Date: 19981216
Docket: T-420-98
BETWEEN:
BAYER INC. and ALZA CORPORATION
Applicants
- and -
APOTEX INC. and THE MINISTER OF HEALTH CANADA
Respondents
REASONS FOR ORDER
JOYAL, J.
[1] Since March 11, 1998, when, pursuant to SOR-98-166, the Amendment to the Patented Medicine (Notice of Compliance) Regulations (the "Regulations") came into effect, it is open to a respondent on prohibition proceedings launched by a patentee to apply for dismissal on the grounds that the proceedings are redundant, scandalous, frivolous or vexatious or are otherwise an abuse of process.
[2] Such is the situation now before this Court. The motion to dismiss is by the main respondent, Apotex, in response to the applicant Bayer"s motion to prohibit the Minister of Health (the "Minister") from issuing to Apotex a Notice of Compliance ("NOC") in respect of the drug Nifedipine, on the grounds that the sale of this drug by Apotex would constitute an infringement of Bayer"s Canadian Patent No. 1,222,950 (the " "950 Patent").
[3] The "950 Patent, marketed as "Adalat" XL"" and licensed to Bayer, claims a device in tablet form for delivery of a beneficial agent, Nifedipine , at a controlled rate when taken orally. This rate is set by an osmotically-driven device which acts independently of the intake of food. Inside the tablet are two compositions, the first containing Nifedipine and an osmopolymer, and the second containing an osmagent and an osmopolymer. On intake, aqueous liquid in the body penetrates through the wall of the tablet. The second composite swells and creates an osmotic pressure forcing the agent Nifedipine out of a passageway in the wall and thereafter absorbed. The device depends only on liquid imbibition to deliver the drug at a controlled rate, which rate remains fairly constant over the gastrointestinal tract.
Notice of Allegation
[4] In its Notice of Allegation ("NOA"), filed on January 23, 1998, as provided in s. 5 of the Regulations, Apotex alleged that with respect to the "950 Patent, 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 of tablets containing Nifedipine. In its legal and factual basis for that claim, Apotex alleged:
| The tablets made and sold by Apotex will not be osmotic devices and will not fall within the scope of the claims. |
| More specifically, the Apotex tablets will be conventional tablets comprising a tablet core surrounded completely by a thin film coating. |
| Hence, the Apotex tablets will not infringe for the following reasons, any one or more of which alone would suffice for non-infringement: |
| 1. The tablets will not be surrounded by a wall, but only by a thin film coat. |
| 2. Even if the thin film coating could be considered to be a "wall", which is not the case, the coating will be a complete coating and will not have a passageway or hole in it |
| 3. When our tablets are ingested and immersed in gastrointestinal fluids, the Nifedipine will be released by virtue of the film coating dissolving away to expose the core, and the core then disintegrating in the gastrointestinal fluid, and hence the Nifedipine will not be delivered through a passageway or hole in the coating. |
| 4. Our tablet core will be homogeneous and not divided into a first composition comprising the drug and an osmopolymer and a second composition comprising an osmagent and an osmopolymer. |
| It is thus clear that our tablets will be conventional film coated tablets and not the novel osmotic device disclosed and claimed in patent 1222950. Our tablets thus will clearly not infringe. |
The Issues
[5] Bayer replied to the foregoing NOA by way of an Application for a Prohibition Order and pleaded as follows:
| 1. The NOA is no different from a NOA covering the same drug issued in earlier proceedings, i.e. January 8, 1996, and which proceedings were later discontinued. Bayer calls this new NOA an abuse of process. |
| 2. The NOA asserts that the Apotex tablet is not osmotic and does not depend on liquid intake to release Nifedipine at a controlled rate. In effect, the Apotex modified-release form depends on gastrointestinal juices and therefore, its patent cannot be bio-equivalent to Adalat XL. |
| 3. It is well nigh inconceivable that there could be developed a Nifedipine controlled-release device other than that covered by the "950 Patent which would deliver the drug at a controlled rate and irrespective of food intake. |
| 4. In the event, it cannot be said that the Apotex product would be the bio-equivalent of Adalat XL and consequently, Adalat XL cannot be used as a reference. |
| 5. In fact, Apotex has adopted a conflicting position: the legal and factual basis for its NOA is different from the position it has to take before the Minister in its New Drug Submission ("NDS"). |
| 6. Any further facts with respect to the Apotex product is strictly within the exclusive knowledge of Apotex and presumably, of the Minister. In the event, it should be not expected that Bayer could properly respond to the NOA. |
| 7. The second NOA does not provide a description of the dosage form and strength of the drug, and therefore, it does not comply with para. 5(3)(c)(ii) of the Regulations and is invalid and void. |
[6] Apotex responded to these pleadings by application to this Court for an order of dismissal of Bayer"s proceedings, and argued the following:
| 1. No evidence has been filed by Bayer that the Apotex formula would constitute an infringement of the "950 Patent. |
| 2. The grounds otherwise raised by Bayer are not in response to the Apotex submission, but are on grounds which are either irrelevant or are not of a justiciable nature, i.e.: |
| (a) that the "highly unlikely" possibility that the Apotex tablet would be bio-equivalent to Bayer"s tablet is not relevant to the issue; it is not a justiciable issue, it is a matter for the Minister. |
| (b) that on any analysis of the case, the position of Apotex is entirely contained within current food and drug legislation and that this legislation is only concerned with safety and efficacy and has nothing to do with competing drug makers. |
| (c) that from the time a request for a NOC and a NDS is made, it is up to the Minister to decide whether the new drug, as formulated, is bio-equivalent to any listed patented drug and complies with safety and efficacy standards. |
| (d) that the commercial or economic interests of competitors are irrelevant to the process at this stage, the whole purpose being one of serving the public interest in the safety and efficacy of drugs. |
| 3. The filing of a new NOA by Apotex does not constitute an abuse of process and the doctrine of res judicata is not applicable. The Federal Court of Appeal in Eli Lilly & Co. et al. V. Apotex Inc. et al (1997), 76 C.P.R. (3d) 1, has provided a clear ruling on this. Further, it is evident from the Order of Madame Justice Reed, dated July 2, 1998, in Court File No. T-470-96, that the merits of the original Notice of Allegation were never judicially considered. |
The Evidence
[7] In support of the within application, Apotex filed the affidavit of its Senior Vice President, Scientific Affairs, Dr. Michael Spino, sworn on April 14, 1998, together with a transcript of the cross-examination thereon dated May 26, 1998. In turn, Bayer provided the affidavits of the head of the Institute for Pharmacological Technology of Bayer AG in Germany, Dr. Roland Rupp, dated May 13, 1998, as well as a transcript of his cross-examination dated June 10, 1998. Affidavit evidence was also provided by a member of the Patent Department of Bayer AG, Dr. Knud Schauerte, sworn on March 11, 1998, as well as one by Dr. Manoj Saxena, Director of Regulatory Affairs at Bayer Inc., dated March 12, 1998. And finally, an affidavit dated March 10, 1998, was filed by Dr. Gordon Johnson, a Doctor of Pharmacology with extensive public and academic positions, and currently Professor Emeritus of the Department of Pharmacology at the University of Saskatchewan.
[8] Before going into the meat of the case, it might be useful to elaborate a bit further on the characteristics of the "950 Patent, which is entitled "Osmotic Device with Dual Thermodynamic Activity" and which is stated to relate to:
| An osmotic device comprising a wall formed in at least a part of a semi-permeable material that surrounds a compartment comprising: (1) a first osmotic composition comprising a beneficial agent, and preferably an osmagent and/or an osmopolymer, said composition in contacting arrangement with (2) a second osmotic composition comprising an osmagent and an osmopolymer. A passageway through the wall connects the exterior of the osmotic device with the first osmotic composition containing the beneficial agent for delivering the first composition from the osmotic device. |
[9] Claim 1 of the "950 Patent reads as follows:
| A device for the delivery at a controlled rate a beneficial agent to an environment of use, the device comprising: |
| (a) a wall formed in at least a part of a composition permeable to the passage of an exterior fluid present in the environment of use, the wall surrounding it forming: |
| (b) a compartment; |
| (c) a first composition in the compartment, said first composition comprising a beneficial agent in an osmopolymer; |
| (d) a second composition in the compartment, said second composition comprising an osmagent and an osmopolymer; and |
| (e) a passageway in the wall communicating with the first composition and the exterior of the device for delivering the beneficial agent from the device. |
[10] The gist of Bayer"s case is that it does not believe that Apotex can produce a Nifedipine tablet which would be bioequivalent to the Bayer osmotic tablet. Alternatively, it is argued that Apotex could not produce a bioequivalent tablet without infringing the "950 Patent. The expert evidence on behalf of Bayer is to the effect that "there is not and has never been a commercial product of Nifedipine that is delivered by a non-osmotic delivery system that would not infringe the "950 Patent".
[11] The qualified opinion of Dr. Rupp in this respect is that "... without actually seeing the Apotex product and notwithstanding Apotex"s allegations in its Notice of Allegation, it is more probable than not that the Apotex product infringes the "950 Patent (i.e. contains all the merits of Claim 1 of the "950 Patent".
[12] Similar evidence is offered by Dr. Johnson, who states that "it is most unlikely that a conventional film coated tablet which Apotex affirms as its Nifedipine once daily formulation would exhibit the same bioavailability characteristics during fasting and after a meal as Adalat XL which releases Nifedipine at a rate essentially independent of the conditions in the gastrointestinal tract".
[13] It is also Dr. Johnson"s evidence that the Food and Drug Regulations , Schedule C, division 8, C.R.C. 1978, c. 870 as amended, require the Minister to have sufficient information to assess the safety and efficacy of a new drug. Regulation C.08.002.1 requires the following:
| [1] A manufacturer of a new drug may file an abbreviated new drug submission for the new drug where, in comparison with a Canadian reference product, |
| (a) the new drug is the pharmaceutical equivalent of the Canadian reference product; |
| (b) the new drug is bioequivalent with the Canadian reference product, based on the pharmaceutical and, where the Minister considers it necessary, bioavailability characteristics; |
| (c) the route of administration of the new drug is the same as that of the Canadian reference product; and |
| (d) the conditions of use for the new drug fall within the conditions of use for the Canadian reference product. |
| [2] An abbreviated new drug submission shall contain sufficient information and material to enable the Minister to assess the safety and effectiveness of the new drug, including the following: |
| (a) the information and material described in paragraphs C.08.002(2)(a) to (f) and (j) to (l); |
| (b) information identifying the Canadian reference product used in any comparative studies conducted in connection with the submission; |
| (c) evidence from the comparative studies conducted in connection with the submission that the new drug is |
| (i) the pharmaceutical equivalent of the Canadian reference product, and |
| (ii) where the minister considers it necessary on the basis of the pharmaceutical and, where applicable, bioavailability characteristics of the new drug, bioequivalent with the Canadian reference product as demonstrated using bioavailability studies, pharmacodynamic studies or clinical studies; |
| (d) evidence that all test batches of the new drug used in any studies conducted in connection with the submission were manufactured and controlled in a manner that is representative of market production; and |
| (e) for a drug intended for administration to food-producing animals, sufficient information to confirm that the withdrawal period is identical to that of the Canadian reference product. |
| [3] The manufacturer of a new drug shall, at the request of the Minister, provide the Minister, for the purposes of an abbreviated new drug submission the Minister considers it necessary to assess the safety and effectiveness of the new drug, with the following information and material: |
| (a) the names and addresses of the manufacturers of each of the ingredients of the new drug and the names and addresses of the manufacturers of the new drug in the dosage form in which it is proposed that the new drug be sold; |
| (b) samples of the ingredients of the new drug; |
| (c) samples of the new drug in the dosage form in which it is proposed that the new drug be sold; and |
| (d) any additional information or material respecting the safety and effectiveness of the new drug. |
[14] It is the opinion of Dr. Johnson, confirming the one expressed by Dr. Rupp and by Dr. Schauerte, that there is no way for Apotex to meet the Minister"s requirements for safety and efficacy and to meet the condition of bioequivalency with the referenced product Adalat XL without one way or another infringing on the "950 Patent.
[15] Apotex, through Dr. Spino, states that its tablet does not contain any device at all, let alone the kind of device described in the "950 Patent claims. This is the essence of the allegation facing Bayer and the witness states that Bayer has not traversed this issue. Nor, says the witness, is there any evidence in Bayer"s Notice of Application that the Apotex film-coated tablet will infringe any of the "950 Patent claims.
[16] As far as Dr. Spino is concerned, all the apprehension and misgivings expressed by Bayer are only obliquely related to the regulatory framework under which a NOA is filed and prohibition proceedings are instituted. In fact, Bayer"s concerns relate to matters which, under the Food and Drug Act and its Regulations, are essentially issues between a NOC applicant and the Minister, the latter making sure, in a non-adversarial way, that the public interest in terms of safety and efficacy of drugs is met and respected. The Regulations at issue are not of the same breed. They are there to enable patentees of drugs to put forward their objections to ministerial NOC"s by establishing that a proposed drug, process or formulation would constitute an infringement of a listed patent.
[17] In that sense, says Dr. Spino, the objections raised by Bayer are off base. They have nothing to do with the requirements set out in the Regulations. Furthermore, Dr. Spino provides details as to more current policies of "bioequivalency assessment". These require the application of stringent statistical criteria, a matter of applied biometrics, I presume, to establish equivalence in terms of rate and extent of absorption of brand and generic drugs. Only then can the test of bioequivalence be met.
[18] In traversing the argument of the "unlikelihood", "implausibility" or "difficulty" of developing a Nifedipine non-osmotic tablet with a rate and extent of absorption which would make it bioequivalent to Adalat XL, i.e. the "950 Patent, Dr. Spino refers to recent developments in the US, published in the F.D.C. Reports - "The Pink Sheet" dated June 16, 1997, involving Mylan controlled-release Nifedipine which uses "TimeRx delivery technology". This technology was developed by Penwest Pharmaceuticals of Bellevue, Washington, and is based on xantham and locust bean gum in the presence of a tertiary saccharine component. Other products on the horizon are the "Scot" system by Andrx and the "Geomatrix" system by Genta Jago.
[19] There being so many different coatings in which to wrap a medicinal tablet and these coatings having an infinite complex of characteristics, the skepticism or somewhat disputatiousness of the Bayer witnesses is, according to Dr. Spino, somewhat baffling.
The Law
[20] The Court, in the context of the evidence and arguments advanced by the parties, must keep in mind that this proceeding is more iffy than the dispute respecting the adequacy or otherwise of Bayer"s response to Apotex"s NOA. The application is for an order dismissing Bayer"s prohibition proceedings on grounds that they are redundant, scandalous, frivolous or vexatious or otherwise an abuse of process, whole, as is now specifically provided in paragraph 6(5)(b) of the Regulations.
[21] In that respect, Bayer alleges that to succeed under the procedure, Apotex must establish that all six reasons it advanced in its prohibition application meet the characteristics imposed above.
[22] Firstly, Bayer relies on this particular provision of the Regulations. The principle involved is nothing new. It simply gives the Court explicit jurisdiction to consider a motion to dismiss where earlier, the Court had to rely on the old Rule 419 or the old (gap) Rule 5 of the Federal Court Rules. The case of Pharmacia Inc. v. Canada (1994), 58 C.P.R. (3d) 209 (F.C.A.) deals with this. At p. 217, the Court of Appeal observed that it is within the Court"s jurisdiction to dismiss in a summary manner a notice of motion which is clearly improper as to be bereft of any possibility of success." "Such cases" said the Court, "must be very exceptional and cannot include cases such as the present where there is simply a debatable issue as to the adequacy of the allegations in the notice of motion".
[23] In short, says Bayer, the rule being as restrictive as it is, it should only be applied in the clearest of cases. As was stated in Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959 at 980:
| Thus, the test in Canada governing the application of provisions like Rule 19(24)(a) of the British Columbia Rules of Court is the same as the one that governs an application under R.S.C. 0.18, r. 19: assuming that the facts as stated in the statement of claim can be proved, is it "plain and obvious" that the plaintiff"s statement of claim discloses no reasonable cause of action? As in England, if there is a chance that the plaintiff might succeed, then the plaintiff should not be "driven from the judgment seat". Neither the length and complexity of the issues, the novelty of the cause of action, nor the potential for the defendant to present a strong defence should prevent the plaintiff from proceeding with his or her case. Only if the action is certain to fail because it contains a radical defect ranking with the others listed in Rule 19(24) of the British Columbia Rules of Court should the relevant portions of a plaintiff"s statement of claim be struck out under Rule 19(24)(a). |
[24] Finally, in David Creaghen v. Canada, [1972] F.C.R. 732 (F.C.T.D.). Pratte J., as he then was, stated:
| Finally, in my view, a statement of claim should not be ordered to be struck out on the ground that it is vexatious, frivolous or an abuse of the process of the court, for the sole reason that in the opinion of the presiding judge, plaintiff"s action should be dismissed. In my opinion, a presiding judge should not make such an order unless it be obvious that the plaintiff action is so clearly futile that it has not the slightest chance of succeeding, whoever the judge may be before whom the case could be tried. It is only in such a situation that the plaintiff should be deprived of the opportunity of having his day in court. |
Findings
[25] First of all, I should find that the burden on Apotex of convincing the Court that Bayer should be cut off at the pass is quite high. Cases cited by Bayer on the application of para. 6(5)(b) of the Amended Regulations mirror pretty adequately the stringent circumstances under which it may be used.
[26] In that respect, I note that Bayer had before it a clear allegation by Apotex that its proposed drug would not be an osmotic device but would nonetheless meet the function and purposeful characteristics of the Adalat XL as described in the "950 Patent. In the context of the underlying Regulations, is this assertion sufficient to shift the evidentiary burden from the respondent to the applicant? As Madame Justice Reed suggested in Hoffmann-LaRoche Ltd. v. Canada (Minister of National Health and Welfare) (1996), 67 C.P.R. (3d) 484, the conflicts between a public safety-driven statute such as the Food and Drug Act and a proprietary-driven statute such as the Patent Act are not easily reconciled. Nevertheless, Reed J. rationalized in the following manner the judicial hurdle which had been overcome since the Regulations came into force: (1) the burden of proof is on the applicant responding to a NOA to prove, on a balance of probabilities, that one or more allegations in the NOA are not justified; (2) the Court had no authority, during the effective currency of the proceedings, to compel production of evidence and there was no oral or documentary discovery; (3) the Court cannot require that samples of the drug proposed to be marketed be provided to the applicant; (4) the Court has no jurisdiction to order the filing and service of a detailed statement or a further and better detailed statement; and (5) jurisprudence has established that the facts asserted in a NOA are to be taken as true until disproved.
[27] At p. 503 of the above decision, Reed J. states:
| These proceedings are not infringement actions, nor are they actions for declarations of non-infringement. In keeping with the summary nature of the proceedings, ... if the facts asserted by a respondent justify an allegation of non-infringement, insofar as the text of the relevant claim is concerned, then, the allegation is justified. The proceeding is a summary one not designed to replace an action between the parties. |
[28] On appeal of Reed J."s decision to the Federal Court of Appeal (Hoffmann-LaRoche Ltd. v. Canada (Minister of National Health and Welfare) (1997), 70 C.P.R. (3d) 206, Stone J.A. adds gloss to doctrine when he suggests as follows at p. 213:
| The first major point taken by the Appellants centres on the Respondent"s alleged failure to disclose facts sufficient to justify its allegation of non-infringement. The Appellants submit that the conclusion that sufficient facts were disclosed cannot be correct because the only reasonable way the Appellants could know whether the Respondent"s product would infringe the Patent " and, accordingly, for them to decide whether to institute a section 6 proceeding " would be if the Respondent"s composition had been disclosed in full so as to allow the Appellants to compare that composition with their own. |
| As is clear from subsection 55.2(4) of the Patent Act, R.S.C. 1985, c. P-4, as amended by the Patent Act Amendment Act, 1992, S.C. 1993, c. 2, the purpose of the Regulations is for "preventing the infringement of a patent by any person who makes, constructs, uses or sells a patented invention". Section 6 proceedings do not amount to an infringement action (Merck Frosst, supra at page 319; Nu-Pharm, supra, at page 218 [p. 14]). The obligation of the Respondent under the Regulations was to faithfully comply with the requirements of subsections 5(1) and (3). With reference to subparagraphs 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 sub-paragraph 5(1)(b) allegation be supported with any affidavit evidence or for testing such assertion on cross-examination. I have no doubt, nevertheless, 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 we be very grave indeed. |
[29] The foregoing observations of Stone J.A. bring me back to the main issue before the Court. The principles found in law, in doctrine or in precedents, all these together impose on a party a very heavy burden to convince the Court that an order of dismissal is warranted.
[30] From one point of view, the Regulations of which the Court is seized are really not that draconian or oppressive. No long-term rights or privileges are lost or gained. The procedure, in my respectful view, is to enable the Minister to deal with an application for a NOC only when he can be reasonably satisfied that it will not issue in the face of an evidently infringed product.
[31] Absent such an order, the Minister is free to deal with a NOC in accordance with the procedures set out in the Food and Drug Act. In carrying out these duties, the Minister is completely out of the usual first person and second person conflict. Furthermore, the rights of the patentee are in no way affected by the ministerial proceedings. There is, from that point of view, little risk to the patentee with respect to the sanctity or integrity of his patent.
[32] It is true that the proceedings under the Regulations are not determinative of the rights of either patentee or innovator. They are a small way station which might, in the public interest and in a manner which is respectful of patent rights, expedite the release of remedial drugs to greater competition.
[33] In playing fair with patent rights, however, the proceedings involved in the Regulations are certainly not intended to prohibit any generic manufacturer from securing a NOC. Setting up summary proceedings is certainly the right direction, but the members of this Court have often observed that these summary proceedings, together with the excessive material fed into them, were often resulting in a plethora of pervasive and exhaustive debates between competing drug makers. I like to think that some of the amendments to the Regulations which came into force on March 12, 1998 were directed to correct or remedy excessively long and protracted hearings.
[34] I should add that the courts have had only limited experience in dealing with motions to dismiss in summary proceedings. The bulk of the doctrine relates to actions. It is recognized that summary proceedings are substantially different from actions. It could be argued that in the proceedings before me, the issues are clearly defined and it would appear that both parties have put their best foot forward. It could also be argued that the arguments heard on the motion before me were very much what might normally be heard on the merits of a prohibition application.
Conclusions
[35] I should now summarize my conclusions, in the following terms:
| 1. The allegation found in the Apotex NOA is not, as alleged by Bayer, a bare assertion of non-infringement. To quote Hugessen J. in Glaxo Canada Inc. v. Canada (Minister of National Health and Welfare) (1998), 80 C.P.R. (3d) 424 at p. 426: "the allegation is, in my view, a specific allegation of fact which is at the foundation of an assertion of non-infringement". The fact asserted by Apotex is that the proposed tablets will not be osmotic devices and will not incorporate the claims found in the "950 Patent. The question remains as to whether or not this is as far as Apotex is required to go. |
| 2. I have carefully read the Transitional Provisions found in s. 9 of the new Regulations and although I fail to see in them grounds to raise procedural defects, they still remain a matter for debate. |
| 3. With respect to all of the evidence provided to the Court, there might not remain any discursive or circuitous argument available to Bayer, except to raise strong doubts that Apotex can develop a tablet which will be the bio-equivalence of the "950 Patent without infringing it. Yet it is an issue which is not completely bereft of argument. |
| 4. It is understood that many arguments advanced by Bayer are matters outside the scope of the Regulations as these existed at all material times. Many of these are in relation to matters best left to the inventiveness or otherwise of Apotex and to disposition of the case, one way or the other, by the Minister. Nevertheless, the peculiarities of the case, namely the allegation by Apotex and the response by Bayer, leave open the question as to the sufficiency of either. If there is any doubt on that issue, it must, for purposes of this motion, be resolved in favour of Bayer. |
[36] I have made several observations which might be viewed as not being prejudicial to Apotex. These observations, nevertheless, do not provide a safe and sure answer to the motion before me. As mentioned earlier, any doubt on any material issue must be resolved in favour of Bayer.
[37] In the light of the foregoing, I should dismiss the motion with costs.
[38] Until clearance is obtained from counsel, these Reasons remain subject to the Protective Order endorsed by the Associate Senior Prothonotary on July 21, 1998.
L-Marcel Joyal
JUDGE
OTTAWA, Ontario
December 16, 1998.