Ab Hassle v. Minister of National Health and Welfare, docket T-2167-93

     T-2167-93

B E T W E E N:

     AB HASSLE AND ASTRA PHARMA INC.

     Applicants

- and -

     THE MINISTER OF NATIONAL HEALTH AND WELFARE

     and NOVOPHARM LIMITED

     Respondents

     REASONS FOR ORDER

NADON J.:

     The Applicants, AB Hassle and Astra Pharma Inc. ("Astra"), are seeking an order of prohibition against the Minister of National Health and Welfare (the "Minister") to prevent the Minister from issuing a Notice of Compliance to Novopharm Ltd. in respect of the medicine METOPROLOL TARTRATE until the expiration of Canadian patent No. 1,293,449 ("449"). The Minister and Novopharm are co-respondents in this application although the Minister did not appear nor participate in these proceedings.

     On March 28, 1991 the Respondent Novopharm filed a new drug submission ("NDS") seeking a notice of compliance ("NOC") from the Minister for 100 mg and 200 mg forms of METOPROLOL TARTRATE sustained release tablets. In its NDS Novopharm compared its product to the existing reference brand which was a 200 mg LOPRESOR SR tablet manufactured by Ciba-Geigy. However, by error Novopharm filed a Form V declaration which indicated that it was actually comparing its product with 200 mg BETALOC DURULES manufactured by Astra. The NDS itself was never changed to indicate a substitution of the BETALOC DURULES for the original comparison with METOPROLOL TARTRATE. Because of the error in comparing with BETALOC DURULES, in July 1993 Novopharm sent a notice of allegation to Astra with respect to the 449 patent.

     At this juncture it will be helpful to set out the general structure of the legislation pursuant to which this application has been brought. The Patented Medicines (Notice of Compliance Regulations) SOR/93-133 were enacted to replace a mandatary licensing scheme and to ensure that patents are not infringed. Under the scheme a "first person" is one who holds a NOC with respect to a particular product and has already filed a patent list with respect to that drug. A "second person" is one who wishes to get a NOC with respect to the same or a similar drug and submits an application to the Minister in order to obtain a NOC. In the submission to the Minister the second person will compare his or her drug to a drug already marketed in Canada. The second person must then send to the holders of all of the patents on the patent list associated with that drug a notice which alleges that the new drug for which the second person seeks a NOC will not infringe their respective patents. Upon receipt of the notice of allegation, the first person may apply to the court for an order prohibiting the Minister from issuing a NOC, thereby preventing the second person from manufacturing that drug. Such an application by the first person must be on the ground that the allegation of non-infringement made by the second person cannot be justified.

     The relevant portions of the Regulations provide:

4.(1)      a person who files, or before the coming into force of these Regulations has filed a submission for or has been issued, a notice of compliance in respect of a drug that contains a medicine may submit to the Minister a patent list.

(2)      A patent list submitted pursuant to subsection (1) must be certified by the person to be accurate, and must set out

(a) any Canadian patent that is owned by the person, or in respect of which the person has an exclusive licence or has obtained the consent of the owner of the patent for the inclusion of the patent on the patent list, that contains a claim for the medicine itself or a claim for the use of the medicine and that the person wishes to have included on the patent list;

(4)      Subject to subsection (5), a person who has already filed a submission for, or has been issued, a notice of compliance before the coming into force of these Regulations and who wishes to submit a patent list shall do so within 30 days after the day on which these Regulations come into force.

5.(1)      Where a person files or, before the coming into force of these Regulations, has filed a submission for a notice of compliance in respect of a drug and wishes to compare that drug with, or make a reference to, a drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the patent list,

(a) state that the person accepts that the notice of compliance will not issue until the patent expires; or

(b) allege that

(i) the statement made by the first person pursuant to paragraph 4(2)(b) is false,

(ii) the patent has expired,

(iii) the patent is not valid, or

(iv) 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 by that person of the drug for which the submission for the notice of compliance is filed.

(3)      Where a person makes an allegation pursuant to paragraph (1)(b) or subsection (2) the person shall

(a) provide a detailed statement of the legal and factual basis for the allegation; and

(b) serve a notice of the allegation on the first person and proof of such service on the Minister.

6.(1)      A first person may, within 45 days after being served with a notice of an allegation pursuant to paragraph 5(3)(b), apply to a court for an order prohibiting the Minister from issuing a notice of compliance until after the expiration of one or more of the patents that are the subject of an allegation.

(2)      The court shall make an order pursuant to subsection (1) in respect of a patent that is the subject of one or more allegations if it finds that none of those allegations is justified.

7.(1)      The Minister shall not issue a notice of compliance to a second person before the latest of

(a) the expiration of 30 days after the coming into force of these Regulations,

(b) the day on which the second person complies with section 5,

(c) subject to subsection (3), the expiration of any patent on the patent list that is not the subject of an allegation,

(d) subject to subsection (3), the expiration of 45 days after the receipt of proof of service of a notice of any allegation pursuant to paragraph 5(3)(b) in respect of any patent on the patent list,

(e) subject to subsections (2), (3) and (4), the expiration of 30 months after the receipt of proof of the making of any application referred to in subsection 6(1), and

(f) the expiration of any patent that is the subject of an order pursuant to subsection 6(1).

(3)      Paragraphs (1)(c), (d) and (e) do not apply in respect of a patent if the owner of the patent has consented to the making, constructing, using or selling of the drug in Canada by the second person.

     In the present case the parties followed the ordinary pattern until after the filing of the application pursuant to section 6 of the Regulations. However, on March 21, 1995 Novopharm withdrew its notice of allegation and notified the Minister and Astra of this fact. Thus, I am faced with an application seeking an order of prohibition pursuant to subsection 6(1) where there no longer exists an allegation of non-infringement. Consequently Novopharm"s NOC submission is incomplete.

     In order to resolve this application two issues must be addressed. The first is whether this court continues to have jurisdiction over this issue despite the withdrawal of the notice of allegation. The second is whether the withdrawal of the notice of allegation renders this entire proceeding moot.

JURISDICTION

     At the time that this application was filed with the court there was no question that the court had jurisdiction pursuant to section 6 as Novopharm had made an allegation with respect to patent 449 per paragraph 5(3)(b) of the Regulations. However the Respondent Novopharm argued that the withdrawal of the notice of allegation removes this case from the jurisdiction of the court. With this submission I cannot agree. The court has jurisdiction over this issue pursuant to section 6. The effect of the withdrawal is something not specifically addressed in the Regulations and must be considered in the context of this dispute. This court therefore retains jurisdiction over these matters despite the withdrawal of the notice of allegation.

     This is clear from the findings of the Federal Court of Appeal in Pharmacia Inc. v. Canada (Minister of National Health and Welfare) (1994), 58 C.P.R. (3d) 207 which dealt at length with the nature of this type of proceeding and the nature of a notice of allegation. Stone J.A. (for the court) stated at 209:

In Merck, supra [Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1994), 55 C.P.R. (3d) 302] Hugessen J.A., at p. 319, observed that under the scheme of the Regulations: "it is the party moving under s. 6...which, as the initiator of the proceedings, has the carriage of the litigation and bears the initial burden of proof" (emphasis added). Later, at the same page, Hugessen J.A. went on to observe that the Minister is permitted by the Regulations to issue a notice of compliance "absent a timely application under s. 6".

It seems to us that while a notice of allegation does play an important role in the ultimate outcome of litigation of this nature, it is not a document by which the judicial review application may be launched under s. 6 of the Regulations. That document was put in as a piece of evidence by the appellants; it originated with the application filed before the Minister. Because it is not a document that was filed with the court but with the Minister, in our view the notice of allegation is beyond the reach of the court"s jurisdiction in a judicial review proceeding. That being so, the court, in our opinion, lacks jurisdiction to strike out the notice of allegation.

     Clearly the existence of a documentary piece of evidence does not add to or take from the jurisdiction of the court.

MOOTNESS

     The issue of mootness was addressed by Sopinka J. in Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342. In that case the plaintiff/appellant was attacking the validity of provisions of the Criminal Code on Charter grounds. By the time the case reached the Supreme Court of Canada the provisions had been struck down by the decision of the Supreme Court in R. v. Morgentaler, [1988] 1 S.C.R. 30. Justice Sopinka, writing for the Court in Borowski, supra, described mootness in the following way at 353:

The doctrine of mootness is an aspect of a general policy or practice that a court may decline to decide a case which raises merely a hypothetical or abstract question. The general principle applies when the decision of the court will not have the effect of resolving some controversy which affects or may affect the rights of the parties. If the decision of the court will have no practical effect on such rights, the court will decline to decide the case. This essential ingredient must be present not only when the action or proceeding is commenced but at the time when the court is called upon to reach a decision. Accordingly if, subsequent to the initiation of the action or proceeding, events occur which affect the relationship of the parties so that no present live controversy exists which affects the rights of the parties, the case is said to be moot.

     Justice Sopinka then discussed the approach the courts should follow in determining whether an issue is in fact moot. He writes (later at 353):

First it is necessary to determine whether the required tangible and concrete dispute has disappeared and the issues have become academic. Second, if the response to the first question is affirmative, it is necessary to decide if the court should exercise its discretion to hear the case...In [1994] S.C.R. 69">The King ex rel. Tolfree v. Clark, [1994] S.C.R. 69...Duff C.J., on behalf of the court, held at p. 72:

It is one of those cases where, the state of facts to which the proceedings in the lower courts related and upon which they were founded having ceased to exist, the sub-stratum of the litigation has disappeared. In accordance with well-settled principle, therefore, the appeal could not properly be entertained.

     On the facts before me I find that this proceeding is moot. Astra, as Applicant, is seeking an order of prohibition against the Minister. Astra gained the standing to bring such an application under ss. 6(1) because Novopharm served it with a notice of allegation pursuant to paragraph 5(3)(b) of the Regulations. However, at the time of the hearing of the application, Novopharm had withdrawn that allegation. Section 7 of the Regulations stipulates that the Minister shall not issue a notice of compliance if there is a patent on the patent list which has not expired and which is not the subject of an allegation. Thus, if the 449 patent is on the list, the withdrawal of the allegation by Novopharm prevents the Minister from issuing the NOC. An order from this court prohibiting the Minister from doing that which he is already prohibited from doing according to the Regulations would add nothing and is unnecessary.

     In AB Hassle v. Canada (Minister of National Health and Welfare) (1995), 62 C.P.R. (3d) 3 my colleague, Richard J., was faced with a situation similar to the one before me in the present matter. Richard J. wrote at 13:

Novopharm submits that the court must look at the state of the entire record before this court, which now includes its notice of the withdrawal of the notice of allegation of non-infringement. However, it is also clear from the record that this submission to the Minister for a NOC for a new drug has not been withdrawn by Novopharm nor is there any evidence that the new drug submission has been amended to withdraw the allegation contained therein. However, at the hearing before me, counsel for Novopharm confirmed that it was the allegation itself which was being withdrawn, not only the notice...Novopharm has withdrawn its notice of allegation, but there is no evidence that the submission itself has been withdrawn...

The issue before me is whether the allegation by Novopharm is justified. Clearly, I may assume that it cannot be justified if notice of it has been withdrawn. It is also open to the court to interpret the withdrawal of the allegation but not of the submission, at this stage of the proceedings, as an admission by Novopharm that none of its allegations included in its submission to the Minister are justified

     The present case can be distinguished from the case before Richard J. in that, in this case, on March 21, 1995 Novopharm sent Health and Welfare Canada a letter by which it withdrew its notice of allegation. Novopharm then served this letter on counsel for the applicants. In turn, on April 18, 1995, Health and Welfare Canada wrote to Novopharm acknowledging receipt of the letter of withdrawal. On the basis of this evidence I am unable to draw the same inferences as my colleague Richard J. did concerning the status of the NOC submission. It is not necessary for the Minister to have done more than acknowledge the letter in order for the submission to have been affected. On this evidence, I must conclude that Novopharm no longer has a complete NDS before the Minister and further that the Minister"s attention has been brought to this matter.

     Subsection 6(2) of the regulations requires the court to issue an order if it finds that the allegations in a notice of allegation are not justified. In Hassle, supra Justice Richard interpreted the withdrawal of the notice as an admission that the allegations therein were not justified. However, in the case before me there are cogent facts which explain why this notice of allegation was withdrawn. I do not interpret the withdrawal as an admission. In this case the only effect of the withdrawal is to render the proceeding moot. Had I not concluded that the matter is moot I would have concluded, as Richard J. did in Hassle, supra, that none of the allegations are justified.

     The facts of this case are also distinguishable from those in Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (24 February 1997), Toronto T-1695-95 (F.C.T.D.). In Merck, Rothstein J. dismissed an interlocutory motion seeking to dismiss an application for an order prohibiting the Minister from issuing a notice of compliance. The motion was brought on the basis that the application for prohibition was moot pursuant to the withdrawal of the notice of allegation. Rothstein J. held that he did not have the jurisdiction to dismiss the proceedings on an interlocutory application unless the application is "bereft of any possibility of success" according to the criteria set out in Pharmacia Inc. v. Canada (Minister of National Health and Welfare) (1994), 58 C.P.R. (3d) 209. Rothstein J. declined to find that an application for an order of prohibition became so bereft on the withdrawal of the notice of allegation. However, in the concluding paragraph of his decision he wrote:

Apotex may, at the commencement of those proceedings, make a preliminary motion to dismiss the application for prohibition if it chooses to do so.

     As the case before me is not an interlocutory motion but a hearing of the application on its merits, it is open to me to conclude that the application should not be granted.

     The second step discussed in Borowski, supra is the exercise of discretion with respect to whether the merits of the case should be determined despite the mootness of the "sub-stratum" of the litigation. In writing the decision in Borowski Sopinka J. stated that there are three rationale on which the mootness doctrine is based and which a court should consider. The first is that our legal system is based on the adversarial model and thus requires the participation of parties adverse in interest in order to ensure that issues and arguments are fully flushed out. (See Borowski, supra at 358.) There is no doubt that in the case before me these parties saw their respective roles as adversarial and thus the merits of the case were fully explored.

     The second rationale is one of judicial economy. Justice Sopinka stated at 360:

The concern for judicial economy as a factor in the decision not to hear moot cases will be answered if the special circumstances of the case make it worthwhile to apply scarce judicial resources to resolve it.

The concern for conserving judicial resources is partially answered in cases that have become moot if the court"s decision will have some practical effect on the rights of the parties notwithstanding that it will not have the effect of determining the controversy which gave rise to the action.

     I will not issue an order of prohibition against the Minister at this stage because to do so will have no practical effect on the rights of the parties as their rights and obligations are fully identified and clarified in the Regulations themselves and an order of prohibition will add nothing. There is no indication that the Minister intends to knowingly step outside of the jurisdiction conveyed on him by the provisions of the statute.

     In Hoffmann-La Roche Ltd. v. Canada (Minister of National Health and Welfare) (1996), 109 F.T.R. 216, aff"d (1996) 70 C.P.R. (3d) 206, referring to a notice of allegation Madame Justice Reed stated at 231:

[T]he notice of allegation is part of the new drug submission which is before the Minister. It is not under the control of this court. Whether that document can be amended, or withdrawn, is a matter to be dealt with by the Minister in accordance with the rules normally applied to material filed as part of a new drug submission and in accordance with the rules normally applied to the withdrawal or substitution of the submission as a whole.

     This accords with my view of the matter. Although Justice Richard in Hassle, supra obviously had doubts with respect to whether the respondent before him would seek a NOC despite having withdrawn the allegation, I have no such doubts. I am convinced that, in this case, Novopharm is not intending to compare itself with the Astra patent but is using instead the patent held by Ciba-Geigy. Furthermore, if patent 449 should be on the patent list associated with the LOPRESOR SR then that is a matter for the consideration of the Minister. Additionally, if Novopharm has compared itself to the wrong drug in its submission then that is also a matter with which the Minister must deal.

     There is one last issue which warrants a few words. Novopharm submitted a copy of the patent register dated December 29, 1994 which contained a reference to the 449 patent but which was for METOPROLOL SUCCINATE and did not deal with METOPROLOL TARTRATE. The Applicants challenged the quality of this evidence but did not submit their own evidence to establish that the 449 METOPROLOL TARTRATE patent was in fact still listed. Had I not concluded that the matter before me is moot, I would have found on the evidence that the 449 patent had been de-listed with respect to METOPROLOL TARTRATE.

     Both parties have asked that costs be allowed in their favour. The Respondent seeks costs from the time it withdrew its notice of allegation. At the time of this withdrawal the Respondent advised the Applicant that it was prepared to pay the Applicant the costs of the application up to that point. Because the Applicant refused this offer, the Respondent submits that it should have its costs on a party to party basis up to May 15, 1996 and on a solicitor-client basis from May 16, 1996. The Applicant, on the other hand, seeks its costs arguing that this is a proper case under Rule 1618 for an award of costs.

     In my view, a proper disposition of this issue is not to allow costs to either party.

     For these reasons, the application shall be denied.

     "MARC NADON"

     JUDGE

Ottawa, Ontario

March 7, 1996

     T-2167-93

OTTAWA, Ontario, this 7th day of March 1997

BEFORE:      The Honourable Mr. Justice Nadon

BETWEEN:

     AB HASSLE AND ASTRA PHARMA INC.

     Applicants

- and -

     THE MINISTER OF NATIONAL HEALTH AND WELFARE

     and NOVOPHARM LIMITED

     Respondents

     ORDER

     IT IS HEREBY ORDERED THAT the Applicants" application for an order of prohibition against the Minister of National Health and Welfare to prevent the Minister from issuing a Notice of Compliance to Novopharm Ltd. in respect of the medicine METOPROLOL TARTRATE until the expiration of Canadian patent No. 1,293,449 is denied.

     There shall be no order as to costs.

                            

                                 JUDGE