Hypothetical Infringement Cannot Be Set up Against S 8 Claim

Pharmascience Inc v Pfizer Canada ULC 2019 FC 1271 O’Reilly J
            2,255,652 / pregabalin / LYRICA

The recent amendments to the PM(NOC) Regulations converted an NOC proceeding from an application to prohibit the Minister from issuing an NOC into an action for patent infringement. The old regime created some difficult questions as to the relationship between an NOC proceeding and subsequent action between the same parties in respect of the same drug. In particular, a statutory stay on the issuance of an NOC is triggered by NOC proceedings (s 7(1)(d)), and s 8 of the Regulations allows the generic to bring an action to recover damages for sales lost as a result being kept out of the market by the statutory stay. But what if the generic was successful in NOC proceedings, but unsuccessful in a subsequent infringement action in respect of the same drug? The law is now settled that the generic is not barred from bringing a s8 claim, but it is not entitled to recover for sales that it would have made but for the statutory stay if those sales would have been infringing: Apotex v Merck 2011 FCA 364 (here); 2012 FC 620 (here); 2012 FC 559 (here); 2017 FC 726 (here); 2018 FC 181 Locke J (here). The logic is that the generic should not be entitled to recover damages for lost sales which it had no right to make.

This case presents a twist on that issue: what if the patentee never brought a subsequent action? Can that patentee argue as a defence / offset in the s 8 action that the generic’s hypothetical sales would have hypothetically infringed the patent at issue, even though validity and infringement was never established in an infringement action?

Pfizer holds the 652 patent related to the use of pregabalin for treating pain. Pharmascience sought to enter the market with a generic version, and in response Pfizer commenced NOC proceedings under the old Regulations, triggering the statutory stay. Pfizer was unsuccessful in its attempt to obtain an order of prohibition (see 2013 FC 120), and Pharmascience is now seeking damages under s 8 of the NOC Regulations for compensation for the time it was kept off the market [1]. In response, Pfizer alleged that Pharmascience is disentitled to damages because the hypothetical sales of PMS-pregabalin would have hypothetically infringed Pfizer’s patent—even though such infringement had never been established in an infringement action [3].

O’Reilly J pointed out that in all the cases establishing that the generic cannot recover damages for wrongful sales, the wrongfulness of those sales had actually been established in an infringement action:

[17] Pfizer’s authorities suggest to me that infringement is a factor that can and should be taken into account in assessing the quantum of s 8 damages, but only where infringement has been asserted and proved, or is not disputed. Otherwise infringement is not relevant to s 8, even when an infringement action is pending.

He relied on the principle that “the but-for world should reflect, to the extent possible, what happened in the real world,” [23] so that if the patentee did not bring an action in the real world, it must be presumed that it would not have brought an action in the but-for world [21] (citing Apotex v Sanofi [Ramipril (s 8)] 2012 FC 553 (here) var’d 2014 FCA 68 (here)). Consequently, hypothetical infringement cannot be raised to reduce or eliminate the generic’s damages [25].

In my view, O’Reilly J’s holding was correct for the reason he gave. It’s a relief that the new Regulations will render such questions moot.

Prosecution History and Summary Judgment

Canmar Foods Ltd v TA Foods Ltd 2019 FC 1233 Manson J
            2,582,376 / method for roasting oil seed

Canmar is the first case to invoke the new s 53.1, which provides that the prosecution history may be used in an action to rebut any representation made by the patentee regarding claim construction. As importantly, it is one of the first patent cases in many years to grant summary judgment on non-infringement / invalidity.

My previous post on Canmar discussed Manson J’s holding that foreign prosecution history may, in some conditions, be considered pursuant to s 53.1. I argued that despite this holding, Manson J did not actually consider the US prosecution history. He undoubtedly did consider the Canadian prosecution history, and moreover, he considered it in order to dispose of the action by way of summary judgment. In this post I will suggest that Manson J used summary judgment in order to side-step the restrictive approach to summary judgment that seems to have prevailed in patent cases for some time. The key claim construction question at issue is one that would often call for expert evidence, but invoking prosecution history turned the issue into a matter of law instead. In effect, Manson J solved a problem in the law relating to summary judgment by invoking prosecution history. The difficulty is that if indeed there is a problem with an overly restrictive approach to summary judgment, prosecution history is not a cure; it will work in only cases where the key prior art was the subject of an objection, and not where the applicant had drafted around it from the outset. Moreover, it is always risky to try leveraging one area of the law to fix a defect in another area, as that will often lead to law that is deficient in both areas.

Loss in Old s 6 NOC Application Does Not Preclude Action under New s 6

Pfizer Canada Inc v Amgen Inc 2019 FCA 249 Nadon JA: Pelletier, de Montigny JJA aff’g 2018 FC 1078 Milczynski J
            1,341,537 / filgrastim / NEUPOGEN / NIVESTYM

I’ll have another post on Canmar 2019 FC 1233 later this week, but I don’t want to delay any more in posting on the decision of the FCA in Pfizer v Apotex, which raises a transitional issue arising out of the recent amendments to the PM(NOC) Regulations that converted an NOC proceeding from an application to prohibit the Minister from issuing a NOC into an action for patent infringement [8]. In this case Pfizer wanted to launch a biosimilar to Amgen’s Neupogen. Amgen had listed its 537 patent against Neupogen, and Pfizer accordingly served an NOA. Amgen responded by commencing an action under s 6 of the new Regulations, asserting the 537 patent.

The twist is that Amgen had previously asserted the 537 patent against Apotex in proceedings under the old Regulations, and lost before Hughes J: Amgen v Apotex 2015 FC 1261 [the Hughes Decision] aff’d as moot 2016 FCA 196. Under the former Regulations, a patentee that had lost an NOC proceeding against one generic would be prevented from bringing another NOC proceeding against a different generic in respect of the same drug, on the basis of abuse of process: Sanofi 2007 FCA 163. The question in this case was whether it was also an abuse of process for a patentee that had lost an NOC proceeding under the former Regulations to bring another NOC proceeding against a different generic under the new Regulations.

In this decision, the FCA held that this does not constitute an abuse, essentially because an action under the new s 6 (like a s 55 action), results in a determination of validity and infringement, while proceedings under the old s 6 only determined whether the Minister should be prohibited from issuing a NOC to the generic [63], [65]. In Pfizer Ireland 2011 FCA 77 the FCA clearly held that a s 55 action cannot be prevented by reason of a decision made under s 6 of the former Regulations; in this decision, the FCA pointed out that the same reasoning applies to an action under s 6 of the new Regulations, which is substantively identical to a s 55 action [83].

While “Pfizer cannot succeed on the motion now before this Court, it remains open to it to raise issue estoppel and abuse of process once Amgen’s action goes to trial. Whether or not Pfizer can succeed on those grounds in respect of factual findings and legal determinations made by the Hughes Decision, shall. . . depend on the trial judge’s assessment of these issues in light of the evidence” [84]. Note that this was also true under the old Regulations: Pfizer Ireland 2011 FCA 77 [19].

Foreign Prosecution History Admissible under S 53.1 — or Is It?

Canmar Foods Ltd v TA Foods Ltd 2019 FC 1233 Manson J
            2,582,376 / method for roasting oil seed

Canmar is the first decision of the Federal Court to interpret and apply the new s 53.1, which provides that the prosecution history may be admitted into evidence in an action to rebut any representation made by the patentee regarding claim construction. The defendant, TA Foods, argued that key limitations in the claims were added to overcome prior art cited by the USPTO [57]. A central issue in the case was therefore whether foreign prosecution history falls within the scope of s 53.1 [69]. This is a very important issue because Canada is typically a jurisdiction of second filing and, as Manson J noted, “Prosecution of Canadian patents often follows prosecution of corresponding patent applications in other jurisdictions” [73].

Manson J held that under certain circumstances, the foreign prosecution history should be admissible to aid in construction of the Canadian claims [77], though his holding on this point was expressly obiter, in that he stated that he would have found there to be no infringement “[r]egardless of the US Application prosecution history” [79]. In this post, I suggest that Manson J’s holding puts significant strain on the text of s 53.1. I also point out that not only was his holding technically obiter, it was substantively obiter, in that Manson J did not rely on the US prosecution history at all in his analysis on the facts. This will no doubt diminish the precedential value of this holding.

Blogging Update

I'm back from my break, but there is a lot of substance in Manson J's decision in Canmar Foods Ltd v TA Foods Ltd 2019 FC 1233, and writing on it is taking longer than usual. I'll have a couple of posts on that decision early next week. Then I'll turn to Pfizer Canada Inc v Amgen Inc 2019 FCA 249 (which I haven't yet had a chance to read).