Canada: AstraZeneca’s LOSEC Patent Valid And Infringed By Apotex

Last Updated: March 18 2015
Article by Mark Biernacki

On March 16, 2015, following a 40-day trial in 2014, Justice Barnes of the Federal Court issued a 175-page decision finding certain claims of Canadian Patent No 1,292,693 ("'693 Patent") valid and infringed by Apotex's manufacture, promotion and sale of Apo-Omeprazole capsules in Canada and elsewhere: AstraZeneca Canada Inc et al v Apotex Inc, 2015 FC 322. A separate reference will determine the quantum of Apotex's liability. This reference will be heard together with the reference to quantify AstraZeneca's liability, if any, following the finding of s. 8 liability in Apotex Inc v AstraZeneca Canada Inc, 2012 FC 559, aff'd 2013 FCA 77. One of the issues for determination will be the impact of the infringement finding on any s. 8 liability.

AstraZeneca was represented by a trial team from Smart & Biggar, comprised of Gunars Gaikis, Nancy Pei, Mark Biernacki, Lynn Ing, Junyi Chen, Urszula Wojtyra and Cameron Weir.

The decision is noteworthy for several reasons, including its unique and lengthy background, a U.S. connection and the variety of issues raised.

The '693 Patent pertains to a formulation for omeprazole (a proton pump inhibitor used for gastrointestinal disorders) having "an inert subcoating", which has been successfully marketed by AstraZeneca under the brand name LOSEC. 

The '693 Patent was first litigated by AstraZeneca and Apotex in 1993, when it became the subject of one of the earliest proceedings under the Patented Medicines (Notice of Compliance) Regulations (Court File No. T-1446-93). That case was concluded on the basis of a consent dismissal. However, the formulation disclosed by Apotex at that time turned out later to not be the one that was the subject of its regulatory submission. This led AstraZeneca to raise deceit as an issue in the later infringement action. Apotex's reliance on a different formulation also led to a judicial review application by AstraZeneca, dismissed in AstraZeneca Canada Inc v Apotex Inc, 2004 FC 1278; aff'd 2005 FCA 58.

Apotex did not separately apply a subcoating to its omeprazole pellets, but rather its subcoating was formed in situ. Thus, while there was no serious dispute that Apotex's omeprazole pellets contained a subcoating, a key issue was whether Apo-Omeprazole contained an inert subcoating as claimed in the '693 Patent.

Apotex argued that, on a purposive of construction, an "inert subcoating" covered only a subcoating that is physically applied to the pellet core and is wholly free of holes, gaps or structural anomalies. Apotex further argued that a person of skill would interpret "inert" to be a compound that is wholly unreactive with any of the other constituents of the formulation, whether or not there are any functional implications. In contrast, AstraZeneca asserted that the claimed subcoating is not limited to any particular process and need not be perfect. In rejecting Apotex's arguments, Justice Barnes cautioned against the danger of relying too heavily on the disclosure as an interpretive guide for claim language. Notably the claims at issue were not limited to any particular method of manufacture and Justice Barnes found the patentee to be entitled to protect the product regardless of the means of its creation. He also did not agree with Apotex that a person of skill would expect the subcoating to be structurally perfect and completely unreactive within its environment.

Turning to validity, Justice Barnes rejected Apotex's anticipation argument on the basis that the asserted reference (EP 495) did not disclose the use of the subcoating to overcome the stability/gastric acid resistance problem addressed by the '693 Patent. Further, in rejecting Apotex's obviousness arguments, Justice Barnes found that neither the problem faced by AstraZeneca nor its solution was as simple as Apotex suggested. He also cautioned against employing a hindsight analysis, particularly in circumstances where the expert who carries out an obviousness analysis relies on prior art references selected by counsel. He also noted that the recognition that a problem exists can be just as relevant to inventiveness as its solution. Finally, in rejecting Apotex's assertions of overbreadth, inutility and ambiguity, Justice Barnes applied the principle set forth by the Supreme Court of Canada in Burton Parsons Chemicals Inc v Hewlett-Packard (Canada) Ltd, [1976] 1 SCR 555that a patent is not overbroad because it leaves it up to the person of skill to avoid known unsuitable choices.

AstraZeneca and Apotex had already litigated the corresponding U.S. patent in respect of the same Apo-Omeprazole made by Apotex in Canada. The U.S. Court had found the U.S. patent valid and infringed. AstraZeneca relied in the Canadian action on its testing of Apo-Omeprazole in the U.S. litigation and also alleged that Apotex was estopped from disputing certain of the U.S. Court's factual findings on the characteristics of Apo-Omeprazole. AstraZeneca relied on testing of additional batches for the Canadian action.

Justice Barnes found Apotex's Apo-Omeprazole infringed the asserted claims. In so finding, Justice Barnes largely rejected Apotex's criticisms of AstraZeneca's testing expert, Dr. Martyn Davies. He also criticized the limited extent of Apotex's testing and the fact that it was not conducted by Apotex's own experts.  Further, Apotex was found to have induced infringement by its customers and by end-users throughout Canada, by promoting and selling its Apo-Omeprazole product across Canada and by directly comparing its product to LOSEC for the same indications. These findings were relevant to the determination that the applicable limitation period in this case was six years, regardless of the place where the infringing activity took place. 

Justice Barnes declined however to find foreign issue estoppel. While he noted it had "some theoretical appeal", he declined to apply the principle, inter alia, for practical considerations (it would only apply to a handful of findings and it was not necessary to fill an evidentiary gap).

As for remedies, Justice Barnes permitted AstraZeneca to elect an accounting of profits. Further, although he did not grant punitive damages for Apotex having misrepresented its Apo-Omeprazole formulation in the course of the earlier NOC proceedings, he found that the failure in not correcting the mistake at the first available opportunity may bear on the issue of costs, which has been reserved pending further submissions. 

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.

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