In Elanco Canada Limited v. Canada (Minister of Health)1, Elanco sought judicial review of Health Canada’s decision to release information about Elanco’s veterinary medication, Fortekor, to a third party under the Access to Information Act (Act)2. The Federal Court Trial Division agreed with Elanco’s arguments under all relevant provisions of the Act as well as their proposed set of redactions. Health Canada’s decision to disclose the records was held to be invalid.
What you need to know
Health Canada filed its notice of appeal on December 18, 2019 and the matter is proceeding before the Federal Court of Appeal3.
This decision, while under appeal, is a significant success for companies wishing to protect confidential information submitted to regulatory authorities in Canada.
The Federal Court Trial Division decision determined that:
information may be exempt from disclosure under the Act even if similar information has been previously made public; and
the information available to the public must be entirely the same as previously published information, to be considered publicly disclosed and therefore subject to disclosure under the Act.
Confidentiality provisions included in employee and supplier agreements are evidence of the intent that information be kept as confidential. Health Canada cannot suggest that such agreements are irrelevant or should be disregarded when considering whether an exemption to disclosure applies.
For third parties, leading evidence before the Federal Court is key in substantiating the applicability of the exemptions in the Act. This can include affidavit evidence from employees.
The records at issue in this case were submitted by Elanco to Health Canada in order to seek approval for its veterinary medication Fortekor Flavour Tabs. Health Canada later received an access to information (ATI) request for information related to the Fortekor Flavour Tabs and notified Elanco of this request in accordance with the Act. Elanco objected to the disclosure of certain portions of these records and provided a redacted set of records to Health Canada for consideration. The disputed information related to product specific information about Fortekor such as solubility, concentration, stability and packaging information, and to Elanco’s supplier agreements.
Health Canada’s initial position was that only a subset of the information to which Elanco objected would be redacted before being disclosed to the requestor; however, following Elanco’s application for judicial review, Health Canada changed its position, taking a harder line, and indicated all requested records should be released without redaction.
Health Canada’s decision was reviewed on a correctness standard by the Federal Court. Elanco successfully argued that the records should only be released according to Elanco’s proposed redactions, on the grounds that certain pieces of information were protected from release under the Act by virtue of being trade secrets or confidential information, or on the basis that the release would prejudice the competitive position of a third party (i.e., Elanco) and interfere with contractual negotiations of a third party (i.e., Elanco).
While the parties received the full decision of the Federal Court on November 19, 2019, the partially-redacted public decision was not released until January 17, 2020. The hearing was also held in-camera to maintain the confidential nature of the information at issue.
Trade secrets: section 20(1)(a)
To be treated as a “trade secret”, such that information is exempted from disclosure under the Act: a) information must be absolutely or relatively secret; b) the possessor of the information must act with the intention to treat the information as a secret; c) the information must be capable of industrial or commercial application; and d) the possessor must have an interested worthy of legal protection.
Elanco argued that it treated the relevant information as confidential, as partially evidenced through confidentiality agreements with all employees and suppliers with whom the information is shared. Additionally, Elanco had submitted information to Health Canada on the understanding that it would remain confidential and Elanco had been reassured by Health Canada that all information submitted during the veterinary drug submission process is treated as proprietary and confidential.
Health Canada argued that because much of the information could be inferred or deduced through foreign public documentation or observation, the information which Elanco sought to protect from disclosure was no longer properly considered a trade secret. Due to the number of individuals that were aware of certain manufacturing information, Health Canada also argued that information could no longer be a trade secret because it is known to more than a few individuals (i.e., no longer relatively secret).
Justice McDonald disagreed with Health Canada’s position that because certain information could be reasonably inferred from documents in the public domain, such information no longer constitutes a trade secret. In coming to this decision, Justice McDonald highlighted the fact that the publicly available information related to a different medicine, not specifically to Fortekor Flavour Tabs (the product named in the ATI request), and also commented that Elanco had not relied on any of the publicly available information in its regulatory submissions to Health Canada.
Confidential Information: section 20(1)(b)
Confidential financial, commercial, scientific or technical information is also exempted from disclosure under section 20(1)(b) of the Act. To be considered confidential information, the record must: a) not be available from sources accessible or observable by the public; b) originate and be communicated with a reasonable expectation of confidence that it will not be disclosed; and c) be communicated in a relationship that is either a fiduciary relationship or not contrary to the public interest, where confidential communications are to the public benefit.
Similar to the arguments made under section 20(1)(a) of the Act, Elanco asserted that confidentiality in the drug submission process is a cornerstone principle to the engagement between manufacturers and Health Canada. Because the information which it sought to protect from redaction had been treated as confidential, including through confidentiality agreements, and had some commercial, scientific or technical aspect, Elanco argued it should be protected from disclosure. Health Canada took the position that certain pieces of the confidential information are in the public domain and because Elanco only provided redacted confidentiality agreements, it could not rely on those agreements.
Again, Justice McDonald agreed with Elanco and was not persuaded that information disclosed in other jurisdictions for other formulations of a drug product would constitute publicly disclosed/non-confidential information: “To be satisfied that this same information is in the public domain requires more than a simple word match”. In her reasons, Justice McDonald appeared to indicate that Health Canada needed to establish some link between the Canadian product and its information and the foreign information that was in the public domain, before the Canadian information could be considered publicly disclosed for the purpose of the Act. Substantial similarities or the ability to locate certain words or phrases in the public domain is insufficient if there is no confirmation that the foreign, publicly-disclosed information is comparable and applicable to the Canadian product at issue.
Prejudice to the competitive position of a third party: section 20(1)(c)
Information which, if released, would reasonably be expected to: a) harm Elanco in the form of financial loss; b) lead to a gain by a competitor; or c) prejudice Elanco’s competitive position, is also protected from disclosure. Third parties are not required to establish that harm or prejudice will result from disclosure. Rather, a speculative approach is applied to assessing whether there is a reasonable expectation of probable harm.
Because Elanco had invested significant time and resources in developing its product, by releasing certain records, Elanco argued that its competitors “would enjoy a head start and material gain from the savings in research and development costs” and be able to bring a competitive product to market with less investment/expenditures in a shorter period of time. Such advancement would prejudice Elanco’s competitive position.
Health Canada took the position that harm must be demonstrated and any arguments with respect to a reasonable expectation of harm must be supported by evidence.
The court found that Elanco had successfully established that there was a reasonable expectation of harm if the information was disclosed. Justice McDonald pointed to Elanco’s evidence that their medication is industry leading, inferring that the fact that Elanco is a leader must be connected to its investment in research and development. It was reasonable to presume that if this information were to be released to a competitor, Elanco’s position in the marketplace would be harmed. Justice McDonald disagreed that expert evidence was required to establish a real risk of harm.
Interference with contractual negotiations of a third party: section 20(1)(d)
Where a contractual situation is not addressed through the exemption under section 20(1)(c), information may nevertheless be exempted from disclosure if its release would interfere with contractual negotiations. In contrast to the evidence required under section 20(1)(c), for section 20(1)(d) to apply there must be evidence about the effect on actual contractual negotiations.
By way of affidavit evidence, Elanco submitted that it was bound by contracts which prohibited Elanco from disclosing the existence of contractual agreements with suppliers as well as the details of those relationships.
Health Canada contended that this evidence was insufficient to meet the requirements of the exemption under section 20(1)(d).
Justice McDonald also agreed with Elanco’s position with respect to section 20(1)(d) and held that the supplier information was entitled to protection. Elanco’s evidence, which illustrated that it was bound to maintain the confidential nature of its relationships with suppliers, was sufficient to meet the requirements of section 20(1)(d), particularly in light of the context and competitive demands of the veterinary pharmaceutical industry.
The Federal Court’s decision in this case highlights several important practice points for companies who submit confidential or proprietary information to government entities, including steps to take when faced with an ATI request, both in terms of an initial response and any subsequent judicial review proceeding:
Mark all documents provided to any entity who is subject to the Act as “confidential/competitively sensitive information” or “trade secret”, as applicable.
Include confidentiality provisions in contracts throughout the supply chain and with employees, to support an argument that the information remains confidential and has been treated as confidential, if there is ever an ATI request with respect to information that is shared with employees, suppliers or other business partners.
In view of possible ATI requests, it may also be beneficial to draft submissions to the government, such that no other documents that may become publicly available are referenced or incorporated by reference.
Even if similar information has been submitted to a foreign regulator, it is preferable to avoid relying on this information in submissions to Health Canada. Instead, the information can be directly incorporated into any Canadian submissions.
When responding to an ATI, provide evidence that the Canadian submission/materials differ from those provided to other regulatory authorities (that may have been made public), and indicate that the information submitted to the Canadian government entity was independently developed, rather than being taken from public domain sources.
For third parties proceeding to a judicial review of a government entity’s decision, leading evidence before the Federal Court is key in substantiating the applicability of the exemptions in the Act. In this case, affidavit evidence from employees was sufficient to meet the third-party evidentiary burden for the purposes of the Act.
1 2019 FC 1455.
2 The Act is Canada’s version of the US Freedom of Information Act.
3 See Federal Court of Appeal Docket A-468-19.
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