In Apotex Inc. v. Syntex Pharmaceuticals International Inc. (2010 FCA 155), the Federal Court of Appeal (“FCA”) affirmed the Federal Court’s (FC) decision (2009 FC 494) dismissing Apotex’s claim for damages under s.8 of the Patented Medicines (Notice of Compliance) Regulations (“PMNOCR”). The FCA held that s.8 of the PMNOCR does not apply where an innovator prevailed in PMNOCR prohibition proceedings but not in subsequent patent litigation, meaning generic manufacturers cannot retroactively apply a finding of invalidity to PMNOCR prohibition proceedings.

After the FC, in a proceeding pursuant to the PMNOCR, prohibited the Minister of Health from issuing a Notice of Compliance to Apotex for naproxen slow release tablets until expiry of Canadian Patent No. 1,204,671, Apotex successfully obtained a declaration of non-infringement and invalidity of the patent. The Minister however still declined to issue the NOC on the basis that the prohibition order remained applicable. Apotex obtained an order setting aside the prohibition order and dismissing the PMNOCR proceeding. Apotex then commenced an action against the former patent holder for damages under s.8 of the PMNOCR.

Because the prohibition order issued in 1996 and the subsequent motion was decided in 1999, amendments to the PMNOCR effective March 11, 1998 (the “1998 PMNOCR“) played a significant role in the FCA’s decision. In particular, s.9(6) of the 1998 PMNOCR provided that amended s.8 of the PMNOCR applied to applications “pending on the coming into force” of the amended regulations.

The FCA first disagreed with Apotex that the respondent innovator was estopped from arguing that the prohibition proceeding was no longer pending as at March 11, 1998. The FC judge on the motion to set aside had heard submissions that she had no jurisdiction because the proceeding was no longer ongoing, but held otherwise. However, the FCA held that the FC judge neither explicitly nor necessarily decided whether the proceeding was pending for the purpose of the s.9(6) of the 1998 PMNOCR.

With respect to whether the prohibition proceeding remained pending, the FCA first held that “pending” means a proceeding not yet finished. At the time of the 1998 amendments a final order had issued and both of Apotex’s allegations were held unjustified. The FCA thus held that the FC’s decision properly gave effect to the dismissal on the merits of the prohibition proceeding. The FCA also disregarded definitions put forward by Apotex for the proposition that a proceeding remains pending so long as the Court may make an order on the matter in issue. Such a definition would mean that prohibition proceedings would be perpetually pending under the transitional provisions, exposing innovators to unforeseen liability years after successfully prosecuting prohibition proceedings.

The FCA then affirmed the FC’s decision preventing Apotex from recovering damages pursuant to s.8 of the 1993 PMNOCR. The 1993 PMNOCR provided relief to a generic manufacturer where the Minister delayed issuance of the NOC “beyond the expiration” of all patents subject to a prohibition order. The FCA agreed with Apotex that the FC’s reference to a patent being declared invalid in PMNOCR proceedings themselves was not an accurate statement because no such declaration may be made in prohibition proceedings. However, the FCA was satisfied that the FC’s semantic error was inadvertent and not material. The FCA then noted that, under the 1993 PMNOCR, innovators commencing a prohibition proceeding obtained the equivalent of an interlocutory injunction prohibiting the issuance of a NOC without having to satisfy the criteria for obtaining injunctive relief or providing an undertaking for damages. The FCA held that s.8 of the PMNOCR was intended to provide redress to a generic where the innovator failed to establish that the generic’s allegations of invalidity or non-infringement were not justified, not where the innovator prevailed in the prohibition proceeding but not in patent litigation. Therefore Apotex could not retroactively apply a finding of invalidity in a patent action so as to argue that the patent had expired within the meaning of s.8 of the 1993 PMNOCR.