Canada: Curtain Lifted On Proposed Amended PM(NOC) Regulations

The curtain has been lifted to reveal the proposed amendments to the Patented Medicines (Notice of Compliance) Regulations (the "Amended Regulations") that have been a long-awaited result of CETA. The amendments are open to public consultation for 15 days following publication in the Canada Gazette — Part I, meaning that comments must be submitted by Sunday, July 30, 2017

The final Amended Regulations are proposed to take effect on the day section 59 of CETA comes into force (provisionally set to be September 21, 2017).

The Amended Regulations overhaul the existing PM(NOC) Regulations (the "Current Regulations"). Changes include the replacement of prohibition applications with actions that result in final determinations of validity and infringement, a right of appeal for all parties, and the elimination of "dual" litigation. Further changes that were less expected include the potential expansion of the relevant period for section 8 damages and the imposition of onerous documentary production on innovators upon commencing proceedings. This article reviews the proposed Amended Regulations, focusing on the differences between the Amended Regulations and the existing patent litigation frameworks, namely ordinary actions for impeachment/infringement and the Current Regulations.


  • The relief sought has been modified. Proceedings will now make determinations of infringement and validity rather than determining only whether to issue an order of prohibition;
  • Documentary production is required upon service of the Statement of Claim (45 days after receipt of the NOA);
  • Proceedings will be via action, with viva voce witnesses and discovery rights;
  • Proceedings must be completed within 24 months and will face compressed timelines;
  • All parties will have a right of appeal;
  • All claims of listed patents will be enforceable;
  • The scope of section 8 damages may be expanded; and
  • Innovators who choose not to institute proceedings in response to a NOA will be precluded from starting proceedings on the same patent against the same generic in the future.

Relief Sought by the Innovator and Impact on the Proceeding

The form of relief sought by the innovator will change. Instead of seeking an order prohibiting the Minister from issuing an NOC to the generic as under the Current Regulations, the primary relief sought by innovators will be a declaration of infringement against the generic. If the innovator succeeds, the Minister of Health will then be prohibited from issuing an NOC to the generic until the expiry of the patent(s) at issue. Further, generics will now have the power to counterclaim for a declaration of invalidity pursuant to section 60(1) of the Patent Act. Therefore, proceedings will now focus on patent infringement and (often) validity instead of whether the Minister is to issue an NOC.

There are important and practical effects of this change. First, innovators will have a right of appeal as appeals will no longer be considered moot. Under the Current Regulations, if the innovator is unsuccessful at first instance it is not granted the requested order of prohibition and the Minister is required to issue an NOC to the generic, assuming the submission is approvable. Once the NOC issues appeals are held to be moot, depriving innovators of appeal rights. Under the Amended Regulations, the issue under appeal will be whether the patent is valid and/or infringed. Whether an NOC has issued to the generic is immaterial to that analysis, and thus innovator appeals will no longer be moot.

In addition to making declarations with respect to validity and infringement, the Court will have the power to order "any other remedy that is available under the Patent Act, or at law or in equity, in respect of infringement of a patent or a certificate of supplementary protection." Thus, injunctions, destruction, delivery up, etc. will be available remedies to innovators.

In order to preserve these remedies, it will be important for innovators to include claims for damages, accounting of profits, and injunctions in their Statement of Claim. Unlike under the Current Regulations, the proceeding will not be moot if the generic is granted an NOC. For example, if the innovator is unsuccessful at trial, the generic's NOC would issue but the innovator may still appeal. Likewise, an NOC may issue before a trial decision is rendered if the 24-month period is not adhered to, or if the innovator chooses to renounce the 24-month stay (discussed later). The generic may launch at risk in such situations, and thus it will be important for the innovator to ensure access to an injunction and financial remedies should it succeed after the generic's NOC issues.

Commencement of Proceedings

Generics will maintain control of when proceedings are started as they will still be required to serve a Notice of Allegation ("NOA") on or after the date they file their drug submission if they choose to challenge any listed patent. Proceedings will be formally instituted by the innovator via Statement of Claim, 45 days or less from the date of service of the NOA. The generic will then serve its defence and potential Counterclaim as in the ordinary course for an action. The generic will also have the ability to challenge any certificate of supplemental protection ("CSP") that issued pursuant to the soon-to-be in place patent term extension provisions of the Patent Act.

The Amended Regulations do not, however, affect the existing Data Protection Regulations. Therefore, a generic will still be precluded from filing a drug submission during the 6-year no-filing period and the Minister will be prohibited from issuing an NOC to a generic during the 8-year data protection term, where date protection applies.

The Notice of Allegation

The NOA will continues to be a document of importance in proceedings under the Amended Regulations, though perhaps not to the extent that it is under the Current Regulations. NOAs will still be required to set out the legal and factual basis for any allegation made. However, it will be the subsequent pleadings, and not the NOA, that frame the scope of the litigation.

Along with its NOA, the generic will be required to serve those portions of its submission that could be relevant to determining whether the patent would be infringed. This requirement is irrespective of whether the generic alleges non-infringement in the NOA. The generic will be able to impose reasonable terms of confidentiality on these documents, which will be enforceable by the Federal Court and subject to challenge by way of motion by the innovator. Also, should the production be insufficient, innovators will be able to bring a motion to seek expanded production. Further, in a change from the Current Regulations, the production of samples of the generic's product to allow for testing will now be available in appropriate situations as the usual discovery procedures will now apply to these actions.

NOAs containing invalidity allegations will still be required to contain detailed statements of the legal and factual basis for these allegations. Copies of all documents relied upon will need to be produced to the innovator when the NOA is served. Generics will also be able to request information about the inventors (their contact information and whether they are currently employed by the patentee/first person) alongside their NOA, and will also be permitted to request copies of documents such as lab notebooks or research reports that are relevant to the determination of whether a particular "property, advantage, or use" asserted by the second person to be part of the invention was established as of the filing date of the patent application.

Documentary Production with the Statement of Claim

Innovators will be required to produce the above-mentioned documents and the inventor information along with their Statement of Claim, or state when production will occur or why they will not be producing the documents. Innovators may be wise to consider prophylactic document collection with respect to listed patents that may be subject to challenge so as to prepare themselves for this tight timeline. These measures would be particularly prudent because generics will have had months or years to prepare their case before serving an NOA, which they can do at the time of their choosing.

The Amended Regulations' contemplation of relevance of such documents as of the filing date and with reference to "whether a particular property, advantage, or use asserted by the second person to be part of the invention" calls to mind Canada's troubled law of utility previous to the Supreme Court's recent decision in Astrazeneca v Apotex.1 The language of this provision should be reconsidered to contemplate relevance as per a different yardstick. Relevance to the facts pled by the innovator in its Statement of Claim and to reasonable allegations of invalidity made in the NOA may be more appropriate measures.

Similar to the provisions for the generics with respect to their regulatory documents, innovators will be able to impose reasonable confidentiality terms for documents produced with the Statement of Claim. Such terms will also be enforceable by the Federal Court and subject to challenge by way of motion.

Prohibition on Subsequent Infringement Actions

A patentee that decides not to start proceedings will be prohibited from commencing future actions for infringement with respect to the same patent against the same generic unless the innovator did not have a "reasonable basis" for bringing the claim. Situations where a reasonable basis may be lacking include if the generic's NOA is incomplete or misleading, or if the generic changes its formulation.

Scope of Enforceable Patents/Claims

The operation of the patent register and the requirements for listing on the register will not change. As before, generics will only have to address listed patents. However, the scope of enforceable claims will be expanded under the Amended Regulations such that all claims in any listed patent will have to be addressed by the generic and will be assertable by a patentee. Thus, for example, in a patent with claims to a product and processes to make that product, the patentee will be able to enforce the process claims. It will remain wise for innovators, where possible, to include listable claims in patents.

Recognizing that in some situations a generic's activities may fall within the scope of the claims of patents that are not listed on the patent register, the Amended Regulations will allow innovators to bring quia timet actions for infringement. Such actions may be instituted where, upon receipt of a NOA, the innovator recognizes that a patent not listed (and thus not addressed in the NOA) may be infringed by the generic's activities. However, it will not be permissible to join such a proceeding to any action brought under the Amended Regulations, thus wielding the spectre of parallel litigation.

Similarly, the Amended Regulations contemplate making generics an "interested person" for the purpose bringing impeachment proceedings with respect to non-listed patents that nonetheless may be infringed by the making, constructing, using or selling of the generic's proposed product.

Conduct of Proceedings

Many aspects of proceedings under the Amended Regulations will be consistent with ordinary actions for infringement/impeachment. For instance, the issues will be framed by the pleadings, there will be oral discovery, full trials with viva voce witnesses will occur, and the burden will be on the party challenging the patent to show invalidity. Some important aspects of these proceedings are highlighted below.

24-Month Timeline and the Duty of the Parties

The schedule for proceedings under the Amended Regulations will remain compressed, with final determinations on infringement/impeachment being targeted within 24 months of the bringing of a claim. Like under the Current Regulations, the Minister of Health will be prohibited from issuing an NOC to the generic within this 24-month period.

The Court will have the power to vary this period, for instance if a party does not cooperate in expediting the action. Further, the innovator will have the option of renouncing the 24-month stay when they bring their claim. This option would place the onus on the generic to launch at risk, and would remove any potential for section 8 liability on the part of the innovator.

Interlocutory Motions

Proceedings under the Amended Regulations will also differ from ordinary actions in that appeals from interlocutory orders will be made directly to the Federal Court of Appeal ("FCA"). However, the FCA will have to grant leave to allow the appeal to be heard.

The Amended Regulations will still allow generics to bring a motion for a declaration that a patent is not eligible for inclusion on the patent register. However, such a motion will not have the same effect as under the Current Regulations. Even if the generic succeeds on the motion, the Minister will not de-list the patent at issue nor issue an NOC until the conclusion of any appeal to the FCA. In addition, since the proceeding will be about patent infringement and validity, and not necessarily whether the Minister should issue an NOC, the proceeding will continue irrespective of the outcome of the motion.

The Minister will be granted a right to intervene in any motion, and subsequent appeal, to declare that a patent is not eligible for inclusion on the patent register.

Joinder and Parallel Litigation

Severe restrictions are proposed on the joinder of cases commenced under the Amended Regulations. In particular, it will not be permissible to join any action to an already commenced litigation during the period of the statutory stay unless the joined litigation: (i) is a different action brought in response to a NOA that relates to the same drug submission (i.e. the same generic), or (ii) is an action brought in relation to a CSP that is added to the patent register after the filing of the submission at issue in the action and the patent covered by the CSP is the same patent at issue in the already commenced action.

Thus, should NOAs be sent by multiple generics, it appears that the innovator will be forced to institute multiple actions, and will be forced to litigate the same action in parallel. Further, as mentioned, should litigation be commenced on a non-listed patent (e.g. an implement or a process patent), such litigation will have to proceed in parallel to any action under the Amended Regulations even if the parties, product, and counsel are all the same in both proceedings.

These scenarios are unwieldy and raise the potential for serious issues. For example, should multiple different generics send NOAs to an innovator within a short timeframe, separate actions will have to be litigated on the same patent in the same tight 24-month timeframe. Such a situation will prejudice innovators, at the least because the logistical issues would be difficult to navigate. While some procedural issues may be resolved across proceedings through consents and the discretionary nature of case management, formal joinder will not be possible.

Burden of Proof

The burden of proof will now be consistent with a standard patent impeachment proceeding (i.e., the party challenging the patent will bear the burden). This is a change from the Current Regulations, which the jurisprudence has held to impose a modified burden from that statutorily imposed by section 43(2) of the Patent Act (for innovators to prove their own patent's validity once the issue is put in play).

Impact on Section 8 Claims

Section 8 of the Current Regulations, which imposes liability on the innovator for losses suffered by the generic as a result of the statutory stay, will likewise be modified. The period of time for which an innovator may be liable for section 8 damages may be expanded. While the start date for section 8 liability will remain the later of the date of service of the NOA and the date when the NOC would have issued in the absence of the Regulations, the Amended Regulations do away with the statutorily imposed end date that currently exists.  Thus, generics may be able to claim for losses suffered beyond the date of any dismissal or discontinuance.

Also, the Amended Regulations will explicitly consider all plaintiffs in the infringement action to be jointly and severally liable for losses suffered by the generic, as opposed to only the "first person" under the Current Regulations.

Section 8(1) will also be amended to specifically contemplate courts other than the Federal Court as the appropriate forum for section 8 proceedings. In particular, the Amended Regulations state that generics may apply to the Federal Court or "another superior court of competent jurisdiction" to seek compensation for losses suffered.


1 2017 SCC 36

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.

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