Ten “Must-Knows” about Proposed Amendments to Canada’s Pharmaceutical Patent Linkage Regulations

On July 15, 2017, the Canadian government published its proposed amendments (Proposed Regulations) to the Patented Medicines (Notice of Compliance) Regulations (Regulations). The Regulations, similar to the Hatch-Waxman Act in the US, links regulatory approval (known as Notice of Compliance or NOC) of a “generic” drug, including biosimilars, to the protection of patent rights of an “innovator”. Pursuant to the obligation under the Canadian-European Union Comprehensive Economic and Trade Agreement (CETA) that all parties be afforded equivalent and effective rights of appeal, the Canadian government introduced the proposed amendments. These amendments, if implemented, will essentially revamp pharmaceutical patent litigation in Canada. There is a 15-day consultation period on the proposed amendments, ending on July 30, 2017. The finalized amendments can be in force as early as September 21, 2017, the start date of the provisional application of CETA and will apply to Notices of Allegation (NOAs) served on or after the coming-into-force date.

Most significantly, the Proposed Regulations will introduce “fast-track” full actions resulting in final determinations of patent validity and infringement. At present, summary judicial review applications under the Regulations focus only on whether patent considerations should prohibit the issuance of an NOC to the generic and do not conclusively determine patent infringement and validity. As a result, parties often seek conclusive and determinative answers on these issues in full actions under the Patent Act, which are started separately, usually after the application under the Regulations are concluded. This results in a system where the same parties litigate the same issues in two different proceedings (known as “dual litigation”). Seeking to facilitate the just and expeditious resolution of patent infringement and validity disputes for pharmaceutical patents, the Proposed Regulations will replace the dual litigation with full actions. In addition, the Proposed Regulations introduce some procedural rules to expedite the proceedings to allow actions to be completed within the 24 months of statutory stay against issuing an NOC to a generic.

The Proposed Regulations will likely bring new challenges and opportunities in highly contentious pharmaceutical litigation in Canada. Hence, it is anticipated that both generics (called the “second person”) and innovators (called the “first person”) will need to develop new strategies to manage the commercial and legal risks brought by the Proposed Regulations, even before the commencement of any litigation.

This article highlights ten “must-know” amendments from the Proposed Regulations, when compared with the current Regulations.

  1. Replacement of summary applications under the Regulations with full actions

To replace the dual litigation, proceedings under the Proposed Regulations will be full actions resulting in final determination of patent infringement and validity. Hence, the more robust legal procedure followed in actions will apply to facilitate access to better evidence. In this regard, there will be discovery and live witness testimony. While NOAs will still be required to address all patents listed on the Patent Register (similar to the Orange Book in the US), full actions will be brought by the innovator, and the owner of the patent if applicable, for a declaration of infringement. The generic may, in response, commence a counterclaim for patent invalidity. The timelines of 45-days after the service of an NOA to commence an action and 24-month statutory stay will remain unchanged. As there are more procedural steps involved in a full action, the conduct of the action will be on a “fast track” to trial in order to obtain a judicial determination of patent infringement and validity before the expiry of the 24-month statutory stay.

  1. Availability of remedies under the Patent Act to innovators

In addition to a declaration of infringement, under the Proposed Regulations, the Court may order any other remedies available under the Patent Act, including injunctions. For example, if an NOC issues prior to a declaration of infringement being made, an injunctive relief may be available as an alternate means of preventing infringement.

  1. Right of action regarding unlisted patents

Upon receiving an NOA, the innovator may bring an infringement action for a patent that is not the subject of the NOA, for example, a patent not listed on the Patent Register (essentially, a quia timet action). However, this action may not be joined with an action brought under the Regulations during the 24-month statutory stay. Similarly, the generic may bring an impeachment action with respect to an unlisted patent.

  1. New allegation requirements: all claims of listed patents must be addressed

An action under the Proposed Regulations may address any claims in a listed patent, not simply claims for the medicinal ingredient, the formulation, the dosage form, or the use of the medicinal ingredient that are required for patent listing. Therefore, a generic must address each claim in a listed patent. For example, the generic will be required to address a process claim, which it is not required to address under the current Regulations.

  1. New allegation of ineligibility of patent for listing, although not dispositive of actions if successful

A generic may allege patent listing ineligibility. The proposed amendments will allow the generic to bring a motion for a declaration of patent listing ineligibility. If the generic is successful on the motion, this finding will not dispose of the action commenced under the Regulations; rather, it will lift the 24-month statutory stay insofar as that patent is concerned.

  1. Early document disclosure requirements accompanying the NOA

The Proposed Regulations have introduced new early disclosure requirements accompanying the service of a generic’s NOA. The generic will still be required to serve on the innovator an NOA providing the legal and factual basis for any allegation made in its regulatory submission or supplement. However, this requirement will not circumscribe or otherwise limit the issues and arguments to be raised in a proceeding brought under the Proposed Regulations. The scope of the proceeding will be defined by the pleadings.

Regarding invalidity allegations, the NOA must provide a detailed legal and factual basis. In addition, the generic must include electronic copies of any document relied upon in support of the allegations when serving the NOA. Additionally, the generic may request (i) contact information for inventors and (ii) laboratory notebooks, research reports or other documents in electronic format that may be relevant to determine whether a particular property, advantage, or use asserted to be part of the invention was established as of the filing date of the application for the patent, if the generic identifies the specific allegation in NOA that is relevant to the request and the portion of the patent in which that property, advantage or use is set out. Such a request must be forwarded to the owner of each patent within 5 days of service and the generic must be promptly notified of this being done, or notified that the innovator is the patent owner.

Regarding non-infringement allegations, they need not be as detailed as invalidity allegations. However, the generic will be required to serve with the NOA, a searchable electronic copy of the portions of the submission or supplement that are relevant to determine infringement. Notably, the generic will be required to comply with this requirement even if it makes no allegation of non-infringement.

  1. Early documentary production with the Statement of Claim

If the innovator commences an action under the Proposed Regulations, the inventor information and the materials requested by the generic must be served on the generic along with the Statement of Claim within 45 days after being served with the NOA. If they are not yet available, the innovator must serve a document explaining the steps that have been and are being taken to locate the information/documents, or setting out the reasons for not providing them.

  1. Prohibition against innovators bringing a subsequent action

If an innovator chooses not to commence an action under the Proposed Regulations in respect of a listed patent that is addressed in an NOA, it will be prohibited from bringing a subsequent infringement action against the generic unless the innovator did not have a “reasonable basis” for bringing the claim, for example, the information provided by the generic was false, materially misleading, or materially incomplete.

  1. Expansion of section 8 damages

As before, the Proposed Regulations will allow a generic to seek compensation for losses suffered during the period it is kept off the market as a result of an unsuccessful or discontinued proceeding brought by an innovator under the Proposed Regulations (section 8 damages). However, the Propose Regulations have further expanded the scope of section 8 damages and will allow the generic to claim section 8 damages against all plaintiffs for the period starting on the later of (i) the date of service of the NOA, and (ii) the date an NOC would have issued. There will be no end date, hence allowing the generic to seek compensation for any loss suffered as a result of delayed market entry. This could include a claim for permanent market loss.

  1. Innovators can renounce 24-month statutory stay to avoid section 8 damages

Despite the expansion of section 8 damages under the proposed amendments, an innovator can avoid them if it renounces the application of the 24-month statutory stay when bringing an action. However, the renouncement will not impact on the innovator’s right to obtain any remedy permitted by the Patent Act.

Lastly, the Canadian government published the Certificate of Supplementary Protection Regulations concurrently with the proposed amendments. The proposed amendments will apply to Certificates of Supplementary Protection (CSPs), also known as patent term restoration. Innovators may obtain up to two years of additional patent term for drugs containing a new medicinal ingredient or a new combination of medicinal ingredients to as a result of delays in research and obtaining marketing authorization. Importantly, a CSP can apply to patents and generics that are already the subject of an action under the Regulations.