Apotex Inc. v. Syntex Pharmaceuticals International Ltd. et al., 2009 FC 494

• Judge: Hughes, J.
• Court: Federal Court (Canada)
• Case Date: May 12, 2009
• Jurisdiction: Canada (Federal)
• Citations: 2009 FC 494;(2009), 352 F.T.R. 124 (FC)

Apotex Inc. v. Syntex Pharmaceuticals Intl. (2009), 352 F.T.R. 124 (FC)

MLB headnote and full text

Temp. Cite: [2009] F.T.R. TBEd. AU.027

Apotex Inc. (plaintiff) v. Syntex Pharmaceuticals International Ltd. and Hoffmann-LaRoche Limited (defendants)

(T-1168-01; 2009 FC 494)

Indexed As: Apotex Inc. v. Syntex Pharmaceuticals International Ltd. et al.

Federal Court

Hughes, J.

May 12, 2009.

Summary:

On March 20, 1996, a patent holder (LaRoche) obtained a prohibition order against a generic drug manufacturer (Apotex) (see 109 F.T.R. 216, affd. 205 N.R. 360). Two days later, Apotex served a new notice of allegation on LaRoche. LaRoche obtained an order permanently staying the proceedings where the notice of allegation was essentially the same as those in the initial application (see 125 F.T.R. 57). Thirty months after the second notice of application was filed, without any determination on the merits having been made, the Minister of Health issued a notice of compliance to Apotex. Laroche obtained an order quashing the notice of compliance (see 168 FT.R. 16). Meanwhile, Apotex commenced an action under the Patent Act and, on April 23, 1999, obtained a declaration that LaRoche's patent was invalid (see 166 F.T.R. 161). On April 30, 1999, Apotex obtained an order setting aside the March 20, 1996 prohibition order and dismissing that application. Apotex sued Laroche for damages and other relief pursuant to the Patented Medicines (Notice of Compliance) Regulations. The following issues were raised: (1) did the 1993 version or the 1998 version of the Regulations apply to Apotex's claims; (2) if the 1998 version applied, did the events respecting the prohibition order proceedings trigger s. 8 of the 1998 Regulations; (3) if the 1993 version applied, did the events respecting the prohibition order trigger s. 8 of the 1993 Regulations; (4) if either the 1993 or 1998 version of the Regulations applied, was Apotex disentitled to any relief by its conduct in the prohibition order proceedings; and (5) if Apotex was entitled to relief under either the 1993 or 1998 Regulations, what was the most appropriate beginning date for the period of liability.

The Federal Court determined the issues as follows: (1) the 1993 version of the Regulations applied; (2) if the 1998 version had applied, the events respecting the dismissal of the application in which the prohibition order was granted would have triggered s. 8 of 1998 Regulations; (3) s. 8 of the 1993 version of the Regulations was not triggered by the events; (4) if Apotex had been entitled to relief, its conduct would not have disentitled it to such relief; and (5) if the 1998 version had applied, the relevant starting date was that certified by the Minister (July 21, 1995). As a result, the court dismissed the action.

Food and Drug Control - Topic 1102

Drugs - New drugs - Legislation, re - On March 20, 1996, a patent holder (LaRoche) obtained a prohibition order against a generic drug manufacturer (Apotex) (the order was affirmed on appeal later that year) - Two days later, Apotex served a new notice of allegation on LaRoche - LaRoche obtained an order permanently staying the proceedings where the notice of allegation was essentially the same as those in the initial application - Thirty months after the second notice of application was filed, the Minister of Health issued a notice of compliance to Apotex - Laroche obtained an order quashing the notice of compliance - On March 11, 1998, amendments to the 1993 version of the Patented Medicines (Notice of Compliance) Regulations came into effect - Meanwhile, Apotex commenced an action under the Patent Act and, on April 23, 1999, obtained a declaration that LaRoche's patent was invalid - On April 30, 1999, Apotex obtained an order setting aside the March 20, 1996 prohibition order and dismissing that application - Apotex sued Laroche for damages and other relief pursuant to the Regulations - The Federal Court stated that the determination of whether the 1993 or the 1998 version of the Regulations applied to Apotex's claim depended on whether the proceedings in which the prohibition order was granted was "pending" as of March 11, 1998, within the meaning of the transitional provisions of s. 9(6) of the amendments - If so, the 1998 version applied - The court concluded that the prohibition order as affirmed by the Court of Appeal was final before the 1998 amendments - There was, as of March 11, 1998, no pending application within the meaning of s. 9(6) - The fact that the judgment was later varied and set aside did not mean that the matter was pending as of March 11, 1998 - See paragraphs 31 to 44.

Food and Drug Control - Topic 1106

Drugs - New drugs - Notice of compliance - Issuance of - Section 8(1) of the Patented Medicines (Notice of Compliance) Regulations provided that "The first person is liable to the second person for all damage suffered by the second person where, because of the application of paragraph 7(1)(e), the Minister delays issuing a notice of compliance beyond expiration of all patents that are the subject of an order pursuant to subsection 6(1)" - The Federal Court stated that, given the definition of "expire" in s. 2 of the Regulations, the patent would expire at the end of its term, or if it lapsed (e.g., for nonpayment of maintenance fees) or if it was terminated by operation of law (e.g., a declaration of invalidity by a court under s. 60 of the Patent Act) - If a patent was declared to be invalid by operation of law in a court decision, it would be unnecessary to vary an order prohibiting the Minister from issuing a notice of compliance "until the expiration" of that patent - In effect it was self-executing - Thus the Minister need not delay in granting a notice of compliance to a generic drug manufacturer if the relevant patent had expired by its term ending, or by lapse of that patent or if the court in proceedings under the Regulations declared the patent invalid between the parties to that proceeding - See paragraphs 50 to 58.

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Compensation by first person - [See Food and Drug Control - Topic 1102 and Food and Drug Control - Topic 1106 ].

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Compensation by first person - On March 20, 1996, a patent holder (LaRoche) obtained a prohibition order against a generic drug manufacturer (Apotex) (the order was affirmed on appeal later that year) - Two days later, Apotex served a new notice of allegation on LaRoche - LaRoche obtained an order permanently staying the proceedings where the notice of allegation was essentially the same as those in the initial application - Thirty months after the second notice of application was filed, the Minister of Health issued a notice of compliance to Apotex - Laroche obtained an order quashing the notice of compliance - On March 11, 1998, amendments to the 1993 version of the Patented Medicines (Notice of Compliance) Regulations came into effect - Meanwhile, Apotex commenced an action under the Patent Act and, on April 23, 1999, obtained a declaration that LaRoche's patent was invalid - On April 30, 1999, Apotex obtained an order setting aside the March 20, 1996 prohibition order and dismissing that application - Apotex sued Laroche for damages and other relief pursuant to s. 8 of the Regulations - The Federal Court held that the 1993 version of the Regulations applied - However, if the 1998 version did apply, the triggering event for that version of s. 8 was that an application had to be "withdrawn ... discontinued ... or dismissed by the Court hearing the application [or] ... on appeal" - Accordingly, s. 8 would have been triggered because of the April 30, 1999 order dismissing the application - See paragraphs 45 to 49 - Section 8(1)(a) gave the court the power to find a date other than that certified by the Minister as being the date that the notice of compliance would have issued (i.e., the beginning date for the period of liability) - The court had to be satisfied on the evidence that another date would be more appropriate - There was no such evidence before the court - See paragraphs 81 to 84.

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Compensation by first person - Section 8(1) of the Patented Medicines (Notice of Compliance) Regulations provided that "The first person is liable to the second person for all damage suffered by the second person where, because of the application of paragraph 7(1)(e), the Minister delays issuing a notice of compliance beyond expiration of all patents that are the subject of an order pursuant to subsection 6(1)" - The Federal Court stated that it would not be proper to construe s. 8 so as to impose a liability on a first person simply because the Minister unreasonably delayed or neglected to issue a notice of compliance to a second person - A reasonable interpretation was to impose liability if the cause of the delay was that the impugned patent had expired by either the natural end of its term or by lapse or by operation of law - If, for instance, the patent was declared invalid in the context of the relevant notice of compliance application itself, then it could be said that the Minister had delayed in issuing the notice of compliance because the patent had to be considered to have "expired" - The extent of the delay could reasonably be considered to be the later of the day upon which the Minister indicated that the notice of compliance would otherwise have been issued if it were not for the court application, or the filing date of that application with the court - The end date would be the date that the notice of compliance was issued - See paragraphs 69 to 71.

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Compensation by first person - On March 20, 1996, a patent holder (LaRoche) obtained a prohibition order against a generic drug manufacturer (Apotex) (the order was affirmed on appeal) - Two days later, Apotex served a new notice of allegation on LaRoche - LaRoche obtained an order permanently staying the proceedings - Thirty months after the second notice of application was filed, the Minister of Health issued a notice of compliance to Apotex - Laroche obtained an order quashing the notice of compliance - On March 11, 1998, amendments to the 1993 version of the Patented Medicines (Notice of Compliance) Regulations came into effect - Meanwhile, Apotex commenced an action under the Patent Act and, on April 23, 1999, obtained a declaration that LaRoche's patent was invalid - On April 30, 1999, Apotex obtained an order setting aside the March 20, 1996 prohibition order and dismissing that application - Apotex sued Laroche for damages and other relief pursuant to s. 8 of the Regulations - The Federal Court held that the 1993 version of the Regulations applied - The 1993 version of s. 8(1) made the first person (LaRoche) liable to the second person (Apotex) "... for all damage suffered by the second person where, because of the application of paragraph 7(1)(e), the Minister delayed issuing a notice of compliance beyond expiration of all patents that are the subject of a prohibition order under subsection 6(1)" - Here, the Minister certified that the notice of compliance would have issued on July 21, 1995, were it not for the 1993 court application - The notice of compliance was issued May 4, 1999 - Thus the period for which LaRoche was liable would be between July 21, 1995 and May 4, 1999 - However, the judgment declaring LaRoche's patent to be invalid did not occur in the context of the Regulations, but in the context of a separate action - That judgment issued only a few days before May 4, 1999 and the order followed on April 30, 1999 - There was no unreasonable delay by the Minister in issuing the notice of compliance - Apotex could not reach back and apply the finding of invalidity so as to argue that the patent had "expired" within the meaning of the 1993 version of s. 8 - Section 8 was not triggered - See paragraphs 45 to 76.

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Compensation by first person - On March 20, 1996, a patent holder (LaRoche) obtained a prohibition order against a generic drug manufacturer (Apotex) (the order was affirmed on appeal) - Two days later, Apotex served a new notice of allegation on LaRoche - LaRoche obtained an order permanently staying the proceedings - Thirty months after the second notice of application was filed, the Minister of Health issued a notice of compliance to Apotex - Laroche obtained an order quashing the notice of compliance - On March 11, 1998, amendments to the 1993 version of the Patented Medicines (Notice of Compliance) Regulations came into effect - Meanwhile, Apotex commenced an action under the Patent Act and, on April 23, 1999, obtained a declaration that LaRoche's patent was invalid - On April 30, 1999, Apotex obtained an order setting aside the March 20, 1996 prohibition order and dismissing that application - Apotex sued Laroche for damages and other relief pursuant to s. 8 of the Regulations - The Federal Court held that the 1993 version of the Regulations applied and that s. 8 was not triggered - The court opined that if Apotex had been entitled to relief, it would not have become disentitled to that relief by its conduct in the prohibition proceedings - Apotex was never reprimanded or criticized by any court respecting any procedural or other steps that it took - It would be unacceptable to now look at what was done in any critical way and come to the conclusion that such conduct was so reprehensible or out of line so as to disentitle Apotex to any relief - On the scant evidence available, the court could not make any such finding - In any event, the proceedings had been in the earlier days of the Regulations which were admittedly arcane and difficult to understand - Several amendments later, the Regulations still presented a puzzling minefield to even the most experienced litigant - See paragraphs 77 to 80.

Food and Drug Control - Topic 1108.3

Drugs - New drugs - Notice of compliance - Prohibition order - Setting aside - [See Food and Drug Control - Topic 1106 ].

Practice - Topic 5729

Judgments and orders - Final judgments and orders - What constitute - [See Food and Drug Control - Topic 1102 ].

Statutes - Topic 2614

Interpretation - Interpretation of words and phrases - Modern rule (incl. interpretation by context) - Legislative or statutory context - The Federal Court reviewed the modern principle of statutory interpretation and concluded that the court had a duty to make some sense of a regulatory provision by reading it in context - The court should not be distracted simply because counsel could suggest ambiguities or absurdities - See paragraphs 64 to 68.

Statutes - Topic 6310

Operation and effect - Effect on earlier statutes - Substitutions - Transitional provisions - Effect of - [See Food and Drug Control - Topic 1102 ].

Words and Phrases

Expiration - The Federal Court considered the meaning of "expiration" as used in s. 8 of the 1993 version of s. 8(1) of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 - See paragraphs 50 to 58.

Words and Phrases

Pending - The Federal Court considered the meaning of "pending" as used in the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, as amended in 1998 - See paragraphs 31 to 44.

Cases Noticed:

AB Hassle et al. v. Apotex Inc. et al. (2008), 384 N.R. 372; 2008 FCA 416, refd to. [para. 40].

Poulton v. Adjustable Cover and Boiler Block Co. (1908), 25 R.P.C. 661 (C.A.), refd to. [para. 41].

Coflexip SA v. Stolt Offshore MS Ltd., [2004] F.S.R. 708 (C.A.), refd to. [para. 41].

Unilin Beheer BV v. Beerry Floor NV, [2007] EWCA Civ. 364 (C.A.), refd to. [para. 41].

Zeneca Pharma Inc. v. Canada (Minister of National Health and Welfare) et al. (1996), 109 F.T.R. 148; 66 C.P.R.(3d) 169 (T.D.), refd to. [para. 53].

Merck Frosst Canada Inc. et al. v. Canada (Minister of National Health and Welfare) et al. (1994), 169 N.R. 342; 55 C.P.R.(3d) 302 (F.C.A.), refd to. [para. 59].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 65].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1, refd to. [para. 66].

Apotex Inc. v. Merck & Co. et al. (2008), 335 F.T.R. 255; 2008 FC 1185, refd to. [para. 83].

Statutes Noticed:

Patent Act Regulations (Can.), Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, sect. 8 [paras. 46, 50, 69].

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

Authors and Works Noticed:

Sullivan, Ruth, Sullivan on the Construction of Statutes (5th Ed. 2008), pp. 1 [para. 65]; 9 [para. 67].

Counsel:

A. Brodkin and J. Topolski, for the plaintiff, Apotex Inc.;

G.A. Gaikis, Nancy Pei and Lyn I. Ng, for the defendants, Hoffman-LaRoche Limited et al.

Solicitors of Record:

[Not disclosed]

This action was heard at Toronto, Ontario, on May 4 and 5, 2009, by Hughes, J., of the Federal Court, who delivered the following reasons for judgment on May 12, 2009.