Apotex Inc. v. Merck & Co. et al., 2011 FCA 329

• Judge: Sexton, Layden-Stevenson and Stratas, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: February 15, 2011
• Jurisdiction: Canada (Federal)
• Citations: 2011 FCA 329;(2011), 425 N.R. 279 (FCA)

Apotex Inc. v. Merck & Co. (2011), 425 N.R. 279 (FCA)

MLB headnote and full text

Temp. Cite: [2011] N.R. TBEd. DE.016

Merck Frosst Canada & Co. (appellant) v. Apotex Inc. (respondent)

(A-154-10; 2011 FCA 329)

Indexed As: Apotex Inc. v. Merck & Co. et al.

Federal Court of Appeal

Sexton, Layden-Stevenson and Stratas, JJ.A.

November 25, 2011.

Summary:

Merck Frosst Canada & Co. held the rights to a patented drug called norfloxacin. In the early 1990s, Apotex Inc. applied to the Minister of Health for a Notice of Compliance (NOC). Apotex alleged that it would not infringe Merck's patent as it would either use norfloxacin raw material acquired by a third company, Novopharm Ltd., under a license from Merck, or it would produce norfloxacin by a method that would not infringe the patent. Merck filed two applications to prohibit the Minister from issuing an NOC to Apotex.

The Federal Court, in a decision reported at 144 F.T.R. 299, allowed Merck's first application relating to the use of a non-infringing method of making norfloxacin. Apotex appealed.

The Federal Court of Appeal, in a decision reported at 236 N.R. 179, dismissed the appeal.

The Federal Court, in a decision reported at 106 F.T.R. 294, allowed Merck's second application, relating to the use of licensed material. Apotex appealed.

The Federal Court of Appeal, in a decision reported at 197 N.R. 294, dismissed the appeal. Apotex appealed.

The Supreme Court of Canada, in a decision reported at 227 N.R. 299, allowed the appeal. A week later, the Minister issued Apotex its NOC. Apotex now sought compensation from Merck under s. 8 of the Patented Medicines (Notice of Compliance) Regulations, as amended.

The Federal Court, in a decision reported at 363 F.T.R. 137, held that "the 1998 version of the Regulations applies to this action and that Apotex would have entered the market sooner had it not been prohibited by the operation of the Regulations and the order Merck obtained in 1995. Therefore, Apotex is entitled under the Regulations to obtain compensation from Merck." Quantum of damages would be determined at a later date. Merck appealed.

The Federal Court of Appeal dismissed the appeal.

Food and Drug Control - Topic 1102

Drugs - New drugs - Legislation, re (incl. international treaty obligations) - Merck Frosst Canada & Co. held the rights to a patented drug called norfloxacin - In the early 1990s, Apotex Inc. applied to the Minister of Health for a Notice of Compliance (NOC) - Apotex alleged that it would not infringe Merck's patent as it would either use norfloxacin raw material acquired by a third company, Novopharm Ltd., under a license from Merck, or it would produce norfloxacin by a method that would not infringe the patent - In 1995, Merck filed two applications to prohibit the Minister from issuing an NOC to Apotex - Apotex was denied an NOC until 1998, when the Supreme Court of Canada allowed its appeal - A week later, the Minister issued Apotex its NOC - Apotex now sought compensation from Merck under s. 8 of the Patented Medicines (Notice of Compliance) Regulations, as amended - At issue was, inter alia, which version of the Regulations applied: the 1993 version or the version that came into force in March 1998 - The applications judge held that the 1998 Regulations applied - Merck's application was pending in March 1998 and therefore, according to the transitional rule, the 1998 Regulations applied - The Federal Court of Appeal dismissed Merck's appeal - See paragraphs 14 to 24.

Food and Drug Control - Topic 1102

Drugs - New drugs - Legislation, re (incl. international treaty obligations) - Merck Frosst Canada & Co. held the rights to a patented drug called norfloxacin - In the early 1990s, Apotex Inc. applied to the Minister of Health for a Notice of Compliance (NOC) - Apotex alleged that it would not infringe Merck's patent as it would either use norfloxacin raw material acquired by a third company, Novopharm Ltd., under a license from Merck, or it would produce norfloxacin by a method that would not infringe the patent - In 1995, Merck filed two applications to prohibit the Minister from issuing an NOC to Apotex - Apotex was denied an NOC until 1998, when the Supreme Court of Canada allowed its appeal - A week later, the Minister issued Apotex its NOC - Apotex now sought compensation from Merck under s. 8 of the Patented Medicines (Notice of Compliance) Regulations, as amended - At issue was, inter alia, which version of the Regulations applied: the 1993 version or the version that came into force in March 1998 - The applications judge held that the 1998 Regulations applied in light of the transitional provisions - Merck appealed, asserting that the transitional provisions in the 1998 Regulations had retroactive or retrospective effect and interfered with vested rights - Consequently, they were invalid - The Federal Court of Appeal rejected the assertion and dismissed the appeal - The 1998 Regulations could not be said to be retroactive or retrospective or interfere with any vested rights of Merck - Accordingly, the court agreed with the applications judge that the 1998 Regulations were authorized by s. 55.2(4) of the Patent Act, were valid, and applied in this case - See paragraphs 25 to 68.

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Compensation by first person - Merck Frosst Canada & Co. held the rights to a patented drug called norfloxacin - In the early 1990s, Apotex Inc. applied to the Minister of Health for a Notice of Compliance (NOC) - Apotex alleged that it would not infringe Merck's patent as it would either use norfloxacin raw material acquired by a third company, Novopharm Ltd., under a license from Merck, or it would produce norfloxacin by a method that would not infringe the patent - Merck filed two applications to prohibit the Minister from issuing an NOC to Apotex - Apotex was denied an NOC until 1998, when the Supreme Court of Canada allowed its appeal - A week later, the Minister issued Apotex its NOC - Apotex now sought compensation from Merck under s. 8 of the Patented Medicines (Notice of Compliance) Regulations, as amended - The applications judge held that Apotex would have entered the market sooner had it not been prohibited by the operation of the Regulations and the order Merck obtained in 1995 - Therefore, Apotex was entitled under the Regulations to obtain compensation from Merck - Merck appealed - The Federal Court of Appeal dismissed the appeal - The applications judge did not commit any reviewable error in its determination of the period of damages for which Merck was liable - See paragraphs 69 to 86.

Patents of Invention - Topic 5513

New substances licences (incl. compulsory licences) - Food and medicine - Patent Act Regulations - Interpretation - [See both Food and Drug Control - Topic 1102 ].

Statutes - Topic 6711

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Retrospective or retroactive operation - Regulations - [See second Food and Drug Control - Topic 1102 ].

Words and Phrases

Pending - The Federal Court of Appeal discussed the meaning of the word "pending" as used in s. 8 of the Patented Medicines (Notice of Compliance) Regulations, SOR/98-166 - See paragraphs 14 to 24.

Cases Noticed:

Apotex Inc. v. Syntex Pharmaceuticals International Ltd. et al. (2009) 352 F.T.R. 124; 2009 FC 494, refd to. [para. 16].

Parklane Private Hospital Ltd. v. Vancouver (City), [1975] 2 S.C.R. 47; 2 N.R. 305, refd to. [para. 30].

Association internationale des commis du détail v. Commission des Relations de Travail du Québec et al., [1971] S.C.R. 1043, refd to. [para. 30].

Smith v. Callander, [1901] A.C. 297, refd to. [para. 31].

Apotex Inc. v. Merck & Co. and Merck Frosst Canada Inc., [1994] 1 F.C. 742; 162 N.R. 177 (F.C.A.), refd to. [para. 32].

Épiciers Unis Métro-Richelieu Inc. v. Collin, [2004] 3 S.C.R. 257; 326 N.R. 89; 2004 SCC 59, refd to. [para. 34].

Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, [1977] 1 S.C.R. 271; 7 N.R. 401, refd to. [para. 39].

Reference Re Constitutional Question Act (B.C.), [1991] 2 S.C.R. 525; 127 N.R. 161; 1 B.C.A.C. 241; 1 W.A.C. 241, refd to. [para. 39].

Reference Re Canada Assistance Plan (B.C.) - see Reference Re Constitutional Question Act (B.C.).

Thiessen v. Manitoba Public Insurance Corp. (1990), 63 Man.R.(2d) 8; 66 D.L.R.(4th) 366 (C.A.), refd to. [para. 41].

Bristol-Myers Squibb Co. et al. v. Canada (Attorney General) et al. (2005), 334 N.R. 55; 2005 SCC 26, refd to. [para. 45].

Apotex Inc. v. Merck & Co. et al. (2009), 391 N.R. 336; 2009 FCA 187, refd to. [para. 45].

Sanofi-Aventis Canada Inc. et al. v. Novopharm Ltd. (2011), 420 N.R. 115; 2011 FCA 149, refd to. [para. 45].

Teva Canada Ltd. v. Sanofi-Aventis Canada Inc. - see Sanofi-Aventis Canada Inc. et al. v. Novopharm Ltd.

Westminster City Council v. Haywood, [2000] 2 All E.R. 634 (Ch.D.), refd to. [para. 48].

British Columbia v. Imperial Tobacco Canada Ltd. et al., [2005] 2 S.C.R. 473; 339 N.R. 129; 218 B.C.A.C. 1; 359 W.A.C. 1; 2005 SCC 49, refd to. [para. 53].

Landgraf v. USI Fil Products (1994), 511 U.S. 244, refd to. [para. 54].

Merck Frosst Canada Inc. et al. v. Canada (Minister of National Health and Welfare) et al. (1995), 169 N.R. 342; 55 C.P.R.(3d) 302 (F.C.A.), refd to. [para. 60].

Apotex Inc. v. Eli Lilly & Co. et al. (2004), 328 N.R. 87; 2004 FCA 358, refd to. [para. 61].

Merck Frosst Canada Inc. et al. v. Canada (Minister of National Health and Welfare) et al.(1996), 197 N.R. 294; 67 C.P.R.(3d) 455 (F.C.A.), revd. [1998] 2 S.C.R. 193; 227 N.R. 299; 80 C.P.R.(3d) 368, refd to. [para. 71].

Waxman et al. v. Waxman et al. (2004), 186 O.A.C. 201 (C.A.), refd to. [para. 76].

Danyluk v. Ainsworth Technologies Inc. et al., [2001] 2 S.C.R. 460; 272 N.R. 1; 149 O.A.C. 1, refd to. [para. 82].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201, refd to. [para. 82].

Statutes Noticed:

Patent Act Regulations (Can.), Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, sect. 8 [para. 12].

Patent Act Regulations (Can.), Patented Medicines (Notice of Compliance) Regulations, SOR/98-166, sect. 8 [para. 13].

Patented Medicines (Notice of Compliance) Regulations - see Patent Act Regulations (Can.).

Authors and Works Noticed:

Canada, Regulatory Impact Analysis Statement, Canada Gazette Part II, vol. 132, No. 7, p. 1056 [para. 45].

Driedger, Elmer A., Statutes: Retroactive Retrospective Reflections (1978), 56 Can. Bar Rev. 264, pp. 268 to 269 [para. 34].

Edinger, Elizabeth, Retrospectivity in Law (1995), 29 U.B.C.L.R. 5, p. 13 [para. 53].

Fitch, Jill E., Retroactivity and Legal Change: An Equilibrium Approach (1996-1997), 110 Harv. L. Rev. p. 1088 [para. 50].

LeSueur, Andrew P., Herberg, Javan W. and English, Rosalind, Principles of Public Law (2nd Ed. 1999), p. 425 [para. 53].

Raz, Joseph, The Rule of Law and its Virtue (1977), 93 L.Q.R. 195, p. 198 [para. 53].

Sampfort, Charles J.G., Louise, Jennie, Blencowe, Sophie and Round, Tow, Retrospectivity and the Rule of Law (2006), pp. 98 [para. 53]; 233, 266, 273 [para. 50].

Sullivan, Ruth, Sullivan on the Construction of Statutes (5th Ed. 2008), pp. 458 [para. 40]; 670, 727 [para. 30].

Counsel:

Patrick Kierans and Brian Daley, for the appellant;

Harry Radomski, Kenneth W. Crofoot and Jerry Topolski, for the respondent.

Solicitors of Record:

Ogilvy Renault LLP, Montreal, Quebec, for the appellant;

Goodmans LLP, Toronto, Ontario, for the respondent.

This appeal was heard on February 15, 2011, at Toronto, Ontario, by Sexton, Layden-Stevenson and Stratas, JJ.A., of the Federal Court of Appeal. The following judgment of the Court of Appeal was delivered by Stratas, J.A., at Ottawa, Ontario, on November 25, 2011.