Apotex Inc. v. Syntex Pharmaceuticals International Ltd. et al., 2010 FCA 155

• Judge: Evans, Dawson and Stratas, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: May 18, 2010
• Jurisdiction: Canada (Federal)
• Citations: 2010 FCA 155;(2010), 404 N.R. 371 (FCA)

Apotex Inc. v. Syntex Pharmaceuticals (2010), 404 N.R. 371 (FCA)

MLB headnote and full text

Temp. Cite: [2010] N.R. TBEd. JN.038

Apotex Inc. (appellant) v. Syntex Pharmaceuticals International Inc. and Hoffmann Laroche Limited (respondents)

(A-238-09; 2010 FCA 155)

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

Federal Court of Appeal

Evans, Dawson and Stratas, JJ.A.

June 10, 2010.

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 F.T.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 (see 167 F.T.R. 111). 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, in a decision reported at 352 F.T.R. 124, 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. Apotex appealed. At issue was the correctness of the first and third determinations.

The Federal Court of Appeal held that the issues had been correctly determined and dismissed the appeal.

Estoppel - Topic 380

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Matters in issue - 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 there was, as of March 11, 1998, no pending application within the meaning of s. 9(6) - Apotex appealed, asserting that in the April 30, 1999 decision, the court rejected submissions that it lacked jurisdiction because the proceedings were no longer extant - Apotex asserted that since that decision was not appealed, the matter was res judicata and La Roche was estopped from reopening the issue - The Federal Court of Appeal rejected the assertion - Issue estoppel only operated where the same question was conclusively determined between the parties - The estoppel extended to the material facts and the conclusions of law or of mixed fact and law that were necessarily, even if not explicitly, determined in the earlier proceedings - The 1999 decision neither explicitly nor necessarily decided whether the prohibition proceedings were pending for the purpose of s. 9(6) of the 1998 version of the Regulations - Rather, the court based its decision on its inherent continuing jurisdiction to amend or annul the prohibition order in response to the changed circumstances - The court in the 1999 decision also expressed the view that the prohibition order had, by its own terms, ceased to have any operative effect with the issuance of the April 19, 1999 order that had declared LaRoche's patent to be invalid - See paragraphs 22 to 24.

Estoppel - Topic 386

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Issues decided in prior proceedings - [See Estoppel - Topic 380 ].

Food and Drug Control - Topic 1108.2

Drugs - New drugs - Notice of compliance - Prohibition order - Compensation by first person - Section 8(1) of the 1993 version 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 - The Federal Court of Appeal agreed with the Federal Court's interpretation of s. 8 - See paragraphs 30 to 37.

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 - The Federal Court of Appeal stated that the Federal Court's reference to a patent being declared invalid in the context of the relevant notice of compliance application itself was not an accurate statement because no such declaration could be made in a prohibition proceedings - However, the error was inadvertent and not material - The situation that was being addressed was where, in a prohibition proceeding under the Regulations, the court found an allegation of invalidity to be justified - With that clarification, the Federal Court correctly interpreted s. 8 of the 1993 version of the Regulations in the context of the unique facts before it - See paragraphs 30 to 37.

Words and Phrases

Pending - The Federal Court of Appeal considered the meaning of "pending" as used in s. 9(6) of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, as amended in 1998 - See paragraphs 25 to 29.

Cases Noticed:

AB Hassle et al. v. Apotex Inc. et al. (2008), 384 N.R. 372; 2008 FCA 416, refd to. [para. 25].

Danyluk v. Ainsworth Technologies Inc. et al., [2001] 2 S.C.R. 460; 272 N.R. 1; 149 O.A.C. 1; 2001 SCC 44, refd to. [para. 23].

Clagett's Estate, In re; Fordham v. Clagett (1882), 20 Ch. D. 637 (C.A.), refd to. [para. 26].

Merck Frosst Canada Inc. et al. v. Canada (Minister of National Health and Welfare) et al. (1994), 169 N.R. 342 (F.C.A.), refd to. [para. 34].

Statutes Noticed:

Patent Act Regulations (Can.), Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, sect. 8 [para. 15]; sect. 9(6) [para. 12].

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

Counsel:

Andrew Brodkin and Ken Crofoot, for the appellant;

Gunars Gaikis and Nancy Pei, for the respondents.

Solicitors of Record:

Goodmans LLP, Toronto, Ontario, for the appellant;

Smart & Biggar, Toronto, Ontario, for the respondents.

This appeal was heard at Ottawa, Ontario, on May 18, 2010, by Evans, Dawson and Stratas, JJ.A., of the Federal Court of Appeal. Dawson, J.A., delivered the following reasons for judgment for the court on June 10, 2010.