Canada: Court Of Appeal Upholds Decision To Deny Amendments To Statement Of Defence In Section 8 Proceeding (Intellectual Property Weekly Abstracts Bulletin: Week of March 24th)

Last Updated: March 27 2014

Court of Appeal Upholds Decision to Deny Amendments to Statement of Defence in Section 8 Proceeding
Sanofi-Aventis Canada Inc. v. Teva Canada Limited, 2014 FCA 65
Drug: ramipril

This appeal was heard in the context of an action commenced by Teva Canada Limited ("Teva") seeking compensation from Sanofi-Aventis Canada Inc. and Sanofi-Aventis Deutschland GmbH (collectively "Sanofi") pursuant to section 8 of the NOC Regulations. The appeal was heard together with two other appeals: 2014 FCA 67 and 2014 FCA 69 (summary below).

This appeal was from an order of the Federal Court which dismissed Sanofi's appeal from an order of Prothonotary Aalto denying its motion seeking amendments to its statement of defence to include allegations respecting two issues: (1) that in the hypothetical market which had to be established, Pharmascience Inc. would have been the first generic drug manufacturer to enter the generic ramipril market; and (2) that the use of ramipril for specified indications for Teva's generic version of ramipril was a significant unapproved indication, and that section 8 of the NOC Regulations does not contemplate recovery of damages with respect to loss sales of a generic product for such an unapproved indication.

The Court of Appeal dismissed Sanofi's appeal. While the Court of Appeal noted that the Federal Court Rules provide for a liberal approach to amendments, it ultimately decided that the timing of Sanofi's motion (3 months prior to trial) was "tardy" and that the amendments "almost certainly ensured that the trial would be considerably delayed". The Court of Appeal found these reasons sufficient to dispose of the appeal.

Court of Appeal Upholds Decision Awarding Section 8 Compensation Where Sales Related to "Unauthorized Indications"

Sanofi-Aventis Canada Inc. v. Teva Canada Limited, 2014 FCA 69
Drug: ramipril

This was an appeal by Sanofi-Aventis Canada Inc. and Sanofi-Aventis Deutschland GmbH (collectively "Sanofi") from a judgment of the Federal Court which dismissed Sanofi's submissions with respect to validity, applicability or operability of section 8 of the NOC Regulations. Sanofi appealed on the question of whether section 8 of the NOC Regulations can validly allow compensation to be paid to a generic drug manufacturer for lost sales attributable to so-called "unapproved" indications, such as "Heart Outcomes Prevention Evaluation" ("HOPE") indications in this case.

The initial Canadian patent for ramipril expired in 2002. It was found that, in an effort to extend patent protection for ramipril, Sanofi later obtained two further patents which concerned the use of ramipril for HOPE indications.

The trial judge held that, in the hypothetical market constructed to determine the compensation owed under section 8, both Teva and Apotex would not have included in their product monographs for their respective versions of ramipril reference to anything other than hypertension, but that nevertheless, some sales of those generic drugs would have related to HOPE indications. The trial judge refused to discard these sales from the calculation of Teva's and Apotex's section 8 compensation.

The Court of Appeal noted that, in the real market, Sanofi had taken no measure to enforce its patents covering the HOPE indications. As a result, the Court of Appeal found that there was no reason to find that the situation would be different in the hypothetical markets involving Teva and Apotex. Sanofi argued, however, that as a matter of jurisdiction, section 8 of the NOC Regulations cannot allow compensation to be paid to generic drug manufacturers with respect to sales for unauthorized indications such as the HOPE indications.

The Court of Appeal agreed with the trial judge and held that "compensation under section 8 of the NOC Regulations for sales related to unauthorized indications may be precluded if the facts so justify." However, in this case, the Court of Appeal found no such facts to support Sanofi's position. The Court of Appeal referred to the decision in Merck Frosst Canada Ltd. v. Apotex Inc., 2009 FCA 187 where the validity of the NOC Regulations was confirmed. Sanofi's appeal was dismissed with costs.


Class Action Settlement Agreement Found to be 'Unfair', 'Unreasonable' and 'Not in the Best Interests of the Class Members'
Waldman v. Thomson Reuters Canada Limited, 2014 ONSC 1288

In this certified class action, the Plaintiff, Lorne Waldman ("Waldman") brought a motion for approval of a settlement of a copyright infringement class action against Thomson Reuters Canada Limited ("Thomson"). The action was commenced because Thomson, through its legal publishing branch known as Carswell, makes available court documents authored by the lawyers who constitute the Class Members. Waldman and Thomson signed a Settlement Agreement which included the following terms: (i) a $350,000 cy-près trust fund to support public interest litigation; (ii) that Thomson would make changes to the copyright notices on its "Litigator" service and to the terms of its contract with subscribers; and (iii) the Class Members receive no monetary award, but they are required to sign a release and grant a non-exclusive license of their copyrights to Thomson. Class Counsel also moved for approval of its contingent fee agreement and for approval of counsel fees. The Settlement Agreement was supported by many different parties, counsel and associations, but was opposed by seven (7) Class Members.

The Court ultimately concluded that the proposed Settlement was "not fair, reasonable, and in the best interests of the Class Members." The motions for settlement and fee approval were therefore dismissed.

The Court conducted a detailed review of the criteria for settlement approval and applied those criteria to the case at bar. The Court found that while the Settlement Agreement was fair and reasonable for Waldman, Class Counsel and Thomson, it was not fair, reasonable and in the best interests of the Class Members as a whole. The Court agreed with the general sentiment of the objectors to the Agreement that (i) it is more beneficial to Class Counsel than it is to the Class Members; and (ii) in its practical effect, the Settlement expropriates the Class Members' property rights in exchange for a charitable donation from Thomson. The Court noted that "the purpose of class actions is not to fund worthy projects [i.e. through the creation of the cy-près trust fund] but to provide procedural and substantive access to justice to Class Members." In this case, the Court felt that there was no access to substantive justice for the claims of the Class Members and no meaningful behaviour modification for Thomson. The Court also held that the "optics of this class action are bad" primarily because Class Counsel was to receive a fee of $825,000 and the Class Members a "notional benefit" of a $350,000 cy-près trust fund. For these reasons, the Court did not approve the Settlement Agreement and, as a result, the question of Class Counsel fee approval was rendered moot.

Edited by Chantal Saunders and Beverley Moore , Adrian Howard and Ryan Steeves

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