Decision resurrects disputed patent principle

A group of pharmaceutical companies will be allowed to argue that a decision that invalidated one of their patents was decided based on “wrong legal principles,” a panel of Court of Appeal of Ontario judges said.

Decision resurrects disputed patent principle
Gunars Gaikis says a recent Ontario Court of Appeal decision could have an immediate impact on other cases involving pharmaceutical giant Apotex. Photo: Laura Pedersen

A group of pharmaceutical companies will be allowed to argue that a decision that invalidated one of their patents was decided based on “wrong legal principles,” a panel of Court of Appeal of Ontario judges said.

Gunars Gaikis, a partner at Smart & Biggar in Toronto, who represented a group of appellants associated with Sanofi-Aventis, says the decision could have an immediate impact favouring the defendants on other cases involving pharmaceutical giant Apotex, pointing to an Ontario Superior Court of Justice case, Apotex Inc. v. Eli Lilly and Company, and Apotex Inc. v Pfizer Ltd. in Quebec Superior Court in the district of Montreal.

The Nov. 8 decision, Apotex Inc. v. Schering Corporation, 2018 ONCA 890, quashes a February Superior Court of Justice decision by Justice Sean Dunphy.

This latest judgment, written by Justice Ian Nordheimer with Chief Justice George Strathy and Justice Colin McKinnon concurring, revolves around Ramipril, a drug used to treat high blood pressure and heart disease.

One long-disputed patent for Ramipril was held by Schering and licensed by Sanofi, Nordheimer wrote, which came into conflict with Apotex’s plan to market a generic drug similar to Ramipril.

The patent, patent 206, was invalidated under a legal convention called the promise doctrine,  which holds that if a patentee’s patent application promises a specific utility, only if that promise is fulfilled, can the invention have the requisite utility needed to be valid, according to the Supreme Court of Canada.

The invalidation of patent 206 led to a decade-long battle from 2003 to 2015 over whether the patent was in violation of Ontario’s Statute of Monopolies, Nordheimer’s decision said.

At one point in 2012, Apotex was awarded $215 million in compensation on the grounds that Sanofi delayed Apotex’s 2007 entry into the drug market.

This lengthy and expensive court battle was further complicated in June 2017, when a pivotal Supreme Court decision involving Apotex, AstraZeneca Canada Inc. v. Apotex Inc., 2017 SCC 36, [2017] 1 S.C.R. 942, altered the state of play in Canadian patent litigation.

That decision, which involved the acid reflux drug Nexium, found the promise doctrine was “not the correct approach,” “unsound” and “not good law.”

That Supreme Court decision involving AstraZeneca specifically cites some of Apotex’s disputes with Sanofi, says Gaikis, who also acted in the Supreme Court case.

The appellants, including Schering and Sanofi-Aventis, sought leave to amend their defence against Apotex to include the argument that the decision to invalidate patent 206 “would not have been made but for the application of the now-invalidated promise doctrine,” wrote motion judge Dunphy in February, when he released the initial decision on the motion.

Dunphy refused leave for the amendments and dismissed the motion, saying that “allowing the proposed amendments would inevitably require the entire re-litigation of an issue” that was already decided.

Nordheimer, however, allowed the appeal in November, giving Sanofi and Schering the right to seek to amend their arguments and ordered Apotex to pay costs of $20,000 to Schering and $20,000 to Sanofi. In doing so, Nordheimer went against Dunphy and also departed from the outcome of a similar case in the Federal Court of Appeal, Eli Lilly Canada Inc. v. Teva Canada Ltd., 2018 FCA 53.

The legal issues that left Nordheimer and the Court of Appeal panel at odds with Dunphy were the principle of res judicata and the doctrine of issue estoppel, which deal with whether the same question had been previously decided, whether the judicial decision was final and whether the parties to the judicial decision were the same as before, Nordheimer wrote.

“It’s an important decision with respect to the jurisprudence generally because there are not many cases that deal with the circumstances under which an estoppel may not be applied by a court,” Gaikis says.

“It’s kind of unusual because it is a fairly rare circumstance when something like this happens, particularly where the change of law has been at the level of the Supreme Court of Canada. The highest court in the land has spoken.”

But Nordheimer’s decision to treat the case as a special circumstance leaves a disappointing lack of finality around an already messy area of patent law, says Amir Attaran, a professor in the faculties of law and medicine at the University of Ottawa.

“I thought the promise doctrine, which was an absolute mess in Canadian patent law, had been put to bed and we would never hear from it again,” says Attaran.

“I’m not saying the decision is wrong; I understand the decision.

“But it is not the sort of decision that lends finality. And that’s a problem throughout the patent system, that there seems to be disappointingly little finality.

“This is a new version of the endless game that’s played around the [validation] of patents. I never even thought this could happen, but there you have it.”

Attaran says that while the case was unusual, it might lead to other similar decisions because pharmaceutical companies such as Apotex frequently find themselves in court.

“Patent litigation is in my thinking a pretty ugly part of the legal system,” says Attaran. “It’s always terribly overwrought litigation. Both sides have enormously deep pockets when they are pharmaceutical companies, they are not willing to let issues rest and here you have the court saying, ‘Indeed, maybe we won’t let the issue rest,’ and that is troubling to me.” 

Still, Gaikis says the outcome of the patent 206 motion is different than trying to reopen or set aside prior decisions.

“There is this notion of finality of the law. If two parties have fought it out and one has won, then it’s over,” Gaikis says.

“There are very limited circumstances that allow one to re-open that. Our case is not that kind of a case. We are defending a new claim that Apotex is making and this litigation in the Ontario court is not over yet. Apotex wants to point to something that happened in the Federal Court to support its position in the Ontario case, and we are simply saying, ‘Well, whatever happened in the Federal Court, that is tainted as confirmed by the Supreme Court of Canada,’ and the Ontario Court of Appeal has agreed that we are allowed to make that pleading and argue that position.”

Goodmans LLP, which represented Apotex, and Gowling WLG, which represented Schering, declined to comment.

Noel Courage, a partner at Bereskin & Parr LLP, says the elimination of the promise doctrine is still very important to patent litigation.

“The Supreme Court said the promise doctrine is dead — that was something that about 10 years ago generic companies started grabbing on to,” he says. “So, for the Supreme Court of Canada to say this was a line of folly — it takes a lot of the pressure off the people that go out and develop patents every day.”

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