Date: 20000619
Docket: A-525-99
CORAM: LINDEN J.A.
ROTHSTEIN J.A.
MALONE J.A.
BETWEEN:
NOVARTIS AG and
NOVARTIS PHARMACEUTICALS CANADA INC.
Appellants
(Applicants)
- and -
ABBOTT LABORATORIES LIMITED and
THE MINISTER OF HEALTH
Respondents
(Respondents)
HEARD at Toronto, Ontario, on Thursday, June 8, 2000
JUDGMENT delivered at Ottawa, Ontario, on Monday, June 19, 2000
REASONS FOR JUDGMENT BY: ROTHSTEIN J.A.
CONCURRED IN BY: LINDEN J.A.
MALONE J.A.
Date: 20000619
Docket: A-525-99
CORAM: LINDEN J.A.
ROTHSTEIN J.A.
McDONALD J.A.
BETWEEN:
NOVARTIS PHARMACEUTICALS CANADA INC. ET AL.
Appellants
- and -
ABBOTT LABORATORIES LTD. ET AL.
Respondents
REASONS FOR JUDGMENT
ROTHSTEIN J.A.
[1] This is an appeal from a decision of a Motions Judge of the Trial Division interpreting subsection 6(7) of the Patented Medicines (Notice of Compliance) Regulations SOR/98-166.
[2] The scheme of the Regulations need not be repeated here in detail. It has been dealt with in a number of Court decisions, the most recent of which is AB Hassle and Astra Pharma Inc v. The Minister of National Health and Welfare, Genpharm Inc. and Takeda Chemical Industries Ltd. (Court File A-692-99, June 12, 2000 per Stone J.A.). Suffice it to say, the issue of non-infringement between the patent holder (first person) and the person seeking a notice of compliance from the Minister of National Health and Welfare (second person), originates with a notice of allegation served on the first person by the second person alleging, amongst other things, non-infringement. Should the first person be of the view that the product of the second person infringes the patent, the first person may apply to the Court for an order prohibiting the Minister from issuing a notice of compliance to the second person until after expiration of the patent.
[3] In the present case, a notice of allegation was served by the second person (Abbott), and an application for prohibition was made to the Court by the first person (Novartis). In order to pursue the question of infringement, Novartis sought disclosure of information contained in Abbott"s abbreviated new drug submission which was part of its application to the Minister for a notice of compliance.
[4] Subsection 6(7) of the Regulations provides for the disclosure of all or part of the submission for a notice of compliance filed by a second person. Subsection 6(7) states:
| 6(7) On the motion of a first person, the court may, at any time during a proceeding, (a) order a second person to produce any portion of the submission for a notice of compliance filed by the second person relevant to the disposition of the issues in the proceeding and may order that any change made to the portion during the proceeding be produced by the second person as it is made; and (b) order the Minister to verify that any portion produced corresponds fully to the information in the submission. |
6(7) Sur requête de la première personne, le tribunal peut, au cours de l'instance : a) ordonner à la seconde personne de produire les extraits pertinents de la demande d'avis de conformité qu'elle a déposée et lui enjoindre de produire sans délai tout changement apporté à ces extraits au cours de l'instance; b) enjoindre au ministre de vérifier que les extraits produits correspondent fidèlement aux renseignements figurant dans la demande d'avis de conformité. |
[5] In this case, the Motions Judge ordered partial disclosure of Abbott"s abbreviated new drug submission. However, with respect to the balance of the application for disclosure, he stated at paragraphs 24, 28 and 36:
| [24] On the basis of the material before me Novartis has not produced compelling evidence that it is necessary for it to know which ester is contained in Abbott"s formulation to enable it to rebutt Abbott"s allegation of non-infringement. |
| [28] Accordingly, I cannot regard Dr. Rousseau"s affidavit as "compelling evidence" that it is necessary to know the proportions of the components in order to know whether they form a microemulsion , and thus infringe the patent. |
| [36] I am not persuaded that the applicants have discharged the heavy onus of showing "compelling evidence" that the additional information that it is seeking (whether Abbott"s formulation forms a hydrosol when added to water) is essential or necessary to enable it effectively to respond to Abbott"s allegation of non-infringement of their patent. [Emphasis added] |
[6] With respect to the refusal to order disclosure, the appellants say that the Motions Judge erred by reading into subsection 6(7) a stringent test for disclosure not found in the words of the subsection. It is argued that the only test for disclosure is relevance and therefore, requiring compelling evidence that the information sought is essential or necessary goes beyond the words of subsection 6(7).
[7] The appellants concede that prior to the making of regulation 6(7) on March 12, 1998, the Court had formulated a stringent standard for disclosure of information contained in a submission to the Minister for a notice of compliance filed by a second person. In his reasons, the Motions Judge made express reference to this jurisprudence:
| There is no doubt that the test formulated by the Court in these decisions was quite stringent. Thus, an applicant must include in the application for disclosure "compelling" (Jansen Pharmaceutica Inc. v. Apotex Inc. (1996), 68 C.P.R. (3d) 114, 117 (F.C. T.D.); Eli Lilly N.C.O. v. Novopharm Ltd. (1996), 69 C.P.R. (3d) 81, 84 (F.C. T.D.)), "clear and persuasive" or "strong" (Merck Frosst Canada Inc. v. Minister of Health and Welfare (1994) 53 C.P.R. (3d) 368, 377-379 (F.C. T.D.), aff"d. (1994 ), 55 C.P.R. (3d) 306, 322 (F.C.A.)) evidence demonstrating that the material sought is "essential and relevant" or "necessary" (Merck Frosst Canada Inc., supra ) for the disposition of the issue of infringement. |
[8] The Motions Judge explained some of the reasons for the stringent standard developed at common law prior to subsection 6(7):
| 1. the proceedings under the Regulations are summary in nature; |
| 2. the issuance of a prohibition application acts as an injunction on the Minister from issuing a notice of compliance for up to 24 months; |
| 3. infringement proceedings remain available; and |
| 4. there is a risk that confidential information may find its way into the hands of a competitor and be used improperly. |
[9] Before the Motions Judge, the appellants conceded that the exercise of discretion conferred by subsection 6(7) should, for the most part, be guided by the Court"s prior jurisprudence. Before this Court, the argument is somewhat different. The appellants say that subsection 6(7) has superseded the stringent test established by the prior jurisprudence. Under subsection 6(7), they say the only test for disclosure is relevancy.
[10] Referring to the regulatory impact analysis statement accompanying the March 12, 1998 amendments to the Regulations, counsel for the appellants submits that the purposes of subsection 6(7) are: (1) fuller disclosure, (2) reducing unnecessary litigation, and (3) streamlining the process. He says that a simple relevancy test is consistent with these objectives.
[11] The appellants seem to interpret subsection 6(7) as imposing the same type of obligation on parties to produce documents and information as pertains in normal civil litigation " to produce documents and answer questions on discovery that are relevant. In litigation, once relevancy is established, there is a general obligation on parties to produce and answer questions.
[12] However, as I read subsection 6(7), it confers on the Court a discretion to order production of any portion of a submission for a notice of compliance relevant to the disposition of the issues in the prohibition proceeding. A condition for the exercise of the Court"s discretion is that the information sought is relevant to the issues in the proceedings. Unlike ordinary civil litigation where there is an obligation on a party to produce relevant information, under subsection 6(7), establishing relevancy is only a condition precedent to the Court exercising its discretion as to whether or not to order production. Therefore, I disagree with the appellants that the only consideration for the determination by the Court to order disclosure is relevancy.
[13] No criteria are specified to limit or guide the Court in the exercise of its discretion under subsection 6(7). It is open to the Court to assess which criteria are appropriate in the circumstances. Accordingly, it is not entirely accurate to describe such criteria as "tests", as some of the cases have done, because that implies a rule applicable to all applications for disclosure and thus a limitation on discretion rather than the exercise of discretion.
[14] On the other hand, the nature and context of the proceedings under the Regulations provides some guidance as to the considerations that should generally guide the Court in the exercise of its discretion under subsection 6(7). As outlined in paragraph 8 above, the Motions Judge identified some of the reasons why the Court in the past has not been permissive in ordering disclosure.
[15] The question is whether subsection 6(7) reflects a less restrictive approach to disclosure from what it was previously. Under the heading "Fuller disclosure" in the regulatory impact analysis statement, the following paragraph appears:
| The court has the explicit capacity to order disclosure to the patentee of portions of a generic manufacturer"s NOC submission where it is relevant to resolving issues in the proceeding. The Regulations provide that the disclosed information must be treated confidentially, under the same terms as would apply to similar disclosure orders made under the authority of the Federal Court Rules. |
I am of the view that this paragraph indicates that the Governor in Council intended fuller disclosure than had previously been ordered by the Court. Although subsection 6(7) is clearly discretionary, there is no reference to a heavy onus or a requirement for compelling evidence for the ordering of disclosure, even though that had been the requirement prior to subsection 6(7) being enacted.
[16] This position is supported by another excerpt in the regulatory impact analysis statement:
| Other changes are designed to reduce unnecessary litigation and streamline the litigation process: specifying the circumstances in which parties can be awarded damages and factors that may be taken into account in calculating damages; specifying some of the circumstances in which costs may be awarded; ensuring the products-specific patent lis; expressly confirming the authority of the Minister of Health to audit patent lists; placing the burden of proof on manufacturers seeking to produce a generic version of a drug covered by a product-by-process patent; permitting the court to order disclosure portions of a generic manufacturer"s Notice of Compliance submission if it is relevant to resolving the issues by the court (the information must be treated confidentially); requiring more specificity with a Notice of Allegation ... |
The reference to reducing unnecessary litigation is clearly in the context of litigation under the regulations (as opposed to separate infringement proceedings). Further, the reduction of unnecessary litigation must be in relation to experience prior to the enactment of the March 12, 1998 amendments to the regulations, one of which is subsection 6(7). The necessary implication is that a change to the approach to disclosure was intended and that the change was to be in the direction of a less restrictive approach than had previously applied.
[17] In SmithKline Beecham Pharma Inc. et al. v. Apotex Inc. (1999), 3 C.P.R. (4th) 22, McGillis J. had occasion to order disclosure under subsection 6(7). At paragraph 8, she stated:
| In my opinion SmithKline has established on a balance of probabilities that disclosure of the full process for the manufacture of Apotex" paroxetine hydrochloride is required to provide, evidentiary foundation for processing the allegation of non-infringement in relation, at least, for the product by process in claim 5 of the "023 patent. I would also note that the evidence of Dr. Fallis that it would be "important", in determining the question of infringement, to assess the further processing done by Apotex after the recrystallization step revealed in the disclosed materials was not undermined in cross-examination. [Emphasis added] |
In SmithKline, McGillis J. found that SmithKline had established on a balance of probabilities that disclosure was required. She also had regard to the criteria of importance. I think whether disclosure is required and is important are appropriate considerations for the exercise of discretion under subsection 6(7).
[18] In Procter & Gamble Pharmaceuticals Canada Inc. and the Procter & Gamble Company v. The Minister of Health and Genpharm Inc. (Court File T-1825-99) Pelletier J. observed that incomplete disclosure in a notice of allegation should not be rewarded by a stringent test for disclosure. I agree that inadequate disclosure in a notice of allegation is also an appropriate consideration in the Court exercising its discretion under subsection 6(7).
[19] I cite SmithKline and Procter & Gamble as examples of appropriate considerations in the exercise of discretion under subsection 6(7). I am also of the opinion that in exercising its discretion, the Court should consider the evidence in respect of disclosure on a balance of probabilities standard rather than the more restrictive prior standard of imposing on a first person a heavy onus of showing compelling evidence justifying disclosure. The balance of probabilities standard reflects the less restrictive approach to disclosure implied by the enactment of subsection 6(7).
[20] In the decision under appeal, the Motions Judge clearly recognized that a decision under subsection 6(7) was discretionary in nature. At paragraph 5 he stated:
| It was conceded by counsel for Novartis that my approach to the exercise of the discretion expressly conferred by subsection 6(7) should for the most part be guided by this jurisprudence. |
I think he also correctly considered, in the exercise of his discretion, whether disclosure was necessary. However, in exercising his discretion, he imposed on the appellants the standard of proof applicable prior to the enactment of subsection 6(7), the heavy onus of showing compelling evidence that the additional information was essential or necessary. At paragraph 11, he stated:
| In my opinion, the addition to the regulations of subsection 6(7) does not significantly weaken any of the reasons previously motivating judicial caution in ordering the disclosure of information in the NDS. It does, however, make clear that limited discovery is permissible, despite the summary nature of prohibition proceedings. Since such power was already recognized in the cases to which I have referred, I see no reason to apply a less stringent test than the one adopted in most of the cases. |
[21] I am of the respectful opinion that having regard to subsection 6(7) and the less restrictive standard for disclosure that it implies, that the learned Motions Judge erred in imposing on the appellants the prior standard of a heavy onus of showing compelling evidence that the information sought was necessary or essential. The onus under subsection 6(7) is on a first person to satisfy the Court on a balance of probabilities that disclosure should be ordered.
[22] While the Court of Appeal will not generally interfere with a discretion exercised by a Motions Judge, in this case, that discretion was exercised having regard to an erroneous standard of proof. This constitutes an error of law.
[23] I would allow the appeal. As the merits of the application for disclosure were not argued before this Court, the matter should be remitted to the Trial Division for redetermination in accordance with these reasons. The appellants should be entitled to costs.
J.A.