| Date: 20010110 |
| Docket: A-69-98 |
CORAM: ISAAC J.A.
LÉTOURNEAU J.A.
McDONALD J.A.
BETWEEN:
PFIZER CANADA INC. and
PFIZER CORPORATION
Appellants
(Applicants)
- and -
APOTEX INC. and
THE MINISTER OF NATIONAL HEALTH AND WELFARE
Respondents
(Respondents)
| Docket: A-681-98 |
BETWEEN:
PFIZER CANADA INC. and
PFIZER CORPORATION
Appellants
(Applicants)
- and -
NU-PHARM INC. and
THE MINISTER OF NATIONAL HEALTH AND WELFARE
Respondents
(Respondents)
Heard at Toronto, Ontario on Wednesday, October 4, 2000
Judgment delivered at Ottawa, Ontario on Wednesday, January 10, 2001
| REASONS FOR JUDGMENT BY: ISAAC J.A. |
| CONCURRED IN BY: LÉTOURNEAU J.A. |
| McDONALD J.A. |
| Date: 20010110 |
| Docket: A-69-98 |
CORAM: ISAAC J.A.
LÉTOURNEAU J.A.
McDONALD J.A.
BETWEEN:
PFIZER CANADA INC. and
PFIZER CORPORATION
Appellants
(Applicants)
- and -
APOTEX INC. and
THE MINISTER OF NATIONAL HEALTH AND WELFARE
Respondents
(Respondents)
| Docket: A-681-98 |
BETWEEN:
PFIZER CANADA INC. and
PFIZER CORPORATION
Appellants
(Applicants)
- and -
NU-PHARM INC. and
THE MINISTER OF NATIONAL HEALTH AND WELFARE
Respondents
(Respondents)
REASONS FOR JUDGMENT
ISAAC J.A.
[1] These are two appeals from orders of the Trial Division dated 30 January 1998 and 21 December 1998, respectively dismissing applications by Pfizer Canada Inc. and Pfizer Corporation (the "appellants") for orders of prohibition pursuant to subsection 6(1) of the Patented Medicines (Notice of Compliance) Regulations1 (the "Regulations"). In those applications, the appellants sought to prohibit the Minister of National Health and Welfare (the "Minister") from issuing Notices of Compliance ("NOCs") pursuant to section C.08.004 of the Food and Drugs Regulations2 to respondents Nu-Pharm ("Nu-Pharm") and Apotex Inc. ("Apotex") respectively, for the medicine, fluconazole, before the expiration of Canadian Letters Patent 1,181,076 (the "Pfizer Patent").
Facts
[2] The facts are not in dispute and may be briefly stated.
[3] On 23 June 1995, each of the respondents, Apotex and Nu-Pharm, issued Notices of Allegation pursuant to the Regulations, alleging that no pertinent claim of the Pfizer patent would be infringed by the specific processes which they intended to use in the manufacture of fluconazole. In response to the Notices of Allegation, the appellant commenced applications for prohibition in the Trial Division on 10 August 1995, pursuant to subsection 6(1) of the Regulations.
[4] The applications were heard separately by two different Motions Judges. On 30 January 1998, the first Motions Judge dismissed the application for prohibition in respect of the Notice of Allegation issued by the respondent, Apotex, on the basis that the appellants had failed to establish that the allegation of non-infringement was unjustified. The appellants appealed from that order on 9 February 1998. However, before the appeal came on for hearing before this Court the Minister issued to Apotex a NOC for fluconazole on October 9, 1998.
[5] On 16 October 1998, the application for prohibition against the respondent, Nu-Pharm came on for hearing before the second motions Judge. On the same day, he dismissed the application on the ground that the appellants had not shown that the allegations of non-infringement made by the respondent, Nu-Pharm, had been unjustified.3 On October 27, 1998, the Minister granted Nu-Pharm its NOC for fluconazole. The appellants appealed the order dismissing this application for prohibition.
[6] Both appeals were heard together before this Court on 4 October, 2000. Although duly served, with all documents relevant to the appeals, the Minister did not file a memorandum of fact and law with the Court or make oral submissions at the hearing of the appeals. On these appeals, the appellants ask the Court to set aside the decisions of the Trial Division, grant the prohibition orders originally applied for and issue orders revoking all NOCs granted to the respondents in respect of fluconazole, until after expiration of Pfizer's patent. For their part, the respondents, Apotex and Nu-Pharm, defended the orders in appeal and raised a new ground on their own. Relying on the judgment of this Court, in Merck Frosst Canada Inc. v. Canada (Minister of National, Health and Welfare) (1999), 240 N.R. 195 (F.C.A.) (leave to appeal to the S.C.C. dismissed, [1999] S.C.C.A. No. 313), these respondents contend that both appeals are moot. They say further that if we accepted their positions that these appeals are moot, we should not exercise our discretion and hear the appeals notwithstanding that they are moot.
[7] Four issues were raised on appeal. However, I am of the opinion that the appeals may be disposed of on a single issue, namely whether the appeals have become moot because the Minister has issued NOCs. To that issue, I now turn.
Position of the Parties
[8] The respondents contend that the appellants disregard the special nature of prohibition proceedings contemplated under the Regulations. In their view, the Regulations constitute a complete code of procedural rights that defines and limits the relief available to a patentee. The Regulations are concerned solely with determining when, and not how, the Minister is permitted to issue a NOC. Once an allegation is served and filed in accordance with paragraph 5(1)(b), section 7 of the Regulations contemplates only two possible outcomes: the Minister is either enjoined from issuing a NOC until the expiry of the patent in question, or is free to do so whenever the latest of the other relevant time periods in subsection 7(1) expires. The former outcome will result where the patentee is successful in obtaining a prohibition order from the Court, and the latter outcome will result where the patentee is unsuccessful in obtaining such an order. In either case, once the Minister issues a NOC, the Regulations cease to have application. In any case, they certainly do not confer on the patentee a right to ask this Court to quash or set aside the NOC after it has been issued.
[9] On this view of the Regulations, the respondents submit that the appeals are moot because the Minister properly exercised his discretion in issuing the NOCs to the respondents after the relevant periods in subsection 7(1) had expired. The respondents say that no appeal from the decisions of the Trial Division may be entertained by this Court because it is without jurisdiction under the Regulations to set aside a NOC after it has lawfully been issued. This follows necessarily, they say, from the limited scope of the remedial jurisdiction of the Court under the Regulations.
[10] In the memorandum of fact and law filed on the appeal, the appellants did not deal with the issue of mootness at all, since that issue was not raised below. However, counsel for the appellants, in response to an invitation by the Court, that they submit a memorandum in response to that of the respondents on the issue, did serve and file such a memorandum with the Court
[11] In their response to the respondents' contentions on the issue of mootness, the appellants make three arguments.
[12] First, they assert that, contrary to the positions taken by the respondents, paragraph 52(b)(i) of the Federal Court Act does invest this Court with jurisdiction to put the parties in the positions they would have been in, if the Trial Division had not erred. Therefore, they argue, in this case this Court has jurisdiction to grant an order of prohibition and to quash the Notices of Compliance issued by the Minister, if it reaches the conclusion that the Motions Judges in the Trial Division had erred in making the orders that they did. Furthermore, they say that the respondents contention that the appellants should have sought a stay of proceedings pending appeal is contrary to the jurisdiction of this Court.
[13] Second, they invoke the principle of fairness and say that because the second persons under the Regulations may appeal from an order made by a Motions Judge which grants prohibition, whether or not the 30 month period prescribed in the regulations has expired, they, too as the first persons under the Regulations, should have the right to appeal orders dismissing an application for a prohibition order, whether or not the 30 month period has expired.
[14] Third, they say that an appeal is necessary because it enables correction of errors in the Trial Division and assists in the resolution of its potential liability under section 8 of the Regulations which entitles a second person to damages for any delay in the issuance of a NOC where an application for prohibition has been dismissed. In any event, the appellants say, the appeals are far from moot as the Pfizer Patent only expires in January of 2001, and an order of prohibition would prevent the Minister from issuing any new NOCs while returning the parties to the positions they were in before the Minister wrongly issued NOCs to the respondents.
Analysis
[15] Despite the ingenious arguments advanced by counsel for the appellants, I am of the view that the decision of this Court in Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1999), 240 N.R. 195, leave to appeal to S.C.C. dismissed [1999] S.C.C.A. No. 313 governs the present appeals such that they should be dismissed. However, in deference to some of the submissions made by counsel and in order to avoid uncertainties as to the procedure to be followed and remedies available under the Regulations, I make the observations that follow.
[16] The disposition of these appeals depends upon the proper interpretation of the Regulations. For ease of reference, I reproduce sections 6 and 7 of the Regulations, as they read at the relevant time.
| Section 6. Right of Action |
| (1) A first person may, within 45 days after being served with a notice of an allegation pursuant to paragraph 5(3)(b), apply to a court for an order prohibiting the Minister from issuing a notice of compliance until after the expiration of one or more of the patents that are the subject of an allegation. |
| (2) The court shall make an order pursuant to subsection (1) in respect of a patent that is the subject of one or more allegations if it finds that none of those allegations is justified. |
| (3) The first person shall, within the 45 days referred to in subsection (1), serve the Minister with proof that an application referred to in that subsection has been made. |
| (4) Where the first person is not the owner of each patent that is the subject of an application referred to in subsection (1), the owner of each such patent shall be made a party to the application. |
| Section 7. Notice of Compliance |
| (1) The Minister shall not issue a notice of compliance to a second person before the latest of |
| (a) the expiration of 30 days after the coming into force of these Regulations, |
| (b) the day on which the second person complies with section 5, |
| (c) subject to subsection (3), the expiration of any patent on the patent list 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) in respect of any patent on the patent list, |
| (e) subject to subsections (2), (3) and (4), the expiration of 30 months after the receipt of proof of the making of any application referred to in subsection 6(l), 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(l), |
| (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. |
| (3) Paragraphs (1)(c), (d) and (e) do not apply in respect of a patent if the owner of the patent has consented to the making, constructing, using or selling of the drug in Canada by the second person. |
| (4) Paragraph (1)(e) ceases to apply in respect of an application referred to in subsection 6(1) if the application is withdrawn or finally dismissed by the court. |
| (5) A court may shorten or extend the time limit referred to paragraph 1(e) in respect of an application where the court has not yet made an order pursuant to subsection 6(1) in respect of that application and where the court finds that a party to the application failed to reasonably cooperate in expediting the application. |
[17] Prohibition proceedings under the Regulations are not similar to patent infringement proceedings. The scheme established by the Regulations has been described at length in previous decisions of this Court (See e.g. Bayer AG v. Canada (Minister of National Health and Welfare) (1993), 51 C.P.R. (3d) 329 per Mahoney J.A., Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare et al.) (1994), 55 C.P.R. (3d) 302 per Hugessen J.A., Hoffmann-La Roche Ltd. v. Canada (Minister of National Health and Welfare) (1996), 70 C.P.R. (3d) 206 per Stone J.A., Merck Frosst Canada Inc. v. Apotex (1997), 72 C.P.R. (3d) 170 per Strayer J.A.).
[18] Section 6 proceedings give to patentees a special method of protecting their patents from possible infringement. As Mahoney J.A. remarked in Bayer AG, supra at 337, the patentee,
| [b]y merely commencing the proceeding ... obtains what is tantamount to an interlocutory injunction for up to 30 months without having satisfied any of the criteria a court would require before enjoining issuance of a NOC. |
[19] This unique benefit conferred upon patentees has as its corollary that Parliament intended section 6 proceedings be dealt with expeditiously by way of summary application for judicial review. This much is evident from the remarks of Strayer J.A. in Merck Frosst, supra (at 177):
| In summary, the legislative stay is an extraordinary sanction detracting from the normal rights of a defendant under ordinary patent law. It must be applied strictly according to its terms. The 30 month period was no doubt intended in part to focus the minds of the parties and the Court as to the need for an expeditious prosecution of the application for prohibition. |
[20] I should like to deal now with some of the arguments advanced by the appellants. They contend that this Court (the Court of Appeal) has the power under section 52 of the Federal Court Act to do what the Trial Judge should have done, namely issue the prohibition. This position assumes that subsection 7(4) of the Regulations lifts the 30 month stay period in subparagraph 7(1)(e) only when the Court of Appeal has given final judgment on the issue of prohibition. This assumption is false in light of the view expressed by this Court in Hoffman Laroche, supra at paragraph 196, that the phrase "dismissed by the court" in subsection 7(4) of the Regulations is to be interpreted as meaning "dismissed by the Federal Court Trial Division". I see no reason to depart from the interpretation placed on that phrase in that case.
[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 Décary J.A. put it in Merck Frosst Canada, supra at paragraph 4, "the appeal is obviously moot, the Minister having done what he is empowered to do under subsection 7(1) of the Regulations, i.e. he issued a Notice of Compliance".
[22] It is my respectful view that no injustice flows from such an interpretation of the Regulations. The appellants have had the benefit of a near-automatic interlocutory injunction for a period of 30 months. If they wished to benefit from an appeal to this Court on the issue of prohibition, they could have brought their application and appeal expeditiously within the period of 30 months provided in subparagraph 7(1)(e) of the Regulations, but they did not. Arguably, the appellants' ability to bring an appeal within that period would have depended upon the Minister not having exercised his discretion to issue the NOCs. But that is a fact that the regulation-making authority provided for by formulating the Regulations in the way it did. I am of the opinion that it would be wrong for us to disturb that arrangement by avoiding a decision on the issue of mootness.
[23] I do not accept the appellants' contention that this Court should exercise its discretion to hear appeals which are otherwise moot in order to clarify their potential liability for damages under section 8 of the Regulations. At the relevant time, that section read:
| 8.(1) 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 the expiration of all patents that are the subject of an order pursuant to subsection 6(1). (2) The court may make such order for relief by way of damages or profits as the circumstances require in respect of any damage referred to in subsection (1). |
8.(1) La première personne est responsable envers la seconde personne de tout préjudice subi par cette dernière lorsque, en application de l'alinéa 7(1)e), le ministre reporte la délivrance de l'avis de conformité au-delà de la date d'expiration de tous les brevets visés par une ordonnance rendue aux termes du paragraphe 6(1). (2) Le tribunal peut rendre toute ordonnance de redressement par voie de dommages-intérêts ou de profits que les circonstances exigent à l'égard de tout préjudice subi du fait de l'application du paragraphe (1). |
I find no merit in the argument, because its acceptance would result in subversion of the regulatory scheme.
[24] To my mind, there is always an incentive in the first person who has sought and lost a prohibition application to try and eliminate a potential liability in damages. The incentive would apply equally to the second person who recognizes that setting aside a prohibition order on appeal could result in a damage award. If this Court decided to hear the appeal on this ground, the universal incentive to seek or to avoid section 8 damages would, in my opinion, always prevail over the issue of mootness. Such a result would be at variance with the stated intention of the regulation-making authority that:4
| These Regulations are needed to ensure this new exception to patent infringement is not abused by generic drug applicants seeking to sell their product in Canada during the term of their competitor's patent while nonetheless allowing generic competitors to undertake the regulatory approval work necessary to ensure they are in a position to market their products immediately after the expiry of any relevant patents. Anticipated Impact These Regulations together with subsection 55.2(1) will allow patentees to enjoy full patent protection while ensuring off-patented competitors will be able to enter the marketplace immediately upon the expiry of all patents pertaining to a medicine. |
Le présent règlement est nécessaire si on veut éviter que cette nouvelle exception en matière de contrefaçon soit mal utilisée par les fabricants de produits génériques désireux de vendre leurs produits au Canada pendant que le brevet original est encore valide. En vertu du règlement, ces fabricants peuvent toutefois entreprendre les démarches nécessaires pour obtenir l'approbation réglementaire et ainsi commercialiser leurs produits dès que les brevets pertinents arrivent à expiration. Répercussions prévisibles Ce règlement et le paragraphe 55.2(1) favoriseront l'investissement dans le domaine de l'innovation parce qu'ils permettront aux titulaires d'un brevet de bénéficier de la protection complète conférée par les brevets tout en donnant aux concurrents la possibilité de mettre leurs produits sur le marché dès que les brevets pertinents seront arrivés à expiration. |
[25] It should be noticed 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 the fact that section 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.
[26] In keeping with the distinct nature of section 6 proceedings, the remedies that may be sought are limited to those prescribed by the Regulations. The Regulations make no mention of certiorari to quash a NOC lawfully issued by the Minister or any other remedy in the form of a declaratory judgment. Hugessen J.A. came to this conclusion in Merck Frosst Canada, supra when he stated (at 319-320):
| In this connection, it may be noted that, while s. 7(2)(b) seems to envisage the court making a declaration of invalidity or non-infringement, it is clear to me that such declaration could not be given in the course of the s. 6 proceedings themselves. Those proceedings, after all, are instituted by the patentee and seek a prohibition against the Minister; since they take the form of a summary application for judicial review, it is impossible to conceive of them giving rise to a counterclaim by the respondent seeking such a declaration. Patent invalidity, like patent infringement, cannot be litigated in this kind of proceeding. |
[27] The only remedy available to the appellants is an order for prohibition. But, for reasons already given, no such order can be made by this Court, because, in each appeal, the Minister has issued a NOC as he was entitled by law to do. This lawful administrative action taken by the Minister under the Regulations has rendered the appeals moot.
[28] At the conclusion of argument on the appeals, the Court indicated to counsel that it would take time to consider its judgment. On 5 October, 2000, while the judgment was thus under reserve, counsel for the appellants delivered to the Court a letter in which he purported "to bring to the Court's attention some additional facts that we did not have available during the hearing but were [subsequently] able to confirm". Without seeking the Court's leave to lead this evidence, counsel proceeded to make arguments based on the new facts. Counsel for the respondents Apotex and Nu Pharm objected to admissibility of this new evidence on the basis that the appellants had not satisfied the well-known criteria for admissibility. I am of the opinion that the objection is well-founded. Rule 351 of the Federal Court Rules, 1998, requires leave of the Court of Appeal to present evidence on a question of fact and a demonstration of special circumstances. In this case, the appellants did not seek leave or demonstrate special circumstances. Accordingly, in disposing of this appeal, I do not consider the facts mentioned in counsel's letter of 5 October, 2000 or the submission based on them.
| [29] I would, therefore, dismiss the appeals with costs. |
[30] A copy of these reasons will be filed in each of files A-69-98, and A-681-98 and when so filed, be considered the disposition of the appeal in each file.
| "Julius A. Isaac" |
| ______________________________ |
| J.A. |
"I agree
| Létourneau J.A." |
"I agree
| McDonald J.A." |
__________________