August 1, 2019
By Andrew McIntosh and Joshua Spicer
The September 21, 2017 amendments to the PMNOC Regulations brought significant change to litigation involving patented medicines in Canada. Perhaps most notably, (i) infringement actions replaced applications for prohibition orders, (ii) eliminating dual litigation and (iii) guaranteeing patentees a right of appeal even if the Minister of Health issues a Notice of Compliance. The amendments introduced documentary and oral examinations for discovery at the interlocutory stage and viva voce testimony at trial, but maintained the 24-month period to complete the proceedings.
The first trials of actions brought under the amended Regulations are scheduled for early 2020. As these cases work their way to trial, the Court has been called on to examine a number of interlocutory issues unique to actions under the Regulations, including rights of confidentiality and the test for striking a claim as frivolous and vexatious.
Prohibition on Joinder
One provision that has received noteworthy attention is the new section restricting joinder of actions. Section 6.02 of the Regulations prohibits joinder with any other action unless it relates to the submission at issue in that given action, or an action brought in relation to a Certificate of Supplementary Protection if the patent set out in that CSP is in issue. The Regulatory Impact Analysis Statement issued with the Regulations explains that the rationale for the prohibition is to restrict the number of issues in dispute and facilitate resolution within the 24-month statutory stay period1.
While in principle prohibiting joinder may facilitate resolution within 24 months, it can also place a heavy burden on innovators served with NOAs from multiple generics by requiring the innovator to litigate concurrently the same or similar issues in multiple proceedings. While this issue existed prior to the amendments, the added workload of an action, including document production and examinations for discovery, heightens the concern. At the same time, the ability of a later generic to challenge a patent whose validity was upheld in earlier proceedings is muted. That is, where the court has declared a patent valid in an action, comity dictates considerably more deference to findings made in a full action on infringement and validity. This is in contrast to findings made in the “summary proceedings” in applications under the former Regulations as to whether allegations were justified in order to determine simply whether the Minister should issue marketing authorization to the generic. Inevitably, under the amended Regulations later challengers will now effectively, notwithstanding the allegations in their NOA, be limited to identifying new grounds of non-infringement and invalidity at trial, and have little or no voice to advance arguments similar to those rejected in earlier proceedings.
Principles of Consolidation
Rule 105(a) of the Federal Courts Rules provides for proceedings to be consolidated, or heard concurrently or consecutively. Much of the case law has developed around the consolidation of proceedings based on a number of policy objectives: avoidance of a multiplicity of proceedings; promotion of expeditious and inexpensive determination of those proceedings; eliminating the duplication of pre-trial preparations, including document production, examination of witnesses, and the length of the trial2. The Federal Court has stated that these objectives further the general interest of justice, its proper administration and the true interests of the parties3.
Although the Regulations prohibit joinder, the Federal Court recently has sought to attain several advantages of consolidation by ordering concurrent trials of common validity issues. Two recent decisions highlight the Court’s approach under the amended Regulations.
The first, Biogen Canada Inc v Taro Pharmaceuticals Inc.4, arose out of scheduling discussions during the case management process. Biogen had sued Taro, and then Apotex, for patent infringement in relation to their proposed fampidrine products. Biogen and Apotex consented to the invalidity issues in both actions being tried together, but Taro, the first generic to serve an NOA, objected. Taro did not want to lose the potential advantage of being the first generic to market if the judgments on validity issued concurrently.
The Court rejected this argument. The Regulations provide no entitlement to the first generic that serves an NOA to obtain the first judgment, or to any generic market exclusivity. In the result it ordered that the invalidity issues be heard concurrently (in March 2020)5. The bulk of the Court’s reasons, however, relate to the strong likelihood the same judge would be assigned to hear the trials in both actions and the similarities between invalidity issues:
Given that the invalidity issues in both actions are essentially the same, that counsel for Biogen are the same, that the same inventors will be called to testify to the same factual issues, that the two actions will be heard in the same period of time and that the judge should be the same, efficient use of the Court and the parties’ time all but demands that the invalidity issues in both actions be tried together6.
The second decision, Bayer Inc v Apotex Inc7, is also a product of the Federal Court’s case management process. Bayer commenced actions against Teva and Apotex under the amended Regulations less than one month apart. Unlike Fampidrine, both generics acknowledged that the interests of justice and sound use of resources dictated concurrent trials on invalidity8. In this instance, Bayer, the innovator, objected for reasons based on potential prejudices of consolidation and unfairness it could face from Teva and Apotex pooling resources.
The matter was before the same prothonotary as Fampidrine. She began her analysis by reviewing the differences between consolidation and a common hearing under Rule 105, and concluded they are distinct procedures: “In short, then, an order of consolidation results in the joinder of two actions into one, including, necessarily, a single trial, while an order that two actions be heard together results in a joint trial, but not otherwise in the joinder of the actions9.
The Court then turned to consider whether the section 6.02 prohibition on joinder applies to concurrent hearings. Based on a plain reading of the provision, the Court concluded that it does not, and that prohibiting common issues from being heard together would not be justified given the purpose or intent of the regulatory scheme10. The features of consolidation, such as a single set of pleadings and discoveries and a single judgment, are complications section 6.02 seeks to avoid to facilitate resolution within 24 months11.
Conversely, the Court found that: “simply directing a common trial of some issues does not create the same complications, and reading s. 6.02 as also preventing common trials would have no effect in restricting the issues in dispute or facilitating the resolution in 24 months”12. The Court therefore rejected Bayer’s arguments that consolidation would cause it prejudice as “simply not applicable to a joint trial”, dismissed its concerns about Teva and Apotex pooling resources as unpersuasive. Concurrent trials were ordered in respect of all common invalidity issues13.
Application of the Prohibition
Section 6.02 also received attention in the context of a motion to add additional defendants beyond the named second person. In Genentech, Inc v Celltrion Healthcare Co, Ltd14, the plaintiffs moved to add defendants into the action they alleged would be involved in making and selling the generic drug at issue. The Court dismissed the motion finding that Regulations do not permit claims against additional defendants.
In doing so the Court rejected arguments that section 6(1) merely provides that a second person must be named as a defendant with no prohibition on adding parties and, alternatively, that the additional defendants fall within the meaning of second person. Section 6.02 played heavily in the analysis of the first argument:
To permit section 6 actions to be brought against a potential endless list of defendants who did not file the NDSs but have or will have some role in the making, constructing, using or selling of the generic drug in accordance with the NDS would render it difficult, if not impossible, to complete the actions within the required 24 month period. This was expressly recognized by Parliament in drafting the Regulations and limiting the scope of claims (and actions) that could be joined15.
Similarly, in Teva Canada Innovation v Pharmascience Inc16, the Court relied on section 6.02 in striking allegations of infringement relating to a dosage form against which no patent was listed. Pharmascience served a Notice of Allegation with respect to a 40 mg/ml dosage of copaxone. In response, Teva commenced an action for patent infringement under the Regulations with respect to this 40 mg/ml dose. In its Statement of Claim, Teva also asserted patent infringement under section 55 of the Patent Act with respect to a 20 mg/ml dose already being marketed by Pharmascience (and against which the patent in issue was not listed).
It was not disputed that Teva could pursue a claim against the 20 mg/ml under section 55 of the Patent Act. The issue was whether the claim could be joined with the 40 mg/ml claim in proceedings under the Regulations.
Despite the financial remedies issues being the only potential difference of significance between the causes of action, the Court held that it had no discretion to allow joinder given the clear language of section 6.02, irrespective of any efficiency that might otherwise be gained17. Citing Rivaroxaban the Court noted that if Teva instituted a separate proceeding, it may be possible to schedule a trial of common issues to proceed simultaneously18.
This small sample of cases shows that the prohibition on joinder in section 6.02 will be strictly enforced. Additional defendants beyond the second person cannot be named in proceedings under section 6(1), and products that no patent is listed against cannot be included. Infringement proceedings under section 55 of the Patent are available in these circumstances. The Court has however, shown a willingness to order concurrent trials of the same issues in appropriate circumstances under Rule 105. When multiple NOAs are served in close proximity and issues overlap, orders for concurrent trials are beginning to evolve as a tool to improve efficiency.
1 Canada Gazette Part I, Vol 151, No 28 at 3321.
2 Sanofi-Aventis Canada Inc v Novopharm Limited, 2009 FC 1285 ¶8
3 John E Canning Ltd v Tripap Inc (1999), 1999 CanLII 8029 ¶26 (FC)
4 2018 FC 1034 (“Fampidrine”)
5 Fampidrine at ¶13
6 Fampidrine at ¶9
7 2019 FC 191 (“Rivaroxaban”)
8 Rivaroxaban at ¶8
9 Rivaroxaban at ¶15
10 Rivaroxaban at ¶16
11 Rivaroxaban at ¶17-18
12 Rivaroxaban at ¶19
13 Rivaroxaban at ¶25
14 2019 FC 29 (“Herzuma”)
15 Herzuma at ¶19
16 2019 FC 595 (“Copaxone”)
17 Copaxone at ¶46
18 Copaxone at ¶47
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