Date: 20050809
Docket: A-665-04
Citation: 2005 FCA 270
CORAM: ROTHSTEIN J.A.
BETWEEN:
NOVOPHARM LIMITED
Appellant
and
PFIZER CANADA INC., PFIZER INC.
and THE MINISTER OF HEALTH
Respondents
Heard at Toronto, Ontario, on June 16, 2005.
Judgment delivered at Ottawa (Ontario), August 9, 2005.
REASONS FOR JUDGMENT BY: MALONE J.A.
CONCURRED IN BY: ROTHSTEIN J.A.
EVANS, J.A.
Date: 20050809
Docket: A-665-04
Citation: 2005 FCA 270
CORAM: ROTHSTEIN J.A.
EVANS J.A.
MALONE J.A.
BETWEEN:
NOVOPHARM LIMITED
Appellant
and
PFIZER CANADA INC., PFIZER INC.
and THE MINISTER OF HEALTH
Respondents
REASONS FOR JUDGMENT
I. INTRODUCTION
[1] The principal question to be determined in this appeal is whether Novopharm Limited's notice of allegation (NOA) relating to its 250 mg azithromycin monohydrate tablets is adequate. Pfizer Canada Inc. and Pfizer Inc. (collectively Pfizer) say that the NOA is inadequate as it does not provide a sufficiently detailed statement of the legal and factual basis for the allegations of non-infringement, as required by paragraph 5(3)(a) of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133(the Regulations). Novopharm replies that the statement contemplated by paragraph 5(3)(a) is adequate because it is sufficiently detailed to make Pfizer fully aware of the grounds for claiming that the issuance of a notice of compliance (NOC) would not infringe Pfizer's patented product. If Pfizer is right, it is entitled to a prohibition order prohibiting the issuance of a NOC to Novopharm until after the expiration of its patent.
[2] Novopharm appeals the order of a Federal Court judge (the Applications Judge) dated November 22, 2004 and reported as Pfizer Canada Inc. v. Novopharm Ltd. (2004), 36 C.P.R. (4th) 117, 2004 FC 1633. That order prohibited the Minister of Health from granting a NOC to Novopharm with respect to its azithromycin monohydrate product (the monohydrate or the Novopharm Product) on the basis that its NOA was defective.
[3] The adequacy of Novopharm's NOA was raised by Pfizer in its notice of application filed in the Federal Court. Pfizer asserted that Novopharm's NOA was inadequate and that the allegation of non-infringement of its Canadian Patent No. 1,314,876 (the '876 patent), dealing with a crystalline azithromycin dihydrate product (the dihydrate), was not justified. Novopharm, a Canadian generic drug manufacturer, denied any infringement of that patent in the making, constructing, using or selling of its monohydrate product.
[4] In its more recent jurisprudence, this Court has repeatedly stated that the test of the adequacy of a NOA is whether the detailed statement was sufficient to make the patentee (Pfizer) fully aware of the grounds on which the generic (Novopharm) claimed that the relevant patent would not be infringed if a NOC was issued by the Minister (see AB Hassle v. Canada (Minister of National Health and Welfare) (2000), 7 C.P.R. (4th) 272 (F.C.A.) at paragraph 17, per Stone J.A. (AB Hassle 1); SmithKline Beecham Inc. v. Apotex Inc. (2001), 10 C.P.R. (4th) 338 (F.C.A.) at paragraph 26, per Noël J.A.; and also Pfizer Canada Inc. v. Apotex Inc. (2004), 38 C.P.R. (4th) 400 (F.C.A.) at paragraph 24, per Evans J.A.).
II. BACKGROUND
[5] The claims at issue in this appeal are claims 1 and 5 of Pfizer's '876 patent. Claim 1 claims crystalline azithromycin dihydrate and is a product per se claim. Claim 5 claims a composition comprising crystalline azithromycin dihydrate. Neither claim relates to a process of making crystalline azithromycin dihydrate.
[6] Novopharm provided Pfizer with its NOA on November 30, 2002. Its detailed statement with respect to claim 1 reads as follows:
The Novopharm Product is free of crystalline azithromycin dihydrate. More specifically, Novopharm Azithromycin is azithromycin monohydrate. The Novopharm Product is formulated with Novopharm Azithromycin. The Novopharm Product, therefore, contains azithromycin monohydrate, which is stable and does not convert to azithromycin dihydrate. As they are free of crystalline azithromycin dihydrate, neither Novopharm Azithromycin nor the Novopharm Product could be found to infringe claim 1.
Novopharm also alleged that its monohydrate product did not infringe claim 5 for the same reasons noted with respect to claim 1.
[7] The following two possible grounds of infringement, as raised in Pfizer's prohibition application, are relevant to this appeal. First, Pfizer claims that Novopharm's detailed statement is deficient because it fails to address the issue of infringement of its '876 patent in the manufacture of the Novopharm product. Pfizer claims that some dihydrate is formed as an intermediate during the process to manufacture the bulk monohydrate even if the dihydrate is not present at the end of the process (the Intermediate Issue). Second, Pfizer disputes the allegation that the Novopharm Product is stable and that the monohydrate in the finished tablets does not convert to azithromycin dihydrate over time (the Tablet Issue).
[8] The Applications Judge granted Pfizer's application based on his finding that Novopharm's NOA was inadequate or insufficient. He held that the NOA failed to address a ground of infringement asserted by Pfizer, namely that the dihydrate is formed as an intermediate during the process used to manufacture bulk monohydrate. While he ruled that it was not open to Novopharm to 'patch-up' its NOA by evidence filed in the proceeding, he concluded that, even if it were permitted to do so, Novopharm had failed to provide an adequate 'patch' through evidence. No further elaboration was offered in the reasons; however, it appears that the Applications Judge placed an evidentiary burden on Novopharm to lead evidence on the Intermediate Issue and ultimately found that Novopharm had failed to do so. The Applications Judge ruled at paragraph 60 as follows:
... it is clear on the facts of this matter that Novopharm had an evidential burden to 'put into play' all aspects of the issue of non-infringement flowing from its issuance of a NOA and detailed statement to the Applicants and to the Minister. [Emphasis Added.]
[9] On the Tablet Issue, the Applications Judge considered all the evidence, but declined to determine whether Novopharm's allegation was not justified. Instead, he simply indicated that the issue of whether the monohydrate in Novopharm's tablets converted to azithromycin dihydrate was an issue for another day.
III. ISSUES
[10] According to Novopharm, the Applications Judge made three legal errors in granting the prohibition order. First, Novopharm alleges that he erred in finding that its NOA was insufficient because the NOA did not anticipate an issue raised in Pfizer's prohibition application, that being whether Pfizer's patented product, the dihydrate, was formed as an intermediate during the manufacture of the bulk monohydrate. Second, Novopharm alleges that he erred in his included finding that it had a burden to lead evidence on this issue. Finally, Novopharm asserts that he erred in declining to decide the issue of whether its tablets contain, or are likely to convert to, the dihydrate.
IV. STANDARD OF REVIEW
[11] If the correct legal test for determining the adequacy of a NOA has been properly formulated by the judge below, the dispute will revolve around the application of the test to the facts. As stated by Evans J.A. in Pfizer Canada Inc. v. Apotex Inc., at paragraph 25:
... in the absence of some extricable general legal proposition, this Court can only interfere with the Judge's conclusion that the NOA was sufficiently detailed to comply with paragraph 5(3)(a) if it was vitiated by some palpable and overriding error.
However, where a legal error in the formulation of the correct legal test can be identified, a correctness standard of review should be applied (see Housen v. Nikolaisen, [2002] 2 S.C.R. 235).
V. ANALYSIS
A. The Intermediate Issue
i. Adequacy of the NOA
[12] Pursuant to subsection 6(2) of the Regulations, if the Applications Judge found that none of the allegations in the NOA was justified, he was required to make an order of prohibition prohibiting the Minister from issuing an NOC to Novopharm until after the expiration of the patent.
[13] The legal burden in these proceedings is on Pfizer to prove, on a balance of probabilities, that the allegations in the NOA were unjustified (see AB Hassle v. Canada (Minister of National Health and Welfare) (2002), 22 C.P.R. (4th) 1, 2002 FCA 421 at paragraph 35, per Sexton J.A. (AB Hassle 2)). However, Novopharm had a preliminary obligation pursuant to paragraph 5(3)(a) of the Regulations to clearly raise the issue of non-infringement in its NOA and detailed statement. If Novopharm failed to provide sufficient information at this preliminary step, Pfizer could discharge its legal burden simply by proving that the NOA was defective, without having to show that Novopharm would infringe its patent if a NOC was granted.
[14] The purpose for Novopharm providing the detailed statement of the legal and factual basis for the non-infringement allegations was to notify the patentee (Pfizer) of the reasons why its patent would not be infringed or was invalid (see AB Hassle 1 at paragraph 16). At paragraph 17 of that decision Stone J.A. stated:
... the detailed statement must be such as to make the patentee fully aware of the grounds for claiming that the issuance of an NOC would not lead to infringement of a listed patent for, otherwise, the patentee would be unable to decide whether or not to initiate a section 6 proceeding.
[15] Similarly, in SmithKline Beecham Pharma Inc. v. Apotex Inc., Noël J.A. stated the following at paragraph 24:
The detailed statement ... is intended to place the patentee in the position of deciding whether to oppose the issuance of a notice of compliance by instituting a section 6 proceeding or to stand aside.
[16] The Applications Judge erred in his formulation of the legal test to determine whether Novopharm's NOA was deficient when he required Novopharm to 'put into play' all aspects of the non-infringement issue. Whether Novopharm's NOA was adequate depends on whether it provided Pfizer with a sufficient understanding of the case it had to meet (supra at paragraph 4). The legal test of adequacy does not require Novopharm to anticipate all possible grounds of infringement, including Pfizer's speculative theory that the dihydrate could be used in the process of manufacturing Novopharm's bulk monohydrate. As noted by Evans J.A. in AstraZeneca AB v. Apotex Inc. 2005 FCA 183, [2005] F.C.J. No. 842 (QL) at paragraph 11:
A second person [the generic] should not be required to anticipate every theory of possible infringement, however speculative, in the detailed statement supporting its allegations.
[17] Applying the correct legal test, I conclude that Novopharm's NOA was not deficient. On the present facts, there is no doubt that Pfizer understood the case it had to meet. The detailed statement makes it clear that Novopharm's bulk material is azithromycin monohydrate, that the tablets only contain the monohydrate, and that the monohydrate is stable and does not convert to the dihydrate. Since Pfizer was not left in a situation where it had to guess at the real grounds for Novopharm's allegation that the patent would not be infringed, the detailed statement was not insufficient (see SmithKline Beecham Inc. v. Apotex Inc. at paragraph 27). In fact, it was Pfizer that raised the Intermediate Issue by filing evidence from its expert, Dr. Eric Munson, to the effect that excipients in the Novopharm formulation could promote a conversion to azithromycin dihydrate.
[18] To conclude, since this ground of infringement is merely speculative and Novopharm's detailed statement adequately informed Pfizer of the case it had to meet, I am not persuaded that Novopharm's NOA is defective.
ii. The Evidentiary Burden
[19] In Pharmacia Inc. v. Canada (Minister of National Health and Welfare) (1995), 64 C.P.R. (3d) 450 (F.C.A.), Hugessen J.A. addressed the evidentiary burden placed on a generic under the Regulations. He adopted the reasons of the trial judge who described this burden as follows:
... the grounds that the patentee has for challenging the generic's notice of allegation should be advanced in the originating notice of motion filed pursuant to s. 6(1) of the Regulations. ... The generic may then be informed as to what vexes the patentee and why a prohibition order barring entry should be issued. Initially, i.e., before the Minister, the generic has raised the issue of non-infringement. At this stage, before the court, the generic now has the opportunity to file evidence supporting its detailed statement. In essence, this is the evidential burden on a respondent.
(see Pharmacia Inc. v. Canada (Minister of National Health and Welfare) (1995), 60 C.P.R. (3d) 328 at 339-40 (F.C.T.D.), per Wetston J.)
[20] In my view, this statement remains good law. Where, as here, the NOA is found to be adequate, the legal burden remains squarely on Pfizer to prove, on a balance of probabilities, that the allegations in the NOA are unjustified. Novopharm has no evidential burden to support the allegations in its NOA and detailed statement (see AB Hassle 2 at paragraph 35). Therefore, Novopharm need only file evidence supporting its detailed statement to counter evidence, if any, submitted by Pfizer in the course of the prohibition proceedings.
[21] The Applications Judge erred by incorrectly placing an evidentiary burden on Novopharm with respect to the Intermediate Issue. The question at issue was whether Pfizer had met its legal burden to show that the allegation was not justified. The Applications Judge did not address that issue. I proceed to do so now.
[22] In my view, the evidence of Pfizer's expert, Dr. Munson, fails to establish, on a balance of probabilities, that the Novopharm Product will infringe its '876 patent. Based on the information available to him, Dr. Munson could only speculate that there was a 'strong possibility' that the dihydrate might be formed as an intermediate and that "sufficient information has not been provided to show that there will not be azithromycin dihydrate formed in the intermediate steps of making Novopharm's bulk azithromycin".
[23] After the production of Dr. Munson's affidavit, Pfizer obtained an order from the Federal Court to compel Novopharm to produce all relevant portions of its abbreviated new drug submission, including the closed portions of the drug master file (DMF) which set out the process details with respect to the manufacture of bulk azithromycin monohydrate. With this information, Pfizer could then consider whether the dihydrate was used or formed in the manufacture of the Novopharm Product. Pfizer was also granted leave to file additional evidence on this issue. However, no such evidence was filed by Pfizer despite the fact that the DMF provided it with the means to replicate Novopharm's manufacturing process.
[24] For whatever reason, Pfizer relies solely on Dr. Munson's speculations in this proceeding. The law is well settled that in order to satisfy the legal burden placed on it under section 6 proceedings, it is insufficient for Pfizer to merely raise the possibility of infringement (see Glaxo Group Ltd. v. Canada (Minister of National Health and Welfare) (1998), 80 C.P.R. (3d) 424 (F.C.T.D.) at paragraph 9). In relying solely on Dr. Munson's evidence, Pfizer has failed to satisfy its legal burden of proving that Novopharm's NOA is not justified.
B. The Tablet Issue
[25] On the tablet issue, Pfizer also had the burden of establishing that Novopharm's allegations were not justified, i.e. that its tablets did not contain or convert to azithromycin dihydrate when stored in their packaging and under the proposed storage conditions.
[26] Early in the proceedings, Pfizer was provided with a sealed bottle of tablets from Lot #1. Dr. Munson conducted certain tests and determined that the Lot #1 tablets did not contain azithromycin dihydrate. However, his tests indicated that without their protective packaging, over time, and in conditions of extreme heat and humidity, some of the azithromycin monohydrate in the Lot #1 tablets appeared to convert to azithromycin dihydrate. Subsequently, twelve additional samples from Lots #1 and #2 were provided to Pfizer, but the Court record does not disclose further testing by Pfizer or the results, if any, of such tests.
[27] On the other hand, evidence was provided by Novopharm that the packaging and proposed storage conditions of the Novopharm tablets were important to the issue of conversion, as they were designed to minimize the amount of moisture that comes into contact with the tablets. It is moisture that can cause conversion from a monohydrate to a dihydrate.
[28] Accordingly, the tests conducted by Dr. Munson are of little probative value. The tests offer no information as to whether the monohydrate in the Novopharm tablets will convert to the dihydrate when stored in their protective packaging and under proposed storage conditions for the duration of their proposed shelf life. At most, Dr. Munson's tests merely raise the possibility of infringement through conversion if the unpackaged tablets are exposed to high temperature and humid conditions over a period of weeks. Again, the law is well settled that it is insufficient for Pfizer merely to raise the possibility of infringement in order to satisfy the ultimate legal burden placed on it under section 6 proceedings (supra at paragraph 24).
VI. CONCLUSION
[29] The appeal should be allowed with costs, the order of the Federal Court set aside and the application for prohibition dismissed with costs.
"B. Malone"
J.A.
"I agree.
Marshall Rothstein J.A."
"I agree.
John M. Evans J.A."
FEDERAL COURT OF APPEAL
Names of Counsel and Solicitors of Record
DOCKET: A-665-04
STYLE OF CAUSE: NOVOPHARM LIMITED V. PFIZER CANADA INC. ET AL.
DATE OF HEARING: June 16, 2005
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR JUDGMENT BY: MALONE J.A.
CONCURRED IN BY: ROTHSTEIN J.A.
EVANS J.A.
DATED: August 9, 2005
APPEARANCES BY:
Mr. Robert W. Staley FOR THE APPELLANT
Mr. Dino Clarizio
Ms. Ruth Promislow
Mr. Anthony G. Creber FOR THE RESPONDENTS
Ms. Jennifer Wilkie
SOLICITORS OF RECORD:
Bennett Jones LLP FOR THE APPELLANT
Toronto, Ontario
Gowling Lafleur Henderson LLP FOR THE RESPONDENTS