Canada: A Paradigm Shift in Patent Law

Last Updated: June 19 2006
Article by William H. Richardson

Most Read Contributor in Canada, September 2018

This article first appeared in the April issue of Managing Intellectual Property, Life Science Focus 2006.

Recent disputes between research-based pharma companies and generics have addressed the viability of use patents in PMNOC proceedings. Bill Richardson of McCarthy Tétrault LLP examines the cases and asks whether the Regulations need to be changed.

A paradigm shift in patent law?

Patent law is based on a compact between the patentee and the public in which the patentee receives a limited monopoly in return for providing a new, useful invention whose content is open to the public. A patent, however, is not necessarily a new thing. It does not have to be a new mechanical device or a chemical composition. Instead, a patent can be a new beneficial use or indication for a previously known mechanism, object or compound (see, for example, Shell Oil Co v Commissioner of Patents (1982), 67 CPR (2d) 1 (SCC)). In the pharmaceutical industry, the public gain from "new use patents" is well-documented as they have been a main driving force for pharmaceutical innovators to research new treatments, cures and preventions based on pre-existing drugs. For instance, many of the medications on the market for arthritis were originally designed to treat other illnesses. To cite a recent example, in March 2006, the US Food and Drug Administration approved Rituxan, a drug used to treat non-Hodgkin’s lymphoma since 1998, to treat rheumatoid arthritis in patients who had not responded to conventional therapies. In many cases, these new uses for old chemical compounds become the gold standard for previously untreatable patients.

Use patents: a balanced approach to infringing use

A pharmaceutical innovator can prevent a generic drug from being marketed if the innovator can prove that members of the public would use the drug for the new use that is covered by a valid patent. In the leading case in this area, Procter & Gamble Pharmaceuticals Canada Inc v Canada, [2003] 1 FC 402 (FCA), the generic manufacturer (Genpharm) alleged that its product would not infringe P & G's patent for a new way of using an existing drug (etidronate) for the treatment of osteoporosis. Although Genpharm assured the court that its generic etidronate would not be used for this new indication, P & G put forward evidence that, inter alia:

    1. some pharmacists would interchange the etidronate drugs for all uses;
    2. if the etidronate drugs were interchanged in a manner that constituted infringing use, Genpharm would not take any positive action to stop this infringing use;
    3. Genpharm's product monograph did not include any precaution against the infringing use and, in fact, included bioequivalent studies with the intermittent cycle use product (covered by the use patent).

Based on this evidence, the Court found that Genpharm's intentions and actions would inevitably lead to infringing use by third parties. In this regard, the Federal Court of Appeal held that a generic manufacturer infringed an innovator's use patent if there was evidence that the innovator's patent would be infringed by third parties, such as patients or pharmacists, even if there was no express inducement or procurement by the generic producer. In the words of Justice Rothstein (as he then was), if a generic markets a product and there will be unlawful use of that product by members of the public,

that is the infringement the Regulations are intended to preclude. There is no suggestion that the generic producer must have induced or procured patients or others to infringe the patent. For this reason, I am satisfied that in the case of use claims, it is not necessary for a pantentee to demonstrate that a generic producer's actions will induce or procure patent infringement by patients or others.

Soon after the Procter and Gamble decision was rendered, Justice Rothstein and the Federal Court of Appeal once again had an opportunity to consider the disconnect between a generic manufacturer's assurances of non-infringing use in the NOC proceedings and the reality of infringing use in the marketplace after the NOC was issued. In Genpharm v AB Hassle, (2004) 38 CPR (4th) 17 (FCA), the Court had to consider whether Genpharm's omeprazole drug for (ostensibly) treating stomach acid secretion would, in fact, infringe a use patent for omeprazole in which it was used to treat stomach bacteria. As in the earlier etidronate proceeding, Genpharm assured the court that it would not be marketing its omeprazole to treat stomach bacteria.

In considering the veracity of this submission, Rothstein J. focused on the fact that, in the original Product Monograph filed in the NOC Proceeding, Genpharm only referred to treating stomach acid. However, after all the evidence had been filed in the NOC Proceeding, Genpharm amended its Product Monograph to include studies relating to stomach bacteria infections. When asked to explain this ex post amendment, Genpharm's response was circumscribed: it stipulated that it would label and market its omeprazole simply for treating acid indigestion and that it would not induce any infringement. Not surprisingly, the Court of Appeal was not satisfied with this response and held that – since the facts indicated that Genpharm's omeprazole drug would be used for treating stomach bacteria by third parties – Genpharm was prohibited from selling or marketing the drug until the term of the use patent had expired.

Proof of infringing use: an innovator's burden

The courts, however, have been careful to emphasize that there is a positive burden on the innovator to demonstrate that, if the generic drug entered the marketplace, third parties would in fact infringe the innovator's use patent. Mere speculation is not sufficient. Instead, as held in AB Hassle v Canada (Minister of National Health and Welfare), (2002) 22 CPR (4th) 1 (FCA), the innovator has to submit concrete facts that the marketing of a generic drug would infringe a use patent vis-à-vis the unlawful use by members of the public.

This balanced approach, in which the courts will only prohibit generics from entering the marketplace in circumstances where the innovator can prove that the use patent would be infringed by third parties, is critical to the viability of use patents. Otherwise, a generic manufacturer could simply make bald assertions in the NOC proceeding that its drug will only be promoted for non-patented uses and then, after the Notice of Compliance has been issued, simply turn a blind eye (or give a gentle nudge) to unauthorized uses by third parties. Indeed, the problem is exacerbated by the fact that provincial formularies often provide incentives for doctors and pharmacists to exchange generics for innovator drugs with little or no guidance concerning the appropriate legal uses (see, for example, Astrazeneca Canada Inc v Apotex Inc, [2006] MJ No 38 (Mn Ct A)). In this regard, a brief word on provincial formularies is warranted.

Provincial formularies

After Health Canada issues a Notice of Compliance, the drug then gets registered on provincial formularies. These formularies are governed by various provincial legislation and regulations that determine which drugs can be interchanged and the level of their maximum price. Under some provincial formularies, pharmacists are required to substitute the lowest-priced interchangeable drug in the formulary unless a doctor specifically writes a "no substitution" script. Further, at least in Ontario, the price of the drug sets the amount of reimbursement to the pharmacist if the drug is dispensed to selected categories of customers, such as senior citizens (see Apotex v Ontario (Minister of Health), (2002) 17 CPR (4th) 1 at para 2 (Ont Ct A)). In this context, bioequivalent drugs are frequently interchanged in an unfettered manner without any limitation on approved uses.

Accordingly, it is not surprising that — contrary to their assurances during the NOC proceedings — a number of generic drug manufacturers have attempted to have their drugs listed on drug formularies as completely interchangeable, even though their legal ability to sell the drug is circumscribed to specific non-patented uses.

The most notable example of this occurred in Apotex v Ontario (Minister of Health), (2002) 17 CPR (4th) 1 (Ont Ct A), in which Pfizer marketed sertraline for the treatment of depression, compulsive disorder and panic disorder. While Pfizer's patent for the treatment of depression expired, it still held use patents for compulsive disorder and panic disorder. In serving its Notice of Allegation, Apotex alleged that it would not make, construct, use, or sell sertraline for the valid patented uses. As a result, Pfizer did not file a Notice of Allegation, but allowed Apotex to enter the market solely to treat depression, and a Notice of Compliance was issued by Health Canada that strictly prohibited Apotex from selling sertraline for compulsive disorder and panic disorder (Apotex Inc v Ontario (Minister of Health) (2000) 10 CPR (4th) 166 at para 14 (Ont Sup Ct)).

Upon receiving the Notice of Compliance, Health Ontario listed Apotex's sertraline on the Ontario formulary as interchangeable strictly for the treatment of depression. Due to Apotex's limited ability to sell the drug legally, Health Ontario placed an asterisk on Apotex's sertraline listing on the formulary specifying that it was only for the treatment of depression. In response to this indication of limited use, the president of Apotex sent a letter to the pharmacists of Ontario in which he urged pharmacists to dispense Apotex's sertraline without regard to indications. Indeed, in sharp contrast with the assurances of limited use in its NOA, Sherman wrote that the Ontario Drug Benefit Formulary had taken the "unprecedented step" of stating that

interchangeability is for treatment of depression, thus suggesting non-interchangeability for other uses. ... This statement by the Ministry is not only unprecedented, but unlawful. ... Why has the Ministry done this? It appears that Pfizer has told the Ministry that use of generic products other than for depression would violate Pfizer's patents for such indications. It is irresponsible for the Ministry to submit to such pressure from Pfizer (Apotex v Ontario (Minister of Health), 10 CPR (4th) 166 at para 17 (Ont Sup Ct).

Soon thereafter, Apotex brought an application for judicial review to force the Ontario Formulary to remove the restriction on the interchangeable use of sertraline, despite the fact that it was only allowed to be sold for depression pursuant to Health Canada's NOC. Both the Divisional Court and the Ontario Court of Appeal rejected Apotex's arguments, holding that Apotex's sertraline was only legally sold to treat depression and that Apotex's attempt to sell sertraline for other disorders would be illegal and in breach of the Canada Food and Drugs Act . In short, the courts of Ontario held that it was well within the government's rights that the formulary for interchangeable drugs only lists those drugs that are legal to sell (Apotex v Ontario (Minister of Health), (2002) 17 CPR (4th) 1 at paras 13-14 (Ont Ct A)).

Changes to the PMNOC Regulations: unfairly tipping the scales?

On December 11 2004, the Canadian government published proposed changes, inter alia, to the Patented Medicines (Notice of Compliance) Regulations (NOC Regulations) under the Patent Act. One of the proposed amendments would allow a generic company a new ground in its Notice of Allegation that will potentially strike a blow to new use patents. Under proposed Section 5(1)(b)(v), a generic company can allege that it will not be seeking approval for a patented use. Essentially, this proposed amendment will allow a generic company to bypass new use patents simply by asserting that the generic will only be expressly marketing the drug for old uses. In the context of past wilful blindness by generics to infringing third party uses, coupled with the trend to make all bioequivalent drugs interchangeable on provincial formularies, innovator companies have reason to be concerned about possible abuses to the proposed amendment.

* * * * * * * * * * * * * *

William H. Richardson is a partner in the litigation department, co-chair of the intellectual property group, and industry group leader of the pharma and life sciences practices at McCarthy Tétrault. Richardson specializes in trial and appellate advocacy, as well as ADR, focused exclusively on intellectual property. He has been counsel on a number of the largest IP cases in Canada, and, consistent with the nature of intellectual property, is frequently consulted on multi-jurisdictional disputes.

Richardson represents clients from a broad range of industries including broadcasting, publishing, entertainment, consumer home and personal care products, foods, pharmaceuticals, biotechnology, petrochemical/energy, internet, clothing and footwear and automotive. He is on the Board of Directors of Street Kids International, a Canadian not-for-profit specializing in the education, support and survival of street youth around the world.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions