On December 4, 2013 the Federal Court of Appeal dismissed an appeal by Apotex Inc. (“Apotex”) from their unsuccessful motion to set aside a prohibition order granted to Eli Lilly Canada Inc. for its olanzaprine products (2010 FC 952). Apotex had relied upon rule 399(2)(a) of the Federal Courts Rules to argue that the subsequent finding of invalidity of the patent at issue was sufficient reason to set aside the earlier order. Apotex also asked that the application resulting in the prohibition order be dismissed. This appellate decision reaffirms that a finding of patent invalidity will not permit the Court to retroactively dismiss an application for a prohibition order.

In dismissing the earlier motion, Justice Gauthier found that setting aside a prohibition order is unnecessary when the patent expires by declaration of invalidity. Invalidating the patent would not be a matter arising after the order of prohibition, and thus would not fall within the narrow exceptions to res judicata established in rule 399. Discretion given to the Court under this rule is exceptional and requires exercising great caution; this is particularly true with respect to patents as they are always at risk of being invalidated.

At issue on appeal was whether a finding of patent invalidity allows the Court to vary its original order and dismiss an application for a prohibition order under subsection 6(1) of the Patented Medicines (Notice of Compliance) Regulations (“Regulations”). Entitlement to damages under section 8 of the Regulations will only arise if the prohibition order is withdrawn or discontinued by the first person, dismissed by the court, or is reversed on appeal.

It has been repeatedly held by the Federal Court of Appeal that a finding of patent invalidity will not allow the Court to dismiss an earlier application for a prohibition order. Therefore, Apotex’s only route to success in the appeal involved persuading the Court that these earlier decisions were “manifestly wrong” so as to overcome the public interest in certainty and consistency.

Although those earlier decisions of the Federal Court of Appeal relied upon an English Court of Appeal decision that was subsequently overturned, there was no basis to find that this amounted to the decisions being “manifestly wrong.” In dismissing the appeal, the Federal Court of Appeal left the door open to further consideration of the issue by noting that challenging those earlier decisions based on their alleged inconsistency with the Regulations would be best dealt with by the Supreme Court of Canada, as this is the appropriate forum for correcting errors of intermediate courts of appeal.

Matthew Doak