Printer Friendly

In patent action by U.S. drug company, Supreme Court of Canada decides whether to allow appeal of Canadian drug company from order issued under recent patent regulations ......

In patent action by U.S. drug company, Supreme Court of Canada decides whether to allow appeal of Canadian drug company from order issued under recent patent regulations (which sought to conform to Agreement on Trade-Related Aspects of Intellectual Property Rights and North American Free Trade Agreement) imposing freeze period on defendant's new drug based mainly on presence of same public domain substance in both plaintiff's and defendant's anticancer drugs

During the 1970s, the National Cancer Institute, a U.S. government-funded organization learned that the bark of the Pacific yew (taxus brevifolia) contained paclitaxel, an anticarcinogenic substance, and put this data into the public domain. Since the yew bushes died when stripped of their bark, however, doubts arose on whether drug companies could turn out enough quantities for pharmaceutical production.

The respondents here include Bristol-Meyers Squibb headquartered in New York City plus its Canadian subsidiary (collectively BMS). In the following decade, BMS produced a drug containing paclitaxel, later marketed as Taxol. In the course of that work, it secured several Canadian patents which involved new formulations and new methods of administering the medicine. None of these patents applied to paclitaxel as such.

Working independently of BMS, the appellant, Biolyse Pharma Corporation (BPC) found out that it could extract paclitaxel from a different species of yew (taxus canadensis) without killing the trees. It applied to the Minister of Health for a notice of compliance (NOC) in order to put its product on the market. The Minister required BPC to submit a New Drug Submission (NDS) rather than an Abbreviated New Drug Submission (ANDS), contending that its different botanical source and its claims for new and different uses for the medicine prevented any reliance on BMS's Taxol as a Canadian reference product.

BPC then submitted independent clinical studies. The Minister approved the safety and efficacy of the BPC product as a new drug and issued it an NOC in 2001. BMS sought to quash this NOC, however, claiming that its issuance had turned on a finding of bioequivalence to the BMS product.

In a reversal of policy, Parliament in 1993 repealed the compulsory licence provisions of the Patent Act and canceled all compulsory licences issued on or after December 20, 1991. In part, these changes flowed from international duties accepted by Canada under the Agreement on Trade-Related Aspects of Intellectual Property Rights, 1869 W.N.T.S. 299 (TRIPS). Some may have thought that Canada's compulsory licensing system might also clash with Canada's obligations under the North American Free Trade Agreement, Can. T.S. 1994/02, in particular Art. 1709(10), signed at the end of 1992.

The new statute abrogated the usual regulatory lag of two years before a generic manufacturer could obtain an NOC. To prevent the generic companies from abusing these "early working" and "stockpiling" exceptions, however, the government also laid down the Patented Medicines (Notice of Compliance) Regulations (PMR). These allowed a patent owner to submit a patent list of any drug that includes a "medicine."

If another manufacturer later asks for a NOC for the same drug this "second person" may serve a Notice of Allegation (NOA) that the "first person's" patent list is not a proper bar. It may contend, for instance, that the first person is not in fact the owner or exclusive licensee in Canada of the drug, or that the patent(s) have expired, or are invalid, or that the applicant would not infringe any claim for the medicine itself and no claim for the use of the medicine.

After being served with an NOA, the innovator may ask for an order barring the Minister from issuing a NOC until all of the listed patents have expired. This application activates a 24-month statutory freeze on the issuance of a NOC.

On an application for judicial review, the motions judge found that BPC had neither applied for, nor obtained, regulatory approval on the basis of bioequivalence. He ruled that, even though neither BMS nor BPC had any patent claim to paclitaxel, Section 5(1.1) of the NOC Regulations caught BPC because paclitaxel was present in both the BPC and the BMS products. The motions judge quashed the NOC and the Federal Court of Appeal upheld that decision. In a six- to-three decision, the Supreme Court of Canada allows BPC's appeal.

In the majority's view, the Minister was entitled to issue the NOC to BPC on the basis of its NDS without making it subject to the statutory freeze. Reading the NOC Regulations to grant BMS a monopoly merely by showing the presence of a public domain medicine like paclitaxel in its product would provide no value to the public in return for the monopoly BMS seeks. When we interpret the NOC Regulations in their proper context, and especially in light of the wording of the statutory power that authorized them, the NOC Regulations do not have the broad effects claimed by BMS.

Parliament enacted the reform legislation in question to protect the rights of patentees to the extent of barring generic manufacturers from marketing "copy-cat drugs" until the expiry of all relevant patents. Under the NOC Regulations, the court hearing the prohibition application has no discretion to lift the stay even if it thinks the innovator's case for interim relief is weak. Nor does the court have a discretion to leave the contending parties to their remedies under the Patent Act. The "second person's" application for a NOC simply goes into a "deep-freeze" until the statutory procedures have played themselves out.

Moreover, Section 5(1.1) of the NOC Regulations does not apply to innovative drugs. The courts should limit it to applications for generic copies of patented drugs in the circumstances had in mind by the regulator.

Furthermore, since Biolyse did not rely on bioequivalence, its product did not fall within the scope of Section 5(1) of the NOC Regulations either. The product was properly treated as an innovator drug, rather than a "copy-cat drug," and neither Sections 5(1) nor 5(1.1) had any application.

Applying the modern approach to statutory interpretation, a court cannot take the word "submission" in Section 5(1.1) out of this context. It also has to look to the scope of the regulation- making power in Section 55.2(4) of the Patent Act; it permits a generic manufacturer to work the patented invention within the 20-year period ("the early working exception") to the extent necessary to obtain a NOC at the time the patent(s) expired and to "stockpile" generic product towards the end of the 20-year period to await lawful market entry. Thus, the judge must consider the grammatical and ordinary sense of the words and give the precise scope of the word "submission" in Section 5(1.1) a purposive interpretation within this context.

Secondly, in analyzing the more specific schemes of the Patent Act and the Minister's regulation-making power, it is apparent that the NOC Regulations are directed to persons who are making use of the "patented invention" which is not necessarily co-extensive with the patented drug or the patented claims. BMS has no patent on paclitaxel and the mere fact that paclitaxel is found in the Biolyse product does not mean that Biolyse took advantage of BMS inventions for the purpose of "early working" a generic copy or "stockpiling" looking toward the expiration of the BMS patents.

Moreover, the limiting words of Section 55.2(4) do not disturb the usual requirement that regulations must fall within the regulation making power. The "plain meaning" adopted by the Federal Court of Appeal in this case would suggest that Section 5(1.1) is ultra vires the very specific authority granted by Section 55.2(4).

Finally, the internal structure of the NOC Regulations supports a narrower interpretation. The word "submission" also appears in Section 4(1), which provides the template upon which the drafters modeled Section 5(1.1).

Moreover, the courts have ruled that Section 4(1) does not apply to all submissions. Any other interpretation of Section 4(1) would allow innovator companies to sidestep the time limits applicable to patent lists by simply making corporate or technical changes to their filing by way of a supplementary NDS. In this context, the courts have found that an unqualified and unrestricted interpretation of the word "submission" would be destructive of regulatory intent.

The majority further explains. "The broad interpretation urged by BMS would lead to an absurd result. The 'medicine' in the drug to which the patent list relates need not itself be patented, or indeed owe anything to the ingenuity of the 'first' person. It could be a 'medicine' whose usefulness was discovered by somebody else (as in the case of paclitaxel) or something in the public domain as common as penicillin."

"So long as such 'medicine' shows up as a component, however minor, in the chemical composition of the drug to which the patent list relates, the 'second person' (including an innovator who is seeking to manufacture a new and useful drug) is barred from proceeding to market by the automatic statutory freeze, and this 'bar' will continue for so long as the patent list holder can 'evergreen' its product by resorting to patentable improvements or other components or additions, be they ever so minor. This would stifle competition and innovation in the pharmaceutical industry and produce a result at odds with what the regulator was trying to achieve." [ 66]

"In my view, Section 5(1.1) does not apply to innovative drugs. It should be confined to applications for generic copies of patented drugs in the circumstances contemplated by the regulator, i.e., where a manufacturer makes a submission for a NOC for a drug which contains a medicine that it purports to copy from another generic but in fact copies from the innovator company that has filed the patent list."

"That is not this case. Where an applicant relies on bioequivalence, it will be caught by Section 5(1). On the facts here, neither Section 5(1) nor Section 5(1.1) applies. Accordingly, I conclude that the Minister was entitled to issue the NOC to the appellant Biolyse on the basis of its NDS without subjecting Biolyse to the statutory freeze." [ 69]

"If BMS believes that the Biolyse product infringes its patent(s), it has recourse to the usual remedies under the Patent Act. The NOC ought not to have been quashed, and the appeal should be allowed. [ 70-71]

Citation: Bristol-Myers Squibb Co. v. Canada, 2005 S.C.C. 26; [2005] S.C.J. No. 26 (Sup. Ct. Canada, May 19).
COPYRIGHT 2005 Transnational Law Associates
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2005 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:International Law Update
Geographic Code:1CANA
Date:Jun 1, 2005
Previous Article:In dispute over attorneys' fees in Holocaust litigation, Ninth Circuit reverses lower court's finding that plaintiffs were not "prevailing parties"...
Next Article:U.S. Supreme Court rejects State of Alaska's claim of title to certain submerged lands underlying waters located in southeastern Alaska finding...

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters