Apotex Inc v Alcon Canada Inc, 2016 FC 720

It appears that Courts look to reduce duplicative pharmaceutical litigation in PM(NOC) proceedings and related patent infringement actions by looking to foster possibilities of settlement when determining how to arrange proceedings that run in parallel.

In the context of a section 8 damages proceeding under the PM(NOC) Regulations and an ongoing related infringement action, the Federal Court (“FC”) bifurcated the issues of infringement and validity from any other section 8 issue in hopes that bifurcation would likely lead to a settlement of all the issues between the parties. [10] In this particular case, the FC found that bifurcation would likely lead to settlement because of similarities between the section 8 proceeding and the infringement action: the allegedly infringing product had a composition, manufacture, and use that would have been the same throughout the hypothetical period as in the real world. [11]

Background: Infringement and Section 8 Damages

This decision was made in the context of multiple proceedings between the parties. Apotex Canada Inc. (“Apotex”), wishing to enter the market selling a generic version of the Travoprost Z ophthalmic solution, served a Notice of Allegation under the PM(NOC) Regulations on Alcon Canada Inc. (“Alcon”), alleging the invalidity of Alcon’s two listed patents against Travoprost Z, Canadian Patent Nos. 2,129,287 (the ‘287 Patent) and 2,606,370 (the ‘370 Patent). [2] In response, Alcon launched proceedings to prevent Apotex’s entry into the market. Alcon’s prohibitions proceedings were dismissed with the finding that Apotex’s allegations in invalidity were justified, opening the door for Apotex into the market. [2]

Infringement of ‘370 Patent: Soon after Apotex’s entry onto the market, Alcon sued Apotex for infringement of the ‘370 patent (but not the ‘287 Patent), asking for an injunction against Apotex. Apotex’s defence was, again, that the ‘370 patent is invalid. [2] Importantly for the bifurcation issue, these ‘370 Patent infringement proceedings were proceeding swiftly. [4]

  1. 8 Damages: Almost simultaneously, Apotex started proceedings under section 8 of the PM(NOC) Regulations for damages caused by Alcon’s prohibition proceedings which delayed the entry of Apotex’s generic onto the market. [3] In its defence, Alcon pointed to the infringement of the ‘287 and ‘370 Patents, as well as a third patent not listed on the Patent Register, the ‘172 Patent. Apotex again replied with allegations of invalidity of each of these patents. [3] In contrast to the infringement proceedings with respect to the ‘370 Patent, these section 8 proceedings were proceeding slowly. [5]

On this motion, Apotex requested that, within the section 8 proceedings, the issues of infringement and validity of the ‘287 and ‘172 Patents be bifurcated from any other section 8 issue. [6] The parties were already in agreement that issue of the infringement and validity of the ‘370 Patent is already bifurcated, as it would be fully determined in the ‘370 action, and binding on the section 8 proceedings. [6]

Alcon opposed bifurcation, citing fears that Apotex would use the bifurcation as a first step toward consolidating the liability phases of the trial of the infringement of the ‘287 and ‘172 patents with the trial of the ‘370 patent, thereby possibly delaying the already-speedy proceedings regarding the ‘370 patent, thereby possibly delaying its chance at obtaining an injunction against Apotex. [7]

Bifurcation: FC Allows Bifurcation as Most Likely to lead to Settlement

Despite Alcon’s fears that the ‘370 Patent infringement action may be delayed, the FC did not accept that bifurcation would necessarily entail consolidating the liability phase of the two simultaneous proceedings. [10]

The FC then looked to whether bifurcation would be more likely than not to lead to the just, expeditious and least expensive determination of the proceeding on its merits. [9] In doing so, in the context of this case, the FC took the determinative question to be whether, or to what degree, bifurcation might facilitate the settlement of the remaining issues or put an end to the ‘370 Patent infringement action. [10]

Given that Apotex’s concession that its product’s composition, manufacture and use would have been the same throughout the hypothetical period as in the real world, there FC thought that a finding of hypothetical infringement in the section 8 proceedings would very likely lead to a settlement, including possibly disposal of the ‘370 infringement action. [11] The FC also thought it more likely than not that if Alcon were successful in the ‘370 infringement action or on any of the hypothetical infringement defences, the remainder of the section 8 claim would settle. [12]