This is a very interesting judgment that will doubtlessly affect some of the strategies used when seeking a prohibition order under the Patented Medicines (Notice of Compliance) Regulations (the "Regulations"), especially in cases where an innovator faces allegations of double patenting.
On the date that it received Sandoz's notice of allegation, Abbott held the '541 and '395 patents. Sandoz contended in its notice of allegation that the '395 patent was invalid because one of its claims constituted a double patenting over one of the '541 patent's claims. The Federal Court initially found in favour of Sandoz.
Yet, Abbot had dedicated the '541 patent to the public in order to protect itself against Sandoz's allegation. This dedication, however, only took place after receipt of the notice of allegation, more specifically 10 days before Abbott served its memorandum of fact and law. The question before the Federal Court of Appeal was thus the following: Should allegations of double patenting be assessed as of the date of the notice of allegation or the date of the hearing on the merits?
The state of the law on this issue was the following. In an earlier case (Bristol Myers Squibb Canada Co. v. Apotex Inc. (2009), 342 F.T.R., 161), the innovator had disclaimed some of a patent's claims after receiving the notice of allegation but before serving its application for a prohibition order. The Federal Court found that the patent in question should be construed as of the date of the notice of allegation, as the generic drug company could not amend it after the fact.
That said, in the earlier Merck Frosst, the Supreme Court had ruled that the date for assessing whether a notice of allegation is justified is the date of the hearing on the merits. This decision was not submitted to the Federal Court at trial.
The Supreme Court's reasoning is the result of a purposive construction of the Regulations. Section 6(2) in force at the time states that the court must make a prohibition order if it finds that none of the allegations in the notice of allegation is justified. Hence, according to the Supreme Court, this can only be done at the hearing on the merits.
In this case, the Court of Appeal applied the Supreme Court's line of reasoning and considered that the Regulations' objective is to strike a balance between effective patent protection on the one hand, and the quick market release of less costly medications on the other.
According to the Court of Appeal, this objective would not be honoured if a motion for prohibition were dismissed on the sole grounds that, at the time the notice of allegation was sent, the state of the facts and allegations did not justify the issuance of a prohibition order, whereas by the time the Court considered the justification, the facts would justify such an order.
The Court of Appeal found that to assess the question of double patenting as of the date of the notice of allegation would be to ignore the fact that patent '541 had been dedicated to the public and the effects of that dedication. The Regulations' objective would thus not be respected, as a notice of compliance could be issued even though a valid patent was infringed. This would directly result in the filing of lengthy and expensive infringement proceedings, something that the Regulations seek to avoid.