Date: 19990331
Docket: T-1144-97
BETWEEN:
ELI LILLY AND COMPANY and
ELI LILLY CANADA INC.
Applicants
- and -
APOTEX INC. and
THE MINISTER OF HEALTH
Respondents
REASONS FOR ORDER
TEITELBAUM, J.
INTRODUCTION
[1] This is an application for judicial review pursuant to section 18 of the Federal Court Act. The applicants, Eli Lilly and Company and Eli Lilly Canada Inc. (Lilly), seek an order of certiorari quashing the Notice of Compliance (NOC) issued on April 30, 1997 by the Minister of Health (Minister) to Apotex Inc. (Apotex) in respect of 150mg and 300mg capsules of nizatidine. The applicants also seek declaratory relief stressing to the Court that the following orders are central to the present proceeding:
| 1) an Order declaring that the Minister of Health is under a duty to comply with section 7(1) of the Patented Medicines (Notice of Compliance) Regulations ("Regulations") before issuing a Notice of Compliance to a second person; |
| 2) an Order declaring that the Minister of Health failed to comply with section 7(1) of the Regulations by issuing the Notice of Compliance to Apotex Inc. for 150mg and 300mg capsules of nizatidine on April 30, 1997; |
| 3) an Order declaring that the Notice of Allegation dated February 10, 1995, was not a valid Notice of allegation contemplated by section 5(1) of the Regulations; |
| 4) an Order declaring that the Minister of Health is under a duty to ensure that there is an allegation on file in a second person"s New Drug Submission at the time when the second person serves a Notice of that Allegation in accordance with section 5(3)(b) of the Regulations ; |
| 5) an Order declaring that the Minister of Health is under a duty to ensure that a detailed statement of the legal and factual basis for the allegation has been provided in accordance with the Regulations prior to the issuance of a Notice of Compliance; |
| 6) an Order declaring that Apotex Inc. failed to comply with section 5(3)(a) of the Regulations by not providing a detailed statement of the legal and factual basis for its allegation; and |
| 7) an order declaring that the Minister of Health is under a duty to ensure that any Notice of Compliance which is granted, is granted only with respect to the particular Allegation, Notice of Allegation and detailed statement of the legal and factual basis for its allegation that has been provided to the first person. |
BACKGROUND INFORMATION
[1] The applicant, Eli Lilly and Company, is the owner of the Canadian Patents 1,166,248 and 1,221,369 for nizatidine and holds an NOC to produce and market a certain dosage of the medicine. The respondent Apotex is a generic manufacturer who sought ministerial approval to market nizatidine in 1993 and in 1995 which resulted in lengthy disputes before the Courts. This proceeding arises out of Apotex"s second Notice of Allegation which resulted in the Minister granting an NOC to Apotex on April 30, 1997.
First Notice of Allegation
[2] On April 28, 1993, Apotex provided Eli Lilly Canada Inc. with a Notice of Allegation (NOA), with a view to obtaining an NOC for 150mg and 300mg of nizatidine, stating that Canadian Patents 1,166248 and 1,221,369 would not be infringed as it undertook to only obtain nizatidine from Novopharm Limited (Novopharm) pursuant to a "mutual agreement" entered into in November 1992 with Novopharm who held a compulsory licence from Lilly.
[3] Lilly commenced prohibition proceedings in the Federal Court of Canada pursuant to section 6 of the Regulations and was granted a prohibition order by Madame Justice McGillis on February 9, 1995 precluding the Minister from issuing an NOC to Apotex. This order was confirmed by the Federal Court of Appeal on different grounds on April 2, 1996, ((1996) 66 C.P.R. (3d) 377), but reversed on appeal by the Supreme Court of Canada on July 9, 1998 ((1998) 80 C.P.R. (3d) 321). The Supreme Court held that Apotex would not infringe the patents held by Lilly simply by selling the medicine in the form contemplated by the NOA.
Second Notice of Allegation
[4] On February 10, 1995, the day following the issuance of Madame Justice McGillis" prohibition order, Apotex issued a second NOA alleging non-infringement of the medicine or the process. The NOA contained no details of Apotex"s intended process. Apotex took the position that the particulars of the process were confidential and would be disclosed when subject to a protective order. Lilly failed to initiate prohibition proceedings pursuant to section 6 of the Regulations for the reasons, inter alia , that Madame Justice McGillis" prohibition order and section 7(1)(f ) of the Regulations prevented the Minister from issuing an NOC, and that the Regulatory scheme did not allow for multiple NOAs.
[5] Subsequently, on June 12, 1995, Apotex initiated mandamus proceedings to compel the Minister to process its New Drug Submission (NDS) and issue an NOC. Although the Minister contested the application, an order of mandamus was granted on April 25, 1997 by Mr. Justice Jerome directing the Minister to process Apotex"s NDS, and further stating that the Regulations did not prevent the Minister from issuing an NOC to Apotex(72 C.P.R. (3d) 421). Lilly appealed to the Federal Court of Appeal and Mr. Justice Marceau, writing for the Court, upheld the decision (76 C.P.R. (3d) 1). The Minister was ordered to issue the NOC notwithstanding the Regulations. On April 30, 1997, the Minister issued an NOC to Apotex with respect to nazitidine which is the object of the present certiorari proceeding.
Procedural Background
[6] The present proceeding gave rise to a number of evidentiary issues. By way of motion filed on June 27, 1997, Apotex sought an order striking Lilly"s originating notice of motion and portions of the affidavits of P. Stringer and T. McCool on the basis, inter alia , that it referred to information contained in a letter of November 29, 1995, for which Apotex had claimed confidentiality. This motion was dismissed on July 30, 1997 by Mr. Justice Gibson who indicated that Apotex" concerns could be raised at the hearing on the merits. Mr. Justice Gibson further ordered that Apotex and the respondent Minister had 14 days to file affidavit evidence and that Lilly had 30 days after receipt of the respondent"s evidence to file their Application Record. On August 22, Apotex introduced into evidence the affidavits of J. Oudenes and B. Sherman both dated August 11, 1997, and the November 29, 1995 letter which was filed without a confidentiality claim. Apotex took the position that the letter was no longer confidential.
[7] On August 20, 1997, Mr. Justice Richard dismissed another of Apotex"s motion for an order striking the originating Notice of Motion or staying the proceedings. Also, in September 1997, the Court was asked to consider a motion brought by Lilly who sought leave to file evidence in reply to the affidavits of Oudenes and Sherman dated August 11, 1997 introduced by Apotex. By order dated September 25, 1997, I allowed Lilly to file reply evidence and granted Apotex the right to cross-examine on the reply affidavits. Also, on October 15, 1997, Apotex requested that this court reconsider the order made on September 25, 1997. On November 14, 1997, I granted Apotex the right to file reply evidence in response to Lilly"s affidavits of P. Stringer and F. Perry dated October 1, 1997 as well as an extension of time to file the within application. Pursuant to this order, Apotex filed four affidavits to introduce expert evidence.
PARTIES" SUBMISSIONS
Lilly"s Submissions
[8] Central to Lilly"s submissions is the contention that the process disclosed in the NDS submitted to the Minister which led to the Minister granting an NOC to Apotex on April 30, 1997 is different from the process disclosed to Lilly in the detailed statement by way of letter dated November 29, 1995.
[9] Lilly"s submissions are twofold. Firstly, it argues that the Minister failed to ensure that the information filed with the Minister matched that of the NOA and detailed statement served upon the first person, Lilly, prior to issuing an NOC to Apotex in breach of subsection 7(1) of the Regulations. In short, the Minister failed to ensure that the process disclosed to the Minister in support of the NOC was the same disclosed to Lilly by letter dated November 29, 1995. Secondly, it argues that Apotex failed to provide Lilly with an accurate detailed statement of the legal and factual basis for its allegation, in contravention of paragraph 5(3)(a ) of the Regulations. Lilly argues that "grave consequences" should flow from Apotex"s failure to comply with the Regulations. In either case, Lilly argues that the proper remedy is the issuance of a writ of certiorari quashing the NOC issued to Apotex on April 30, 1997.
Minister of National Health"s Submissions
[10] The Minister makes no submission on whether Apotex"s intended use of process as disclosed in the NOA is the same as the Torcan process, but advocates that such issues are not intended to be determined by the Minister on the strength of an NOA alone as these issues are usually considered in prohibition proceedings under section 6 of the Regulations.
[11] The Minister argues that the impugned NOC was issued to Apotex pursuant to Mr. Justice Jerome"s mandamus order, upheld by the Federal Court of Appeal, which directed the Minister to process Apotex" NDS "without regard to any patent lists" filed by the applicant. Consequently, issues raised by Lilly involving the interpretation of the Regulations with respect to the issuance of the NOC are irrelevant as the Court held that the NDS was to be processed without regard to the Regulations. Also, this proceeding is the result of Lilly"s own failure to initiate an application for prohibition and involves issues which were raised and previously dismissed on opposition to the mandamus proceeding and on appeal from the order of mandamus.
[12] Counsel further submits that pursuant to the legislative and regulatory scheme, the Minister is not required to ensure that the NDS is linked or corresponds to the NOA and detailed statement at all times as subsection 5(3) of the Regulations only requires that the Minister be served with the NOA, not the detailed statement of fact and law which is served upon the first person. The Minister does not have any duty to inform a first person of any discrepancy in the documents. Discrepancies in the disclosure of a process does not in itself constitute a ground for invalidating an NOC.
Apotex"s Submissions
[13] Apotex"s first submission is that the Minister"s submissions with respect to the mandamus order directing the Minister to process Apotex"s NDS answers in full this application for judicial review. Counsel for Apotex further reiterates that Lilly could have raised the present issues in a prohibition application but failed to do so not because of alleged discrepancies between the NDS and the detailed statement but for other reasons, and did raise the same issues before the Trial Division and the Appeal Division where it was dismissed . Secondly, Apotex submits that to a person skilled in the art, such as the expert witnesses who testified by way of affidavit, there is no difference between what is disclosed in the NDS and the detailed statement. Further, assuming that Lilly was factually correct, there is no assertion that the alleged inaccuracy of the information disclosed to Lilly has any bearing on infringement.
ISSUES
[14] Insofar as the Court is concerned, the main issue for determination is whether the applicants have shown grounds upon which this Court can exercise its discretion by way of certiorari to quash the NOC issued to Apotex by the Minister on April 30, 1997.
[15] A secondary issue for determination is, assuming the NOA sent to Lilly by Apotex in the second NOA contains inaccurate or misleading statements and failed to disclose the true process by which nizatidine was to be manufactured, is the fact alone sufficient to quash the NOC issued by the Minister?
ANALYSIS
[16] The issuance of the NOC to Apotex was the outcome of a lengthy dispute between Apotex and Lilly. Apotex"s first attempt at obtaining an NOC resulted in a prohibition order by Madame Justice McGillis precluding the Minister to issue an NOC to Apotex on February 9, 1995. This is no longer a contentious issue as the Supreme Court of Canada held that Apotex would not infringe Lilly"s patent by obtaining the drug pursuant to Novopharm"s compulsory licence. Apotex"s second attempt at obtaining an NOC also became contentious when the Minister took the position that an NOC could not be issued in light of Madame Justice McGillis" prohibition order. Apotex sought a mandamus order compelling the Minister to process its NDS, which, as I have stated, was granted by Mr. Justice Jerome on April 25, 1997 and upheld by the Federal Court of Appeal on September 29, 1997.
[17] Lilly argues that the Minister erred in issuing the NOC to Apotex as the mandamus order was not binding upon him and that the Minister failed to ensure that the Regulations were complied with before issuing the NOC.
[18] Lilly submits that Mr. Justice Jerome"s mandamus order was based on the assumption that the facts disclosed in the NDS which were not directly before the Court were correct, which facts are now alleged by Lilly to be inaccurate. Hence it is submitted that Mr. Justice Jerome"s mandamus order had no binding effect on the Minister and did not apply to the process disclosed in Apotex"s NDS for which a NOC was issued to Apotex on April 30, 1995. In Lilly"s view, it follows that the Minister was faced with two contradicting orders at the time he issued the NOC.
[19] Notwithstanding Lilly"s submissions that the Minister was faced with contradictory orders and that the mandamus order could only relate to what was actually before Mr. Justice Jerome when the order was issued, I am in agreement with the respondent Minister"s submissions that the Minister had no choice but to issue the NOC in accordance with Mr. Justice Jerome"s decision as upheld by the Court of Appeal.
[20] In my view, the orders are not contradictory and the mandamus order applied to the NOC issued by the Minister. As submitted by the Minister, Lilly was represented in the mandamus proceeding before Mr. Justice Jerome who took into consideration Madame Justice McGillis" prohibition order and stated that it did not apply to the circumstances in the following words at page 429:
| I do not find the arguments of Eli Lilly with regard to the contents of the NDS and the issue of res judicata to be convincing. The contents of the NDS and its evaluation is part of a parallel process pursuant to the Food and Drug Regulations and is related to health and safety concerns. The contents of the NDS are not before the Court directly. The Court's focus in dealing with the Patented Medicines (Notice of Compliance) Regulations is the notice of allegation and whether the issuance of a NOC should be prohibited. The Court's task is to determine whether the notice of allegation is justified. |
| Further, it would be extraordinary to interpret the Order of McGillis J. as dealing with anything more than that which was before her for hearing. McGillis J. was not able to rule prospectively in respect of issues and evidence of which she was not seized. McGillis J. only determined whether the allegation advanced in the First Notice was sufficiently justified to allow the Minister to issue a NOC. Thus, the scope of any prohibition order issued in proceedings brought under subsection 6(1) must be confined to the specific allegations advanced in those proceedings. To find otherwise would be inconsistent with the jurisprudence of this Court that multiple notices of allegation may be filed by the second party. It was open to Eli Lilly to file an originating notice of motion seeking an order prohibiting the Minister from issuing a NOC. Had this been done, a judicial review hearing would have been held to determine whether the allegation of production by a non-infringing process was justified. As Eli Lilly did not commence an application for a prohibition order, I find that the Minister, upon the expiry of the 45 days, was under no restriction to issue a NOC to Apotex in respect of its 150 mg and 300 mg nizatidine capsules. |
| For these reasons, the relief sought by the applicant is granted. |
[21] For the reasons mentioned above, the application was granted by Mr. Justice Jerome, which order, as I have stated, was upheld by the Federal Court of Appeal on September 29, 1997.
[22] It follows that the Minister had no choice but to comply with the mandamus order and to process Apotex"s NDS which led to the issuance of the NOC on April 30, 1995.
[23] Also, Lilly submits that the Minister had an obligation to ensure that the information filed by Apotex with the Minister matched the information served upon Lilly under the Regulations. This argument is also based on the premiss that there were discrepancies or inaccuracies between the details of the process provided to the Minister and that provided to Lilly by letter dated November 29, 1995. Lilly submits that the Minister ought to have ensured the process underlying the NDS was the same as that which had been disclosed to Lilly.
[24] Paragraph 7(1)(b) of the Regulations provides that the Minister shall not issue an NOC before, inter alia, the second person has complied with section 5 of the Regulations. These provisions impose specific obligations upon both the Minister and the first person.
[25] As submitted by counsel for the respondent Minister, with whom I agree, who took no position with respect to the issue of whether the process disclosed to Lilly was the same as that disclosed to the Minister, a second person is required, under the Regulations, to file with the Minister an NOA as well as proof of service of the allegation and detailed statement upon the first person. The Minister submits that the Minister does not have access to the NOA and detailed statement served upon the first person. Consequently, the Minister is unable to match the documents for accuracy and has no duty to inquire into the adequacy of the NOA and detailed statement filed on the first person.
[26] Counsel for Lilly argues that the Minister"s obligation arises out of Mr. Justice Wetston"s decision in Merck and Co. v. Canada (unreported), March 31, 1998, T-1273-97 which, it is argued, stands for the proposition that the Minister must ensure that the information in the NDS and the Notice of Allegation matches prior to the issuance of an NOC. The pertinent passages are as follows:
| While it is evident that the Minister is under a duty to comply with the NOC Regulations, in my opinion, he was not under any duty to inform Merck of the deemed withdrawal of the 1993 NDS or to otherwise become involved in the prohibition proceeding. His duty is restricted to ensuring that the requirements of the regulations are met prior to the issuance of a NOC. That is, he must ensure that the patent register is maintained and ensure that no NOC will issue unless the patent holder or licensee has had the opportunity to contest a NOA with respect to a patent on that list. |
| I have already found that the NDS does not underpin a prohibition proceeding. The Minister is not under any obligation to ensure that the second person's NDS is linked, at all times, to the NOA and detailed statement, or to inform a first person of any differences that may exist |
| between them. As previously stated, the Minister must ensure that the information in the NDS and NOA matches prior to the issuance of a NOC: Eli Lilly, supra & Smithkline Beecham, supra. As the Minister was not under any duty to inform the Court of the withdrawal of the NDS, his representatives, as officers of the Court, would similarly not be under an |
| obligation to do so. |
[27] In my view, neither the Regulations nor the case law imposes a duty upon the Minister to ensure that the content of the documents filed with his office and the documents served upon the first person is identical. The Minister must ensure that his office is in receipt of a proof of service of the NOA and detailed statement onto the first person. The Regulations do not require that the second person copy the Minister with the NOA and the detailed statement. Consequently, the Minister has no legal obligation to compare them for accuracy.
[28] Lilly"s second submission is that the NOA it was provided by Apotex did not reflect the true nature of the intended use of the process disclosed in Apotex"s NDS, or that it was inaccurate. They rely on Hoffman-La Roche Ltd. v. Canada (Minister of National Health and Welfare) (1996), 70 C.P.R. (3d) 206 (F.C.A.) to impress upon the Court the importance of providing accurate NOAs and detailed statements. At page 213, Mr. Justice Stone, writing for the Court of Appeal, states:
| The obligation of the Respondent under the Regulations was to faithfully comply with the requirements of subsections 5(1) and (3). With reference to subparagraph 5(3)(a) this meant the providing of a detailed statement of the "legal and factual basis for the allegation" (emphasis added). As has been pointed out by this Court in Merck Frosst, supra , and Bayer AG, supra, there is no requirement under the governing Part V.1 procedural rules that a subparagraph 5(1)(b) allegation be supported with any affidavit evidence or for testing such assertion on cross-examination. I have no doubt that such an allegation is intended to be accurate. Once a second person"s product reaches the market the first person is in a position to test the accuracy of the detailed statement; if it were shown to be inaccurate, the consequences for a second person could well be very grave indeed. |
[29] It is submitted that at a minimum, the grave consequences referred to by Mr. Justice Stone requires in the circumstances of this case that the NOC issued to Apotex be quashed.
[30] This contention assumes that Apotex is at fault for providing inaccurate documents to Lilly and that its actions should be condemned. Assuming there were discrepancies and I am satisfied the information supplied, as to process, to say the least, was misleading, what is the meaning of grave consequence? In Merck, supra, Mr. Justice Stone referred to the possibility of testing the allegation once the product reaches the market. In Apotex Inc. v. Canada, supra, Mr. Justice Marceau reiterated that the Regulations are not aimed at providing a forum to adjudicate on issues of infringement or the validity of patents, concluding that "the appellant is, in no way, deprived of all the recourses normally available to a patent-holder to enable it to enforce its rights."
[31] Counsel for Lilly submits that "grave consequences" are out of the ordinary consequences and would exclude consequences flowing from an action for infringement. In my view, grave consequences may be out of the ordinary damages and could incur punitive damages, solicitor-client costs, but it does not mean that a legally valid NOC granted by the Minister pursuant to an order of mandamus can be quashed.
[32] Notwithstanding Lilly"s arguments, I am of the view that certiorari proceedings are not the proper forum to determine the differences or discrepancies or inadequacies in the process disclosed by Apotex to the Minister and Lilly. What must be determined is whether the Minister committed a reviewable error to warrant this Court"s intervention. Lilly has not convinced me that the Minister has committed any reviewable error so as to warrant the quashing of the issued NOC.
[33] In the final analysis, what is of most concern in this type of proceeding is the issue of infringement. An NOA speaks to the issue of infringement. If what was told to Lilly in the NOA turns out to be inaccurate, then a Court, on infringement proceedings, will determine if Apotex has infringed Lilly"s patent by using a process other than the one for which the NOC was issued. In such an event, Apotex could be subject to "grave consequences" such as, in addition to ordinary damages, punitive damages and solicitor-client costs.
CONCLUSION
[34] The application for judicial review is denied.
COSTS
[35] I raised the issue of costs with the parties. After hearing the submission that this case may be covering new ground, I am satisfied that no costs are to be allowed to any of the parties.
"Max M. Teitelbaum"
J.F.C.C.
Ottawa, Ontario
March 31, 1999