Date: 20010109
Docket: A-721-00
CORAM: STRAYER J.A.
SEXTON J.A.
SHARLOW J.A.
BETWEEN:
APOTEX INC.
Appellant
(Respondent)
- and -
BRISTOL-MYERS SQUIBB CANADA INC.
(Respondent)
(Applicant)
- and -
ATTORNEY-GENERAL OF CANADA
THE MINISTER OF HEALTH
Respondents
(Respondents)
Heard at Ottawa, Ontario, January 8, 2001
delivered at Ottawa, Ontario, January 9, 2001
REASONS FOR JUDGMENT BY: SHARLOW J.A.
CONCURRED IN BY: STRAYER J.A.
SEXTON J.A.
Date: 20010109
Docket: A-721-00
CORAM: STRAYER J.A.
SEXTON J.A.
SHARLOW J.A.
BETWEEN:
APOTEX INC.
Appellant
(Respondent)
- and -
BRISTOL-MYERS SQUIBB CANADA INC.
(Respondent)
(Applicant)
- and -
ATTORNEY-GENERAL OF CANADA
THE MINISTER OF HEALTH
Respondents
(Respondents)
REASONS FOR JUDGMENT
SHARLOW J.A.
Apotex Inc. appeals the order of a motions judge dated November 16, 2000 staying the decision of the Minister of Health to remove Patent 1,198,436 (the "436 patent") from the patent register maintained by the Minister under the Patented Medicines (Notice of Compliance) Regulations, 1993, SOR/93-133.
To put this issue in context, it is necessary to describe certain aspects of the regulatory scheme. The Regulations were enacted in 1993 as part of a major reform of the patent law respecting pharmaceutical products. The Regulations link the system of regulatory approval for new drugs to the protection of patent rights. They permit the holder of a patented medicine used in a marketable drug to have the patent included in a public document called the "patent register" maintained by the Minister. A drug is marketable in Canada only if it is the subject of a notice of compliance issued by the minister under the Food and Drug regulations.
If a drug manufacturer wishes to market a new drug that is bioequivalent to an existing marketable drug, and believes it can produce the new drug without infringing any patent shown on the patent register in relation to the existing drug, a submission must be made for a notice of compliance for the new drug, and the patent holder must be served with a notice of allegation stating the basis on which it is alleged that the rights of the patent holder will not be infringed if a notice of compliance is issued for the new drug.
Within 45 days of being served with a notice of allegation, the patent holder may apply for a court order prohibiting the issuance of a notice of compliance for the new drug until it is established that the patent holder's rights will not be infringed. The prohibition application takes the form of an application for judicial review in the Trial Division of the Federal Court.
When a patent holder commences a prohibition application under the Regulations, the Minister's authority to issue the notice of compliance for the new drug is automatically stayed pending the determination of the prohibition proceedings. This automatic stay is in place for a maximum of 24 months, unless extended pursuant to Regulation 7(5). The automatic stay prescribed by the Regulations has been described as draconian because it permits a patent holder to delay the entry of competitors into the market without having to establish even a prima facie case of patent infringement: Apotex v. Merck Frosst Canada Inc., [1998] 2 S.C.R. 193, (1998) 80 C.P.R. (3d) 368.
Against this regulatory background, the facts relevant to this matter may be stated. On April 27, 1994, the Minister granted the respondent Bristol-Myers Squibb Canada Inc. a notice of compliance for a product called Serzone containing the medicine nefazodone hydrochloride.
When Bristol-Myers filed the new drug submission required to obtain the notice of compliance for Serzone, it filed patent lists for a number of patents in relation to Serzone that were subsequently added to the patent register. It is common ground that Bristol-Myers could have filed a patent list for the 436 patent but failed to do so at the stipulated time. The patent register cannot now be amended to include the 436 patent in relation to Serzone.
After the notice of compliance was issued for Serzone, Apotex filed a new drug submission for a product named Apo-Nefazodone that it asserts is bioequivalent to Serzone. It was required to serve Bristol-Myers with a notice of allegation under subsection 5(1) of the Regulations in order to address the patents shown on the patent register with respect to Serzone. The notice of allegation did not refer to the 436 patent because the 436 patent was not then on the register. At the date of the hearing of this appeal, no notice of compliance had been issued for Apo-Nefazodone.
On December 22, 1999, Bristol-Myers submitted a supplemental new drug submission relating to a change in the name of its product from Serzone to Serzone-5HT2. With the supplemental new drug submission, Bristol-Myers filed a patent list for the 436 patent. Its position is that it was entitled to file the patent list for the 436 patent in conjunction with the supplemental new drug submission because a supplemental new drug submission is a "new drug submission" within the meaning of the Regulations.
On February 7, 2000, the Minister issued to Bristol-Myers a notice of compliance for Serzone-5HT2. The Minister advised Bristol-Myers that the patent list for the 436 patent had been reviewed and found eligible for listing on the patent register. The 436 patent was added to the patent register on February 18, 2000. The decision of the Minister was based on Apotex Inc. v. Canada (Minister of Health) (1999), 165 F.T.R. 42, 87 C.P.R. (3d) 271 (F.C.T.D.) (appeal pending).
It appears that once the 436 patent was added to the patent register, the Minister took the position that he could not issue a notice of compliance to Apotex for its product Apo-Nefazodone unless Apotex first served on Bristol-Myers a notice of allegation with respect to the 436 patent. Apotex has not filed such a notice of allegation. Its position is that the 436 patent should not be on the patent register and ought to be removed, and that if it is removed, no notice of allegation is required.
On August 8, 2000, the Minister advised Bristol-Myers by letter that he had reconsidered the eligibility of the 436 patent to be included on the patent register and had concluded that it should not have been included in the patent register. Discussions ensued between Bristol-Myers and the Minister, but the Minister maintained his opinion that the 436 patent should be removed from the patent register.
In September of 2000, Bristol-Myers commenced an application for judicial review of the Minister's decision to remove the 436 patent from the register. The Minister deferred the actual removal to allow Bristol-Myers time to seek interim relief. After further correspondence, the Minister indicated on November 3, 2000 that he would remove the 436 patent from the patent register on November 17, 2000 absent a court order precluding him from doing so. Meanwhile, Apotex was added as a respondent to the application for judicial review because of its outstanding new drug submission for Apo-Nefazodone.
Bristol-Myers sought a stay of the Minister's decision pending the disposition of the application for judicial review. The stay was granted on November 16, 2000. Apotex now appeals that order. The application for judicial review is scheduled to be heard one week from the date of the hearing of this appeal.
The motions judge correctly stated that the stay could not be granted unless the tests in RJR-Macdonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, were met. The tests are stated as follows at page 334:
| First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits. |
I agree with the motions judge that the first test was met. That is amply indicated by the fact that the Minister has, within the space of a few months, adopted two contradictory interpretations of the applicable Regulations.
The motions judge also held that if the stay was not granted, Bristol-Myers would suffer irreparable harm as a result of being denied the procedural benefit of the regulatory scheme. He concluded, in effect, that the inability of Bristol-Myers to take advantage of the automatic 24 month stay, in and by itself, establishes irreparable harm. For the reasons that follow, I must respectfully disagree with the conclusion of the motions judge that the harm that would be suffered by Bristol-Myers if no stay is granted is irreparable.
The question of whether harm is irreparable was discussed in RJR-Macdonald (cited above) at page 341:
| "Irreparable" refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Examples of the former include instances where one party will be put out of business by the court's decision (R.L. Crain Inc. v. Hendry (1988), 48 D.L.R. (4th) 228 (Sask. Q.B.)); where one party will suffer permanent market loss or irrevocable damage to its business reputation (American Cyanamid, supra); or where a permanent loss of natural resources will be the result when a challenged activity is not enjoined (MacMillan Bloedel Ltd. v. Mullin, [1985] 3 W.W.R. 577 (B.C.C.A.)). The fact that one party may be impecunious does not automatically determine the application in favour of the other party who will not ultimately be able to collect damages, although it may be a relevant consideration (Hubbard v. Pitt, [1976] Q.B. 142 (C.A.)). |
In order to determine whether harm is irreparable, it is necessary to consider the consequences of the denial of the stay, if the merits of the proceeding are finally determined in favour of the party seeking the stay. In this case, it is reasonable to assume that, but for the stay, the Minister would have removed the 436 patent from the patent register and issued a notice of compliance to Apotex in respect of its product Apo-Nefazodone. There would then be no legal reason why Apotex could not start to market its product in competition with Serzone and Serzone-5HT2.
What would happen if the application for judicial review of the Minister's decision to remove the 436 patent from the patent register were to succeed? An issue would arise as to whether or not the notice of compliance for Apo-Nefazodone should be allowed to stand on the basis that when it was issued, the 436 patent was not on the patent list. It is not necessary for me to express an opinion on how that issue should be resolved, and I will not do so. I simply note that if the notice of compliance for Apo-Nefazodone is allowed to stand, and Apotex has started to market Apo-Nefazodone in competition with Serzone and Serzone-5HT2, it would continue to do so unless and until its activities are stopped as a result of patent proceedings taken by Bristol-Myers. If the notice of compliance for Apo-Nefazodone does not stand, the period of competition will end.
Thus, regardless of the ultimate fate of the notice of compliance for Apo-Nefazodone if the Bristol-Myers application for judicial review succeeds, Bristol-Myers may suffer some harm from competition on the part of Apotex that might have been stopped, at least during the 24 month automatic stay, if the 436 patent had remained on the patent register until the disposition of Bristol-Myers application for judicial review.
However, Bristol-Myers has no legal right to object to any competition by Apotex unless the competition involves an infringement of the 436 patent. And if Apotex infringes the 436 patent, Bristol-Myers will be entitled to all of its remedies for infringement, including an award of damages. It is by now trite law that the Regulations do not replace the private rights of action open to patent holders. The relevant authorities are listed in the most recent decision of this Court affirming this proposition: Apotex Inc. v. Zeneca Pharma Inc. et al (unreported, A-340-95, December 19, 2000, at paragraph 5).
There is no evidence in the record to suggest that an award of damages in an action for patent infringement would not be an adequate remedy in this case. Therefore, assuming infringement is finally proved, the harm caused to Bristol-Myers because of its inability to take advantage of the automatic stay in the Regulations is not irreparable.
Bristol-Myers argues that the harm it will suffer from its inability to take the benefit of the automatic stay is irreparable. It is implicit in that argument that Bristol-Myers is entitled to the benefit of the stay under the Regulations even if it turns out that there is no infringement.
If there is no infringement, Bristol-Myers would never be compensated for any loss that would arise from competition during the period when the automatic stay might have been in
place. However, that is not because Bristol-Myers has suffered a loss that cannot be quantified or cured by an award of damages. It is because the loss, in the context of the Regulations, is legally irrelevant. It is not a loss resulting from an infringement of the patent rights that the Regulations were enacted to protect.
I conclude that any loss suffered by Bristol-Myers as the result of its inability to obtain an automatic stay under the Regulations is not "irreparable harm" within the principles stated in RJR-Macdonald. It follows that the stay of execution of the Minister's decision to remove the 436 patent from the patent register should not have been granted.
I would allow this appeal, set aside the decision of the motions judge, and deny the motion for a stay of the Minister's decision. Apotex should be entitled to its costs of the appeal and the motion.
Karen R. Sharlow
J.A.
"I agree
B.L. Strayer, J.A."
"I agree
J. Edgar Sexton"
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