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Abuse of Process - Patents. Janssen Inc. v. Apotex Inc.
In Janssen Inc. v. Apotex Inc. (Fed CA, 2023) the Federal Court of Appeal considered abuse of process in a patent context:[17] I turn now to jurisprudence in which the doctrine of abuse of process has been considered in the context of patent litigation.
[18] In Sanofi-Aventis Canada Inc. v. Novopharm Limited, 2007 FCA 163, 282 D.L.R. (4th) 476 at paras. 26, 35 (Sanofi-Aventis), and Pfizer Canada Inc. v. Amgen Inc., 2019 FCA 249, 311 A.C.W.S. (3d) 823 at para. 57 (Pfizer), this Court has confirmed that the principles enunciated in C.U.P.E. must inform analysis with respect to abuse of process in the context of the Regulations.
[19] In Apotex Inc. v. Merck & Co., 1999 CanLII 7874 (FC), [1999] F.C.J. No. 575, 167 F.T.R. 59 (F.C.T.D.) (Merck), Apotex brought an action to impeach the patent in suit after it had lost an earlier patent infringement action in which it had not raised the issue of invalidity of the patent. Apotex had also lost a motion to vary the appeal judgment that declared the claims in issue valid. Merck moved to strike Apotex’s statement of claim as an abuse of process. The Federal Court Trial Division granted the motion, on the basis that the validity of the patent implicitly underlay the finding of infringement in the previous action. At paragraph 25, the Court stated:... [I]t is apparent that the application of the doctrine of res judicata does not depend on whether the parties actually raised the issue or issues in previous proceedings, but rather whether the parties could have done so. Should a party choose to drop certain issues for reasons of tactics, strategies, or otherwise, the party seals its fate with regard to those decisions. Parties must bring forward their whole case, and will not be permitted to litigate by instalments in piecemeal fashion. It is a principle of law and also of policy that there be finality to court decisions: see also Grandview v. Doering, 1975 Can.LII 16 (SCC), [1976] 2 S.C.R. 621 at 634 and 636. Parties to litigation must be able to rely on the finality of final judgments so that they can adjust their affairs, if necessary, and conduct themselves accordingly. [20] This Court in Procter & Gamble Pharmaceuticals Canada Inc. v. Canada (Minister of Health), 2003 FCA 467, [2004] 2 F.C.R. 85 (Procter & Gamble), likewise extended the principle of finality to issues that could have been raised but were not, albeit in the context of issue estoppel. There, this Court found that an allegation pursuant to the Regulations that the patent in suit was not eligible to be listed on a patent list had been determined implicitly in a prior proceeding under the Regulations in which a prohibition order had been issued.
[21] In AB Hassle v. Apotex Inc., 2005 FC 234, [2005] 4 F.C.R. 229, Apotex issued an NOA alleging non-infringement and invalidity of the patent in suit after a prior unsuccessful NOA alleging non-infringement only led to a prohibition order. At paragraph 81, the Federal Court concluded that Apotex’s prior allegation of only non-infringement indicated that it had accepted the validity of the patent in suit, and that the issue of invalidity had effectively been decided. The Federal Court found therefore that the later NOA was barred by issue estoppel, and that it also constituted an abuse of process.
[22] On appeal (AB Hassle v. Apotex Inc., 2006 FCA 51, [2006] 4 F.C.R. 513 (AB Hassle)), this Court affirmed the Federal Court’s abuse of process finding. At paragraph 24, this Court recognized that more than one NOA in respect of the same patent may be proper in certain circumstances, but it noted that the recipient of a second or subsequent such NOA could commence proceedings under the Regulations, and then argue that the NOA is an abuse of process. At paragraph 25, this Court provided the following non-exhaustive list of circumstances in which a second NOA may not be an abuse of process: if it is based on new facts, a newly discovered process, a change in the law, a situation that limits the scope or application of an existing prohibition order, or a new and definitive decision as to the validity or construction of the patent. This Court also recognized a residual discretion to decide an application even if it is determined to be an abuse of process. At paragraph 26, this Court found no error in the Federal Court’s finding of abuse of process on the basis that Apotex could have raised its invalidity allegations in the previous proceedings. This Court also refused to interfere with the Federal Court’s exercise of discretion.
[23] The principle from AB Hassle that segmentation of NOAs may be an abuse of process has since been reiterated by this Court in Apotex Inc. v. Sanofi-Aventis, 2014 FCA 68, [2015] 2 F.C.R. 828 at para. 76.
[24] Finally, this Court has commented that misconduct is not a required element to find abuse of process in Canada: Sanofi-Aventis at para. 43.
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[42] ... In this case, I conclude that the Federal Court erred in law in that it applied the incorrect legal test in determining that there was no abuse of process.
[43] Although the power to stay proceedings for abuse of process is a discretionary one, it must be exercised in accordance with settled jurisprudence, and failure to do so amounts to an error of law. In my view, the Federal Court erred in its consideration of Janssen’s abuse of process argument by focusing on the distinction in the Regulations between non-infringement allegations and invalidity allegations, and the propriety of Apotex’s service of multiple NOAs. Since the doctrine of abuse of process is about the inherent power of the Court to prevent the misuse of its procedure, the focus should instead have been on the proceedings before the Court – in this case, the Underlying Actions.
[44] In my view, the Regulatory Impact Analysis Statement (RIAS) that accompanied the 2017 amendments to the Regulations (Canada Gazette, Part II, Vol. 151, Extra No. 1) makes it clear that a principal aim was to avoid multiple proceedings concerning patents on medicines, regardless of whether those proceedings are within or outside the Regulations. The RIAS includes the following:Canada is … replacing summary prohibition applications with full actions resulting in final determinations of patent infringement and validity [page 32, see also pages 34 and 52 to similar effect]
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The costly and inefficient practice of dual litigation is eliminated, leading to greater legal and market certainty [page 34]
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More broadly, replacing the current summary proceedings with full actions will result in greater overall efficiency. As a result of this change, the Court will provide final determinations of patent infringement and validity [page 35]
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Proceedings under the Regulations may now address any claim in a patent included on the patent register, not simply claims for the medicinal ingredient, the formulation, the dosage form, or the use of the medicinal ingredient … This eliminates the need for separate proceedings to address all claims in a single patent [page 37]
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The NOA must provide the legal and factual basis for any allegation made in the submission or supplement. This will facilitate early consideration of issues likely to be raised in litigation. This requirement does not circumscribe or otherwise limit the issues and arguments that may be raised in a proceeding brought under the Regulations. The scope of proceedings will be defined by the pleadings in accordance with prevailing rules and practices. This will further align litigation under the Regulations with litigation under the [Patent] Act [page 40]. [45] Even though the specific measure in the 2017 amendments to the Regulations was to eliminate the proceeding that could lead to a prohibition order against the Minister of Health, the aim of avoiding multiple proceedings was front and centre. A proceeding pursuant to section 6 of the Regulations as amended in 2017 would proceed as “an action for patent infringement, with procedural safeguards of examination for discovery and oral evidence as well as determinations on substantive patent validity and infringement” such that “an action commenced under section 6 of the Amended Regulations ..., for all intents and purposes, is a proceeding identical to a section 55 action”: see Pfizer at paras 8, 83.
[46] Further indication that an action under section 6 of the Regulations is to proceed and have an effect much like a normal patent infringement action is that a second person is not limited in its defence to what is alleged in the NOA. Subsection 6(3) of the Regulations provides that the second person may bring a counterclaim, and does not place a limit on the issues that may be raised therein. Moreover, as indicated at paragraph 44 above, the RIAS states at page 40 that the requirement in subparagraph 5(3)(b)(ii) of the Regulations that the NOA include a statement of the legal and factual basis of the allegation “does not circumscribe or otherwise limit the issues and arguments that may be raised in a proceeding brought under the Regulations.” This Court has affirmed the permissibility of amendments to pleadings in an action under section 6 of the Regulations that introduce issues not raised in the underlying NOA: Sunovion Pharmaceuticals Canada Inc. v. Taro Pharmaceuticals Inc., 2021 FCA 113, 183 C.P.R. (4th) 167, aff’g 2021 FC 37, 328 A.C.W.S. (3d) 149.
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