Over the past few years the pharmaceutical marketplace has seen an increase in patent “re-litigation” (where a patentee is involved in a second case against another generic). Following the Federal Court of Appeal’s warning to losing brands that they must put their best foot forward in case1[1], and at the same time, arguably permissive attitude regarding new generics in case2, the Federal Court continues to grapple with how to fairly deal with re-litigation. One notable hurdle is the unusual procedural regime of the Notice of Compliance (“NOC”) Regulations. NOC proceedings are designed to result in merely preliminary type findings and are not directed at actual validity/infringement. One’s entitlement to have their day in court is to be balanced against concerns of abuse of process, judicial comity and court resources. Clarification of this balancing of procedural versus substantive rights would be welcome, in the context of both co-pending and consecutive cases.

Examples of Re-litigation

No Re-litigation – Acceptance of Case1

Generic1 Win – Generic2 Win

A recent example where a generic1 win resulted in an “automatic” generic2 win is the case of Bayer v Apotex2014 FC 403. Justice Hughes had earlier found that Cobalt (generic1) did not infringe and that certain claims were invalid (as they were directed at a method of medical treatment which is not patentable subject matter)[2]. In his brief decision, Justice Hughes specifically referred to a warning given to the parties at a pre-trial conference that the court was “unlikely to come to any different conclusions” in the second case. The court ended up simply adopting its reasons from case1 after being advised by the parties that they would not be making submissions. The court awarded a 25% increase in costs against the brand for persisting with its losing case for 6 months following the court’s decision in case1. The court rationalized the cost consequences by referring to the trend against litigation in NOC proceedings:

“The Court has been critical of situations where multiple proceedings have been taken in respect of the same patent under the NOC Regulations where a previous determination has been made as to the justification of allegations as to infringement and /or validity. …

There is little need to relitigate a patent under the NOC Regulations except where significantly different issues are raised or significantly different new evidence is placed on the record.”[3]

Similarly a generic1 win, even an originally “secret” win (Alcon v Apotex 2012 FC 410, publicly released December 2013), had strict consequences for a brand’s case against a second generic (Cobalt). In Alcon v Cobalt 2014 FC 525 (olopatadine, an eye drug), the brand discontinued its case2 against a second generic days before the hearing. The history of case1 was admittedly unusual – after the parties in case1 had advised the court that they were in the process of settling, a confidential decision was mistakenly released finding Alcon’s patent obvious. The confidential decision was withdrawn after the court was mistakenly informed a settlement was reached, and case1 was discontinued. The confidential decision remained confidential for 1.5 years (and was only publicly released after generic2 moved for its release). Only after the decision was public did the brand finally discontinue its case2[4]. Justice Gleason found Sanofi-Aventis 2007 was “dispositive” and it was an abuse for the brand to re-litigate obviousness in case2: “That issue was the same in both cases and arose directly from the patent, itself.”

The court granted solicitor client costs (a rare relief) against Alcon for the 5 month period from the time it was clear from Ontario court proceedings that Alcon had no settlement and had kept the invalidity decision in case1 “secret”. At that time “it was incumbent” to advise the court so that decision1 could be reinstated. The court explicitly recognized the effect that decision1 could (and in fact did) have on re-litigation with subsequent generics who were forced to litigate issues and “incur expenses that were wholly unnecessary”. Re-litigation, as opposed to properly appealing (or in the NOC regime bringing an infringement action) was “reprehensible, scandalous or outrageous” conduct. This finding arguably highlights the dangers of re-litigation and the court’s impatience with parties’ efforts to avoid its effects.

A recent example of co-pending cases involves Viiv Healthcare’s abacavir combination drugs – where Apotex’s case started 4 months after Teva’s case[5]. The 2 generics have most recently been successful on motions dismissing their cases as they relate to a patent to one drug that was deemed not eligible for inclusion on the patent register against a combination.[6] Interestingly, generic2 (Apotex) and the brand agreed that the evidence would be the same on the motion in case2 as in case1, with the result that the Prothonotary granted the motion in case2, without a hearing.

Generic1 Loss - Generic2 Loss

The FCA has equally instructed that a brand’s successful legal arguments from case1 are to be applied in case2, unless the second court is “convinced that the prior decision is wrong and can advance cogent reasons in support of this view”.[7]

A good example of confusion that can arise, both procedurally and substantively, was in Apotex v Allergan 2012 FCA 308. Although Justice Hughes in fact came to a new result in case2, the FCA found this was a “fairly straightforward application of the doctrine of comity”. The FCA rationalized the doctrine was to “prevent the same legal issue from being decided differently by members of the same Court, thereby promoting certainty in the law”. As the FCA was troubled by the existence of “conflicting and equally authoritative decisions as to how the ‘764 patent is to be construed … it falls upon this Court to determine which is the correct one”. The FCA then conducted a de novo analysis, and came to the same findings as in case1.[8]

Arguably concerns of re-litigation and consistency arise even in co-pending cases (a frequent occurrence under the NOC Regulations).  Although not strictly invoking the principles of abuse of process or comity (given case1 may simply have been heard before case2, without any decision1), it is clear that case1 may certainly have an effect – even if unstated – on case2.  From a practical/procedural standpoint, the Federal Court Registrar will generally often try to schedule co-pending re-litigation cases with the same hearing judge.  Query whether there is any duty of the court to refer to the existence of a co-pending case and/or a prior hearing in their decision.

For example Justice O’Reilly recently heard two NOC cases in March and April 2014, and wrote nearly identical decisions (released the same day) upholding Allergan’s bimatoprost improved eye drop formulation patent.   The court makes no reference to the co-pending case in either decision.  It appears there were no substantive differences in the legal/factual arguments in regards to anticipation and obviousness – the wording of the decision is identical in these 2 areas, notwithstanding the two generics had different experts.  Allergan’s experts in the 2 cases were the same; Allergan also relied on the evidence of one of the inventors in the Cobalt case1 (whose evidence was not discussed in the decision).  The only notable differences in the 2 decisions relate to the factual basis for a sound prediction (at paras. 33-34).  Cobalt was critical of the testing method of the example formulations in the patent; Apotex alleged that the rabbit testing of a parent bimatoprost was not predictive of effects in humans.  As would be expected, Apotex (generic2) successfully requested that at least a portion of Allergan’s court materials in case1 be filed publicly, prior to the filing of Apotex’s factum

Permitted Re-litigation – New Result in Case2

Generic1 win - not necessarily Generic2 win

At the same time, the court has refused to follow an earlier decision regarding patent construction, on a generic2’s motion to dismiss[10]. It was not an abuse of process for the same brand to argue for a different legal construction in a second NOC case.

Generic1 loss - Generic2 win

Justice Hughes found a generic2 (Apotex) successful after a generic1 (Cobalt) loss[11], in the area of infringement. Infringement may understandably be characterized as a “generic specific” issue if it relates to properties of the generic product, as opposed to “patent specific” issues which would likely be equally applicable irrespective of the generic respondent. Apotex successfully argued its drospirenone/ethinyl estradiol product does not infringe.

Interestingly, again Justice Hughes specifically addressed the effect of case1 on case2 before him:

[7] At a pre-hearing conference which I held with Counsel for the parties I indicated that I had read the Record in the present proceedings and the memoranda of argument filed in these proceedings by each party. I indicated that I would be inclined to follow my decision in the Cobalt Proceedings unless a different issue has been raised in these proceedings or substantially different evidence was in the Record in these proceedings. …

This resulted in generic2 dropping its obviousness attack; however it unsuccessfully re-argued insufficiency – the slightly different allegations raised by Apotex in fact appeared to stress the futility of both generics’ arguments: “Apotex and Cobalt seem more intent in casting about to pick at whatever [sp] they can than to argue genuine ambiguities or insufficiencies”. A new argument regarding anticipation by prior experimental clinical trials was also unsuccessful.

With respect to construction, Hughes identifies more claims in issue in Apotex case2. New “pinching issues” related to the forms of drugs covered in the claims. At the same time, the court is careful to repeat sections of the earlier Cobalt decision1. Following construction, the court found Apotex’s testing more persuasive, resulting in a finding of non-infringement.

Next Developments

Although these cases are all in the NOC context, they are good examples of the balancing involved in any abuse of process or comity “re-litigation” matter. At the same time, the practical reality may be that re-litigation in the Federal Court will generally be restricted to the pharmaceutical marketplace. Expected amendments to the NOC Regulations regime (following the recently finalized CETA), may drastically change the nature and effect of NOC proceedings, and their interplay with full patent actions. This may result in more appellate decisions, such that abuse/comity may give way to standard stare decisis principles (with lower court judges simply following binding legal findings from the FCA). The ultimate example of currently permitted re-litigation as between NOC cases and actions is the case of clopidogrel. Six years after the SCC considered the NOC case (finding Sanofi’s patent not anticipated or obvious), the SCC will once again consider the validity of the same patent in an action (re-litigating issues of obviousness, and considering utility/promise).[12]

Previously posted on SLAW online magazine.

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