Canada: Twice Is Not Nice – Second Notice Of Allegation May Be Abusive

On December 23, 2023, the Federal Court of Appeal (FCA) held that it was an abuse of process for Apotex to raise invalidity in defending actions under the Patented Medicines (Notice of Compliance) Regulations (Regulations) after unsuccessfully asserting only non-infringement in a 2021 action involving the same parties and the same patent: Janssen Inc v Apotex Inc, 2023 FCA 253. According to the FCA, had Apotex wished to allege invalidity, it could and should have done so in the 2021 action.

Procedural background

In 2021, Apotex served a notice of allegation (NOA) that alleged non-infringement (but not invalidity) of Janssen's patent for dosing regimens of paliperidone palmitate (INVEGA SUSTENNA) (Canadian Patent No. 2,655,335 (335 patent)). Apotex alleged non-infringement on the basis that its abbreviated new drug submission did not include a 75 mg dose pre-filled syringe (ANDS #1). Apotex had also submitted to Health Canada a second ANDS—which included a 75 mg dose pre-filled syringe—wherein Apotex accepted that a notice of compliance would not be issued until the 335 patent expired (ANDS #2).

Following a summary trial in the action pertaining to ANDS #1 (the 2021 action), the Federal Court (Manson J) held that Apotex would induce infringement of the 335 patent. In January 2024, Apotex's appeal was dismissed.

After the summary trial decision in the 2021 action, Apotex delivered NOAs in relation to ANDS#1 and ANDS #2 alleging that the claims of the 335 patent are invalid. In response, Janssen commenced actions pursuant to the Regulations (the 2022 actions). Janssen moved for summary judgment, alleging that Apotex's invalidity defences were res judicata, an abuse of process and precluded by the doctrine of election. The Federal Court (Manson J) dismissed Janssen's motion in June 2023.

Janssen appealed to the FCA. Abuse of process was the sole issue in dispute at the time of the FCA's decision.

Federal Court erred in its determination of abuse of process

The FCA concluded that the Federal Court erred in law by applying the incorrect legal test in determining there was no abuse of process. Instead of focusing on the proceedings before it (i.e., the 2022 actions), the Federal Court improperly focused on the distinction in the Regulations between non-infringement and invalidity allegations as well as Apotex's service of multiple NOAs.

Referring to the Regulatory Impact Analysis Statement that accompanied the 2017 amendments to the Regulations, the FCA observed that a principal aim of the amended Regulations was to avoid multiple proceedings—both those conducted within and outside of the Regulations. The FCA noted further that actions under s. 6 of the amended Regulations were intended to proceed like a "normal" patent infringement action and are "for all intents and purposes... identical to a section 55 action [under the Patent Act]".

Thus, in view of the relevant jurisprudence, the Federal Court should have considered whether a defendant in an infringement action under the Patent Act that unsuccessfully defends solely based on non-infringement can later bring an action to impeach the same patent. In the FCA's view, the latter action would typically constitute an abuse of process, and there was no reason why this reasoning should not also apply to separate actions under the Regulations.

The FCA rejected Apotex's arguments as to why sequential NOAs raising different allegations should be permitted and declined to distinguish prior decisions on abuse of process, including AB Hassle v Apotex Inc, 2006 FCA 51, aff'g 2005 FC 234. In the FCA's view, the fact that Apotex raised invalidity only after being unsuccessful in the 2021 action suggested that Apotex was attempting "to split its case and to litigate by instalments in a way that has been found to be an abuse of process". The FCA noted further that invalidity was implicitly considered in the 2021 action, as (i) a patent is presumed to be valid under s. 43(2) of the Patent Act, and (ii) the injunctive remedies granted by the Federal Court in that proceeding implied a finding of patent validity.

The FCA also found an abuse of process in relation to ANDS #2, holding that "[i]t would be nonsense to prohibit Apotex from alleging invalidity of the 335 Patent for the purposes of ANDS#1 under the doctrine of abuse of process, but to permit the same allegation for the purposes of ANDS#2."

FCA grants relief sought by Janssen

The FCA held that Apotex's invalidity defences constituted an abuse of process and granted the declaratory, injunctive and other relief sought by Janssen.

In doing so, the FCA rejected Apotex's argument that the injunction sought was overly broad for covering activities outside the scope of rights enumerated in s. 42 of the Patent Act, including offering for sale, marketing, importing, exporting and distributing.

The FCA observed that s. 42 of the Patent Act does not constitute a definition of infringement. Rather, per the majority of the Supreme of Court of Canada (SCC) in Monsanto Canada Inc v Schmeiser, 2004 SCC 34 at para 34, "what is prohibited is 'any act that interferes with the full enjoyment of the monopoly granted to the patentee'". The FCA held that the injunction proposed by Janssen was appropriate and would prevent future infringement of the 335 patent.

Apotex would need leave from the SCC to appeal this decision.

Should you have any questions, please do not hesitate to contact a member of the Pharmaceutical Litigation Group.

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