In an action brought by Apotex Inc. (Apotex) to recover damages
under section 8 of the Patented Medicines (Notice of
(Regulations) in respect of the medicine modafinil, Shire Canada
Inc. (Shire) brought this motion for leave to amend its statement
of defence, alleging two new defences. Apotex opposed Shire's
motion, arguing that the proposed amendments did not disclose a
reasonable defence and ought not to be permitted. The prothonotary
struck out the first proposed amendment, finding that a defence
based on the outcome of a separate infringement action to which
Shire was not a party would be speculative and hypothetical, but
permitted the second proposed amendment which alleged a "grave
Apotex filed an abbreviated new drug submission (ANDS), seeking
a notice of compliance (NOC) that would allow it to market its
generic Apo-modafinil tablets, by comparing its tablets to
Shire's modafinil product. Shire had listed Canadian patent no.
2,201,967 (the '967 patent) on the patent register in respect
of its modafinil tablets. On March 16, 2006, Apotex served a notice
of allegation (NOA) on Shire, alleging that the claims of its
'967 patent were invalid, void and of no effect. In response,
Shire commenced an application for an order prohibiting the
issuance of a NOC to Apotex. This application was dismissed two
years later, on April 25, 2008. Apotex obtained a NOC shortly after
the judgment was released and now seeks damages under section 8 of
the Regulations for the delay in issuance of the NOC
resulting from Shire's unsuccessful application for a
Defence based on a separate action by Cephalon Inc.
For its first proposed new defence, Shire proposed to rely on
the outcome of a separate infringement action against Apotex
commenced by the owner of the '967 patent, Cephalon Inc.
(Cephalon). Shire argued that, should the '967 patent be found
to be valid and infringed in that other action, Apotex should not
be entitled to recover any damages in the present proceeding based
on the loss of infringing sales.
The prothonotary struck this proposed defence, finding that the
outcome of the Cephalon action was an uncertain future event which
was not susceptible of being determined or even influenced in the
context of the present action. This was the essence of a
speculative and hypothetical pleading that ought to be struck.
Moreover, these issues could not be determined unless and until the
proceedings by Cephalon in the other court file were resolved. This
would unreasonably delay, embarrass and prejudice the trial of the
present action by Apotex againt Shire.
Defence based on the "Grave Consequences"
For its second proposed new defence, Shire sought to rely on the
existence of Canadian patent no. 2,165,824 (the '824 patent), a
second patent listed on the patent register against Shire's
modafinil tablets. In particular, in a NOA served on Shire by
Apotex, dated August 30, 2005, Apotex alleged that it would not
infringe the '824 patent on the basis of its draft product
monograph and gave an undertaking that it would not make, use or
sell its tablets for the patented use of treatment of sleep apnea
or ventilation problems of central origin. However, according to
Shire, Apotex's product monograph does include the patented
indication, and Apotex has sold its modafinil tablets for such use
in breach of its undertaking. Shire therefore seeks to allege that
Apotex breached this undertaking, giving rise to the possible
finding of "grave consequences", alluded to by the
Federal Court of Appeal, in the form of a denial of any remedy for
delayed entry into the market pursuant to section 8 of the
Apotex argued that subsection 8(5) of the Regulations,
which requires the court to take into account "all matters
that it considers relevant to the assessment of the amount,
including any conduct [of the parties] which contributed to delay
the disposition of the application", should be interpreted as
any valid defence arising exclusively in the context of the very
prohibition proceeding that was dismissed or discontinued.
The prothonotary, however, found that Apotex's argument
raised a difficult question that should not be determined on a
motion to strike. It was reasonably arguable that the Court could
conclude that Apotex's breach of an undertaking, if
established, could affect the assessment of damages. Apotex
therefore did not meet the very heavy onus of showing that this
proposed defence was plainly and obviously devoid of any merit and
stood no chance of success whatsoever.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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