Pharmacapsules @ Gowlings - November 2, 2009.

Edited by Jennifer Wilkie and Chantal Saunders

Contents Cleantech Megatrend

Second Phase of Alberta's Pharmaceutical Strategy Aims to Reduce Drug Costs, Improve Access to New Drugs and Expand the Role of Pharmacists

Eli Lilly and Company Successful in Patent Infringement Action Against Apotex - Case Summary

Recent Cases

Cleantech Megatrend By Natalie Rizkalla-Kamel

Large investors, early-stage venture capitalists, governments, corporations and industry associations are returning to the clean technology sector - cleantech. Cleantech, also called greentech, is a category of technologies that significantly improve financial performance through energy and fuel efficiency and eliminating waste and pollution.

In the last quarter of 2009, cleantech became the largest category of venture capital investing in North America attracting 27% of all VC funds, surpassing biotech and software.

Governments, other than Canada, are getting involved in this megatrend in a big way. Of the U.S. $2.3 trillion dollars that governments have committed to economic stimulus globally, 22% has been committed to green projects. Others include South Korea at 89%, European Union at 64%, China at 34% and Canada at only 9%.

Although Canada trails far behind the others, the Toronto Stock Exchange is home to more cleantech companies than any other exchange - 122 companies with a combined market capital of $9.9 billion as of August 31, 2009. It remains to be seen whether Canada can afford to miss out on this growing green market.

More detailed information can be accessed at the following site: http://www.financialpost.com/story.html?id=2135907

Second Phase of Alberta's Pharmaceutical Strategy Aims to Reduce Drug Costs, Improve Access to New Drugs and Expand the Role of Pharmacists By Natalie de Paulsen

On October 20, 2009, the Alberta Government released the second phase of the Alberta Pharmaceutical Strategy which indicates that the Government will:

Reduce generic drug prices - the Government states it will reduce the price of new generic drugs from 75 percent of the brand name drug to 45% and announces that its discussions with pharmacists and pharmacies regarding the price reduction will begin this month.

Faster Access to New Drugs - the Government indicates that it will use product listing agreements with brand name manufacturers to reduce costs, provide faster access to innovative drugs and help fund health research.

Expand Pharmacists' Roles - the Government indicates that it will work with pharmacists and pharmacies to support them as they shift their focus from dispensing prescription drugs to providing more professional services such as counselling and advising patients. In support of this model, the Government will introduce a new payment model for pharmacists.

More detailed information can be accessed at the following Government website: http://alberta.ca/acn/200910/27147728F7862-B441-C5BC-EFE4D66ADF9D5114.html.

Eli Lilly and Company Successful in Patent Infringement Action Against Apotex - Case Summary By Patrick Smith

On October 1, 2009, Justice Gauthier of the Federal Court of Canada rendered a decision upholding the validity of eight process patents relating to intermediates used in the production of the antibiotic cefaclor. In a 326-page decision, Justice Gauthier thoroughly canvassed various aspects of infringement and validity and relied upon the Supreme Court's decision in Monsanto reconfirming the application of the Saccharin doctrine in Canada. Thus, the importation of a product made by a patented process or made through processes relating to key intermediates constitutes an infringement of a Canadian process patent. As such, Apotex' purchase and importation into Canada of cefaclor made by processes within the scope of various claims of the patents infringe the exclusive rights granted to Eli Lilly and Company by virtue of the patents.

Additionally, Justice Gauthier rejected Apotex' allegations brought under the Competition Act that the patents at issue were unenforceable by Lilly. In so doing, Justice Gauthier held that Lilly's acquisition of the "Shionogi" patents did not result in an undue lessening of competition. In the result, the Plaintiffs are entitled to either elect an accounting of Apotex' profits or its damages sustained by the infringing activities of Apotex. The Plaintiffs were awarded their costs both for the infringement and validity phases of the trial as well as for the Competition Act counterclaim.

The full text of the decision can be found at: http://decisions.fct-cf.gc.ca/en/2009/2009fc991/2009fc991.html

Recent Cases By Beverley Moore

Eli Lilly Canada Inc. v. Apotex; Application to Declare NOA Null and Void; Olanzapine; October 19, 2009

Apotex sent a NOA regarding the validity of a patent list on the Patent Register for an orally disintegrating tablet form of a drug. It had previously sent an NOA regarding the validity of the same patent with respect to a standard tablet form of the drug. In that prior proceeding, Apotex' NOA had been found not justified. Subsequently, another generic company sent an NOA regarding validity of the same patent. This second generic company's NOA was found to be justified. Thus, the second generic company, and all subsequent senders of NOAs entered the olanzapine market, but Apotex was prohibited due to its first NOA.

In response to Apotex' latest NOA, Lilly started a proceeding seeking a declaration that the NOA is an abuse of process and otherwise null and void. Apotex brought a motion to dismiss the proceeding as an abuse of process. The Court held that Lilly's application should be dealt with prior to Apotex' motion.

The Court then held that the requirements for issue estoppel had been met. The previous Court proceeding between Apotex and Lilly involving this patent had become final and addressed the same issue as the current proceeding. The fact that the formulation sought to be marketed by the generic in the context of this proceeding is different, does not change that the cause of action is the same.

Furthermore, Apotex had already commenced an impeachment action. Thus, there is no reason to exercise discretion not to apply the doctrine of issue estoppel. As a result, Lilly is entitled to a declaration that Apotex is precluded for pursuing its current NOA which is null, void and of no effect. Thus, the current prohibition application is terminated.

The full text of the decision can be found at: http://decisions.fct-cf.gc.ca/en/2009/2009fc1053/2009fc1053.html

Sanofi-Aventis v. Novopharm; preliminary questions regarding costs assessment; ramipril; October 2, 2009

Sanofi had brought a proceeding against Novopharm and joined Schering as the respondent/patentee pursuant to the NOC Regulations. The NOA was found to be justified and the proceeding was dismissed with costs.

During the costs assessment, a preliminary issue arose as to whether the respondent/patentee should be jointly and severally responsible for the costs award. The Court found that this was not the case and that Sanofi should be solely responsible.

The order dismissing the application and directing costs did not specifically grant any costs against Schering. It was acknowledged that Schering was the respondent/patentee and is not an applicant but is required to be added as a respondent pursuant to the NOC Regulations. However, Schering did participate in the proceeding by filing motion records, filing affidavits and making submissions.

The Court found that as a general rule, costs should follow the event. In this proceeding, the application of Sanofi was dismissed and thus, it follows that costs were against Sanofi.

During the course of the hearing, Sanofi indicated that it may be appealing this costs ruling. Thus, the full costs assessment was postponed pending a decision on any appeal.

The full text of the decision can be found at: http://decisions.fct-cf.gc.ca/en/2009/2009fc1003/2009fc1003.html

Sanofi-Aventis v. Canada; PMPRB decision; Nicoderm; September 24, 2009

Sanofi was seeking judicial review of an interlocutory decision of the Board, which was made during the course of dealings that had lasted a number of years. The Court found that the application should be dismissed as it is premature. Furthermore, the Court held that the Board had jurisdiction to continue the proceedings and did not breach principles of procedural fairness. Furthermore, the impugned decision was otherwise reasonable.

Sanofi's predecessor had submitted a voluntary compliance undertaking to the Board. However, the chairperson of the Board determined that a hearing should be held regardless. Two judicial review proceedings were started. After they were heard, Sanofi's predecessor and the Board staff proposed a joint submission to the Board and proposed that the hearings occurring before the Board be terminated on the basis of this joint submission. The Board convened an oral hearing to discuss the joint submission and the joint submission was rejected. The Board then directed that the hearing be continued. It was this decision that is the subject of the present judicial review.

The Court found that the hearing was not time barred as although it was delayed, it started within the timeframes contemplated by the Patent Act. The length of the delay itself did not lead to a presumption of prejudice. Furthermore, there was no evidence of prejudice suffered by the Applicant.

Furthermore, the unwillingness of the Board to accept the joint submission does not call into question the independence of the adjudicator. There was no breach of fairness in this decision as before dismissing the joint submission and deciding to continue the proceedings, there was an oral hearing and the Applicant had the opportunity to make representations.

Finally, the Court found that the Board's decision to continue with the proceedings is reasonable in the circumstances. As the Board already determined that it was proper to proceed with this matter and that that determination was upheld by the Court in 2005. The Board is not bound by any recommendation made by Board staff. Thus, the judicial review is dismissed.

The full text of the decision can be found at: http://decisions.fct-cf.gc.ca/en/2009/2009fc965/2009fc965.html

Apotex & Novopharm v. Wellcome; interlocutory motion to amend pleadings; AZT; September 22, 2009

The Trial Division upheld the decision of the Prothonotary to allow GSK to amend its pleadings revising the quantum of damages sought in the proceeding.

This proceeding is the reference portion of the infringement case where it was held by the Supreme Court in 2002 that the patent at issue was valid and infringed. A hearing date has been set for the Spring of 2011 to hear the reference.

GSK's previous pleadings set out the quantum of damages from the infringement proceedings as totalling around $300 million. The amendment sought to raise the total of the damages claims to approximately $675 million.

The Court held that in order to make the amendment, GSK only has to prove that there is an arguable case to make. There was sufficient evidence of this. Furthermore, there is enough time for further discovery and no prejudice not compensable in costs has been shown. In addition, the stipulation of the $300 million amount in the earlier pleadings does not amount to an admission that this is the maximum recovery GSK can seek. Thus, the amendments were allowed with GSK to bear cost of any additional discovery.

The full text of the decision can be found at: http://decisions.fct-cf.gc.ca/en/2009/2009fc949/2009fc949.html

Eli Lilly v. Novopharm; merits of an infringement proceeding; olanzapine; October 5, 2009

After a trial on the merits, the Court found that the patent at issue was invalid as it is not a valid selection patent. The Court further found that since there was no "invention" the patent was also invalid for anticipation and double patenting.

The patent had previously been the subject of two NOC proceedings. In the first proceeding, Justice Gauthier had found that Apotex' allegations of invalidity were not justified. In the second proceeding, Justice Hughes found one of Novopharm's allegations of invalidity was justified. It was this second proceeding that lead to the infringement case.

Novopharm admitted that if the patent at issue was valid, it would be infringing.

The Court held that in order for the patent to be valid as a selection patent, olanzapine must have an advantage over the other compounds of the previous genus patent and that that advantage must be substantial and somewhat peculiar to olanzapine. Furthermore, the patent must clearly describe the substantial and special advantage.

In coming to its conclusion on invalidity, the Court introduced new disclosure requirements for patentees, effectively requiring human trials before filing a patent application and shifting the burden to the patentee to prove a proper selection where the burden of proof is normally on the party alleging invalidity.

The full text of the decision can be found at: http://decisions.fct-cf.gc.ca/en/2009/2009fc1018/2009fc1018.html

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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