Date: 20071106
Docket: A-274-07
Citation: 2007 FCA 359
PRESENT: SEXTON
J.A.
PELLETIER
J.A.
RYER
J.A.
BETWEEN:
ELI
LILLY CANADA INC.
Appellant
and
NOVOPHARM
LIMITED
Respondent
and
THE
MINISTER OF HEALTH
Respondent
and
ELI
LILLY AND COMPANY LIMITED
Respondent/Patentee
REASONS FOR ORDER
SEXTON J.A.
Introduction
[1]
This is a
motion by the Respondent, Novopharm Limited (“Novopharm”) to dismiss the appeal
of the Order of Mr. Justice Hughes dated June 5, 2007 (the “June 5 Order”) on
the ground that the appeal is moot.
[2]
The June 5
Order dismissed Eli Lilly Canada’s (“Eli Lilly”) application for an order
prohibiting the Minister of Health (the “Minister”) from issuing a Notice of
Compliance (“NOC”) to Novopharm for its 2.5 mg, 5 mg , 7.5 mg, 10 mg and 15 mg
olanzapine tablets. After the June 5 Order, the Minister granted an NOC to
Novopharm.
[3]
This Court
has consistently held that, once an NOC has been
issued, a patent holder’s appeal from an application to prohibit the issuance
of an NOC will be dismissed due to mootness. Nevertheless, Eli Lilly argues, that,
inter alia, the recent decision in Sanofi-Aventis Canada Inc. v.
Novopharm Limited et al. 2007 FCA 163, 282 D.L.R. (4th) 476, 59 C.P.R. (4th)
416, (leave to appeal to the S.C.C. dismissed, [2007] S.C.C.A. No. 311) (“Sanofi-Aventis”)
demands that this Court revisit the law with respect to a patent holder’s right
to appeal an otherwise moot NOC proceeding.
[4]
For the
reasons that follow, I disagree with this submission and would allow
Novopharm’s motion and dismiss this appeal on the ground of mootness.
Background
[5]
This
motion arises from an appeal from prohibition proceedings pursuant to the Patented
Medicines (Notice of Compliance) Regulations, SOR/93-133 (the “NOC
Regulations”). The patents that are discussed in these NOC proceedings are
for drugs that are used to treat schizophrenia.
[6]
The
persistent theme in the development of these drugs was that while innovators
could discover drugs that were effective in treating schizophrenia, the drugs
all had dangerous side-effects. Eli Lilly had identified a number of potential
drug candidates that would have reduced side-effects, which led to the
development of a class of compounds in Canadian Patent 1,075, 687 (the “‘687
Patent”).
[7]
The ‘687
Patent claimed a genus of approximately 15 trillion compounds. The only
compounds that were individually claimed in the ‘687 Patents were flumezapine
and ethylflumezapine. Testing on these two drugs revealed that they possessed
either unacceptable side effects or a lack of effectiveness in treating
schizophrenia. Further research, however, was conducted on compounds that were within
the class outlined in the ‘687 Patent; this resulted in favourable results for one
particular drug called olanzapine. As a result, Eli Lilly decided to file
Canadian Patent 2,041,113 (the “‘113 Patent”) which characterizes olanzapine as
a selection from the class of the ‘687 Patent. The ‘113 Patent discloses that
Lilly “discovered a compound which possesses surprising and unexpected
properties by comparison with flumezapine and other related compounds.”
[8]
The ‘113
Patent is what is known as a “selection patent,” which is, within the context
of pharmaceutical patents, a compound selected from an existing patented class when
it is discovered that the selected compounds possess unexpected characteristics
which could not be predicted before the discovery was made: see In re I.G.
Farbenindustrie A.G.’s Patents (1930) 47 R.P.C. 283 (Ch. Div.) at pp. 322-3
(“I.G. Farbenindustrie”); Harold G. Fox, Canadian Patent Law and
Practice, 4th ed. (Toronto: The Carswell Company Limited, 1969)
at 89. Selection patents exist to encourage researchers
to discover new advantages for compounds within the known class. This constitutes
an inventive skill (Pfizer Canada Inc. et al. v. Minister of Health et al. 2006
FCA 214, 272 D.L.R. (4th) 756, 52 C.P.R. (4th) 241 at
para. 5).
[9]
On June
20, 2005, Novopharm filed the Notice of Application (“NOA”) which was the basis
for Eli Lilly’s application for prohibition to the Federal Court. The NOA alleged
that the ‘113 Patent was invalid for the reasons of anticipation, obviousness,
double patenting, an intention to mislead in violation of section 53 of the Patent
Act R.S.C. 1985, c. P-4 (the “Act”), insufficient
disclosure and inutility. On Sept. 8, 2005, Eli Lilly applied for a prohibition
order to the Federal Court, arguing that the grounds listed in the NOA were not
justified. The NOC proceeding before Justice Hughes did not occur until May 25,
2007.
[10]
In his decision, Eli Lilly Canada Inc. v.
Novopharm Limited 2007 FC 596, which is the subject of the appeal concerned
in this motion, Justice Hughes held that Eli Lilly was unable to establish that
the allegation by Novopharm that the ‘113 Patent was invalid by reason of insufficient
disclosure was not justified. His findings on this ground can be summarized in
paragraph 162 of his decision:
I find that
the ‘113 patent fails to provide sufficient disclosure in its specification as to
the invention, if any, in selecting olanzapine from a previously disclosed
group of compounds. The prior art British Patents [inter alia, Patent
‘687] says that the whole class of compounds [is] useful in treating central
nervous system disorders. The invention in selecting olanzapine is the so
called “surprising and unexpected” properties of olanzapine in “comparison with
flumezapine and other related compounds”. No such comparison is made anywhere
in the ‘113 patent. No data was given. We are left only with rhetoric such as
“high level of efficiency” and “mild and transient” and “lower” side effects.
[11]
The main
challenge by Eli Lilly to the decision of Hughes J. is stated to be that he
found the law of Canada requires that the
specification of a selection patent must contain comparative data which
demonstrates the advantages of the selected class over the class disclosed in a
previous patent. Not only does Eli Lilly argue that this was not raised in
Novopharm’s NOA, but that such a finding is in contravention of the
requirements of the Act, and of Canada’s obligations under the Patent
Cooperation Treaty and the Agreement on Trade-Related Aspects of
Intellectual Property Rights.
[12]
The day
following the issuance of the decision of Hughes J., Novopharm received an NOC
from the Minister for Novo-Olanzapine tablets, which are Novopharm’s 2.5, 5,
7.5, 10 and 15 mg strength olanzapine tablets.
Issues
[13]
There are
two issues in this motion:
i.
Is the
appeal moot?
ii.
If the
appeal is moot, should the Court exercise its discretion to hear the appeal?
Analysis
1) Is the Appeal
Moot?
[14]
As
Novopharm correctly points out, this Court has consistently dismissed, on the
grounds of mootness, appeals from orders refusing prohibition applications
under the NOC Regulations in circumstances where an NOC has issued. See,
for instance, Pfizer Canada Inc. v. Apotex Inc. et al. (2001) 11
C.P.R. (4th) 245 (F.C.A.) (leave to appeal
to the S.C.C. dismissed, [2001] S.C.C.A. No. 111) (“Pfizer”); AstraZeneca
AB v. Apotex Inc. 2004 FCA 224 (leave to appeal to the S.C.C. dismissed,
[2004] S.C.C.A. No. 391). The reason for this is that once the prohibition application
is dismissed, the Minister is acting entirely lawfully in issuing an NOC to the
generic, as per subsection 7(1) of the NOC Regulations: Merck Frosst
Canada Inc. v. Canada (Minister of National Health and Welfare) [1999]
F.C.J. No. 555 (F.C.A.) (leave to appeal to the S.C.C. dismissed, [1999]
S.C.C.A. 313). Moreover, once the NOC has been issued, there is no provision
under the NOC Regulations that would permit this Court to retroactively
prohibit its issuance.
[15]
Subsections 7(1) and (2) of the NOC
Regulations read as follows:
|
7. (1) The Minister shall not issue a
notice of compliance to a second person before the latest of
(a) [Repealed, SOR/98-166, s. 6]
(b) the day on which the second person
complies with section 5,
(c) subject to subsection (3), the expiration
of any patent on the register 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) or (c) in respect of any patent on
the register,
(e) subject to subsections (2), (3) and (4),
the expiration of 24 months after the receipt of proof of the making of any
application under subsection 6(1), and
(f) the expiration of any patent that is the
subject of an order pursuant to subsection 6(1).
(2) Paragraph (1)(e) does not apply if at any
time, in respect of each patent that is the subject of an application
pursuant to subsection 6(1),
(a) the patent has expired; or
(b) the court has declared that the patent is
not valid or that no claim for the medicine itself and no claim for the use
of the medicine would be infringed.
|
7. (1) Le ministre ne peut
délivrer un avis de conformité à la seconde personne avant la plus tardive
des dates suivantes :
a) [Abrogé,
DORS/98-166, art. 6]
b) la date à laquelle
la seconde personne se conforme à l'article 5;
c) sous réserve du
paragraphe (3), la date d'expiration de tout brevet inscrit au registre qui
ne fait pas l'objet d'une allégation;
d) sous réserve du
paragraphe (3), la date qui suit de 45 jours la date de réception de la
preuve de signification de l'avis d'allégation visé aux alinéas 5(3)b) ou c)
à l'égard de tout brevet inscrit au registre;
e) sous réserve des
paragraphes (2), (3) et (4), la date qui suit de 24 mois la date de réception
de la preuve de présentation de la demande visée au paragraphe 6(1);
f) la date
d'expiration de tout brevet faisant l'objet d'une ordonnance rendue aux
termes du paragraphe 6(1).
(2) L'alinéa (1)e) ne
s'applique pas si, à l'égard de chaque brevet visé par une demande au
tribunal aux termes du paragraphe 6(1) :
a) soit le brevet est
expiré;
b) soit le tribunal a
déclaré que le brevet n'est pas valide ou qu'aucune revendication pour le
médicament en soi ni aucune revendication pour l'utilisation du médicament ne
seraient contrefaites.
|
[16]
Once “the
court”, which has been held to be the “Federal Court Trial Division” (see Pfizer,
supra, at paragraph 20) has dismissed the prohibition motion, the Minister
may issue the NOC. Indeed, the Minister “shall” do so: section C.08.004(1) of
the Food and Drug Regulations, C.R.C. 1978, c. 870. As Isaac J.A. (as
he then was) stated in Pfizer, supra, at paragraph 21:
It follows
that once the prohibition proceedings brought by the appellants were dismissed
by the Trial Division, the Minister was entitled to and did issue the NOCs to
Apotex and to Nu Pharm with respect to fluconazole. The issue of these NOCs
foreclosed any attempts to continue prohibition proceedings under the Regulations,
as the summary procedure therein was spent. As Decary J.A. put it in Merck
Frosst Canada, supra, at para. 5, “[t]he appeal is obviously moot,
the Minister having done what he is empowered to do under s. 7(1) of the Regulations,
i.e., he issued a notice of compliance”.
[17]
Eli Lilly
insists, however, that the reasons in Sanofi-Aventis somehow demand that
the cases cited above need to be revisited. I do not agree with this
proposition. The error in Eli Lilly’s logic can be demonstrated through the
presentation of their argument on this issue in their Memorandum of Fact and Law:
As a result
of the recent decision of this Court in Sanofi, an invalidity finding on
any issue in a first prohibition proceeding, once all appeals are final, estops
a first person (the patentee or a licensee) from again litigating that same
validity issue in subsequent NOC proceedings. Thus, even if this court could
not set aside the NOC, the appeal is not moot as other generics can now rely on
Justice Hughes’ decision.
[…]
The result of
Justice Sexton’s decision in Sanofi is that non-party generics can rely
on the successful allegation of invalidity that another generic has made once
the decision becomes final. Consequently, once an allegation of invalidity
succeeds in a NOC proceeding, the innovator is deprived of the opportunity of
succeeding against subsequent invalidity allegations.
As a result
of Sanofi, Justice Hughes’ decision affects Lilly’s ability to rebut
allegations that the ‘113 patent is invalid for insufficiency by any other
generic. If this appeal is not granted, Lilly will be denied both an
opportunity to address the basis for Justice Hughes’ decision in this case, and
an opportunity to address invalidity arguments regarding insufficiency of the
‘113 patent made by other generics in other NOC proceedings. This is true even
though the ‘113 patent and its foreign counterpart have previously survived
attacks on validity.
[18]
Nothing in
Eli Lilly’s reasoning suggests why the law is, or ought to be, any different
with respect to mootness after the reasons in Sanofi-Aventis. The Sanofi-Aventis
case simply stands for the proposition that it is an abuse of process for a
patent holder, having lost in a prohibition proceeding on an issue relating to
invalidity, to relitigate the same issue against another generic. It does not
change the test for mootness as set by the Supreme Court of Canada in Borowski,
infra, nor does it somehow grant this Court the right to quash an NOC
that had been issued by the Minister in compliance with the NOC Regulations.
Rather, Eli Lilly has argued that, due to Sanofi-Aventis, Justice
Hughes’ decision may impact other NOC proceedings. Such considerations, if of
merit, would only be relevant in considering a court’s discretion to hear a
moot appeal.
[19]
Notwithstanding
the existing jurisprudence on this issue, I will nevertheless address the three
arguments Eli Lilly advances for why its appeal is not moot:
a. Justice Hughes decided the
case on an issue not raised by the parties, which gives rise to procedural
unfairness;
b. There is still a live issue
between the parties as Novopharm can rely on the decision of Hughes J. to
obtain an NOC for ZYDIS (another Eli Lilly product), as well as a dosage form
of olanzapine oral tablets (20mg), both of which are listed under the ‘113
Patent on the Patent Register; and
c. Due to this Court’s recent
decision in Sanofi-Aventis, supra, this appeal would affect the
rights of Novopharm vis à vis other generics.
[20]
With
respect to the first argument, I do not find it persuasive. Eli Lilly’s
lengthy submissions on this point stem from one claim: that Novopharm never
raised this issue in their NOA. I fail to see that Novopharm, in its NOA, did
not provide sufficient notice of its argument relating to the insufficiency of disclosure
in the ‘113 patent. For instance, the NOA claims:
7. Invalidity
– Section 53(1) of the Patent Act and/or Insufficiency of Disclosure
[…]
The person of
ordinary skill would not have had sufficient information to put the invention
into practice. In fact, they would have had misinformation that olanzapine was
“markedly superior” to the other clinical options with an adverse effect
profile that was substantially and peculiarly better than those others. If
there are circumstances where olanzapine can be used to realize marked
superiority, the specification of the ‘113 patent does not set out the method
by which it can be achieved and certainly not in such full, clear, concise and
exact terms as to enable a person skilled in the art to achieve it. The patent
is therefore invalid because the invention as described would not work to the
extent promised without this additional and better information (per s. 27(3)(b)
of the Patent Act) and because, as shown below, the added or omitted
information described was purposively included or withheld (as the case may be)
for the purpose of misleading (per s. 53(1) of the Patent Act).
[21]
In any
event, even if there had been resulting procedural unfairness, which I conclude
there was not, it would not change the fact that an NOC has issued and the
Court is unable to change that result. Eli Lilly cites the case of G.D.
Searle & Co. v. Novopharm Limited 2007 FCA 173, 281 D.L.R. (4th)
207, 58 C.P.R. (4th) 1 (leave to appeal to
the S.C.C. dismissed, [2007] S.C.C.A. No. 340) (“G.D. Searle”) as an example
where this Court, in the words of Eli Lilly, “issued the prohibition order that
ought to have been imposed.” However, in the G.D. Searle decision a NOC
had not been issued. Thus, the case cannot detract from the general principle
already stated that once an NOC has been issued the appeal is moot.
[22]
Eli Lilly
stressed in oral argument that a finding from this Court that Hughes J. made
his decision on a ground not raised in the NOA would render the June 5 Order a “nullity,”
as he would not have been within his jurisdiction to issue the June 5 Order.
As such, so the argument goes, this would lead to the possibility of Eli Lilly applying
for judicial review of the Minister’s decision directly. Based on my
conclusion that Justice Hughes did decide the case on an issue adequately
raised in the NOA, I do not have to address this contention.
[23]
With
respect to the second and third issues, Eli Lilly’s submissions are misplaced.
The possibility that generics, or even Novopharm, can rely on Justice Hughes’
decision in subsequent proceedings does not make the appeal not moot with
respect to the NOC in question vis à vis the parties in this
proceeding. The Supreme Court of Canada has established the criteria for
determining whether a matter is moot in Borowski v. Canada (Attorney General) [“Borowski”], [1989] 1
S.C.R. 342, 57 D.L.R. (4th) 231 at paragraph 15:
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. The general policy or practice is enforced in moot cases
unless the court exercises its discretion to depart from its policy or
practice. [emphasis added]
[24]
In this
case, the controversy between the parties was whether an NOC should issue to
Novopharm in respect of tablets for oral administration of drugs containing
olanzapine in strengths of 2.5 mg, 5 mg, 7.5 mg, 10 mg, and 15 mg. Justice
Hughes decided that Eli Lilly’s application for prohibition against issuing an
NOC should be dismissed. The Minister has issued an NOC. This Court cannot
alter this decision. Applying the Borowski criteria, the appeal is
moot. The issue of whether the decision below could be relevant in other
proceedings will be addressed when I consider whether this Court should
exercise its discretion in hearing the appeal.
2) If the appeal is
moot, should the Court exercise its discretion to hear the appeal?
[25]
The
Supreme Court of Canada in Doucet-Boudreau v. Nova Scotia (Minister of Education) 2003 SCC 62, [2003] 3 S.C.R.
3, 232 D.L.R. (4th) 577 (“Doucet”) confirmed the three Borowski
factors to consider when deciding whether to exercise the discretion to
hear a moot appeal (at paragraph 18):
(1) the presence
of an adversarial context;
(2) the concern
for judicial economy; and
(3) the need for
the Court to be sensitive to its role as the adjudicative branch in our
political framework.
[26]
In Borowski,
supra, the Supreme Court of Canada emphasized that the factors are not
to be employed in a mechanical manner (at paragraph 42):
In exercising
its discretion in an appeal which is moot, the Court should consider the extent
to which each of the three basic rationalia for enforcement of the mootness
doctrine is present. This is not to suggest that it is a mechanical process.
The principles identified above may not all support the same conclusion. The
presence of one or two of the factors may be overborne by the absence of the
third, and vice versa.
[27]
There is
an adversarial context between Eli Lilly and Novopharm. However, that
adversarial context is in fact situated in another proceeding in which Eli
Lilly has launched an infringement action with respect to the ‘113 patent. The
main point of controversy between the parties, namely the question of the
threshold for sufficient disclosure in selection patents, can be addressed just
as adequately in an infringement proceeding and those proceedings can produce
an in rem decision as to the validity of the patent which the present
proceeding cannot do. Thus, the existence of an adversarial context between
the parties does not lend any weight to exercise my discretion in hearing this
appeal.
[28]
Nor does
the prospect of subsequent litigation necessarily affect the discretion to hear
a moot appeal. As C.J. Richard stated in Janssen-Ortho Inc. v. Novopharm
Ltd. 2005 FCA 6, 40 C.P.R. (4th) 1 (“Janssen-Ortho”), at
paragraph 20:
With respect
to the argument that there will be other challenges for levofloxacin, the
Supreme Court of Canada, in Borowski v. Canada (Attorney
General),
[1989] 1 S.C.R. 3 42 at para. 34, rejected the relevance of such considerations
as follows:
[34] The mere
fact, however, that a case raising the same point is likely to recur even
frequently should not by itself be a reason for hearing an appeal which is
moot. It is preferable to wait and determine the point in a genuine
adversarial context unless the circumstances suggest that the dispute will have
always disappeared before it is ultimately resolved.
[29]
Turning to
the question of judicial economy, Eli Lilly submits that this appeal should be
heard because of the prospect of other generics looking to obtain NOC’s for
olanzapine, following the judgment of Hughes J. Contrary to this submission,
the question of judicial economy suggests that this appeal should not be heard.
[30]
Eli Lilly
argues that this Court should hear the moot appeal so that the law could be
made clear as to whether comparative data is required to be disclosed in
selection patents. They argue that the reasons of Hughes J. stand for the
proposition that selection patents which do not contain comparative data are
invalid. I do not agree that one can take this broad principle from his
reasons. He said:
The invention
in selecting olanzapine is the so called “surprising and unexpected” properties
of olanzapine in “comparison with flumezapine and other related compounds”. No
such comparison is made anywhere in the ‘113 patent. No data was given. We
are left only with rhetoric such as “high level of efficiency” and “mild and
transient” and “lower” side effects.
It is certainly arguable that all Hughes J. meant was that
the disclosure in a selection patent must explain what the “surprising and
unexpected” properties of olanzapine in the new selection patent were. Even
counsel for Eli Lilly admitted in oral argument that one could not tell what
Hughes J. meant when he used the words “No data was given.” If one cannot tell
what the Motions Judge meant, then one cannot conclude that he meant that
“comparative data” must always be provided in a selection patent. This
being the case, it would be unwise, in the context of deciding whether to
exercise the discretion to hear a moot appeal, to assume that this is what he
meant and then go on to define, as a matter of first instance in this Court,
what the law requires by way of disclosure in a selection patent.
[31]
Even if
Eli Lilly were correct in arguing that this appeal raises a pure question of
law, then it would be better if this Court had the benefit of a full record to
adjudicate such a question. Indeed, as counsel for Eli Lilly states in their
Memorandum of Fact and Law:
Thus, the
conclusion enunciated by Justice Hughes indicating that a selection patent must
have comparative data present in the patent specification was never raised by
Novopharm and, as such, Lilly had no opportunity to address this issue in
its evidence or in its argument before the Court. [emphasis added]
[32]
This
appeal arises out of a proceeding under the NOC Regulations and the
issue relating to insufficient disclosure may turn out to be a complicated one.
This Court has said repeatedly that NOC proceedings should be summary in nature
and of short duration. In the words of Sharlow J.A. in AB Hassle v. Apotex
Inc. 2006 FCA 51, 265 D.L.R. (4th) 363, 47 C.P.R. (4th)
329 (“AB Hassle”) at paragraph 2:
These are
summary proceedings, intended to facilitate a relatively quick determination by
the Federal Court of certain issues of patent construction, infringement and
validity, but only for the limited purpose of making (or declining to make) an
order prohibiting the Minister of Health from approving the sale in Canada of a
new generic drug for which approval is sought on the basis of a comparison to
an existing product whose producer has certain patent rights.
[33]
Unfortunately,
the fact remains that parties in disputes like this one are ignoring the
intended summary nature of NOC proceedings. As Noel J.A. stated in Abbott
Laboratories v. Canada (Minister of Health) 2007 FCA 187
(“Abbott”) at paragraph 28:
…[the
24-month statutory stay period provided in paragraph 7(1)(e) of the NOC
Regulations] was no doubt intended to focus the minds of the parties and the
Court on the summary nature of the proceedings and the need for their
expeditious prosecution. It is the absence of focus on this time frame which
has given these summary proceedings over time the ponderous character of patent
infringement actions commonly known to last numerous days and sometimes weeks.
The end result is that judicial resources are increasingly being consumed by
these so called summary proceedings at the expense of other jurisdictions which
advance more obvious public policy concerns.
[34]
The
following comments in Sanofi-Aventis, supra, although
contemplating the issue of abuse of process, are particularly apposite in this
regard (at paragraph 37):
In the
context of the NOC Regulations, encouraging the efficient use of scarce
judicial resources is also of particular concern. Judicial resources are
already taxed considerably by the voluminous proceedings brought under the
regulations. An attempt to further strain the resources of parties and of the
courts through repetitious litigation without any compelling justification
strongly favours a finding of abuse of process.
[35]
The three
excerpts above can be applied to the notion of considering the constraint of
judicial resources in hearing a moot appeal. As Noel J.A. held in Abbott,
supra, NOC proceedings are taxing the judiciary’s resources, and as such
it makes little sense to hear moot appeals in those proceedings, especially
when the main issue will be the subject of infringement proceedings already in
progress.
[36]
In
deciding whether to hear a moot case on the question of judicial economy,
courts must weigh the expenditure of scarce judicial resources against
"the social cost of continued uncertainty in the law" (Borowski,
supra, at p. 361). While I am not entirely confident as to what the
phrase “social cost” means, I would think that it refers to costs to society
generally as opposed to the potential costs to some participants in one
particular industry. In the Borowski and Doucet cases, Charter
remedies were in issue.
[37]
This Court
previously held, notably, that “There is no evidence that there is a social
cost in leaving the matter of ‘selection’ patents undecided” (Janssen-Ortho,
supra, at paragraphs 21-2). In this motion, counsel for Eli Lilly made
no reference to evidence of social costs resulting from any uncertainty in the
law, either in his Memorandum of Fact and Law or in oral argument.
[38]
Eli Lilly
suggests that the concern for judicial economy favours the Court hearing this
appeal as there are four or more other generics looking to produce olanzapine;
this will result in four or more infringement actions as the generics obtain
their NOCs. Without dictating how the infringement proceedings should
specifically proceed, I am not convinced that this will lead to an inefficient
use of judicial resources. Even if there are numerous infringement
proceedings, they will all have many common issues, including the main issue of
controversy in this appeal: the sufficiency requirement for selection
patents. It is quite possible that the infringement proceedings could be
consolidated, or that the issues could be decided in one proceeding, with the
others being stayed.
[39]
Eli Lilly also
argues that the decision of Justice Hughes will affect the validity of many
other patents and patent applications in Canada by adding a retroactive test for the
sufficiency of disclosure for selection patents. Furthermore, they argue that
the decision of Justice Hughes impacts the sufficiency requirement of many
other Canadian patents and pending applications and is thus at odds with Canada’s international obligations
relating to patents as well as the Act itself.
[40]
It is
doubtful that these propositions have application with respect to an NOC
proceeding. It is settled law that decisions under the NOC Regulations
cannot be taken as an in rem determination of the validity of patents: Pharmacia
Inc. v. Canada (Minister of National Health
and Welfare)
(1994), 58 C.P.R. (3d) 209 (F.C.A.); Sanofi-Aventis, supra, at
paragraph 36. As Richard C.J. stated in Janssen-Ortho, supra, at
paragraph 19:
Similarly, in
Novartis v. Apotex, 2002 FCA 440, [2002] F.C.J. No. 1551 (C.A.) (QL), this
Court stated [per Strayer J.A.]:
[9] I believe
that the fundamental principles applicable are those stated in the reasons of
Isaac J.A. in the Pfizer case, as approved and followed by another panel of
this Court in the Rhoxalpharma case less than one year ago. The basic
principle is that the extraordinary procedures provided by the Regulations are
for the public law purpose of enabling the Trial Division to prevent a public
officer from issuing a Notice of Compliance, designed for the protection of the
public’s health, if the patentee can show that the patents, as referred to by a
generic company in its notice of allegation seeking a Notice of Compliance, are
owned by the applicant “first person” and that the relevant claims are not
invalid and would be infringed. This is a finding of the Court for the
limited purpose of deciding whether or not the Minister can issue a Notice of
Compliance: no one could suppose that this is a scheme designed for res
judicata determinations of the scope or validity of patents.
[emphasis
added]
[41]
NOC
proceedings were never intended to be substitutes for an infringement action: Merck
Frosst Canada Inc. v. Canada (Minister of National Health
and Welfare)
(1994), 55 C.P.R. (3d) 302 (F.C.A.) at 319 (leave to appeal to the S.C.C. dismissed
[1994] S.C.C.A. 330); Pfizer, supra at paragraph 17. Similarly,
it is inappropriate to rely on NOC proceedings to set binding precedent on
controversial and uncertain questions in patent law (see Sanofi-Aventis,
supra, at paragraph 49). NOC proceedings are supposed to be summary in
nature and do not lend themselves to such determinations. Rather, Eli Lilly
can seek resolution of these questions in the infringement proceedings which it
has already commenced. The decision in Sanofi-Aventis, supra, affirms
this point at paragraph 40:
While it is
important in each case to ensure the application of the doctrine of abuse of
process does not give rise to unfairness in the circumstances, in my view, no
such unfairness would result in the present case. Prohibition proceedings
under the NOC Regulations do not prevent patentees from enforcing their patent
rights through actions for patent infringement in accordance with the Patent
Act. Moreover, the findings from any such prohibition proceedings have
no bearing on patent infringement actions. [emphasis added]
[42]
As
discussed above, Eli Lilly argues that the decision in Sanofi-Aventis elevates
the importance of an innovator’s right to appeal since other generics can now
rely on a Motions Judge’s decision. While it may be likely that other generics
will attempt to rely on decisions such as the one by Justice Hughes, this does
not alter the fact that the innovator has ample means to defend its rights,
namely an infringement proceeding. See Novartis AGC v. Apotex Inc.
(2002) 22 C.P.R. (4th) 450 (F.C.A.) at paragraph 9; AB Hassle, supra,
at paragraphs 28-9. As was stated in Pfizer, supra, at paragraph
25:
It should be
noted that a decision by this Court that the appeals are moot does not mean
that the appellants are without remedies. They may commence actions for
infringement if so advised and the facts warrant. This Court has been very
clear on this fact that s. 6 proceedings are not adjudicative of the rights of
the patentee. In Merck Frosst Canada, supra, at 319, Hugessen
J.A. rejected the notion that prohibition proceedings could be assimilated to
an action of any kind:
The
proceedings are not an action and their object is solely to prohibit the
issuance of a notice of compliance under the Food and Drug Regulations.
Manifestly, they do not constitute “an action for infringement of a patent” …
In these
circumstances, it is idle to suggest that any decision that this Court makes in
these appeals could be used to attack collaterally a judgment in an infringement
action.
[43]
Indeed,
Eli Lilly has already commenced an infringement proceeding with respect to
their ‘113 Patent in this case. If Novopharm is actually infringing the ‘113
Patent due to the issuance of the NOC, Eli Lilly can be adequately compensated
through various remedies by way of an injunction, an award of damages and/or an
accounting of profits, if applicable. See Bristol-Myers Squibb Canada Inc.
v. Canada (Attorney General) (2001) 11 C.P.R. (4th)
539 (F.C.A.) at paragraphs 22-3.
[44]
It has
been argued that it may be unfair for a patent holder to not be allowed an
appeal when a generic can appeal an unfavourable decision in an NOC proceeding.
However, this Court has already held that the fact that generics can appeal,
whereas innovators cannot, does not constitute an unfair interpretation of the NOC
Regulations. See Pfizer, supra, at paragraph 22. See also Sanofi-Aventis,
supra, at paragraph 50. When one considers the issue of fairness, it
must be kept in mind that innovators still have the benefit of a
“near-automatic interlocutory injunction” for a period of 24 months. I would
point out that in this case, Eli Lilly had a prohibition order for over 20
months even though it was ultimately held that they were not entitled to one.
It should also be pointed out that actions of innovators are not the only ones
being scrutinized with respect to the multiplicity of proceedings. Generics
have been prevented from bringing more than one NOA relating to the validity of
a patent (Abbott Laboratories v. Canada (Minister of Health) 2007 FCA 140, 282 D.L.R. (4th)
145, 59 C.P.R. (4th) 131).
[45]
Once
again, innovators like Eli Lilly are not without remedy. They may still
commence an infringement action. Thus, even though Eli Lilly cannot proceed
with this appeal, it certainly can seek an injunction, damages, and/or loss of
profits via an infringement action, which it has done. It has the same remedy
against other generics if it considers infringement is occurring.
[46]
As to the
factor relating to this Court’s adjudicative role, there were no submissions
that if this Court were to hear the appeal, it would be trespassing upon the
role of Parliament. However, this factor seems relatively unimportant in the
present case.
[47]
Thus, all
considerations militate against exercising the Court’s discretion to hear this
appeal. Even if the Court heard the appeal:
a. The decision to issue the NOC
cannot be changed;
b. Eli Lilly can receive a no
less conclusive and principled decision with respect to the necessary
disclosure in a selection patent via an infringement action based on a more
fulsome record; and
c. Eli Lilly can obtain all of
the relief it is entitled to if there is indeed infringement by seeking an
injunction, damages, and/or loss of profits and costs in an infringement action
against Novopharm and other generics.
Conclusion
[48]
I conclude
that the appeal is moot and decline to exercise my discretion to hear the
appeal. The motion to dismiss the appeal for mootness is granted with costs.
"J. Edgar Sexton"
“I agree
C. Michael Ryer”
PELLETIER J.A. (Dissenting)
[49]
I have read the carefully prepared reasons of my
colleague Sexton J.A. I agree with his conclusion that the appeal before us is
moot. With respect, I do not agree that we should decline to exercise our
discretion to hear the appeal.
[50]
In my view, the conditions for the exercise of
our discretion under the three part test set out in Borowski v. Canada (Attorney General) [1989] 1 S.C.R. 342 have been met. My colleague agrees that there
is an adversarial context between Eli Lilly and Novopharm. The question as to
whether the matter is one for judicial determination is not contentious. We
disagree as to whether the interests of judicial economy will be served by
hearing the appeal. In my view, the decision under appeal will increase, rather
than decrease, the incidence of litigation in this litigious area.
[51]
The fact that the Borowski conditions are
met does not require us to exercise our discretion; the decision as to whether
to do so remains discretionary. In the circumstances of this case, I believe
that we should exercise that discretion and hear the appeal.
[52]
I say this for the following reasons. The
decision under appeal is an authoritative statement of law. It raises a doubt
as to the validity of any selection patent which does not contain comparative
data in support of the advantage claimed in the patent. That doubt justifies
our intervention.
[53]
Even though proceedings under the
Patented Medicines (Notice of Compliance) Regulations (“NOC”) do
not result in an in rem finding of invalidity, the patent law principles
applied in NOC proceedings are necessarily the same as those applied in an
infringement action. There is only one law of patents. Decisions of this Court
addressing principles of patent law in the context of NOC proceedings are
regularly and consistently cited as authority in other NOC proceedings. They
are also cited as authority in patent litigation unrelated to NOC proceedings. See,
for example, Calgon Carbon Corp. v. North Bay (City), 2006
FC 1373, [2006] F.C.J. No. 1719 at paragraphs 125 and 126, Johnson & Johnson Inc. v. Boston Scientific Ltd., 2004
FC 1672, [2004] F.C.J. No. 2040 at
paragraphs 52,75 and 97, Jay-Lor International Inc.
v. Penta Farm Systems Ltd., 2007 FC 358, [2007] F.C.J. No. 688, at paragraphs 74 and 77, Wessel v. Energy Rentals Inc., 2004 FC 791, [2004] F.C.J. No. 952 at paragraph 21, Varco Canada Ltd. v. Pason Systems Corp., 2006 FCA
100, [2006] F.C.J. No. 375 at
paragraph 4.
[54]
Quite apart from the
decisions of this Court, the judges of the Federal Court regularly rely upon
that court’s jurisprudence in NOC proceedings as authority for propositions of
patent law in NOC cases and in non-NOC cases. In that regard, see, for
example, Aventis Pharma Inc. v. Apotex Inc. 2005 FC 1283, [2005] F.C.J.
No. 1259 at para. 364 and Pfizer Canada Ltd. v. Canada (Minister of Health) 2007 FC 446,
[2007] F.C.J. No 596 at para. 31 where judges of the Federal Court applied
patent law principles articulated by judges of that court in NOC proceedings in
the name of judicial comity.
[55]
In the same way, I would
assume that until it is set aside or overtaken, the Patent Office will treat
the decision under appeal as the current state of the law on the subject of
selection patents and will assess pending applications accordingly.
[56]
Because it is an
authoritative statement of the law, the decision under appeal puts into
question the validity of all selection patents whose disclosure does not
contain comparative data in support of the unexpected or surprising advantage
claimed in the patent. That is so whether the decision is ultimately confirmed
or disapproved. All decisions on a point of law are capable of having an effect
which reaches beyond the parties. In that respect, the decision under appeal is
not unique. What distinguishes it from others the fact that it creates a doubt
with respect to selection patents as a class. Every prudent holder of a
selection patent will now re-read that patent to see if it is vulnerable to
challenge on the ground of insufficiency of disclosure. It is not necessary to
know exactly how many of them will decide they have a problem in order to
conclude that the question has broad implications for holders of selection
patents.
[57]
In my view, the
uncertainty surrounding the validity of selection patents which do not contain
comparative data is undesirable and should be resolved sooner rather than
later. I do not see the state of the record as a reason which would prevent us
from hearing the appeal now. Had the NOC not issued, we would have heard the
appeal on the very record which is now before us.
[58]
As for the question of
social cost, I would simply say that I do not see how the uncertainty created
by the decision under appeal can do other than act as a drag on efficient
decision-making in the pharmaceutical industry, or in any other industry which
relies on patent protection. To the extent that there is uncertainty as to the
validity of a class of patents, the value of patents of that class will be
discounted to reflect that uncertainty. That is inconsistent with the rationale
underlying selection patents, which is to encourage inventors to fully exploit
the subject matter of their patents.
[59]
I do not take this
Court’s comments about social cost in Janssen-Ortho Inc. v. Novopharm Ltd,
2005 FCA 6, [2005] F.C.J. No. 1196 to have set a standard with respect to the
determination of social cost. I can only point to the Supreme Court’s own
treatment of the issue of social cost in Doucet-Boudreau v. Nova Scotia
(Minister of Education) 2003 SCC 62, [2003] 3 S.C.R. 3, where the court
said at paragraph 21:
21 Moreover, in deciding
whether to hear a moot case, courts must weigh the expenditure of scarce
judicial resources against "the social cost of continued uncertainty in the law" (Borowski,
supra, at p. 361). The social
cost of uncertainty as to
the available Charter remedies is high. The Charter is designed to protect those who are most vulnerable to the dangers
of majority rule; this aspect of the Charter's purpose
is evident in the provisions protecting official minority language education
rights. If the Court leaves this matter undecided and courts are left under a
misapprehension as to the tools available to ensure that government behaviour
conforms with the Charter, the obvious danger is less than full
protection of Charter rights. Thus, the expenditure of judicial
resources is warranted in the present case despite the fact that the appeal may
be moot. The decision of this Court will provide guidance on the important
question of the nature and extent of remedies under s. 24 of the Charter in similar cases.
[60]
The reasoning employed by
the Supreme Court in deciding that there was a social cost in not hearing that
appeal had nothing to do with evidence, and everything to do with its view of
the likely consequences of inaction. This case is no different.
[61]
For those reasons, I
believe that we should exercise our discretion to hear this appeal even though
it is moot. I would therefore dismiss the motion with costs.
“J.
D. Denis Pelletier”
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