Canada: Pharmacapsules @ Gowlings: September 30, 2009

Last Updated: October 12 2009

Edited by Jennifer Wilkie and Chantal Saunders


  • Guidelines Published to Govern Ontario Emerging Technologies Fund
  • Law Professor Criticizes Recent Court Rulings on Patent Disclosure
  • Recent Cases

Guidelines Published to Govern Ontario Emerging Technologies Fund
By: Michael Herman

Several months ago, the Ontario government announced that it was forming the Ontario Emerging Technologies Fund. The Fund will co-invest with other investors in companies involved in the clean technology, life sciences and digital media and ICT sectors. The Fund is a $250 million fund over 5 years, limited to $50 million per year.

The Ontario government has now announced that Covington Capital Corporation and Northwater Capital Management Inc. have been appointed as managers to evaluate co-investment opportunities for this new Fund.

In addition, the government has published the guidelines (the "Guidelines") that apply to and govern investments by the Fund.

One of the interesting aspects of the Fund is that it will co-invest in portfolio companies with Qualified Investors. In addition to venture capital and private equity funds, Qualified Investors can include angel investors/groups and corporations not principally engaged in making venture capital or private equity investments. For example, if a large pharmaceutical company wants to invest in an emerging life sciences company, it can become a Qualified Investor and apply to have the Fund co-invest with it. Neither the Qualified Investor nor the portfolio company need be a Canadian company, although the portfolio company must be a private company and have an "Ontario Footprint" which is described in detail in the Guidelines.

More detailed information and a copy of the Guidelines can be accessed at the following site:

Law Professor Criticizes Recent Court Rulings on Patent Disclosure
By: Beverley Moore

In a recent issue of the Lawyers Weekly, Professor Jeremy de Beer of the University of Ottawa criticizes the uncertainty in Canadian patent law and calls on the Supreme Court to clarify disclosure obligations.

The article discusses how in recent jurisprudence judges are trying to apply vague theories to practical disputes. A recent Federal Court of Appeal decision casts doubt on the status of many existing and pending patents. The Court is now suggesting that patents should include specific data proving that an invention is special. Furthermore, it has been stated that adjectives and adverbs are not enough to define that specialty. These increasing disclosure obligations in Canadian patents is argued to be shifting Canadian patent law out of alignment with other countries. Specifically, the article argues that this change is being effected without recognizing the practicalities of patent filings.

The article discusses the international Patent Cooperation Treaty, which is meant to establish uniform disclosure requirements across jurisdictions and argues that this streamlined process is being undermined by the inconsistent documentation standards and heightened disclosure obligation in Canadian patent law.

In conclusion, the article calls on the Supreme Court to clarify the disclosure obligations in Canadian patent law so as to resolve uncertainties. The only other alternative would be to test each and every suspect patent through a lawsuit, which would increase in litigation and be bad news for industry.

For more information, please see:

Recent Cases
By: Beverley Moore

Aventis v. Pharmascience; motion to set aside a previous order of prohibition; 2009 FC 915; ramipril; September 15, 2009

Pharmascience had previously sent an Notice of Allegation (NOA) with respect to a patent to Aventis, resulting in a full hearing and appeal, concluding with an order of prohibition. Subsequently, certain claims of the same patent were found invalid after a patent infringement action. The Minister, however, refused to grant a Notice of Compliance (NOC) to Pharmascience as the whole patent had not been found invalid in the action.

Pharmascience sought to set aside the prohibition order and have the proceeding dismissed. The underlying NOC proceeding had addressed only an allegation of double patenting and found double patenting. This finding was not upset by the subsequent infringement and validity action. As a result, the motions judge found it would be improper for the Court to dismiss the NOC proceeding but should instead set aside the Prohibition Order to allow the Minister to issue a NOC to Pharmascience. Pharmascience has appealed.

The full test of the decision can be found at:

Merck Frosst v. Novopharm; appeal of a motion for reply evidence; 2009 FC 914; ezetimibe; September 15, 2009

The Prothonotary hasd dismissed Novopharm's motion for leave to file reply evidence. The motions judge partially overturned that order.

Novopharm had sent a NOA that was very broad and alleged some 223 pieces of prior art. Merck Frosst started a proceeding by way of an Application. The order of evidence was reversed, resulting in Novopharm filing its evidence relating to validity first.

The Court held that its job is to determine, on an objective analysis, whether the proposed reply evidence could reasonably have been anticipated as relevant. The Court then found that the generic company does not need to speculate as to every piece of evidence that an Applicant may choose to put forward. Where the Applicant is not merely challenging the generic company's expert but rather is raising new matters with different science, authorities and assumptions, then reply evidence from the generic may be appropriate.

The Court refused to allow reply evidence to be filed where the Applicant's witnesses were merely considering other parts of documents that Novopharm's witnesses had commented upon. However, when Merck Frosst's witnesses were raising new issues, reply evidence was allowed.

The full text of the decision can be found at:

AstraZeneca v. Novopharm; interlocutory motion in a 55.2 proceeding; 2009 FC 902; rosuvastatin; September 11, 2009

The Court granted a motion brought by Novopharm for reply evidence. Again, evidence was reversed in this proceeding. Novopharm argued that it was forced to file its evidence in chief essentially in a vacuum without any knowledge of AstraZeneca's position as the Notice of Application was bereft of any relevant facts that would permit Novopharm to know the case it had to meet. AstraZeneca argued that this was an attempt by Novopharm to split its case and that much of the evidence was available on an earlier date.

The Court held that the Notice of Application contained bald denials and did not inform Novopharm of the evidence that might ultimately by led to support these denials. The Court also noted that in this case, the affidavit filed by Novopharm in support of the motion states that the proposed reply evidence is focused on matters which were not anticipated and provides specific details of the evidence and why it was not anticipated. This type of evidence is necessary to meet the required tests for reply evidence. In the result, the majority of the reply evidence sought to be filed by Novopharm was permitted.

The full text of the decision can be found at:

Janssen-Ortho v. Apotex; motion for a stay; 2009 FCA 250; tramadol and acetaminophen; August 20, 2009

In the Courts below, Apotex brought a motion to dismiss the application. This motion was granted by Prothonotary Aalto and upheld by Justice Hughes. Janssen has appealed the Hughes Order to the Federal Court of Appeal. The within motion was to stay the Aalto Order pending the appeal. The Court dismissed the stay motion.

In the underlying proceeding, upon receipt of Apotex' NOA, Janssen filed a disclaimer. Janssen then commenced an application in Court. The main ground of that application was that the NOA was invalid as it did not address the disclaimed claims. In response to Apotex' motion, Prothonotary Aalto stated that Apotex was only obliged to address the claims of the patent as they read when the NOA was served. Thus, Janssen's prohibition application was an abuse of process.

The Court of Appeal found that generally the function of a stay is to stop a party from taking a step that an Order requires to be taken. An Order that does nothing but dismiss an unmeritorious claim does not require anybody to do anything. The Minister is compelled to act because of the Food and Drug Regulations, not because of the Aalto Order. Thus, the motion must fail because there is nothing to stay.

Furthermore, Janssen was seeking a remedy that is not contemplated by the statutory scheme of the NOC Regulations. Finally, the Court of Appeal found that there was no irreparable harm. The Court of Appeal found that the negative effects on marketing and promotional programs, hindrances to the company's plan to become a leader in the field of pain management and any other remedies for infringement could all be quantified in monetary terms. The Court of Appeal also found that the loss of the statutory stay under the NOC Regulations cannot constitute irreparable harm. Finally, a clear undertaking was not provided. Thus, Janssen's motion was dismissed on all grounds.

The full text of the decision can be found at:

Multi Formulations v. Allmax Nutrition; appeal of a motion to strike; 2009 FC 896; September 11, 2009

In the Court below, the Prothonotary refused to strike portions of the pleading relating to economic torts of inducing breach of contract and interference with economic relations and claims against corporate officers. The motions judge upheld the decision of the Prothonotary regarding the economic tort allegations that serve as a foundation for a claim brought under sections 45 and 36 of the Competition Act. To the extent that the tortious conduct could help establish a statutory cause of action, it is necessarily incidental to the Court's jurisdiction and may represent the "something more" required to establish a breach of section 45 of the Competition Act. Furthermore, these types of allegations are relevant to arguments that the parties should not be entitled to equitable relief.

However, the counterclaim went further than is permitted as it did not restrict the tort allegations to the statutory claim for relief and actually sought damages for inducing breach of contract and tortious interference with economic relations. These pleadings fall well outside the jurisdiction of the Court and were struck.

In addition, the Court refused to strike paragraphs from the claim regarding personal liability of the directors as it found that they were sufficiently pleaded. Even if the allegations were not sufficiently pleaded, this would be an appropriate situation to allow an amendment to the counterclaim rather than striking the counterclaim.

The full text of the decision can be found at:

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