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IN THE MATTER OF an application of an Order pursuant |
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section 55.2(4) of the Patent Act and Section 6 of the |
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Patented Medicines (Notice of Compliance) Regulations |
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[1] These reasons arise out of an application by Merck & Co., Inc. and Merck Frosst Canada (collectively "Merck") for an order under section 6 of the Patented Medicines (Notice of Compliance) Regulations (the "Regulations"). Merck seeks, among other reliefs, an order prohibiting the Minister of Health (the "Minister") from issuing a notice or notices under section C.08.004 of the Food and Drug Regulations to the Respondent Novopharm Limited ("Novopharm") in connection with 5 mg, 10 mg and 20 mg tablets of the drug enalapril maleate until after the expiration of Canadian Letters Patent 1,275,349 (the "Patent") . Merck & Co., is the owner of the patent. Merck Frosst Canada Inc. is the exclusive Canadian licensee of the patent. \par
[2] On the 4th of September, 1990, Novopharm issued a purchase order to Delmar Chemicals Limited ("Delmar") for the purchase of 100 kg of enalapril maleate. The purchase order provided:
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Product must meet HPB [Health Protection Branch of the Department of Health] requirements. If patent issued before product manufactured purchase order is nul and void without further obligation to either party. If necessary manufacturer to purify material at cost. |
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[3] The specified delivery date was the 15th of October, 1990. Under date of the 31st of August, 1990, Delmar produced a "certificate of analysis" with respect to enalapril maleate indicating that it "meets specifications". It is of note that the certificate of analysis pre-dates the purchase order but there was no dispute before me that the certificate of analysis was applicable with respect to the enalapril maleate eventually delivered to Novopharm.
[4] On the 1st of October, 1990, the 100 kilograms of enalapril maleate was delivered by Delmar to Novopharm. The enalapril maleate was in bulk form and was packaged in four fibre drums. Since receipt, Novopharm has stored the bulk enalapril maleate in double polyethylene bags enclosing the fibre drums at -70C.
[5] On the 16th of October, 1990, the Patent issued.
[6] On the 5th of April, 1993, Novopharm filed a New Drug Submission ("NDS") with the Health Protection Branch ("HPB") of the Department of National Health and Welfare (now the Department of Health) for a Notice of Compliance ("NOC") for 5 mg, 10 mg and 20 mg tablets of enalapril maleate to be made from the 100 kg of bulk enalapril maleate held by it.
[7] On the 19th of April, 1995, the Court of Appeal released its decision in Merck & Co. v. Apotex Inc. Mr. Justice MacGuigan, for the Court, wrote at page 375:
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The trial judge stated his views as follows ...: |
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That may be an appropriate description of the chemical processes here followed. Nevertheless, I am persuaded, as the plaintiffs submit, that the enalapril maleate delivered to Apotex in these three lots could not be said to be in existence for purposes of the statutory immunity until the product was considered by Delmar to be of such a quality that the manufacturer would ship it under the contract for purchase by Apotex. Only when it was deemed to be of proper quality could it be considered to be purchased or acquired by Apotex within the meaning of s. 56 [of the Patent Act]. Since it was not judged by the supplier in these cases to be of that quality until after the issue of the patent to Merck in mid-October, 1990, each of those lots of bulk enalapril maleate could not be said to be in existence at that date. |
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I agree with the trial judge that the three lots of enalapril maleate had not been "purchased or acquired" by Apotex, within the meaning of s. 56. In my view, purchasers cannot be said to have "purchased or acquired" a product until they have obtained title to it. Since we were shown no evidence of a contrary intention in the contract between Apotex and Delmar, title could not pass to Apotex until the product was in a deliverable state: see s. 19, Rule 5 of the Sale of Goods Act , R.S.O. 1990, c. S. 1. In circumstances where the seller itself thought that the product was unsuitable for delivery, I do not think this court should conclude otherwise. |
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It is true, as Apotex submitted, that enalapril maleate was in existence even before the lots were repurified. Moreover, as I have pointed out, the form taken by an invention is not governing for the purposes of s. 56. Thus, if Apotex had purchased or acquired enalapril maleate in any form, whether pure bulk powder, tablets, or some other combination of enalapril maleate and another substance, it could be said to have acquired Merck's invention within the meaning of s. 56. However, in the case at bar, the product which Apotex sought to purchase or acquire was pure powder. If the seller was not satisfied that the product met that description and could be delivered, Apotex could not be said to have acquired the product. \par |
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[8] On the 25th of June, 1997, Novopharm served a Notice of Allegation on Merck, pursuant to the Regulations, in respect of its application for an NOC for enalapril maleate alleging that no claim to the medicine itself and no claim for the use of the medicine would be infringed by its making, constructing, using or selling of the drug for which the submission for the NOC had been filed because:
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All of the bulk raw material which Novopharm will be using to manufacture the finished Drug for sale in Canada was purchased prior to the date of issuance of the earliest of the Patents. Specifically, all of Novopharm's raw material was purchased prior to October 16, 1990, the date of issuance of Canadian Patent 1,275,349... . |
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[9] This application pursuant to the Regulations followed from the serving of the Notice of Allegation.
- The issue on this application, as described by Merck in its Memorandum of Points of Argument is the following:
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A. Is Novopharm's allegation of non-infringement of the Patent, by its activities of making, constructing, using and selling enalapirl maleate, justified, and, in particular: |
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i. Is Novopharm entitled to the protection of section 56 [of the Patent Act] in respect of the limited quantity of enalapril maleate received in October 1990? |
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ii. Was Novopharm's limited quantity of enalapril maleate in a form fit for medicine in October, 1990? |
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iii. Is Novopharm's limited quantity of enalapril maleate still in a form fit for medicine? |
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iv. Is Novopharm's quantity of bulk enalapril maleate so limited that the allegation of non-infringement of the Patent is not justified or justified only for a limited duration and only in relation to material shown to be protected under section 56 of the Patent Act? |
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[11] I return to the quotation from the reasons of Mr. Justice MacGuigan in Merck & Co. v. Apotex Inc. cited earlier in these reasons and incorporating in part the reasons of the trial judge in the same matter. As in that matter, the issue before me would appear to turn to a significant extent on whether or not the bulk enalapril maleate received by Novopharm from Delmar on the 1st of October, 1990 was "purchased or acquired", within the meaning of section 56 of the Patent Act , on that date or, in any event, prior to the issue of the Patent on the 16th of October 1990.
[12] Mr. Justice MacGuigan reasoned that, as applied to the facts of this matter, Novopharm could not be said to have "purchased or acquired" the bulk enalapril maleate until it obtained title to it. He continued in his analysis by concluding that title could not pass, once again on the facts of this matter, to Novopharm until the product was in a deliverable state. For ease of reference, I quote again:
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In circumstances where the seller itself thought that the product was unsuitable for delivery, I do not think this Court should conclude otherwise. |
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[13] On the evidence before me, clearly, as of the 31st of August, 1990, Delmar considered the bulk enalapril maleate to be in a "deliverable state". In its certificate of analysis referred to above, it concludes "Meets specifications".
[14] I can find no basis on which to conclude that the phrase "Meets specifications" refers other than to the stipulation in Novopharm's purchase order for the bulk enalapril maleate that the product must meet Health Protection Branch requirements. If I am wrong in this and the words "meets specifications" in the Delmar certificate of analysis referred to the bulk enalapril maleate meeting Delmar's specifications as opposed to those of Novopharm and, by incorporation, those of the Health Protection Branch, I still conclude that the words clearly and unequivocally demonstrate that Delmar was, as of the date of the certificate, of the opinion that the bulk enalapril maleate was in a "deliverable state".
[15] Once again, to quote from Mr. Justice MacGuigan in Merck & Co. v. Apotex Inc.:
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In circumstances where the seller itself thought that the product was unsuitable for delivery, I do not think this Court should conclude otherwise. |
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[16] I am satisfied that the converse is equally appropriate. In circumstances where the seller itself thinks the product "meets specifications", at least in the absence of evidence to the contrary, I do not think that this Court should conclude otherwise. I find no evidence to the contrary on the record before me. It is true that the evidence indicates that Novopharm itself did at least two analyses on samples of the bulk enalapril maleate received by it from Delmar. The first of those analyses, conducted shortly after Novopharm took delivery, might serve to indicate that the bulk enalapril maleate was not at that time up to standards satisfactory to the Health Protection Branch. Whether that be true or not, there certainly was no evidence before me that Novopharm refused to accept delivery of the bulk enalapril maleate or in any way indicated that Delmar had failed to fulfil the conditions of Novopharm's purchase order.
[17] I am satisfied that Novopharm purchased or acquired, on the 1st of October, 1990, a limited quantity of the invention for which the Patent was afterwards obtained by Merck, within the meaning of section 56 of the Patent Act. Thus, pursuant to that section, Novopharm, before the claim date of the claims in the Patent, had the right to use and sell to others subject of course to the issuance of an appropriate, or more than one appropriate, notice or notices of compliance under the Regulations, the limited quantity of the specific composition of matter for which the Patent was afterwards obtained under the Patent Act.
[18] That the right to use and to sell to others includes the rights to reformulate the bulk enalapril maleate obtained by Novopharm from Delmar is beyond question. In Novopharm Limited v. Eli Lilly and Company and Eli Lilly Canada Inc. and the Minister of National Health and Welfare, Mr. Justice Iacobucci, for the Court, wrote:
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The better view, as I have stated, is that the right to reformulate is premised on the inherant right of an owner of property to deal with that property as he or she sees fit. In the absence of some express term in the compulsory licence, prohibiting purchasers of bulk Nizatidine from Novopharm from reformulating it into final-dosage form, the weight of the caselaw supports the view that Apotex, having validly acquired the bulk medicine, would be free to reformulate it for resale without fear of infringing any right under Eli Lilly's Patents. |
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While there is no compulsory licence here at issue, certainly there was no evidence before me that Novopharm, as a purchaser of bulk enalapril maleate from Delmar was in any way prohibited from reformulating that bulk enalapril maleate into final-dosage form. |
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[19] Counsel for Merck urged that, if I were to reach the conclusion that I have, a prohibition should nonetheless issue prohibiting the Minister from issuing a notice or notices under section C.08.004 of the Food and Drug Regulations to Novopharm in connection with 5mg, 10mg and 20 mg tablets of the drug enalapril maleate, until after the expiration of the Patent, where such tablets are formulated other than from the 100 kilograms of bulk enalapril maleate delivered to Novopharm on the 1st of October, 1990. I cannot adopt this submission. There is no evidence whatsoever before me to indicate that Novopharm has applied to the Minister for a notice or notices in respect of tablets of the drug enalapril maleate formulated from other than the 100 kg of bulk enalapril maleate in question. I am satisfied that it would be quite inappropriate for this Court to issue a speculative prohibition.
[20] In the result, this application will be dismissed.
[21] I have had the benefit of written submissions on the issue of costs. Those submissions have been received since the date of hearing of this matter.
[22] Prior to the coming into force of the Federal Court Rules, 1998, Rule 1618 of the Federal Court Rules provided that no costs would be payable on an application such as this unless the Court, for special reasons, ordered otherwise. With the coming into force of the new Rules, the Court now has full discretion over the amount and allocation of costs and the determination of by whom they are to be paid. The submissions of counsel indicate that there is no disagreement that the new regime applies with respect to this application.
[23] In AIC Ltd. v. Infinitiy Investment Counsel Ltd. el al, Mr. Justice Rothstein wrote:
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Rule 501(1) [of the new Rules] provides that prima facie the new Rules should apply to the award of costs in proceedings commenced before the new Rules came into force but in which the award of costs takes place after the coming into force of the new Rules. Of course, Rule 501(1) should be interpreted not to affect rights accrued or accruing when the former Federal Court Rules ceased to have effect. However, there were no rights accrued or liabilities incurred with respect to costs of the plaintiff's motion prior to the old Rules ceasing to have effect. Such rights or liabilities could not arise until the Court dealt with the question of costs, which in this case was after the new Rules came into effect. I am satisfied that the new Rules apply to the award of costs in this case. |
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I am satisfied that Mr. Justice Rothstein's reasoning applies to this matter. |
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[24] In the absence of special circumstances, and barring a special Rule such as the former Rule 1618, costs should follow the event. I am satisfied that no special reason exists to vary from that general principle. In the result, Novopharm having been successful on this application, will be entitled to its costs as against Merck. There will be no order as to costs with respect to the Minister.
[25] Counsel for both Merck and Novopharm, in their written submissions, requested an opportunity to make further submissions pursuant to Rule 400 et seq as to directions to be given to an assessment officer. Counsel for Novopharm will have fourteen (14) days from the date of my order herein to file and serve written submissions. Following service of such submissions, counsel for Merck will have fourteen (14) days to file and serve submissions. Following service thereof, counsel for Novopharm will have seven (7) days to file and serve reply submissions. Thereafter, I will consider whether or not to provide directions to the assessment officer dealing with the issue of costs in this matter.
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1 SOR/93-133 as amended by SOR/98-166 (March 12, 1998)
2 C.R.C. 1978, c. 870 (as amended)
3 Canadian Letters Patent 1,288,351 was, at an earlier stage of proceedings surrounding enalapril maleate, in issue. However, that patent expired in 1994.
4 (1995), 60 C.P. R. (3d) 356 (F.C.A.)
Section 56 of the Patent Act, R.S. 1985, c. P.-4, as amended and applicable to the Patent and the alleged purchase or acquisition here in issue reads:
56. Every person who, before an application for a patent becomes open to the inspection of the public under section 10, has purchased, constructed or acquired the invention for which a patent is afterwards obtained under this Act, has the right to use and sell to others the specific article, machine, manufacture or composition of matter patented and so purchased, constructed or acquired without being liable to the patentee for so doing, but the patent shall not, with respect to other persons, be held invalid by reason of that purchase, construction or acquisition or use of the invention by the person first mentioned, or by those to whom that person has sold it, unless it was purchased, constructed, acquired or used before the date of filing of the application or, in the case of an application to which section 28 applies, before the priority date of the application, and in consequence whereof the invention was disclosed in such a manner that it became available to the public in Canada or elsewhere. |
56. Quiconque, avant la date à laquelle une demande de brevet est devenue accessible sous le régime de l'article 10, achète, exécute ou acquiert une invention éventuellement brevetée peut utiliser et vendre l'article, la machine, l'objet manufacturé ou la composition de matières brevetés ainsi achetés, exécutés ou acquis avant cette date sans encourir de responsabilité envers le breveté ou ses représentants légaux. Toutefois, à l'égard des tiers, le brevet ne peut être considéré invalide du seul fait de cette opération, à moins qu'elle n'ait eu lieu avant la date du dépôt de la demande de brevet ou, dans le cas d'une demande à laquelle l'article 28 s'applique, avant la date de priorité de la demande de brevet si l'opération a eu pour effet de divulguer l'invention d'une manière telle qu'elle est devenue accessible au public au Canada ou ailleurs.
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R.S., 33 (3rd Supp.), s. 22
In reference to this provision, Mr. Justice Macguigan commented in
Merck & Co. v. Apotex Inc. at page 365:
The trial judge correctly observed that the change in the wording of s.56 [to the form here quoted] made no difference in the circumstances of this case, because
Merck's patent [here the
Patent ] did not become open to inspection by the public until it was issued. Consequently, like the trial judge, I use the phrase "before the issuance of the patent" in these reasons to refer to the relevant date for the purposes of s. 56. I will do likewise.
5 9 July 1998 [1998] S.C.J. No. 59 (QL)
6 SOR/98-106
7 C.R.C. 1978, c. 663 (as amended)
8 (10 June 1998), T-1712-97 (F.C.T.D.)