Date: 19990407
Docket: T-2309-98
BETWEEN :
HOFFMANN-LA ROCHE LIMITED,
SYNTEX PHARMACEUTICALS
INTERNATIONAL LIMITED
Applicants
- and
THE MINISTER OF NATIONAL HEALTH AND WELFARE and
APOTEX INC.
Respondents
REASONS FOR ORDER
EVANS J.:
| A. Introduction |
[1] This is but the latest, and almost certainly not the last, skirmish in a battle that Hoffmann-La Roche and Apotex have been waging since 1993. The Patented Medicines (Notice of Compliance) Regulations SOR/93-1933 provide the principal materiel for the engagement. The battle is being fought to secure a competitive advantage when Hoffmann-La Roche"s patent on naproxen sustained release 750mg tablets, a popular pain killer, expires in 2003.
[2] To be completely accurate, the patent is owned by Syntex, a corporate predecessor of Hoffmann-La Roche and one of the applicants in this proceeding. However, in the interest of simplicity I shall refer in these reasons to Hoffmann-La Roche as the patent holder and the applicant in these proceedings.
[3] In 1993 Hoffmann-La Roche instituted the first proceeding in this matter when it sought an order prohibiting the Minister of Health, during the life of Hoffmann-La Roche"s patent, from issuing to Apotex an approval, or Notice of Compliance, to use the statutory term of art, in respect of Apotex"s formulation of naproxen sustained release 750 mg tablets.
[4] If Apotex obtained a Notice of Compliance it could have started immediately to manufacture and stock pile its tablets so that it could get them to market on the very day that Hoffmann-La Roche"s patent expired. The issue of a Notice of Compliance does not prevent the patent holder from commencing an action for patent infringement. Without the Notice of Compliance, however, Apotex would not be able to seek approval for its tablets until 2003, thus effectively extending the period of Hoffmann-La Roche"s monopoly significantly beyond the statutory twenty years of the patent.
[5] The application for a prohibition eventually came on in 1996. Reed J. granted the relief sought by Hoffmann-La Roche after concluding that Apotex"s allegation that it would not infringe the applicant"s patent was not supportable on the evidence: Hoffmann-La Roche Limited v. Canada (Minister of National Health and Welfare) (1996), 67 C.P.R. (3d) 484 (F.C.T.D.). Apotex appealed this order to the Federal Court of Appeal. The appeal was dismissed: Hoffmann-La Roche Limited v. Canada (Minister of National Health and Welfare) (1996), 70 C.P.R. (3d) 1 (F.C.A.).
[6] However, Apotex was not content to let matters rest there. Later in 1996 it filed a second notice of allegation in which, in effect, it attempted to provide evidential support for its previous allegation of non-infringement that Reed J. had held to be unsubstantiated. This second notice of allegation also contained a paragraph to the effect that Hoffmann-La Roche"s patent on naproxen sustained release 750 mg tablets was invalid.
[7] If Apotex could support this latter element of the allegation, it would thereby become entitled to obtain a Notice of Compliance, despite the order granted by Reed J. in the first proceeding. This is because it had been held in Eli Lilly and Co. v. Apotex Inc. (1997), 76 C.P.R. (3d) 1 (F.C.A.) that an order of prohibition was in force only in respect of the ground relied on in the notice of allegation that the Court had found not to be supported. The existence of an order of prohibition would thus not prevent a competitor from filing a second notice of allegation raising a different ground.
[8] MacKay J. heard Hoffmann-La Roche"s second application for judicial review for an order prohibiting the Minister from issuing a Notice of Compliance to Apotex. In his reasons he found that the first and second allegations were essentially similar, because both alleged non-infringement of the patent, and that the second notice of allegation constituted an abuse of process. Consequently, he ordered a stay of further proceedings in the file, with the result that the prohibition granted by Reed J. remained in effect: AB Hassle v. Canada (Minister of National Health and Welfare) (1997), 71 C.P.R. (3d) 129 (F.C.T.D.).
| B. The current campaign |
[9] The third and current phase of the battle started in October 1998 when Apotex advised the Minister that the thirty month period from the making of the second prohibition application would expire in the following month. The significance of this is that under the Regulations the institution of proceedings for a prohibition restraining the Minister from issuing a Notice of Compliance operates as a statutory stay, so that no Notice of Compliance may be issued for thirty months (subsequently reduced to twenty-four months by an amendment to the Regulations), unless the period was extended under one of the circumstances prescribed by the Regulations, or an order of prohibition was granted within the period.
[10] Since MacKay J. had neither granted an order of prohibition with respect to the allegations of invalidity contained in the second notice, nor extended the thirty months" stay, Apotex took the position that it was entitled to a Notice of Compliance. The Minister accordingly issued the Notice of Compliance on the basis of MacKay J."s order. However, when the Minister later received from counsel for Hoffmann-La Roche a copy of MacKay J."s reasons, he decided that he had no jurisdiction to issue the Notice of Compliance, and informed the parties that he considered the Notice to be void.
[11] A few days before this communication from the Minister, Hoffmann-La Roche filed the application for judicial review that is now before me. In it the applicant requests the Court to set aside the Notice of Compliance issued by the Minister with respect to the naproxen sustained release 750 mg tablets, to declare that the Notice was invalid and to order the Minister to withdraw it.
[12] Not surprisingly, now that he has done what Hoffmann-La Roche was seeking in its notice of application, the Minister sees little point in the Court"s granting any relief to the applicant: the dispute is now moot. I should add here that the Minister"s only interest in the issues raised by this litigation is to do what the law requires, a position that has proved easier to state than to deliver on. Hoffmann-La Roche, however, maintains that its application for a prohibition should not be dismissed for mootness because, for the Court to determine that the Notice of Compliance was invalid, and to grant the appropriate relief, would clarify the issue once and for all.
[13] Equally predictably, Apotex, the second respondent to the application for judicial review, does not see the matter in this way at all. It takes the position that the Minister"s first decision was correct. And, since the order of MacKay J. neither granted the order of prohibition sought, nor extended the thirty month statutory stay, the Minister was legally obliged to issue a Notice of Compliance subject to Apotex"s satisfaction of the statutory safety and effectiveness standards by establishing that its tablets were the functional equivalent of Hoffmann-La Roche"s naproxen sustained release 750 mg tablets.
| C. Issues and analysis |
Issue 1: Mootness
[14] The first issue is whether I should dismiss the application for judicial review for mootness, as the Minister has urged me to do. However, as I have already noted, Hoffmann-La Roche has maintained that there would still be some practical utility in granting the relief that it seeks.
[15] Counsel for Apotex also submitted that I should not dismiss the application on the ground of mootness, and advanced two arguments to support this position. First, he contended that the issues were not moot because Apotex took the view that the Minister had acted unlawfully in withdrawing the Notice of Compliance, which he was in law required to issue to Apotex. The validity of the Notice of Compliance thus remains a live issue between the applicant and the second respondent, which has a direct financial interest in the resolution of this issue.
[16] I do not find this argument persuasive. This proceeding is in form one involving public law, in the sense that it concerns the validity of administrative action by a Minister pursuant to a statutory scheme. It would seem, therefore, that when the applicant and the Minister are in agreement on the issue, the proceeding should be regarded as moot, at least as far as Apotex is concerned. If Apotex wishes to take issue with the Minister"s withdrawal of the Notice of Compliance, it should institute its own application for judicial review and seek a mandatory order requiring the Minister to issue a Notice to it.
[17] Apotex"s second argument is that, even if a proceeding is moot, the Court has a limited discretion to hear and determine it, when this is in the public interest: Borowski v. Canada (Attorney General) , [1989] 1 S.C.R. 342.
[18] In my view, this is one of those relatively rare cases where, despite the constraints that are imposed on the exercise of judicial power by the adversarial system, and reflected in the mootness doctrine, it would be appropriate for me to determine the issues in dispute between Hoffmann-La Roche and Apotex. My reasons are as follows.
[19] First, even though, as an application for judicial review this proceeding takes the form of public law litigation, the peculiar nature of the statutory scheme from which it arises is also designed to protect the intellectual property rights of patent holders, which are, of course, matters of private law. It would be unrealistic, therefore, for me not to recognize that this litigation has an important bearing on the legal rights of patent holders and their commercial competitors. And, as between Hoffmann-La Roche and Apotex, the issues in dispute are very live indeed.
[20] Second, since all parties were present before the Court, and counsel made full written and oral submissions on all the issues, it would be wasteful of time and resources if I were to dismiss the proceeding as moot. The very likely result of that would be that Apotex would promptly file an application for judicial review to require the Minister to issue the Notice of Compliance.
[21] It may seem odd that by seeking relief Hoffmann-La Roche risks having the issue decided against it, so that the administrative action that it and the Minister now agree was invalid may be found not to have been invalid, with the result that Apotex becomes entitled to receive a Notice of Compliance. However, by instituting the application for judicial review in order to clarify matters, Hoffmann-La Roche cannot be heard to complain if matters are clarified, but not in the way that it had anticipated.
Issue 2: The permissible scope of review
[22] The issue here is whether, in interpreting the order of MacKay J. disposing of Hoffmann-La Roche"s second application for a prohibition, the Court is entitled to go behind the order itself and consider the reasons given for it.
[23] Because the order neither granted a prohibition, nor extended the thirty month statutory stay on the issue of a Notice of Compliance, it would seem clearly to follow from the terms of the order itself that Apotex is entitled to be issued with a Notice at the expiry of that period. Apotex maintains that if a Court order is clear on its face, as MacKay J."s order is, it is illegitimate to consider the reasons that the Judge gave for issuing it.
[24] I do not find this persuasive on the facts before me. The purpose of looking to the reasons and, if necessary, to the entirety of the record that was before the Court is not so much to clarify any ambiguities in MacKay J."s order, which is agreed on all sides to be "clear". Rather, it is to examine the context from which the order arose in order better to understand its scope and significance. I would have thought that courts" scepticism about "plain meaning" as a particularly reliable guide to the proper interpretation of legal texts is as applicable to judicial orders as it is to legislation.
[25] However, I agree with the submission of counsel for Apotex that, having decided to look beyond the terms of the order, I should also look at the reasons given by MacKay J. in the context of the pleadings and the record with which he was dealing. To look at only half the context may be more misleading than examining none of it.
Issue 3: Res judicata
[26] An examination of the reasons and the record on which MacKay J."s order rests reveals a difficulty. It is this. Although the notice of allegation with which he was dealing contained two elements, an allegation of non-infringement and an allegation that Hoffmann-La Roche"s patent was invalid, MacKay J. appears only to have considered the former. Indeed, it is inconceivable that he would have thought that the allegation of invalidity was essentially the same as the allegation of non-infringement that had been the subject of the prohibition granted by Reed J. when she considered the first notice of allegation.
[27] Counsel for Hoffmann-La Roche argued that it was not open to Apotex to impugn or otherwise to deconstruct the judgment of MacKay J. If Apotex had wished to object to his apparent conclusion that the allegation of invalidity was essentially similar to the first allegation of non-infringement, it should have pursued its cross-appeal from the order. Right or wrong, MacKay J."s order made the issue of similarity between the second and first notices of allegation res judicata .
[28] In the result, therefore, Reed J."s order of prohibition applies to both of the elements contained in Apotex"s second notice of allegation. Hence, the Minister was prohibited from issuing a Notice of Compliance to Apotex until the expiry of Hoffmann-La Roche"s patent on naproxen sustained release 750 mg tablets.
[29] Counsel for Apotex responded by stating that it is quite obvious that MacKay J. could not have thought that the second element of the notice of allegation before him, the invalidity of the patent, was essentially the same as the first element, the allegation of non-infringement. In all probability MacKay J. simply overlooked the invalidity allegation, which is certainly given less prominence in the notice of allegation than that of non-infringement.
[30] It is important to remember that, as a result of Eli Lilly, supra, orders of prohibition issued in this area are not in rem. That is, they do not operate to prevent the Minister from ever issuing a Notice of Compliance with respect to a particular product. Their scope is limited to the kind of allegation that the Court found to be unsupported by the evidence adduced by the respondent when it issued the order of prohibition. Hence, when a different kind of allegation is made with respect to the same patent, the patent holder must seek another order of prohibition in order to restrain the Minister from having to issue a Notice of Compliance. This was the conclusion that MacKay J. had also reached in AB Hassle, supra, when dealing with the second notice of allegation by Apotex.
[31] Thus, the prohibition issued by Reed J. could only apply to the allegation of non- infringement before her, and any other allegation that was found to be essentially similar. Accordingly, in the absence of either an order of prohibition issued by MacKay J. with respect to the allegation of invalidity, or an order extending the thirty month statutory stay, Apotex became entitled to a Notice of Compliance by virtue of its allegation that Hoffmann-La Roche"s patent with respect to naproxen sustained release 750 mg tablets is invalid.
[32] If I were to decide in favour of Hoffmann-La Roche and thus, on the facts of this case, prefer the advantages offered by the principle of res judicata, namely certainty and a measure of finality to litigation, I would thereby give an effect to a judgment of this Court that it could not have been intended to have, and exhibit a preference for form over substance. Conversely, to accede to the argument advanced on behalf of Apotex would inevitably sacrifice the important principle that, subject to their reversal on appeal, orders of this Court are final and should be given effect according to their clear terms.
[33] I do not regard this as an attractive choice. However, I have decided that on the facts of this case the lesser evil is to find in favour of the applicant, and thereby uphold the values underlying the res judicata doctrine. My reasoning is as follows.
[34] It is important to note that both parties, and their counsel, are experienced and highly sophisticated participants in the litigation process in this area of the law. Each side has sought to turn to its own advantage the situation facing it. Hoffmann-La Roche seeks to rely on a judgment that it must recognize was not intended to decide that allegations of invalidity and non-infringement are essentially the same. Apotex, on the other hand, may well have taken the decision not to pursue its cross-appeal against the order of MacKay J. in anticipation of the imminent expiry of the thirty month stay period, secure in its belief that, if it lay low, there was nothing in the order to justify the Minister"s refusing to issue a Notice of Compliance to it.
[35] Apotex had filed a cross-appeal against MacKay J."s judgment and, for its own tactical reasons, decided not to pursue it. It can hardly be heard to cry foul when it is stuck with the consequences of that decision. Even litigants as skilled as Apotex and its legal advisors cannot expect all their calculated risks to come good.
[36] Naturally, it is hard not to be troubled by the fact that a consequence of my decision is that Apotex is prevented from litigating under the Patented Medicines (Notice of Compliance) Regulations its allegation of invalidity and from having the Court determine whether it is sufficiently supported as to prevent the Court from prohibiting the Minister from issuing a Notice of Compliance. I am mindful also, of course, that the effect of my order may well be to delay the introduction of competition until well after the expiry of Hoffmann-La Roche"s patent on naproxen sustained release 750 mg tablets. However, the protection of patent rights also rests on public interest considerations, and I am in no position to determine here how the competing public interests should be balanced out in this case.
[37] What I do know is that standing firmly on the res judicata doctrine will forestall the expenditure of additional time and resources, both public and private, that a finding in favour of Apotex would have involved. However, I have no illusions that my reasons and order disposing of this application for judicial review will be taken as the final word on the matter.
| D. CONCLUSION |
[38] While the adoption by the Minister of the view that he had no jurisdiction to issue the Notice of Compliance to Apotex makes the invalidity of the Notice a moot issue between the applicant and the Minister, nonetheless, a useful purpose will be served by granting at least some of the relief sought by Hoffmann-La Roche.
[39] An order setting aside the Minister"s issue of a Notice of Compliance to Apotex, and declaring it to have been beyond the jurisdiction of the Minister and consequently invalid, is necessary to prevent Apotex from instituting an application for judicial review alleging that the Minister is obliged in law to issue to it a Notice of Compliance on the basis of the allegation of invalidity of the patent contained in its second notice of allegation, or in a substantially similar allegation.
"John M. Evans"
TORONTO, ONTARIO
April 7, 1999. J.F.C.C. FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
COURT NO: T-2309-98
| STYLE OF CAUSE: HOFFMANN-LA ROCHE LIMITED, |
| SYNTEX PHARMACEUTICALS |
| INTERNATIONAL LIMITED |
Applicants
| - and |
| THE MINISTER OF NATIONAL HEALTH AND WELFARE and |
| APOTEX INC. |
Respondents
DATE OF HEARING: MONDAY, MARCH 8, 1999
PLACE OF HEARING: TORONTO, ONTARIO
| REASONS FOR ORDER BY: EVANS J. |
DATED: WEDNESDAY, APRIL 7, 1999
APPEARANCES: Mr. S. Hamilton and
| Ms. Shonagh L McVean |
For the Applicants
Mr. F.B. (Rick) Woyiwada
| For the Respondent, The Minister of National Health and Welfare |
| Mr. Harry B. Radomski and |
| Mr. David M. Scrimger |
| For the Respondent, Apotex Inc. |
SOLICITORS OF RECORD: Smart & Biggar
| Barristers & Solicitors |
| Box 111, 1500-438 University Avenue |
Toronto, Ontario
M5G 2K8
For the Applicants
Morris Rosenberg
Deputy Attorney General
of Canada
| For the Respondent, The Minister of National Health and Welfare |
Goodman Phillips & Vineberg
| Barristers & Solicitors |
| Box 24, 2400-250 Yonge Street |
| Toronto, Ontario |
| M5B 2M6 |
| For the Respondent, Apotex Inc. |
FEDERAL COURT OF CANADA
Date: 19990407
Docket: T-2309-98
Between:
| HOFFMANN-LA ROCHE LIMITED, |
| SYNTEX PHARMACEUTICALS |
| INTERNATIONAL LIMITED |
Applicants
| - and |
| THE MINISTER OF NATIONAL HEALTH AND WELFARE and |
| APOTEX INC. |
Respondents
REASONS FOR ORDER