Minister be prohibited form issuing a Notice of Compliance to Novopharm in respect to the medicine omeprazole until after it files a new submission or amends its present submission and the provisions in sections 5 and 6 of the Regulations have been complied with or until after the expiration of Canadian Letters Patent 1,127,158, 1,129,417, 1,264,751, 1,292,693, 1,302,891, and 1,234,118, whichever comes first; and

3)      Costs be payable to the applicants on a solicitor-client basis.

[9]      The 1997 Hassle decision was one in which the Court declined to issue a prohibition order when the respondent had withdrawn its notice of allegation because, as a result of the withdrawal, the application for that remedy had become moot. The withdrawal of the notice of allegation meant that the minister was precluded, under the terms of the Regulations, from issuing a notice of compliance. That prohibition would continue until a notice of allegation, that complied with Regulations 5 and 6, was filed.

[10]      The fact situations in the two cases were different. In the 1995 Hassle case, the respondents had withdrawn their notice of allegation after the applicants had filed their evidence contending that the notice of allegation was not justified. In the 1997 Hassle case, the notice of allegation that was filed had named the wrong party in error and the allegation had therefore been withdrawn and a second notice of allegation filed.

[11]      Mr. Justice Nadon, in the 1997 decision held that while in the 1995 decision the withdrawal of the notice of allegation could be interpreted by the Court as an admission that the allegation was not justified, this interpretation could not be put on the facts before him. The notice of allegation was withdrawn simply because it had been issued in error.

[12]      Since the agreement of counsel on behalf of the parties in this case, in 1995, there have been other developments in the jurisprudence also relevant to the present motion. It is now clear that multiple notices of allegation are possible providing the second is separate and distinct from the first and that it does not constitute an abuse of process: Eli Lilly & Company v. Apotex (A-339-97, September 29, 1997). The second notice of allegation must be dealt with independently of the first, providing it is not essentially the same as the one previously filed: Apotex v. Minister of National Health and Welfare (1997), 72 C.P.R. (3d) 421 (F.C.T.D.) at 428. A respondent is entitled to serve a second notice of allegation when it is separate and distinct from the first: Eli Lilly and Co. v. Novopharm Ltd. (T-734-96, October 15, 1997).

[13]          When the second notice of allegation is almost identical to an earlier one it will be declared invalid: Schering Canada Inc. v. Nu-Pharm Inc. (1994), 58 C.P.R. (3d) 14 (F.C.T.D.). In the Schering case the respondent had filed a second notice of allegation because the time limits for filing evidence in support of its first notice of allegation had been missed. Thus, an order of prohibition was clearly going to issue in the proceedings relating to the first notice as there was no evidence before the Court in support of the respondent's position. The second notice of allegation was filed to circumvent that result. The Court indicated that multiple notices of allegation seeking a new determination on the same allegations that were already before the Court were not contemplated, and that res judicata would, in any event, operate to preclude a second notice of allegation "setting forth the same allegation" (emphasis added). The Court held that a second notice of allegation that was the same as a previous notice of allegation can be declared invalid.

[14]      In AB Hassle v. Minister of National Health and Welfare (1997), 71 C.P.R. (3d) 129 (F.C.T.D.) proceedings relating to a second notice of allegation were stayed as an abuse of process when the second notice of allegation was essentially the same as the first. See also Zeneca Pharma Inc. v. Canada (Minister of National Health and Welfare) (1994), 55 C.P.R. (3d) 10 (F.C.T.D.).

[15]      In Merck Frosst Canada v. Minister of National health and Welfare (1997), 72 C.P.R. (3d) 468 (F.C.T.D.) the respondent withdrew a second notice of allegation that put in issue a process different from that to which the first notice of allegation pertained. The respondent argued that the application seeking a prohibition order on the basis of the second allegation was moot. The Court agreed and an order issued dismissing the application. The headnote to the reasons for the decision, at page 469, reads, in part, as follows:

The question to be decided with respect to mootness was whether the decision of the court would have a practical effect on the rights of the parties; but even if a case was moot, the court might decide at its discretion to hear the case.

The second notice of allegation had been withdrawn. The second notice of allegation was, therefore, no longer part of the NDS. On a balance of probabilities, it was determined that the withdrawal of the allegation was effective as far as the Minister was concerned. The prohibition application was indeed moot.

The reasons for decision, at pages 478 - 479, reads in part:

Had I been of the view that a prohibition order in this matter would have consequences beyond prohibiting Apotex from using the process disclosed in the withdrawn notice of allegation, the necessary adversarial relationship may have continued. But I have concluded that the prohibition application is solely related to the allegation that gives rise to it. I do not see collateral consequences or other factors that would suggest that in respect of these proceedings an adversarial relationship prevails. ...

. . . .

While resolution of issues of public importance in a case which is moot sometimes justifies expenditure of judicial resources, I do not see that this condition is applicable here. It is true that the issuance of a notice of compliance by the Minister is a matter of public interest as well as the interest of the relevant competitors. However, a determination of this prohibition application on the merits would not resolve any matter of public importance. Apotex has said it will not be producing lovastatin by the method in the withdrawn allegation.

[16]      I turn then to the order sought by the applicants in this case. The part of the order to which Novopharm objects is that requiring it, if another notice of allegation is filed, to establish to the Court "that the Second process is materially different from the First Process".

[17]      I do not think it is appropriate to include in the order a term that requires a future finding of "material difference". The jurisprudence has described the circumstances in which a second notice of allegation will be valid. Terms such as "separate and distinct" and "not essentially the same" have been used. I understand the applicants' concern, that they should not be faced with a second notice of allegation that is different in only a trivial way from the first. As I read the decisions of this Court, the applicants' concern is covered in the jurisprudence that has now developed.

[18]      With respect to the applicants' concern that the burden of proof be placed on the respondent to demonstrate that the process to which any second notice of allegation relates is different from the process to which the withdrawn notice of allegation relates, I am of the view that that is where the burden lies under the order that Novopharm has agreed to. The order states that the prohibition order will stay in place until reference to another process is included in the new drug submission and the Regulations are complied with. The respondent will have to prove those circumstances exist before the prohibition order is lifted.

[19]      That leaves for consideration whether any order at all should issue. Counsel for the respondents noted the jurisprudence that has issued since the agreement between the parties in 1995 seems to make the order reductant. He was not resiling from the agreement that had been made but noted that it was within the Court's discretion to issue or not issue an order that counsel on behalf of their clients had agreed upon between themselves.

[20]      It is clear that in the absence of an order the withdrawal of a notice of allegation means that the Minister cannot issue a notice of compliance for the drug in question. A notice of compliance cannot be issued until there exists a notice of allegation that has survived the challenge that it is not justified. It is also clear that a second notice of allegation can be successfully attacked if it is essentially the same as or not separate and distinct from the first. Therefore, to some extent the order that is sought from the Court is redundant. The consequences that would follow in the absence of such an order would be the same. There is, however, an outstanding application before the Court. Some disposition should be made of it if for no other reasons that to close the file.

[21]      As I read the jurisprudence, there are two avenues that can be pursued to dispose of an application before the Court. They lead to the same result. The respondent can argue that the application should be dismissed for mootness (paying costs of the application on a solicitor-client basis). The applicant can seek an order of prohibition that in essence duplicates the results that arise by operation of law when the application is dismissed as moot (seeking payment from the respondent of costs on a solicitor-client basis). The latter is the procedure adopted in this case.

[22]      There is no motion before me that the application should be dismissed for mootness and I am not prepared to convert the applicants' motion into that form. The parties agreed to an order, having in mind the order that had at that time been issued in the 1995 Hassle decision. I am persuaded that that form should govern. An order will issue accordingly.

    

                                 Judge

OTTAWA, ONTARIO

December 18, 1997