Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (T.D.) [1997] 3 F.C. 752
| T-304-96 |
BETWEEN:
MERCK FROSST CANADA INC., and
MERCK & CO., INC.,
Applicants
- and -
THE MINISTER OF NATIONAL HEALTH AND WELFARE, and
THE ATTORNEY GENERAL FOR CANADA
Respondents
- and -
APOTEX INC. and NOVOPHARM LIMITED
Intervenors
AND: T-306-96
MERCK FROSST CANADA INC., and
MERCK & CO., INC.,
Applicants
- and -
THE MINISTER OF NATIONAL HEALTH AND WELFARE, and
THE ATTORNEY GENERAL FOR CANADA
Respondents
- and -
APOTEX INC. and NOVOPHARM LIMITED
Intervenors
AND: T-386-96
GLAXO WELLCOME INC., and
THE WELLCOME FOUNDATION LIMITED
Applicants
- and -
THE MINISTER OF NATIONAL HEALTH AND WELFARE, and
THE ATTORNEY GENERAL FOR CANADA
Respondents
- and -
APOTEX INC. and NOVOPHARM LIMITED
Intervenors
REASONS FOR ORDER
This is an application brought by Merck Frosst Canada Inc. and Merck & Co., Inc. (the "Applicants") for judicial review of a decision of the Minister of National Health and Welfare (the "Minister") to remove Canadian Patents Nos. 1,287,063 ("063") and 1,287,639 ("639") from the Patent Register. The Register is maintained by the Minister pursuant to the Patented Medicines (Notice of Compliance) Regulations , SOR/93-133 (the "Regulations"). Two similar applications, one brought by Glaxo Wellcome Inc. and the Wellcome Foundation Ltd. (T-386-96) and a second brought by Merck Frosst Canada Inc. and Merck & Co., Inc. (T-306-96) involve the same issues and similar facts. The reasons in this decision will apply to these three applications.
Background and Facts
The Regulations with which all three applications are concerned were enacted pursuant to ss. 55.2(4) of the Patent Act, R.S.C. 1985, c. P-4 (the "Act") which states:
| (4) The Governor in Council may make such regulations as the Governor in Council considers necessary for preventing the infringement of a patent by any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) or (2) including, without limiting the generality of the foregoing, regulations |
| (a) respecting the conditions that must be fulfilled before a notice, certificate, permit, or other document concerning any product to which a patent may relate may be issued to a patentee or other person under any Act of Parliament that regulates the manufacture, construction, use or sale of that product, in addition to any conditions provided for by or under that Act; |
| (b) respecting the earliest date on which a notice, certificate, permit or other document referred to in paragraph (a) that is issued or to be issued to a person other than the patentee may take effect and respecting the manner in which that date is to be determined; |
| (c) governing the resolution of disputes between a patentee or former patentee and any person who applies for a notice, certificate, permit or other document referred to in paragraph (a) as to the date on which that notice, certificate, permit or other document may be issued or take effect; |
| (d) conferring rights of action in any court of competent jurisdiction with respect to any disputes referred to in paragraph (c) and respecting the remedies that may be sought in the court, the procedure of the court in the matter and the decisions and orders it may make; and |
| (e) generally governing the issue of a notice, certificate, permit or other document referred to in paragraph (a) in circumstances where the issue of that notice, certificate, permit or other document might result directly or indirectly in the infringement of a patent. |
By the terms of s. 3 of the Regulations the Minister is required to open and maintain a patent Register.
| 3.(1) On the 30th day after coming into force of these Regulations, the Minister shall open and thereafter maintain a register of any information submitted pursuant to section 4. |
Section 4 of the Regulations states that persons who hold a notice of compliance ("NOC") or persons who make a new drug submission ("NDS") may submit a patent list to the Minister.
| 4.(1) A person who files, or before the coming into force of these Regulations has filed a submission for or has been issued, a notice of compliance in respect of a drug that contains a medicine may submit to the Minister a patent list. |
| (2) A patent list submitted pursuant to subsection 1) must be certified by the person to be accurate, and must set out |
| (a) any Canadian patent that is owned by the person, or in respect of which the person has an exclusive licence or has obtained the consent of the owner of the patent for the inclusion of the patent on the patent list, that contains a claim for the medicine itself or a claim for the use of the medicine and that the person wishes to have included on the patent list; |
| (b) a statement that, in respect of each patent, the person applying for a notice of compliance is the owner, has an exclusive licence or has obtained the consent of the owner of the patent for the inclusion of the patent on the patent list; |
| (c) the date on which the term limited for the duration of each patent will expire pursuant to section 44 or 45 of the Patent Act; and |
| (d) the address in Canada for service on the person of any notice of an allegation referred to in paragraph 5(3)(b), or the name and address in Canada of another person on whom service may be made, with the same effect as if service had been made on the person. |
Any subsequent person seeking a NOC, i.e. a generic drug company, may compare or refer to any drug for which a NOC has already issued. When doing so, this person, referred to as a "second person" in the Regulations, must look at all the patents on the patent Register which are filed with respect to the drug to which a comparison will be made and must allege that the drug for which they seek a NOC will not infringe any of the related patents on the Register. Additionally, the second person must send to the holder of the patent a notice of the allegation of non-infringement ("NOA").1 Once a first person receives this notice, it may bring an application for judicial review to determine whether the allegations of non-infringement are justified. Sections 5 and 6 set out this procedure.
| 5.(1) Where a person files or, before the coming into force of these Regulations, has filed a submission for a notice of compliance in respect of a drug and wished to compare that drug with, or make a reference to, a drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the patent list, |
| a) state that the person accepts that the notice of compliance will not issue until the patent expires; or |
| (b) allege that |
| (i) the statement made by the first person pursuant to paragraph 4(2)(b) is false, |
| (ii) the patent has expired, |
| (iii) the patent is not valid, or |
| (iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed. |
| (2) Where, after a second person files a submission for a notice of compliance, but before the notice of compliance is issued, a patent list is submitted or amended in respect of a patent pursuant to subsection 4(5), the second person shall amend the submission to include, in respect of that patent, the statement or allegation that is required by subsection (1). |
| (3) Where a person makes an allegation pursuant to paragraph (1)(b) or subsection (2) the person shall |
| (a) provide a detailed statement of the legal and factual basis for the allegation; and |
| (b) serve a notice of the allegation on the first person and proof of such service on the Minister. |
| 6.(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. |
While this process is unfolding, the Minister is prohibited from issuing a NOC to the second person for a defined period. For our purposes, the relevant parameters are the latest of 45 days after receiving proof that the NOA was served on the first person or 30 months after receiving proof that a judicial review proceeding has been commenced by the first person or the expiration of the patents on the list which are not subject to an allegation. Section 7 of the Regulations deals with the statutory stay.
| 7.(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(1), and |
| (f) the expiration of any patent that is the subject of an order pursuant to subsection 6(1). |
In order to fully understand this process it must be emphasized that the regulations bridge two distinct statutes. The Food and Drugs Act, R.S.C. 1985, c. F-27 requires that anyone who wishes to market a drug in Canada must satisfy the Minister that the drug meets the required safety and effectiveness standards. Once these standards are met, the Minister, pursuant to regulation C.08.004 of the Food and Drug Regulations, C.R.C., c. 870, will issue a NOC thus enabling the applicant to market that particular drug. The Patent Act protects the property rights of inventors. The Regulations also establish a framework with a view to the prevention of patent infringement. Under the Regulations, anyone wishing to market a drug without having to independently establish the safety and effectiveness of the drug, i.e. a generic drug company, may submit a NDS to the Minister and compare the drug to be marketed with one which has already received approval. Thus, the Regulations facilitate the marketing of generic drugs by relieving generic manufacturers from having to independently establish the safety of their products. At the same time the Regulations help ensure that the patents held by brand name manufacturers are not infringed.
This being the general scheme, the specific events which give rise to this proceeding are relatively straightforward. Merck Frosst filed patent lists containing both the 063 and the 639 patents on April 6, 1993 in respect of the drug SIMVASTATIN. The Minister placed both the 063 and the 639 patents on the Register. In the spring of 1995 the Health Protection Branch ("HPB") of Health Canada began to establish a process whereby the Patent Register would be audited in order to remove from the Register patents which had expired or which covered only a process2 or which were clearly irrelevant such as a patent for medical devices and not for a medicine at all. This audit was undertaken in order for the Minister to comply with Federal Court jurisprudence, specifically Deprenyl Research v. Apotex Inc. (1994), 55 C.P.R. (3d) 171, aff"d (1995), 60 C.P.R. (3d) 501 (F.C.A.) and Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1994), 55 C.P.R. (3d) 176. HPB reached an agreement with the Canadian Intellectual Property Office ("CIPO") that CIPO would conduct the audit on behalf of HPB. CIPO is an agency within Industry Canada.
In May of 1995, Mr. Michael Howarth, an employee of CIPO, began the audit of the register. He completed the work in approximately 10 working days. Mr. Howarth submitted a report to HPB indicating which patents, in his view, should be deleted from the Register. In December of 1995 HPB sent out letters to persons and associations involved in the pharmaceutical industry describing the Minister"s intent to remove process patents which were improperly on the Register and to take measures to ensure that, in the future, process patents were not placed on the Register. This letter reads:
| This letter is to inform you of the Drugs Directorate"s intent to remove process patents from the Patent Register and to prevent their inclusion in the future. |
| The Federal Court and the Federal Court of Appeal have ruled that process patents are not to be included on any patent list that is submitted to Health Canada for inclusion in the Patent Register. As a result of these decisions, we had the Patent Register audited by the Canadian Intellectual Property Office (CIPO). All process patents on the Register were identified. All patent lists will now be sent to CIPO for audit prior to their addition to the Patent Register. |
| Patent holders who have listed process patents on the Register are being informed that the Drugs Directorate will remove those patents in 30 calendar days from the date of receipt of the letter, subject to any written representations that the patent holder may wish to make prior to that date. Any written representations that are received will be forwarded to CIPO for review and taken into consideration in their final recommendations. |
| If no representations are made within the 30 day period, or if CIPO remains of the view that the patent is a process patent after taking into account any representations that are made, the Drugs Directorate will remove the patent from the Register. |
| This policy does not apply to patents that are the subject matter of cases that are presently before the Courts, pursuant to the Patented Medicines (Notice of Compliance) Regulations. |
The Applicants in this case received a letter on January 12, 1996, which stated that the 063 and the 639 patents would be removed from the Patent Register subject to any written submissions of the Applicants. On February 7, 1996 the Applicants responded by contesting the Minister"s authority to proceed in the intended manner and requesting that the Minister confirm that the patents at issue would not be removed. The Applicants did not then, nor do they now, make any admission with respect to whether the patents are indeed process patents. The Applicants" argument is a purely procedural one.
Also on January 12, 1996 the Applicants filed a motion seeking an interim order enjoining the Minister from removing the patents from the Register. This motion was denied by Pinard J. by Order dated 12 February, 1996, on the grounds that the Applicant had not established irreparable harm and that the balance of convenience favoured the Minister:
| "who, in the public interest, must be allowed to perform the legislative duty imposed upon him maintaining a Patent Register in accordance with section 3 and section 4 of the Patented Medicines (Notice of Compliance) Regulations." |
At the present time, the patents do not appear on the Register in association with SIMVASTATIN.
Issues
The issues for consideration in this matter are the following:
| 1. Does the Minister have the power to examine patents on lists submitted pursuant to section 4 of the Regulations? |
| 2. Once patents are in the Register, does the Minister have the ability to remove these patents? |
| 3. If the Minister does have the authority to examine and remove patents, have these powers been improperly delegated to CIPO in this case? |
| 4. If the Minister does have the authority to examine and remove patents, have the principles of natural justice been violated in the process which was followed by the Minister in this case? |
The following two issues were raised in the Applicant"s supplemental record and involve additional facts relevant only to those issues. For that reason the additional facts will be dealt with after the resolution of issues 1 through 4.
| 5. Do the additional facts reveal a reasonable apprehension of bias on the part of the Minister? |
| 6. Even assuming the Minister has the authority to audit and remove patents from the Register, was that power exercised for an improper purpose in this case? |
1. Scope of the Minister"s Authority
With respect to whether the Minister has the power to examine patents before placing them on the Register and/or removing them from the Register, the Applicants submit that the administrative action at issue here is ultra vires the Minister on the following grounds: a) the plain meaning of the Regulations does not confer on the Minister the power to audit and remove patents because the term "maintain" must be strictly construed; b) ss. 31(2) of the Interpretation Act , R.S.C. 1985, c. I-21 cannot be of assistance to the Minister as the ability to audit and remove patents is not strictly necessary to carry out the Minister"s obligation of maintaining the Register, as that obligation is interpreted by the Applicants; c) that what the Minister has done and is proposing to continue to do in the future is a judicial or quasi-judicial function as it involves the interpretation of patent claims which is a question of law; and finally, d) that the actions taken by the Minister in this instance interfere with the first person"s right to bring an application for an Order of prohibition against the Minister.
a) meaning of the term "maintain"
The Applicants cited two definitions for the word "maintain". They are:
| To keep up, preserve, cause to continue in being (...) to guard from loss or derogation. (Compact Edition of the Oxford English Dictionary, 1971, page 1698 (52)). |
| To keep in an existing state (...). (Merriam-Webster"s Collegiate Dictionary, 10th Edition, page 702). |
To the above definitions I would add from the New Oxford English Dictionary, L. Brown, ed., 4th ed. (Oxford: Clarendon Press, 1993) "...to keep vigorous, effective, or unimpaired;..". The Respondent replies that "maintain" must refer to a continuous obligation. Additionally, the Respondent Minister looks to the French version of subsection 3(1) which states:
| 3.(1) Le 30e jour suivant la date d"entrée en vigueur du présent règlement, le ministre ouvre un registre de tout renseignement soumis aux termes de l"article 4 et le tient à jour. |
The Applicants submit that the court must give the term "maintain" its plain and ordinary meaning. I agree entirely with this and, additionally, I adopt the rule of statutory interpretation as enunciated by Cory J. in R. v. Hasselwander, [1993] 2 S.C.R. 398 at 413 that:
| ...the real intention of the legislature must be sought, and the meaning compatible with its goals applied. |
This principle was reiterated by the majority of the Supreme Court in R. v. Heywood, [1994] 3 S.C.R. 761 at 784:
| When a statutory provision is to be interpreted the word or words in question should be considered in the context in which they are used, and read in a manner which is consistent with the purpose of the provision and the intention of the legislature: Elmer A. Driedger, Construction of Statutes (2nd ed. 1983), at p. 87; R. v. Hasselwander, [1993] 2 S.C.R. 398. If the ordinary meaning of the words is consistent with context in which the words are used and with the object of the act, then that is the interpretation which should govern. |
I must also acknowledge that the English and French versions of the Regulations are equally authoritative and one should look carefully at both in interpreting the meaning of any term. (See the Official Languages Act, R.S.C. 1985, c. 31 (4th Supp.), s. 13 and Thomson v. Canada (Deputy Minister of Agriculture), [1992] 1 S.C.R. 385). The phrase "tient à jour" necessarily implies an on-going function, i.e. updating. In the context of these Regulations the term "maintain" can support the same interpretation. Thus, the duty imposed on the Minister by subsection 3(1) is to maintain, in an up-to-date state, the Register.
Section 3 of the Regulations must be read in conjunction with section 4. Section 3 only requires the Minister to "maintain" a Register, with whatever meaning is given to that term, in accordance with s. 4. Paragraph 4(2)(a) states in part that the patent list must include only patents containing "a claim for the medicine itself or a claim for the use of the medicine". Thus, the Minister"s duty of maintenance is only triggered when the first person is in compliance with paragraph 4(2)(a). How is the Minister to determine whether the patent is in compliance with the Regulations unless she examines the patent? If the Minister is denied the ability to look at the patents submitted, it seems that there would be no point in having a Register at all as there would be no guarantee that the Register was an accurate reflection of patents legitimately related to a specific medicine. For example, a patent for a boat propeller3 could prevent a generic from manufacturing SIMVASTATIN for almost three years. If a clearly irrelevant patent can be placed on the Register, even by inadvertence, a second person will be required to make an allegation of non-infringement with respect to that patent. The NOA which will be sent to the first person will, undoubtedly, state that no infringement will occur because the patent listed has no relation with the drug sought to be marketed. If the procedure in the Regulations is followed, the first person has the right to file an application for judicial review which would invoke a statutory stay for up to thirty months. In the result, the generic company would be prevented from marketing a drug for 30 months on the basis of an unquestionably irrelevant patent. Clearly, this would pervert the goal of the legislation which is to have safe generic products on the market while protecting legitimate patent rights.
The Applicants take exception to the inference that they would insist on the judicial review proceeding when faced with a pure process and/or expired patent. The transcript of the cross examination of Mr. Michael Levy, the Vice-President, Medical Sciences and Chief Medical Officer of Glaxo Wellcome Inc., in discussing Canadian patent number 1062257, at 10 - 11 reads:
| Q. All right. Is there any dispute that it is a process patent? |
| A. No, there is not. |
| Q. I take it that you have not, you of course meaning your employer, removed it from the patent list? |
| A. No, we have not. |
| Q. And do I take it that you have no intention of doing that? |
| A. We have no intention at this time of doing that. |
From this evidence I can only conclude that at least some of the major innovators would be willing to insist on a full judicial review despite the fact that the issues for the court to determine in such a proceeding would be moot.
In her written submissions counsel for the Applicants wrote at paragraph 56:
| As the Minister"s functions under the Regulations are confined to listing and maintaining patents on the patent register, he is without authority to audit or remove patents from the patent register. The scope of the Minister"s discretion, if any, is to be strictly confined to what has been expressed in the Regulations . |
This paragraph highlights the flaw in counsel"s reasoning. It is not the Minister"s duty to maintain patents on the Register, which I would interpret to mean "keep" patents on the Register. Instead, it is the Minister"s duty to maintain the Register itself, which is a very different thing.
This issue is poignantly recast by counsel for the Respondent as being a determination of whether "the Minister has a duty to include on the Register a patent which does not contain a claim for a medicine or a claim for the use of a medicine."
| b) application of the Interpretation Act |
Having interpreted the term "maintain" in this way, it is unnecessary for me to deal with ss. 31(2) of the Interpretation Act . The obligation to ensure that the Register is perpetually in accordance with sections 3 and 4 of the Regulations is the Minister"s duty. For this reason, examination of the patents to ensure compliance with the Regulations is not merely ancillary to the duty.
| c) interpretation of patent claims |
Counsel for the Applicants submits that the interpretation of patent claims is a judicial or quasi-judicial function and that it therefore cannot be exercised by the Minister or her delegate. I state at the outset that my decision on this issue is taken in the context of process patents alone. Counsel for the Applicants argued that, should the Minister be allowed to determine whether a patent is a process only patent, this will pave the way for claims dealing with compositions, intermediate substances and crystalline forms to be similarly dealt with by the Minister without the involvement of the court. However, these types of patents and the issues related to them are not before me. I must decide whether the action of removing a patent from the Register on the basis that it is a process only patent or clearly irrelevant patent involves the interpretation of a patent claim and, if so, whether that is indeed a judicial or quasi-judicial function.
The only evidence before me on this issue is the affidavit evidence of Mr. Randall Mitchell, a patent agent in Toronto, and the transcript of Mr. Howarth"s cross-examination. In his affidavit dated 20 February, 1997, Mr. Mitchell, at paragraph 4, states:
| 4. It is a straightforward matter to identify a process patent. To do so does not require any real understanding of the meaning of the claims. A process patent is one that contains only process claims i.e. claims containing wording such as "a process for...". A process claim can be easily distinguished from a product-by-process claim (a claim where a given product is defined in the claim wholly or partially by the process used to produce the product), or a product claim. It would have been a straighforward [sic] matter for CIPO to audit the Register to identify process patents. |
In the cross-examination on the affidavit of Mr. Howarth the following questions and answers appear at page 19 of the transcript:
| Q. I would take it that in your role as a Patent Examiner you have examined obviously probably many thousands of patents over the years. |
| A. Probably, yes. |
| Q. In the affidavit of Randall Mitchell -- and I don"t know if you have had a chance to review that. |
| A. Yes. |
| Q. You have reviewed that. |
| He states that identifying a claim as a process claim is what he calls a straightforward matter. Would you agree with that? |
| A. I would agree with that, yes. |
I cannot fault Applicants" counsel for not taking any position with respect to whether the 063 and 639 patents were in fact process patents. I note that, although the allegation is not denied, it is also not admitted. However, the Applicants submitted no evidence to contradict the statements of Mr. Howarth and Mr. Mitchell that the identification of process patents involves merely reading the words of the claim and does not involve any interpretation per se of the claim.
Counsel for the Applicants argues at paragraph 67 of her written submissions:
| 67. A number of decisions of this Honourable Court indicate that the question of whether or not a given claim in a patent falls within the scope of the Regulations is a question of law to be decided by the Court in the context of proceedings brought pursuant to the Regulations. |
I agree with this statement but I must add that whether pure process claims fall within the ambit of the Regulations has already been decided and the Federal Court of Appeal has held that they do not. On the premise that the identification of process claims is accomplished merely by reading the claim, without even having to understand the contents of the claim, I fail to comprehend how anything further is required of this court. The court has stated that such patents do not fall within the ambit of the Regulations. The Minister, in maintaining the Register, has the power to remove process patents. Should a dispute arise as to whether a particular patent contains only process claims, then that issue must be addressed. It may be that an application to this court will eventually be required and that the claim at issue will be interpreted. However, I cannot state that, a priori, the court is required to pronounce in every instance whether a simple phrase such as "a process for" is found in a claim. If the evidence had been inconclusive with respect to how pure process claims are identified, my decision might have been otherwise.
| d) interference with rights of the first person |
The Applicants have submitted that the first person, by virtue of the Regulations, acquires a public law right. If the Minister has removed the patent from the Register then, according to the terms of ss. 6(1) of the Regulations, the first person will not be served with a NOA and will lose the right to bring an application for an order of prohibition against the Minister.
With respect for the contrary view, I find the argument of counsel on this point to be specious. The right to bring an application can only accrue with respect to patents which are validly on the Register. If one were to presume otherwise then it would be the act of listing a patent which gave the right to the first person. In my view this is unsustainable. It is the fact of being the rightful owner of a patent which may be infringed and which falls within the scope of the Regulations which accords to the first person the right to make the application. The purpose of ss. 6(1) is the protection of patents against infringement. It is not the arbitrary prevention of the manufacture and marketing of generic drugs.
The Applicants further allege that, absent this right of action, there is no protection for patents. With respect, I cannot agree. Simply put, the Regulations, according to the decision in Deprenyl, supra, do not cover patents which contain only process claims. The Minister therefore has the authority to refuse to list process only patents. A process only patent confers no rights on the patent-holder in the context of these Regulations. However, should there arise an issue as to whether any specific patent is a process only patent, the person alleging that it should be on the Register will be able to bring a motion for an order of mandamus obliging the Minister to place the patent at issue on the Register, assuming the applicant in such a motion can establish that the patent covers more than merely a process. Furthermore, nothing in these Regulations derogates from the patent-holders" rights to enforce their property rights in the context of a patent infringement action.
Counsel for the Respondent Minister states that the use of the term "wishes" in ss. 4(2) indicates that the first person has no rights with respect to what patents are listed on the Register. I cannot agree. The wording of section 3 imposes a clear duty on the Minister with respect to the patents to be listed. Assuming a patent fulfils the requirements set out in s.4, the first person has the right to have that patent listed on the Register. The most that can be said about the use of the term "wishes" is that the determination of whether a patent complies with s. 4 belongs to the Minister and not the first person.
2. The Minister"s ability to remove patents from the Register
Counsel for the Applicants argued that, even if the Minister has the authority to examine a patent submitted on a list before it is entered on the Register, once it is there the Minister is functus officio with respect to whether that patent is appropriately listed and the Minister cannot re-visit that same issue at a later time. However, with respect for the contrary view, this is not in accord with the duty to maintain the Register.
If the Minister was not able to keep the Register up to date, patents which expire would pose a barrier to second persons in the following way. As an example, suppose a first person"s patent is appropriately placed on a patent list on January 1, but the patent expires on January 15. On February 1 a second person files a NDS and sends a NOA to the first person with respect to that patent in accordance with s.5 of the Regulations. The first person then commences judicial review proceedings in order to determine if the allegations of non-infringement are accurate. The Minister is prohibited from issuing a NOC to the second person for up to 30 months from receiving proof that the judicial review proceedings have been filed. If the Minister does not have the power to remove the expired patent, the generic drug company may be prevented from marketing a drug for 30 months without reason. Clearly the generic manufacturer cannot be in violation of a patent which has expired. For this reason, the Minister, in "maintaining" the Register, must have the power to periodically review the list of patents to ensure continued compliance with s. 4 of the Regulations.
That the above scenario might indeed occur is evidenced by the following exchange which occurred between counsel during the cross-examination of Mr. Levy on March 12, 1997.
| Mr. Hore: Q. But I take it that you would not maintain that a generic product should be kept off the market in proceedings in which the only patent that is in dispute is an expired patent? |
| Ms. Robinson: I think that in the law as it stands the decisions of Madame Justice Simpson is certainly a right to a hearing on the merits and adjudication of the application for prohibition. |
| Mr. Hore: Where a patent has expired? |
| Ms. Robinson: Where a patent has expired, yes. |
On the facts of this case, it cannot be said that the Minister ever examined whether these patents were eligible to be placed on the Register. In fact, the evidence is that no examination of the patents themselves was ever conducted prior to the audit undertaken by Mr. Howarth. This issue arises now because this is the first time patents have been examined to determine whether they are purely process patents.
The position taken by the Applicants stems in part from the decision of Simpson J. in Merck Frosst v. Canada (Minister of National Health and Welfare) (1996), 65 C.P.R. (3d) 483. In that case, the Applicant Merck sought an Order of prohibition against the Minister on the basis that, at the time the NOA was issued and at the time the NOC could have been issued, no non-infringing activity was possible. Simpson J. states at 487:
| The applicants allege that the Notice was premature because, on the 46th day after the service of the Notice, when the NOC could theoretically have been issued, there was no non-infringing activity possible under the NOC due to the Prohibitions. I accept this submission. At the time the NOC was requested and could have been issued, all purposes for which the NOC was required were prohibited. |
* * *
| I have concluded that the allegation of non-infringement is not justified. In my view, because a NOC is at issue, infringement is to be considered only in respect of activities for which the NOC is required. Those activities are Canadian sales of Norfloxacin and, as they were prohibited both at the date of the Notice and at the date a NOC could have issued under the Notice, the allegations of non-infringement were premature. |
Simpson J. adopts as the relevant date the day on which the NOC could have issued, i.e. 46 days after the Minister is served with a notice that the NOA was served on the first person. On the issue of what date the court is to use in making a determination under s. 6 of the Regulations, I agree entirely with the decision of my brother Muldoon J. in Merck Frosst Canada Inc. v. Canada (Minister of Health and Welfare) (1997) (T-1312-96, Ottawa May 27, 1997) at 17 to 18 of his decision:
| The legislative purpose of the subject regulations was stated to the Court to be the due protection of patentees from unwarranted NOCs under which patent infringements could be effected. That is probably so. However, this judge well remembers the legislative purpose of compulsory licences. It was and remains to permit, upon payment of a royalty to the patentee, the profitable marketing and sale to the public by the licensee of reasonably priced pharmaceutical drugs. |
| So, while protecting the patentee from infringement, or while ensuring that a royalty is paid under a compulsory licence which wipes away infringement, it would be wrong of this Court to enforce a narrow, unlegislated notion of prematurity in order to nullify a compulsory licence. So be it in this case. The generic Genpharm, with its compulsory licence, has long been permitted to manufacture the 10mg tablets of famotidine in Canada, and, since mid-October, 1996, it has been lawfully permitted to import that drug from a non-infringing source abroad. No order of prohibition against the Minister should be given so as to thwart Genpharm from the lawful exercise of its compulsory licence. |
| Prohibition is an extraordinary remedy which stops someone from doing something. If there be nothing to prohibit, the foundation of the remedy evaporates. In order to determine if the foundation of the prohibition application exists, the Court must be aware of the status of respondent"s allegations at the time of the hearing. It would be strange indeed for the Court to prohibit a party from doing that which the party is legally entitled to do. That is to say, the foundation of the prohibition applications is moot... |
| It follows that a Court hearing a prohibition application must assess the respondent"s allegations of non-infringing activity at the time it is hearing the application. The justification for the allegations is not frozen in time. This Court cannot be blind to the fact that in this case Genpharm would have already been able to act on its compulsory licence and legally import famotidine as of October 7, 1996 but for the present prohibition application. |
I am not inclined to interpret these Regulations in such a way as to require that this court entertain applications when the "foundation" of the application has "evaporated".
The Applicants also allege that, in reading the Regulations as a code, the appropriate method for dealing with situations such as this one is the judicial review process provided for by ss. 6(1). If I understand it well, it is the position of the Applicants that all patents submitted by the first person should be placed on the Register and the second person should make the necessary notices of allegation and then wait to see if the first person will file an application for judicial review with respect to the allegations. Paragraphs 71 and 72 of the written submissions of counsel for the Applicants state:
| 71. The Regulations confer on a first person a public law right to bring an application before the Federal Court for an Order of prohibition against the Minister of National Health and Welfare in order to prevent the infringement of its patent(s) listed on the patent register. |
| 72. The Applicants submitted patent lists in respect of the Simvastatin Patents and the Minister accepted these patent lists and listed the patents on the patent register. The position now being adopted by the Minister effectively deprives the Applicant of the right to be served with a notice of allegation by a second person and of applying to the Federal Court pursuant to the statutory "right of action" for the protection of these patents against infringement. |
However, there are four problems with this proposition.
The first problem is that s. 6 accords to the first person procedural fairness at best and not substantive rights which may fetter the Minister"s ability to perform her duties as required by sections 3 and 4.
The second problem is that this argument puts the cart before the horse. In order to be given the rights described by the Applicants, the Applicants must have submitted, for listing on the Register, patents which comply with s. 4. According to the decision in Deprenyl, supra, patents containing only claims for a process do not comply with that section. How then can the Regulations be interpreted as giving the holder of those patents any rights at all? In my view they cannot be so interpreted.
The third problem is that the process provided for by s. 6 of the Regulations does not remove patents from the Register. Although this court may find that the allegations of non-infringement made by the second person are indeed justified in a particular case, the court is limited to refusing to make an order of prohibition. Nothing in the Regulations gives the court the power to order a patent struck. Thus, in my view, this situation does not fall within the parameters of the Regulations.
The fourth problem is that this argument puts control of the entire process in the hands of the first person and makes the Minister a mere pawn. While this argument certainly goes a long way to protecting patents, it is over-encompassing as it also prevents the manufacture and sale of generic drugs. It warrants reiteration at this point that the Regulations really bridge two pieces of legislation. Although the protection of patents is legitimate, it is not to be pursued under this legislative scheme at all costs. In fact, even with the Minister auditing the Register, the Applicants were unable to convince me that a situation will arise in which a patent is compromised. The only evidence is that, of the 169 patents identified as being a process only patent or irrelevant to the medicine under which it was listed, only one first person disputed the findings of Mr. Howarth and stated that the patent was incorrectly identified. That error has been corrected and does not form part of this case.
3. Delegation to CIPO
Counsel for the Applicants submitted that the Minister cannot delegate the decision to remove patents from the Register because she is given no statutory authority to delegate, that, in any event a judicial or quasi-judicial function cannot be delegated and that delegation violates principles of natural justice.
The Applicants cite Halsbury"s Laws of England, 4th ed., vol. 1(1) (London: Butterworths, 1989) in support of the contention that a statute must expressly provide for delegation or that delegation be necessary by implication. Halsbury"s Laws state at paragraph 31:
| In accordance with the maxim delegatus non potest delegare, a statutory power must be exercised only by the body or officer on whom it has been conferred, unless sub-delegation of the power is authorised by express words or necessary implication. There is a strong presumption against construing a grant of legislative, judicial, or disciplinary power as impliedly authorising sub-delegation; and the same may be said of any power to the exercise of which the designated body should address its own mind. Even where a power to make decisions is exercisable only by the delegate itself, however, considerations of practical convenience may justify entrusting powers to a committee or officers to conduct an investigation and to make recommendations as to the decision to be taken. |
| [footnotes omitted] |
In the circumstances before me, although the Minister referred the task of the identification of process only patents and clearly irrelevant patents to CIPO, the final decision with respect to whether the patents should be actually removed from the Register was made by the Minister. I pause to make it clear that I am not finding that the Minister determined whether these patents contained only process claims. I am saying that, once the expert, Mr. Howarth, identified these patents as irrelevant or process only patents, the Minister then determined whether they should be struck from the Register in accordance with the Regulations. This is evidenced by the fact that the Minister chose not to remove those patents which, while identified as process only patents or clearly irrelevant patents, were the subject of judicial review proceedings which had already been commenced.
I accept the position of the Minister that the task of identifying process only and irrelevant patents was a ministerial act. That is to say that there was in fact no decision to be made. (See generally S.A. de Smith, Judicial Review of Administrative Action, 6th ed. (London: Stevens & Sons, 1996)). The determination of whether a claim is one for only a process involved a mere reading of the claim. Consequently, as the Regulations require that patents submitted by first persons and placed on the Register by the Minister comply with the requirements of s. 4, as interpreted by this court, it is merely a ministerial act for the patents to be added or removed. The Minister shall maintain the Regulations in accordance with the Regulations. The Minister is not accorded any discretion whatsoever. In this case, in light of the fact that proceedings had already been commenced with respect to some patents, the Minister made an exception and left those patents on the Register pending resolution of those proceedings.
Whether the consultation with CIPO amounted to a fettering of discretion was not put before me and I make no finding with respect thereto, except to say that the Minister of Health and Welfare was justified in referring the issue to persons with expertise in this area.
The Applicants state that the Minister, by giving first persons an opportunity to respond to the characterization of their patents as process-only, is acknowledging that the actions taken by HPB were not ministerial. However, counsel for the Applicants" written submissions subsequently state that even if the power is ministerial, the Minister has an obligation to observe principles of fairness. The Applicants cited the decision of Dickson J. in Martineau v. Matsqui Institution Disciplinary Board (No. 2), [1980] 1 S.C.R. 602 in support of the latter statement. At 622 Dickson J. states:
| The authorities to which I have referred indicate that the application of a duty of fairness with procedural content does not depend upon proof of a judicial or quasi-judicial function. Even thought the function is analytically administrative, Courts may intervene in a suitable case. |
I accept that the Minister, in performing this truly ministerial task, was still bound by the duty to provide procedural fairness to the Applicants.
4. Natural Justice
The Applicants put forth the argument that, even if it was the Minister who actually made the decision to remove these specific patents from the Register, the representations made by the Applicants would have only been forwarded to CIPO. The Applicants allege that this would have violated the principle that he who decides must hear. With respect to the patents at issue here, the evidence is that none of the Applicants made any representations as to whether they believed that their patents were incorrectly identified as process only or irrelevant patents. I cannot make a finding as to whether, had the Minister done something, that thing would have been a denial of natural justice. The issue simply does not arise legitimately in these circumstances. The letter from HPB to the "innovative" sector does not state that the Minister will not examine the submission. Any response received from the first person will however be considered by CIPO in making its recommendation. I do not see how, on the evidence, I can conclude that the actual decision was not taken by the Minister"s representative.
5. Reasonable Apprehension of Bias
The next two issues arise because, on April 19, 1996, the Minister released additional documents which had inadvertently been omitted from the package of material submitted in March of the same year. These documents reveal the following correspondence between Ms. Beth Pieterson, the then Acting Chief of the Submission and Information Policy Division, Bureau of Drug Policy and Co-ordination and Mr. Dann Michols, Executive Director NPS/Drugs Directorate.
Mr. Michols wrote the following note to Ms. Pieterson on April 11, 1995:
| Beth: a couple of reactions: 1) we need to develop a fee structure and cost recovery proposal for the Registry and these costs should be indicated. 2) initiative looks good. 3) We need a communication plan to announce initiative and review. We should make some points with generic industry and could maybe change innovator behaviour. |
Ms. Pieterson responded to this in a memorandum stating in part the following:
| 2. I was not intending to communicate our intentions until the Register has been audited. At that time, the fact that it had already been done would be communicated along with our plans to eliminate the process and irrelevant patents. I suggest this approach because it avoids the confrontation with the innovative sector now. We do not want their comments on our intentions to audit the Register, do we? |
| I do agree however, that we would gain points with the generic sector and maybe change innovator behaviour. In that sense, maybe we should communicate now. The audit will be completed by September, so we communicate now or in September. Let me know your preference. |
The Applicants allege that this correspondence reveals a reasonable apprehension of bias on the part of senior officials of Health Canada in that they had a clear predisposition to:
| court favour with and advantage generic drug manufacturers at the expense of the patent right of "innovators" such as the Applicants |
I cannot agree with this submission for three reasons. The first is that these memos deal ex post facto with the decision to perform an audit on the Register. I interpret the statement that points will be scored with the generic manufacturers as merely of a statement of a positive side effect of a decision which had already been reached in accordance with how the Department saw its duties in light of Federal Court jurisprudence. The rest of the memos really address the implications of telling the "innovative sector" immediately or at a later point in time. This is really a public relations issue. There is no doubt that the decision to perform the audit had already been taken. In light of this I fail to see how the reasonably informed bystander could reasonably interpret this correspondence as bias on the part of Health Canada officials. (See Newfoundland Telephone Co. v. Board of Commissioners of Public Utilities, [1992] 1 S.C.R. 627).
Secondly, at best, if these memos did indeed reveal any bias, it would be bias with respect to the decision to perform the audit at all and not with respect to the actual decision to remove any particular patent. The decision to remove a patent is a ministerial act, involving no discretion on the part of the Minister. The Applicants have failed to establish a link between this alleged predisposition toward generic manufacturers and the identification and subsequent removal of the patents at issue here.
6. Exercise of Ministerial Power for an Improper Purpose
The Applicants" allegations that the Minister audited and removed patents from the Register in order to "score points" with the generic industry fails for the same reason as does their allegation of a reasonable apprehension of bias.
For these reasons, the applications in T-304-96, T-386-96 and T-306-96 will be dismissed.
"MARC NADON"
Judge
Ottawa, Ontario
June 13, 1997
| T-304-96 |
OTTAWA, ONTARIO, THIS 13TH DAY OF JUNE 1997
PRESENT: THE HONOURABLE MR. JUSTICE NADON
BETWEEN:
MERCK FROSST CANADA INC., and
MERCK & CO., INC.,
Applicants
- and -
THE MINISTER OF NATIONAL HEALTH AND WELFARE, and
THE ATTORNEY GENERAL FOR CANADA
Respondents
- and -
APOTEX INC. and NOVOPHARM LIMITED
Intervenors
ORDER
This application is dismissed.
"MARC NADON"
Judge
T-306-96
OTTAWA, ONTARIO, THIS 13TH DAY OF JUNE 1997
PRESENT: THE HONOURABLE MR. JUSTICE NADON
BETWEEN:
MERCK FROSST CANADA INC., and
MERCK & CO., INC.,
Applicants
- and -
THE MINISTER OF NATIONAL HEALTH AND WELFARE, and
THE ATTORNEY GENERAL FOR CANADA
Respondents
- and -
APOTEX INC. and NOVOPHARM LIMITED
Intervenors
| ORDER |
The application is dismissed.
"MARC NADON"
Judge
T-386-96
OTTAWA, ONTARIO, THIS 13TH DAY OF JUNE 1997
PRESENT: THE HONOURABLE MR. JUSTICE NADON
BETWEEN:
GLAXO WELLCOME INC., and
THE WELLCOME FOUNDATION LIMITED
Applicants
- and -
THE MINISTER OF NATIONAL HEALTH AND WELFARE, and
THE ATTORNEY GENERAL FOR CANADA
Respondents
- and -
APOTEX INC. and NOVOPHARM LIMITED
Intervenors
ORDER
This application is dismissed.
"MARC NADON"
Judge
__________________1 Of course, where it is clear that the NDS will infringe one or more patents, the second person is not required to allege non-infringement, but the NOC cannot then issue until the expiration of the patents with respect to which no allegation was made.
2 Claims for a process which produce a medicine, without any claim for the medicine itself or a use for the medicine, are known as "process" claims and were held by the Federal Court of Appeal to be outside of the ambit of the Regulations. See Deprenyl Research Ltd. v. Apotex Inc. (1994), 55 C.P.R. (3d) 171 (F.C.T.D.), aff"d (1995), 60 C.P.R. (3d) 501 (F.C.A.). Therefore, patents containing only process claims should not be on the Register.
3 The audit performed by Mr. Howarth, attached as Exhibit A to the affidavit of Dr. Sidney Smith, reveals that the Register included inter alia , a patent for: a bicycle brake; a compact disc storage container; and a mobile crane.