Lovastatin Background

Merck & Co Inc. v. Apotex Inc. / lovastatin 2010 FC 1265 Snider J

I have now commented on a variety of the legal issues that were raised in Snider J’s 244 page lovastatin decision, and while those issues do stand alone, a factual background might be useful. Of course, it would have been better if I had provided this background at the outset, but I was anxious to post on the legal issues.

The sole patent in issue, #1,161,380 (granted in 1984 – old Act), was a process and product-by-process patent to lovastatin when made with the micro-organism A. terreus. Lovastatin, the first commercialized “statin” sold in the Canadian market for the treatment of elevated blood cholesterol, was sold by Merck as MEVACOR. Merck was unsuccessful in obtaining an order of prohibition under the PM(NOC) Regulations because the statutory stay expired before the application was heard on the merits. (In 2010 FC 1264, released together with 2010 FC 1265, Snider J held that Apotex was not entitled to section 8 compensation: see my posts here and here.) This means that Snider J faced the infringement and validity questions on a clean slate.

In anticipation of obtaining a compulsory licence, Apotex had developed an infringing process for the production of lovastatin, AFI-1, that used A. terreus. In anticipation of the compulsory licencing regime being replaced by the PM(NOC) Regulations, Apotex subsequently developed a non-infringing process, AFI-4, which used a different organism, C. fuckelii. Apotex supplied the Canadian market primarily with product made in China by Blue Treasure, a joint venture with Chinese partners. Apotex transferred know-how related to both the AFI-1 and AFI-4 technologies to Blue Treasure. Once it became clear that Apotex would proceed under the NOC Regulations rather than by compulsory licence, Apotex insisted that Blue Treasure use the non-infringing AFI-4 technology. However, this was more expensive than the infringing AFI-1 process, and Snider J ultimately held on the facts that Blue Treasure had been boosting its profits by using the cheaper infringing process to make the lovastatin that it delivered to Apotex.

An interesting practical point is that Snider J accepted evidence that traces of DNA of the producing organism were present in the final product, so that by identifying the DNA it was possible to determine which process had been used. Snider J relied on this evidence in holding that one particular batch, that had been made in Winnipeg, had been made by the infringing process [465]. This DNA evidence was crucial for the particular batch in question, as the documentary evidence was not conclusive. (Snider J did not rely on DNA evidence for the Blue Treasure product as the provenance of the samples was not proven adequately, and documentary evidence sufficiently established infringement.) While interesting, this does not appear to raise any novel questions of evidence law. The primary debate, as to whether traces of DNA could survive the processing and whether Merck’s testing was reliable, was purely factual.

I have already commented on most of the legal issues raised by the decision. For completeness, I will mention two more. Apotex had argued that Merck was not the first inventor of the compound as claimed: recall that at the time the Act embodied a first-to-invent system. However, the Act at the time, in section 61(1), placed certain limitations on the challenge to validity based on inventorship. After a rigorous interpretation of that section Snider J held that Apotex’s challenge based on inventorship was precluded by the section, and in any event, there was no conflict in inventorship. Finally, a certain quantity of product was exempted on the basis of the regulatory working exemptions in s 55.2(1) of the current Act. On the only contentious point, Snider J held that production of product for the purpose of improving Apotex’s manufacturing process was exempt, on a straightforward application of Micro Chemicals [1972] S.C.R. 506.