Federal Court Decisions

                                    

     T-1927-95

BETWEEN:

     PHARMACIA INC. and PHARMACIA SpA

     Applicants

     - and -

     BEN VENUE LABORATORIES, INC. and

     THE MINISTER OF NATIONAL HEALTH AND WELFARE

     Respondents

     REASONS FOR ORDER

JEROME A.C.J.:

     This is an application pursuant to section 6 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, whereby the applicant, Pharmacia Inc. seeks to prohibit the Minister of National Health and Welfare from issuing a Notice of Compliance ("NOC") to Ben Venue Laboratories, Inc. with respect to the medicine doxorubicin hydrochloride. This matter first came on for hearing before me on June 4, 1996, at Toronto, Ontario. Subsequently, on September 26, 1996, I convened a meeting by way of conference call ordering that the parties file written submissions. Thereafter, on October 23, 1997, the matter again came on for hearing. At the conclusion of that hearing, I indicated that the submissions would be considered and written reasons given.

BACKGROUND

     The applicant, Pharmacia SpA, is the owner of Canadian patent 1,291,037 which includes a claim for the medicine doxorubicin hydrochloride itself and a claim for the use of the medicine. On July 31, 1995, the applicants received a Notice of Allegation from the respondent, Ben Venue Laboratories, Inc. which stated in part:

We hereby serve you with a Form V declaration and a Statement of the Legal and Factual Basis in support of the allegation made therein, as notice of allegation required pursuant to s. 5(3)(b) of the Patented Medicines (Notice of Compliance) Regulations (the "Regulations").

As required by paragraph 5(3)(a) of the Regulations, a detailed statement of the legal and factual basis upon which the Second Person, Ben Venue Laboratories, Inc. bases its opinion is set forth below.

The Second Person is licensed by the patentee to make, have made, use and sell in Canada doxorubicin hydrochloride which comes within the claims of Canadian Patent 1,291,037 and is therefore justified in making such allegation.

In essence, the respondent stated that it will not infringe the applicant's patent because it has a license from the applicant to use that which is covered by the patent. Following receipt of the Notice of Allegation, the applicants commenced the within proceeding for an order prohibiting the Minister from issuing a NOC to Ben Venue Laboratories, Inc. until after the expiration of the patent.

     The relevant portions of the Regulations governing the NOC process state:

5.(1)      Where a person files or, before the coming into force of these Regulations, has filed a submission for a notice of compliance in respect of a drug and wishes to compare that drug with, or make a reference to, a drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the patent list,

(a) state that the person accepts that the notice of compliance will not issue until the patent expires; or

(b) allege that

(i) the statement made by the first person pursuant to paragraph 4(2)(b) is false,

(ii) the patent has expired,

(iii) the patent is not valid, or

(iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed.

(2)      Where, after a second person files a submission for a notice of compliance, but before the notice of compliance is issued, a patent list is submitted or amended in respect of a patent pursuant to subsection 4(5), the second person shall amend the submission to include, in respect of that patent, the statement or allegation that is required by subsection (1).

(3)      Where a person makes an allegation pursuant to paragraph (1)(b) or subsection (2) the person shall

(a) provide a detailed statement of the legal and factual basis for the allegation; and

(b) serve a notice of the allegation on the first person and proof of such service on the Minister.

RIGHT OF ACTION

6.(1)      A first person may, within 45 days after being served with a notice of an allegation pursuant to paragraph 5(3)(b), apply to a court for an order prohibiting the Minister from issuing a notice of compliance until after the expiration of one or more of the patents that are the subject of an allegation.

(2)      The court shall make an order pursuant to subsection (1) in respect of a patent that is the subject of one or more allegations if it finds that none of those allegations is justified.

(3)      The first person shall, within the 45 days referred to in subsection (1), serve the Minister with proof that an application referred to in that subsection has been made.

(4)      Where the first person is not the owner of each patent that is the subject of an application referred to in subsection (1), the owner of each such patent shall be made a party to the application.

ANALYSIS

     In Eli Lilly & Co. et al. v. Nu-Pharm Inc. et al. (1996), 199 N.R. 185 (F.C.A.), the Federal Court of Appeal engaged in a thorough review of the jurisprudence interpreting the Patented Medicines (Notice of Compliance) Regulations and ruled on the appropriate burden of proof under section 6. Stone J.A. stated on behalf of the Court:

In my view, the law as so developed by this court clearly places the legal burden on the respondents [Eli Lilly] to show that allegations of fact contained in the Notice of Allegation are not true [Merck Frosst Canada Inc. et al. v. Canada (Minister of National Health and Welfare) et al. (1994), 169 N.R. 342 (F.C.A.)]. ... The detailed statement is to be served on the patentee and on the Minister who is faced with determining whether to issue a notice of compliance. Service upon the patentee alerts that party to the fact a submission had been presented to the Minister. The patentee must then decide whether to oppose the issuance of the notice of compliance pursuant to s. 6 of the Regulations. It is a critical decision. ... The purpose of the detailed statement is to ensure that the first person is fully cognizant of the grounds on which the second person relies on in making its allegation of noninfringement. (at 198-199)

If the patentee raises no objection by way of s. 6 proceedings, the Minister is free to dispose of the submission without anything further. If, on the other hand, s. 6 proceedings are launched, the patentee is required to do that which is imposed upon him by s. 6(2) of the Regulations. ...[The burden of proof] must be applied within the overall statutory framework and spirit of the Regulations. Thus while the respondents [Eli Lilly] must satisfy the legal burden of proof, they are to do so on the basis that the appellant [Nu-Pharm] has itself fulfilled the requirements of the Regulations including the submission of a "detailed statement". (at 199)

Thus, the applicant in a section 6 proceeding has the burden of proving or disproving the allegation, but the allegation must be supported by a statement of law and fact detailed enough to reveal the premises upon which the allegation is based.

     In Eli Lilly, it was argued that a common law presumption applied which shifted the burden of proof from the applicant to the respondent in the section 6 proceeding. The Court of Appeal addressed this argument as follows:

I respectfully agree, however, that before giving effect to the [common law] presumption the court would have to be satisfied that the required information was not in possession of the respondents and that it was peculiarly within the knowledge of the appellant. It would also be necessary for the respondents to show that the required information was not adduced in evidence by the appellant and that the respondents did not have available other means of accessing it. The appellant asserted in its letter of May 5, 1993 that its process would not infringe the patent but provided no evidence to that effect beyond the bald assertion. The respondents could not possibly know, without more, that this assertion was true. Evidence that the process would not infringe the patent obviously lay peculiarly within the knowledge of the appellant. (at 200-201)

    

     The Court of Appeal rendered its decision in Eli Lilly on June 27, 1996. At a teleconference held at Ottawa, Ontario on September 26, 1996 and at a hearing before me in Toronto, Ontario on October 23, 1996, I provided the parties an opportunity to make written and oral submissions regarding the impact of the Court of Appeal's ruling upon their case.

     The applicants submit that the Eli Lilly decision is directly relevant to the disposition of this matter in that it established: that generics are required to provide a detailed statement of the legal and factual basis for their allegations; that where there is a bald assertion of non-infringement, an evidential burden is imposed to adduce evidence to support that allegation; and, that where such evidence is not adduced, the court may apply a common law presumption and draw an adverse inference. The applicants state that an application of these principles to this case should lead the Court to conclude that their order should be granted as no detailed statement has been made and no evidence has been presented on the nature of the license or its terms.

     The respondent, Ben Venue Laboratories, Inc. submits that Eli Lilly made clear that the applicants bear the legal burden of proof to show that the allegations are not true and that the common law presumption only operates where the Court is satisfied that:

1.      the required information was not in the possession of the opposite party;

2.      the required information was peculiarly within the knowledge of the party; and

3.      the opposite party is without other available means of accessing the information.

The respondent submits that the common law presumption should not be applied to this case as the applicants have failed to satisfy all three of the conditions. The applicants have not denied the existence of the license and its terms are within their knowledge.

     I find the Eli Lilly decision to be instructive on the issues before me and I am persuaded by the respondent's submissions. In the case at bar, the applicants' knowledge of the license agreement is as good as the respondent's and there is nothing to prevent the applicants from meeting their burden of proof. Because the applicants have made no attempt to demonstrate that the allegation of non-infringement is not justified, they have failed to satisfy their legal burden. Nor is there any reason to apply a common law presumption in favour of the applicants as I find that the applicants fail to satisfy the prerequisites articulated in Eli Lilly.

     For these reasons, the application for an order prohibiting the Minister of National Health and Welfare from issuing a notice of compliance is dismissed with costs.

O T T A W A

January 27, 1997                      "James A. Jerome"

                             A.C.J.