Apotex Inc. v. Sanofi-Aventis Canada Inc.

Apotex Inc. v. Sanofi-Aventis Canada Inc. Court (s) Database Federal Court of Appeal Decisions Date 2007-01-08 Neutral citation 2007 FCA 7 File numbers A-1-07 Decision Content Date: 20070108 Docket: A-1-07 Citation: 2007 FCA 7 Present: SHARLOW J.A. BETWEEN: APOTEX INC. Appellant and SANOFI-AVENTIS CANADA INC. Respondent and THE MINISTER OF HEALTH Respondent Heard at Ottawa, Ontario, on January 5, 2007. Order delivered at Toronto, Ontario, on January 8, 2007. REASONS FOR ORDER BY: SHARLOW J.A. Date: 20070108 Docket: A-1-07 Citation: 2007 FCA 7 Present: SHARLOW J.A. BETWEEN: APOTEX INC. Appellant and SANOFI-AVENTIS CANADA INC. Respondent and THE MINISTER OF HEALTH Respondent REASONS FOR ORDER SHARLOW J.A. [1] The appellant Apotex Inc. has appealed an interlocutory order of the Federal Court and now seeks to stay the interlocutory order until the disposition of the appeal. [2] I summarize as follows the facts underlying this motion. [3] Since 1994, the respondent Sanofi-Aventis has made and sold a drug called Altace for the treatment of high blood pressure. The medicinal ingredient in Altace is ramipril. [4] On the patent register maintained by the Minister under the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, (the NOC Regulations) are a number of patents listed in respect of Altace. For the purposes of this motion, only two of those patents are relevant, Canadian Patent No. 2,382,387 and Canadian Patent No. 2,382,549. Both of those patents were issued after Sanofi obtained its notice of compliance for Altace. Both were filed on the basis of a new drug submission (submission number 082094) filed by Sanofi on November 6, 2003 as the result of an amendment of the “Action and Pharmacology” section of the product monograph for Altace. [5] Apotex has filed an abbreviated new drug submission seeking a notice of compliance so that it can market its own ramipril product, to be called Apo-Ramipril. Altace is the comparator drug for that abbreviated new drug submission. The abbreviated new drug submission was filed before Sanofi filed the new drug submission upon which it relied to add the 387 patent and the 549 patent to the patent register. [6] At some point before the events that resulted in the order under appeal (the exact date is not material to this motion), the Minister was satisfied that Apo-Ramipril is bioequivalent to Altace, and that a notice of compliance should issue, subject to the requirements of the NOC Regulations. [7] In November of 2005, Apotex served on Sanofi a notice of allegation under the NOC Regulations. The notice of allegation addresses the 387 patent and the 549 patent. Apotex alleges, first, that certain claims in both patents are claims for something other than the use of the medicine ramipril, and for that reason are irrelevant in the sense that they need not be addressed under the NOC Regulations. Second, it is alleged that both patents are improperly listed because they are based on a new drug submission which, according to the relevant jurisprudence, cannot support the listing of a patent. Third, it is alleged that Apotex will not be infringing the patents because the uses for which it is seeking a notice of compliance are uses disclosed in the prior art. Fourth, it is alleged that the patents are invalid on a number of grounds (including anticipation and obviousness). [8] On January 17, 2006, Sanofi commenced an application (T-87-06) under the NOC Regulations for an order prohibiting the Minister from issuing a notice of compliance to Apotex for Apo-Ramipril. At the time, all parties would have agreed that the filing of that application marked the beginning of the 24 month period in paragraph 7(1)(e) of the NOC Regulations, often referred to as the “statutory stay”. Section 7 of the NOC Regulations reads as follows: 7. (1) The Minister shall not issue a notice of compliance to a second person before the latest of (a) [Repealed, SOR/98-166, s. 6] (b) the day on which the second person complies with section 5, (c) subject to subsection (3), the expiration of any patent on the register 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) or (c) in respect of any patent on the register, (e) subject to subsections (2), (3) and (4), the expiration of 24 months after the receipt of proof of the making of any application under subsection 6(1), and (f) the expiration of any patent that is the subject of an order pursuant to subsection 6(1). (2) Paragraph (1)(e) does not apply if at any time, in respect of each patent that is the subject of an application pursuant to subsection 6(1), (a) the patent has expired; or (b) the court has declared that the patent is not valid or that no claim for the medicine itself and no claim for the use of the medicine would be infringed. (3) Paragraphs (1)(c), (d) and (e) do not apply in respect of a patent if the owner of the patent has consented to the making, constructing, using or selling of the drug in Canada by the second person. (4) Paragraph (1)(e) ceases to apply in respect of an application under subsection 6(1) if the application is withdrawn or discontinued by the first person or is dismissed by the court hearing the application. (5) If the court has not yet made an order under subsection 6(1) in respect of an application, the court may (a) shorten the time limit referred to in paragraph (1)(e) on consent of the first and second persons or if the court finds that the first person has failed, at any time during the proceeding, to reasonably cooperate in expediting the application; or (b) extend the time limit referred to in paragraph (1)(e) on consent of the first and second persons or, if the court finds that the second person has failed, at any time during the proceeding, to reasonably cooperate in expediting the application. 7. (1) Le ministre ne peut délivrer un avis de conformité à la seconde personne avant la plus tardive des dates suivantes : a) [Abrogé, DORS/98-166, art. 6] b) la date à laquelle la seconde personne se conforme à l'article 5; c) sous réserve du paragraphe (3), la date d'expiration de tout brevet inscrit au registre qui ne fait pas l'objet d'une allégation; d) sous réserve du paragraphe (3), la date qui suit de 45 jours la date de réception de la preuve de signification de l'avis d'allégation visé aux alinéas 5(3)b) ou c) à l'égard de tout brevet inscrit au registre; e) sous réserve des paragraphes (2), (3) et (4), la date qui suit de 24 mois la date de réception de la preuve de présentation de la demande visée au paragraphe 6(1); f) la date d'expiration de tout brevet faisant l'objet d'une ordonnance rendue aux termes du paragraphe 6(1). (2) L'alinéa (1)e) ne s'applique pas si, à l'égard de chaque brevet visé par une demande au tribunal aux termes du paragraphe 6(1) : a) soit le brevet est expiré; b) soit le tribunal a déclaré que le brevet n'est pas valide ou qu'aucune revendication pour le médicament en soi ni aucune revendication pour l'utilisation du médicament ne seraient contrefaites. (3) Les alinéas (1)c), d) et e) ne s'appliquent pas à l'égard d'un brevet si le propriétaire de celui-ci a consenti à ce que la seconde personne utilise, fabrique, construise ou vende la drogue au Canada. (4) L'alinéa (1)e) cesse de s'appliquer à l'égard de la demande visée au paragraphe 6(1) si celle-ci est retirée ou fait l'objet d'un désistement par la première personne ou est rejetée par le tribunal qui en est saisi. (5) Lorsque le tribunal n'a pas encore rendu d'ordonnance aux termes du paragraphe 6(1) à l'égard d'une demande, il peut : a) abréger le délai visé à l'alinéa (1)e) avec le consentement de la première personne et de la seconde personne, ou s'il conclut que la première personne n'a pas, au cours de l'instance relative à la demande, collaboré de façon raisonnable au règlement expéditif de celle-ci; b) proroger le délai visé à l'alinéa (1)e) avec le consentement de la première personne et de la seconde personne, ou s'il conclut que la seconde personne n'a pas, au cours de l'instance relative à la demande, collaboré de façon raisonnable au règlement expéditif de celle-ci. [9] By November of 2006, cross-examinations were in progress in relation to the prohibition proceedings. [10] On November 3, 2006, the Supreme Court of Canada issued its decision in AstraZeneca Canada Inc. v. Canada, 2006 SCC 49. There appears to be some debate about the precise point determined in that case, but for the purposes of this motion it is enough to refer to the description of the issue in paragraph 31 of the reasons of Justice Binnie, writing for the Court. Paragraph 31 says that “the question is whether the reference in s. 5(1) [of the NOC Regulations] to ‘another drug for the purpose of demonstrating bioequivalence’ and ‘the other drug’ against which the patents are listed is a reference to [the innovator drug] in any of its formulations, including formulations never brought to market (which is the AstraZeneca position); or does it mean, more narrowly, the [innovator drug] based on the [particular notice of compliance] which Apotex copied (as Apotex contends)”. [11] The AstraZeneca case is important because, on the view taken by the Minister and Apotex, the principle for which that case stands can be applied to the present case, which would make the prohibition proceedings unnecessary. Sanofi takes the opposite position. [12] Early in December, Apotex wrote to the Minister to request that a notice of compliance be issued for Apo-Ramipril notwithstanding the prohibition proceedings. Apotex apparently argued that, based on the interpretation of subsection 5(1) of the NOC Regulations adopted in AstraZeneca, Apotex was not required, as a matter of law, to address the 387 patent and the 549 patent. I assume that Apotex also reminded the Minister of the jurisprudence of this Court to the effect that when an abbreviated new drug submission is made in circumstances to which the NOC Regulations do not apply, the Minister has a legal obligation to issue a notice of compliance once he is satisfied as to bioequivalence: Apotex Inc. v. Canada (Attorney General) (C.A.), [1994] 1 F.C. 742. [13] In a letter dated December 8, 2006, a Health Canada official told Apotex that the Minister agreed that the principle in AstraZeneca applied to this case, but that a notice of compliance would not be issued because of the statutory stay resulting from the pending prohibition proceedings. Sanofi was provided with a copy of that letter. [14] On December 11, 2006, Sanofi replied to the Minister indicating its disagreement with the Minister’s analysis of the AstraZeneca case and with the Minister’s conclusion that the AstraZeneca case applied. [15] The Minister apparently was not convinced by Sanofi’s submissions. For reasons that are not clear, the Minister also changed his view of the statutory stay, because on December 12, 2006, the Minister issued a notice of compliance to Apotex for Apo-Ramipril. [16] On December 13, 2006, the Minister also issued a notice of compliance to Ratiopharm Inc. for its ramipril product, apparently manufactured by Sanofi and marketed by Ratiopharm under license. Sanofi refers to this as an authorized generic product. Apotex refers to it as a pseudogeneric. Whatever term is used, it is clearly a product that is intended to compete with Apo-Ramipril in the generic market. [17] Meanwhile, on December 12, 2006, Sanofi filed an application for judicial review (T-2196-06), seeking, among other things, an order quashing the decision to issue the notice of compliance to Apotex, an order prohibiting the issuance of the notice of compliance, a declaration that the Minister had misinterpreted AstraZeneca and subsection 5(1) of the NOC Regulations, and an interim order pursuant to section 18.2 of the Federal Courts Act staying the effect of the decision to issue the notice of compliance, and an order prohibiting the issuance of the notice of compliance. The notice of application for judicial review apparently was served on the Minister and Apotex the next day, December 13, 2006. It is not clear whether the Minister was aware, when the notice of compliance was issued to Apotex on December 12, 2006, that Sanofi had filed its notice of application for judicial review, although Sanofi apparently had told the Minister of its intention to do so. [18] Sanofi filed, with its application for judicial review, a notice of motion seeking an order “staying the operation and effect” of the decision of the Minister to issue the notice of compliance to Apotex. On December 15, 2006, an interim stay was denied, and the motion for an interlocutory stay was set down for hearing on December 21, 2006. The motion was heard on that day. On December 29, 2006, the order under appeal was issued. The order stays the operation of the notice of compliance and requires Apotex and the Minister to comport themselves as of the notice of compliance had not been issued. [19] The order by its terms is in effect until the disposition of the Sanofi application for judicial review of the decision of the Minister to issue the notice of compliance (T-2196-06), or the termination of the 24 month period of the statutory stay that arose because of prohibition proceedings commenced by Sanofi (T-87-06), whichever occurs first. [20] Apotex immediately appealed the order and filed a notice of motion to seek a stay. The motion was heard on an expedited basis. [21] I will deal first with the submission of Sanofi that this motion is doomed to fail because it is in essence a rehearing of the stay motion heard in the Federal Court. That submission is based on Wellcome Foundation Ltd. v. Apotex Inc. (1990), 32 C.P.R. (3d) 515 (F.C.T.D.) and Syntex Inc. v. Apotex Inc. (No. 2) (1989), 28 C.P.R. (3d) 43 (F.C.T.D.). Those cases dealt with motions in the Federal Court in patent infringement proceedings to stay an interlocutory injunction granted by the same Court. In my view, the reasoning in those cases cannot apply to the rather unusual situation in this case. [22] The Judge considered the traditional tests for a stay, citing Manitoba (Attorney General) v. Metropolitan Stores (MTS) Ltd., [1987] 1 S.C.R. 110. In the context of the motion before him, the relevant questions under the traditional test were: (1) Does Sanofi’s application for judicial review of the Minister’s decision to issue the notice of compliance raise a serious issue? (2) Will Sanofi suffer irreparable harm if the stay is not granted and its application succeeds? (3) Does the balance of convenience favour granting the stay? [23] Although the Judge did not expressly deal with whether there was a serious question, it is obvious that he believed that test was met. He engaged in an extensive consideration of the evidence and concluded that Sanofi had not established that it would suffer irreparable harm. That would have been sufficient to justify a refusal of the motion for a stay based on the traditional test. [24] The Judge granted the stay for an entirely different reason. He concluded that, because prohibition proceedings were pending when the notice of compliance was issued, the issuance of the notice of compliance was disrespectful of the process of the Federal Court. [25] In the motion before me, which is a motion to stay the Federal Court order, the traditional tests are the same, and may be expressed as follows: (1) Does the appeal of the stay order raise a serious issue? (2) Will Apotex suffer irreparable harm if the stay is not granted and its appeal succeeds? (3) Does the balance of convenience favour granting the stay? [26] The first test generally is considered to represent a very low bar, with the result that it is not usually necessary or desirable to consider the grounds of appeal in any depth. At the same time, I cannot help but note that there are strong grounds of appeal in this case. In that regard, I would make three general observations. [27] First, the effect of the order under appeal is to abrogate, albeit on an interlocutory basis, a decision that not only falls within the scope of the statutory mandate of the Minister, but also appears on its face to be a decision that was compelled by the jurisprudence of this Court (Apotex Inc. v. Canada (Attorney General), cited above). It is true that prohibition proceedings were pending and the NOC Regulations impose a statutory stay when prohibition proceedings are commenced. However, the Minister is often required to act on his own analysis of the law, and cannot be expected on every occasion to seek the approval of the Court before doing so. In principle, if an event occurs that undermines the foundation of a particular prohibition proceeding, the Minister can and probably must take note of that event and act accordingly. In the context of this case, the Minister may or may not prove to be correct in concluding that the principle established in AstraZeneca meant that there was no longer a foundation for the prohibition proceeding commenced by Sanofi, but his decision to act on that conclusion cannot fairly be characterized as disrespectful of the Federal Court. The statutory stay is legislative, not judicial. It may turn out that the Minister’s act was based on a legal error, but if so it seems to me to have been an error of statutory interpretation, not an affront to the Federal Court. [28] Second, the effect of the order under appeal is not to preserve the status quo, which is normally the objective of a stay order, but to change the status quo to give a competitive advantage to the party seeking the stay. The status quo when the motion for a stay was made in the Federal Court was that Apotex was entitled to market Apo-Ramipril. In granting the stay, the Judge placed Apotex at a competitive disadvantage for the duration of the stay. [29] Third, the stay was granted dispite the finding of fact that Sanofi will suffer no irreparable harm from the issuance of the notice of compliance to Apotex. I was referred to no jurisprudence that would permit a stay to be ordered in the face of such a finding. [30] Apotex has submitted evidence of irreparable harm related to competition from Ratiopharm. At this time, there is no other generic ramipril product on the market, or poised to enter the market in the near future. The evidence of Apotex, which is not contradicted, is that within the market for generic products, the first entrant always has a permanent and unquantifiable advantage in terms of market share. Sanofi argues that the evidence of irreparable harm to Apotex cannot be considered to be stronger than the evidence of irreparable harm presented by Sanofi in the Federal Court. However, in my view it is stronger, because of the issuance of a notice of compliance to Ratiopharm, Sanofi’s licensee, at virtually the same time as the issuance of a notice of compliance to Apotex. [31] In the course of the hearing of this stay motion, counsel for Sanofi appeared to acknowledge the merits of the Apotex evidence on the question of irreparable harm caused by competition from Ratiopharm, and indicated that Sanofi would undertake that Ratiopharm would not market its product as long as the notice of compliance is stayed and Apotex is not otherwise in the marketplace. That proposal did not appear in his written submissions, and appears to have been somewhat of an afterthought. I must assess that undertaking as very weak protection for Apotex. Counsel for Sanofi was unable to provide any assurance that Sanofi has a contractual right to control the marketing activities of Ratiopharm. In addition, as counsel for Apotex pointed out, the proposed undertaking does not by its terms prevent Ratiopharm from shipping product for which it already has orders, and it does not preclude the customers of Ratiopharm from stocking and dispensing its product. I presume that Sanofi knows or has the means of knowing all the relevant facts about its contractual relationship with Ratiopharm and any steps that Ratiopharm has taken to market, sell or ship the Ratiopharm product, and yet the record is silent on these points. [32] I conclude that Apotex has established that it will suffer irreparable harm if the interlocutory order is not stayed. [33] I conclude also that the balance of convenience favours granting the stay. Sanofi provided no evidence in response to the Apotex motion that it will suffer irreparable harm, and the evidence presented in the Federal Court on that point was held not to be sufficient. More importantly, granting the stay will restore the status quo (i.e., the state of affairs before the stay motion of Sanofi was heard in the Federal Court). That will enable Apotex to compete with Ratiopharm in a normal fashion, or at least well as it can, given the time that has elapsed since the notices of compliance were issued to Apotex and Ratiopharm. [34] I will grant the Apotex stay motion, subject to the condition that Apotex, upon the request of Sanofi, will take all reasonable steps to ensure that the prohibition proceedings (T-87-06) are stayed pending the disposition of the judicial review application (T-2196-06), and that the statutory stay is extended accordingly. I understand that the hearing of the application for judicial review has been expedited in the Federal Court, and that a hearing is anticipated in late March of 2007. [35] The notice of motion of Apotex includes a request for an expedited hearing of the appeal. All parties agree that this is appropriate, and they have agreed to cooperate to ensure that an expedited hearing will be possible. An order will be made accordingly. “K. Sharlow” J.A. FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-1-07 HEARING OF A MOTION FOR A STAY OF THE ORDER OF THE FEDERAL COURT DATED DECEMBER 29, 2006 (NO. T-2196-06) STYLE OF CAUSE: Apotex Inc. v. Sanofi-Aventis Canada Inc. et al. PLACE OF HEARING: Ottawa, Ontario DATE OF HEARING: January 5, 2007 REASONS FOR ORDER BY: Sharlow, J.A. DATED: January 8, 2007 APPEARANCES: Mr. H. B. Radomski Mr. A. Brodkin Mr. Miles Hastie Mr. J. Simpson FOR THE APPELLANT Mr. Gunars A. Gaikis Mr. A. David Morrow Mr. J. Sheldon Hamilton Ms. Nancy Pei FOR THE RESPONDENT (Sanofi-Aventis Canada Inc.) Mr. F. B. Woywada FOR THE RESPONDENT (The Minister of Health) SOLICITORS OF RECORD: Goodmans LLP Toronto, Ontario FOR THE APPELLANT Smart & Biggar Toronto, Ontario Mr. John H. Sim, Q.C. Ottawa, Ontario FOR THE RESPONDENT (Sanofi-Aventis Canada Inc.) FOR THE RESPONDENT (The Minister of Health)