Apotex Inc. v. Bayer AG

Apotex Inc. v. Bayer AG Court (s) Database Federal Court of Appeal Decisions Date 2004-06-23 Neutral citation 2004 FCA 242 File numbers A-546-03 Notes Digest Decision Content Date: 20040623 Docket: A-546-03 Citation: 2004 FCA 242 CORAM: LINDEN J.A. ROTHSTEIN J.A. SEXTON J.A. BETWEEN: APOTEX INC. Appellant (Respondent) and BAYER AG AND BAYER INC. Respondents (Applicants) and THE MINISTER OF HEALTH Respondent (Respondent) Dealt with in writing without appearance of parties. Order delivered at Toronto, Ontario, on June 23rd, 2004. REASONS FOR ORDER BY: ROTHSTEIN J.A. CONCURRED IN BY: LINDEN J.A. SEXTON J.A. Date: 20040623 Docket: A-546-03 Citation: 2004 FCA 242 CORAM: LINDEN J.A. ROTHSTEIN J.A. SEXTON J.A. BETWEEN: APOTEX INC. Appellant (Respondent) and BAYER AG AND BAYER INC. Respondents (Applicants) and THE MINISTER OF HEALTH Respondent (Respondent) REASONS FOR ORDER ROTHSTEIN J.A. [1] This is a motion by Bayer AG and Bayer Inc. ("Bayer") to dismiss an appeal by Apotex Inc. ("Apotex") on the grounds of mootness. [2] By Order of Gibson J. of October 17, 2003, the Minister of Health was prohibited from issuing a Notice of Compliance to Apotex in respect of certain formulations of ciprofloxacin until after the expiry of Bayer's Canadian Patent 1,218,067 ("the '067 Patent"). On November 14, 2003, Apotex appealed the Order of Gibson J. to this Court. On February 17, 2004, the '067 Patent expired. The Minister of Health has now issued a Notice of Compliance to Apotex in respect of ciprofloxacin. [3] Bayer says that prohibition proceedings become moot when a patent expires or when the Minister of Health issues a Notice of Compliance. Both have occurred in this case. Therefore, Bayer argues that Apotex's appeal is moot. [4] Apotex says that if the order prohibiting the Minister from issuing a Notice of Compliance is reversed on appeal, Bayer will be liable for damages to Apotex under section 8 of the Patented Medicines (Notice of Compliance) Regulations, SOR/98-166, for a loss which Apotex alleges it suffered as a result of Bayer's prohibition application. Apotex says that unless this Court decides its appeal on the merits, it will be denied the opportunity to invoke section 8 to obtain compensation for its loss and that no other remedy will be available to it. Therefore, Apotex says that the Court should dismiss Bayer's motion. [5] I am satisfied that this appeal is, indeed, moot. The '067 Patent has expired and a Notice of Compliance has issued to Apotex. The live controversy between the parties has ceased to exist. [6] While the usual practice of the Court is to decline to hear and decide moot appeals, the Court may exercise its discretion to hear and decide such appeals. In Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342 at 358-62, the Supreme Court identified three rationales which a Court exercising its discretion whether to hear and decide a moot appeal should consider: 1. that an adversarial relationship prevails. Collateral consequences of the outcome of an appeal may provide the necessary adversarial context; 2. that a decision on appeal will have some practical effect on the rights of the parties and will, therefore, not be a waste of judicial resources; and 3. that pronouncement of a judgment in a moot appeal in the absence of a dispute not be seen as intrusion into the legislative branch of government. [7] Applying these considerations to this case, I think that the Court should exercise its discretion to hear and decide this moot appeal. [8] First, this is a case in which there may be "collateral consequences" from the outcome of the appeal that provide the necessary adversarial context referred to in Borowski. Section 8 of the Regulations provides that a patentee may be liable to a generic manufacturer for loss suffered by the generic if an order prohibiting the Minister from issuing a Notice of Compliance to the generic is reversed on appeal. Subsection 8(1) provides: 8. (1) If an application made under subsection 6(1) is withdrawn or discontinued by the first person or is dismissed by the court hearing the application or if an order preventing the Minister from issuing a notice of compliance, made pursuant to that subsection, is reversed on appeal, the first person is liable to the second person for any loss suffered during the period (a) beginning on the date, as certified by the Minister, on which a notice of compliance would have been issued in the absence of these Regulations, unless the court is satisfied on the evidence that another date is more appropriate; and (b) ending on the date of the withdrawal, the discontinuance, the dismissal or the reversal. 8. (1) Si la demande présentée aux termes du paragraphe 6(1) est retirée ou fait l'objet d'un désistement par la première personne ou est rejetée par le tribunal qui en est saisi, ou si l'ordonnance interdisant au ministre de délivrer un avis de conformité, rendue aux termes de ce paragraphe, est annulée lors d'un appel, la première personne est responsable envers la seconde personne de toute perte subie au cours de la période : a) débutant à la date, attestée par le ministre, à laquelle un avis de conformité aurait été délivré en l'absence du présent règlement, sauf si le tribunal estime d'après la preuve qu'une autre date est plus appropriée; b) se terminant à la date du retrait, du désistement ou du rejet de la demande ou de l'annulation de l'ordonnance. [9] Second, a decision on the appeal will have a practical effect on the rights of the parties. If Apotex is successful, its access to the remedy under section 8 will be preserved. If the appeal is dismissed for mootness, Apotex will be denied access to that remedy with no other remedy being available to it. [10] Third, there is no suggestion here that a decision on this appeal will constitute an intrusion into the role of the legislative branch of government. Bayer did not argue that this is a case of public importance in which the Court would be establishing laws of general importance or application. [11] Bayer relies on the obiter dicta in Pfizer Canada Inc. v. Nu-Pharm Inc.; Pfizer Canada Inc. v. Apotex Inc. (2001), 11 C.P.R. (4th) 245 at 253 (F.C.A.), in which Isaac J.A. did not accept the argument that the Court should hear moot appeals "in order to clarify ... potential liability for damages under s. 8 of the Regulations." Pfizer was an appeal by a patentee from an order dismissing a prohibition application. The appeal became moot when the Minister issued Notices of Compliance to the respondents. Isaac J.A. held that hearing the appeal in such circumstances "would be at variance with the stated intent of the regulation-making authority" and emphasized that the patentee could still seek a remedy by commencing an action for infringement. [12] I do not think the obiter dicta of Isaac J.A. in Pfizer are applicable in this case or, indeed, at all under the current version of section 8 of the Regulations. First, unlike a patentee, a generic can not commence an action for infringement if it is denied a remedy under section 8. The only way in which a generic can recover damages or lost profits caused by an erroneous prohibition order is to have the Court of Appeal reverse the Federal Court and then seek damages under section 8. [13] Second, section 8 of the Regulations to which Isaac J.A. referred in Pfizer (SOR/93-133) has now been replaced (SOR/98-166). The regulatory impact analysis statement of the current Regulations states in relevant part: A clearer indication is given to the Court as to the circumstances in which damages could be awarded to a generic manufacturer to compensate for loss suffered by reason of delayed market entry of its drug, and the factors that may be taken into account in calculating damages. Unlike the former section 8, the current section 8 expressly refers to the reversal on appeal of a prohibition order giving rise to liability by a patentee to a generic manufacturer. [14] There is no indication in section 8 that the reversal on appeal must occur prior to expiry of the patent at issue or the issuance of a Notice of Compliance to the generic. Nor is there any rationale for such a requirement. If a generic manufacturer has been wrongly excluded from the market during the lifetime of a patent, the fact that an appeal is decided after the patent expires should have no bearing on the generic's entitlement to damages. In my respectful opinion, it would be inconsistent with the object of the current Regulations to deprive a generic manufacturer of the opportunity to avail itself of section 8 of the Regulations merely because a patent has expired or a Notice of Compliance has issued. The liability referred to in section 8 arises from the period prior to the expiry of the patent or issuance of the Notice of Compliance to the generic and the mere fact that the appeal is decided after that date has no bearing on the application of section 8. [15] Bayer also argues that Apotex should have attempted to have the appeal expedited in order that it be decided before expiry of the '067 Patent and issuance of the Notice of Compliance to Apotex. It says that Apotex's failure to do so constitutes an inordinate delay which should cause the Court to exercise its discretion against hearing the appeal. [16] I do not accept Bayer's argument that there has been inordinate delay. That an appellant does not seek to expedite an appeal does not, of itself, amount to inordinate delay in the absence of other circumstances. For example, where an appellant seeks and obtains a stay of a decision pending appeal, an application to expedite will always be appropriate and failure by an appellant to make such application and to proceed diligently may result in the Court considering there to have been inordinate delay. However, there are no such extenuating circumstances here. There is no connection between the expiry of a patent or the issuance of a Notice of Compliance to a generic manufacturer on the one hand and the preservation of a right to compensation for loss under section 8 on the other. [17] I would dismiss Bayer's motion to dismiss Apotex's appeal with costs. Although the appeal is moot, I would exercise my discretion in favour of the appeal being heard and decided. "Marshall Rothstein" J.A. "I agree A. M. Linden J.A." "I agree J. E. Sexton J.A." FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-546-03 STYLE OF CAUSE: APOTEX INC. Appellant (Respondent) and BAYER AG AND BAYER INC. Respondents (Applicants) and THE MINISTER OF HEALTH Respondent (Respondent) MOTION DEALT WITH IN WRITING WITHOUT APPEARANCE OF PARTIES REASONS FOR ORDER BY: ROTHSTEIN J.A. CONCURRED IN BY: LINDEN J.A. SEXTON J.A. DATED: JUNE 23, 2004 WRITTEN REPRESENTATIONS BY: Neil Belmore Ken Clark FOR THE RESPONDENTS (APPLICANTS) Andew Brodkin Lauren Butti FOR THE APPELLANT (RESPONDENT) SOLICITORS OF RECORD: Gowling Lafleur Henderson LLP Toronto, Ontario FOR THE RESPONDENTS (APPLICANTS) Goodmans LLP Toronto, Ontario FOR THE APPELLANT (RESPONDENT)