Canada: Hypothetical World When Multiple S. 8 Damages Cases Held Not To Reflect Size Of Actual Generic Market (Intellectual Property Weekly Abstracts Bulletin - Week Of March 31)

Edited by Chantal Saunders and Beverley Moore , Adrian Howard and Ryan Steeves

Hypothetical World When Multiple S. 8 Damages Cases Held Not to Reflect Size of Actual Generic Market

Drug: ramipril

In May, 2012, the Federal Court quantified damages owed to Apotex pursuant to s. 8 of the NOC Regulations (decision here, summary here). Similarly, damages were quantified to Teva, as discussed in the case below. Both parties appealed. In a split decision, the Federal Court of Appeal (FCA) upheld the trial judge's findings with respect to all issues but the date upon which Teva would have entered the market.

The FCA considered Sanofi's arguments that  the combined effect of the decisions of the Trial Judge in this case and the Teva case below was that the hypothetical generic market exceeds the size of the actual generic market. However, the Court rejected this argument, holding that the Trial Judge was correct in her interpretation of the NOC Regulations. The NOC Regulations should only be disregarded with respect to the determination of the beginning of the liability period. All other dates must be determined on the basis that the NOC Regulations exist. As a result, the hypothetical worlds in different cases will not be the same. The FCA invited Parliament or the Governor-in-Council to remedy the NOC Regulations if this is a problem.

The FCA held that the generic parties would have behaved in the hypothetical world just as they did in the real world. This included seeking summary dismissal of NOC Proceedings as soon as they considered they had a fair chance of success. However, the Court saw no reason to conclude that this would have happened any earlier in the hypothetical world than it did in the real world. Thus, Teva would not have entered the market during Apotex' s. 8 liability period and the only competition to Apotex would have been the authorized generic.

Appeals Dismissed from Quantification of S. 8 Damages

Drug: ramipril

As discussed above, in May 2012, the Federal Court quantified damages owed to Apotex and Teva pursuant to s. 8 of the NOC Regulations. (Teva decision here, summary here). Both parties appealed, and the FCA dismissed both the appeal and the cross-appeal.

As above, the FCA concluded that the hypothetical world constructed for the purposes of determining s. 8 damages includes the NOC Regulations, except for the purpose of determining the beginning of the liability period. The FCA considered arguments from both sides regarding the date Apotex would have entered the market and dismissed them.

Appeal Upholds Dismissal of Request to Amend Pleadings due to Proximity to Trial

Drug: ramipril

This case concerns an appeal of a motion to amend pleadings in the s. 8 case described above. The motion had originally been brought three months prior to trial and dismissed due to their timing and the real risk of having to adjourn the trial. Sanofi sought to amend its pleadings to assert that a different generic company would have been the first to enter the hypothetical market. Sanofi also sought to amend its pleadings to argue that there should be no s. 8 damages for an unapproved indication. The appeals were dismissed for substantially the same reasons as in Sanofi v. Teva (summary here).

Appeal of the Re-Examination Board's Decision Dismissed: Three Claims Rejected

This was an appeal of a decision of a Re-Examination Board cancelling three claims of Newco Tank Corp.'s ("Newco") Canadian Patent No. 2,421,384 (the " '384 Patent"). On appeal, Newco sought an order cancelling the Certificate of the Board confirming the patentability of the subject claims, or in the alternative, an order returning the '384 Patent to the Board for a new decision to redetermine the issue of obviousness.

The '384 Patent issued on December 15, 2009,  and on October 4, 2011, the Commissioner wrote to Newco to inform it that a re-examination of the '384 Patent had been requested. The requester had brought to the Board's attention 11 U.S. patents and asked that the subject claims be disallowed. The Board ultimately found that the subject claims were novel, but rejected them as being obvious in view of certain of the U.S. patents.

On appeal, the Court considered five (5) issues, including certain questions related to the test for obviousness: (1) Was the Board's selection of the POSITA reasonable? (2) Was the Board's identification of the POSITA's skill level reasonable? (3) Did the Board unreasonably base the decision on its perspective and not that of the POSITA? (4) Did the Board unreasonably conclude that the problem of inefficient heating formed part of the common general knowledge and prior art? and (5) Did the Board act unreasonably in applying the 'obvious to try' test?

With respect to the first two issues, the Court deferred to the Board's expertise and found that its decisions were reasonable. With respect to the third issue, the Court noted that this argument was "unfounded" and amounted to a "complaint about the wording chosen by the Board to express its reasons for decision". Reading the decision as  a whole, the Court concluded that the Board did not substitute its own perspective on the matter  for that of the notional skilled person, despite the Board's use of words such as "we see..." and "our opinion...". With respect to the fourth issue, Newco argued that the 'problem' statement (i.e. a solution to the inefficient heating method) was clearly presented as part of the invention rather than as part of the background; and as such, the Board based its rejection on an incorrect assumption that the 'inefficient method' was part of the prior art and common general knowledge. However, the Court concluded that it was reasonable for  the Board to consider the information found in the patent (i.e. under the "Summary of the Invention" heading) to be part of the background knowledge
which the skilled person would have. With respect to the final issue, the Court found that the 'obvious to try' test was neither required nor used by the Board.

The Court held that Newco failed to meet its burden of establishing that the Board's decision was unreasonable; the Court found "no palpable and overriding error". The appeal was dismissed with costs on the normal scale.

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