In a recent decision1, the Federal Court confirmed that, under the new Patented Medicine (Notice of Compliance) (PM(NOC)) Regulations, a generic drug manufacturer may amend its pleading to include invalidity allegations that were not included in the Notice of Allegation that it served on the innovator drug manufacturer before the proceeding commenced.
What you need to know
- Significant changes to the PM(NOC) Regulations came into effect on September 21, 2017, the most notable of which was to convert the PM(NOC) litigation process from an application to an action.
- Under the old Regulations, generic drug manufacturers made allegations of invalidity against the patent(s) at issue in a Notice of Allegation (NOA) that was served on innovators. The NOA was known to “cast a long shadow” on the proceeding; new issues could not be added in the application. While proceedings under the new Regulations are still precipitated by an NOA, its effect on the subsequent action has been uncertain.
- The Federal Court has now ruled that, under the new Regulations, courts should consider proposed pleading amendments under the ordinary principles relating to pleading amendments. The NOA no longer appears to be a strict limit on the issues that may be raised in the proceeding.
Background: the amendments to the PM(NOC) Regulations
The PM(NOC) Regulations were significantly amended in fall 2017. Under the old Regulations, issues of patent infringement and validity were litigated in an application, on a paper record, with the possibility of a subsequent action to finally determine issues of patent infringement and validity. The key change in the new regime is that the issues are litigated in an action, with pleadings, full discovery and live witnesses in a full trial, with no possibility of a second proceeding to determine the same issues.
Litigation in the old regime was triggered by the service of a Notice of Allegation, or NOA, and the abbreviated litigation process that followed focused on the question of whether the allegations in the NOA were “justified”. The NOA was known to “cast a long shadow” on the proceeding. It was required to be comprehensive and to raise all facts and legal arguments upon which the generic intended to rely in support of its allegations.
Under the new regime, an NOA still triggers the start of litigation. However, given that the issues in the litigation are defined by the pleadings, it was uncertain whether it would pose the same strict limit to new issues being raised in the litigation.
The role of the NOA and pleadings in the new PM(NOC) regime
In Sunovion Pharmaceuticals Canada Inc. v. Taro Pharmaceuticals2, Taro sought to amend its pleadings to include new allegations that were not in its NOA. Sunovion argued in response that, under the new Regulations, the NOA governed the scope of the litigation just as it had under the old Regulations. The court rejected this argument, finding that while the delivery of an NOA still facilitates early consideration of issues likely to be raised in the litigation, it is now the pleadings and not the NOA that define the issues and arguments that may be raised. As a result, just as pleadings may be amended in the course of a non-PM(NOC) patent infringement action, they may be amended in the course of a PM(NOC) action. Consequently, the usual Federal Courts Rules and principles regarding pleadings amendments apply.
Rule 75 provides that the Court may, at any time, allow a party to amend a document on such terms as will protect the rights of the parties. If the amendment has a reasonable prospect of success, the Court will consider other factors to ensure that granting the amendment will serve the interests of justice, including the timeliness of the motion, any delay that would be caused, prejudice to the other party, and whether the amendments will facilitate the court’s consideration of the true substance of the dispute on its merits.
In this case, the Court exercised its discretion to grant the amendments. It considered that the proposed amendments were already being litigated in parallel litigation about the same drug product, and were raised early in the litigation process, before any discovery occurred. As a result, there would be no prejudice to the plaintiffs.
This case shows that the NOA will not pose the same strict bar to raising new issues under the new Regulations as it did under the previous regime. Whether it continues to cast any shadow on the litigation at all remains to be seen.
1 Sunovion Pharmaceuticals Canada Inc. v. Taro Pharmaceuticals Inc., 2021 FC 37
2 2021 FC 37
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