Section 8 Damages under the PM(NOC) Regulations not available when patent subsequently invalidated in Impeachment Action

June 17, 2010

Apotex Inc. v. Syntex Pharmaceuticals International Inc. and Hoffman LaRoche Limited, 2010 FCA 155

Apotex was unsuccessful in its attempt to recover damages under section 8 of the 1993 version of the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”) in relation to its naproxen slow release tablets. 

Background

In 1996, Syntex Pharmaceuticals International Inc. (“Syntex”) and Hoffman LaRoche Limited (“Roche”) were successful in obtaining an order under the Regulations prohibiting the Minister of Health (“Minister”) from issuing a notice of compliance (“NOC”) to Apotex with respect its naproxen slow release tablets until after the expiration of the 671 patent.  Apotex did not challenge the validity of the 671 patent at that time.  An appeal and cross-appeal from this decision was dismissed.  Apotex subsequently commenced an action seeking to impeach (invalidate) the 671 patent, and on April 19, 1999, the court found that Apotex’s formulation was non-infringing and that the 671 patent was invalid.  No appeal was taken from that judgment.

However, notwithstanding that the 671 patent had been invalidated, the Minister did not immediately issue a NOC to Apotex on the basis that the Minister was of the opinion the original prohibition order remained in effect.  On motion by Apotex, the court set aside the 1996 prohibition order and dismissed the application “for greater certainty” to ensure that Apotex received its NOC.  No appeal was taken from this decision.  This order formed the basis for Apotex’s claim for damages under section 8 of the Regulations.  Specifically, the Minister had certified that, but for the prohibition order, a NOC would have issued to Apotex years earlier on July 21, 1995.

Analysis
 
The Court was first required to determine whether section 8 as it read in the 1993 or 1998 version of the Regulations applied.  The transitional provisions of the 1998 Regulations provided that section 8, as amended, applied to an application “pending” on the coming into force of the new Regulations.  Since “pending” generally referred to “a proceeding that is not yet finished, one in which there is no final judgment”, the court found that, given the final original decision and appeal therefrom, the prohibition proceeding was not pending at the relevant time.  Therefore, it followed that the 1993 Regulations applied.

Section 8 as it read in the 1993 Regulations provided that an innovator pharmaceutical company (“first person”) is liable to a generic pharmaceutical company (“second person”) where, because of a prohibition application, the Minister delays issuing a NOC beyond the “expiration” of all patents that are the subject of an order prohibiting issuance of a NOC.

In the court’s view, section 8 was not intended to provide redress where the innovator prevailed in the prohibition proceeding, even if the generic was later successful in an impeachment action: Apotex could not “reach back and apply the finding of invalidity in the action so as to argue that the ‘671 patent had ‘expired’ within the meaning of section 8” of the 1993 version of the Regulations.  As a result, Apotex was unable to recover its losses between 1995 and 1999.   

 

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