Federal Court of Appeal confirms no litigation by installments in patent cases—even under the PM(NOC) Regulations

In Janssen Inc. v. Apotex Inc., 2023 FCA 243, the Federal Court of Appeal found that it was an abuse of process for Apotex to challenge the validity of a patent after it had already (unsuccessfully) argued that it would not infringe the same patent. Each of the non-infringement and invalidity proceedings was triggered by Apotex sending Janssen notices of allegation (NOAs) under the Patented Medicines (Notice of Compliance) Regulations (PM(NOC) Regulations). In deciding that the second proceeding was abusive, the Court emphasized that a key goal of the 2017 amendments to the PM(NOC) Regulations was to avoid multiple proceedings about the same patent. Whether a patent case is under the PM(NOC) Regulations or simply under the Patent Act, it appears that it is now an abuse of process to raise arguments in a second patent case that could have been raised in the first case about the same patent.

What you need to know

• Successive patent cases in respect of the same product and patent will usually constitute an abuse of process. A party arguing that they are not infringing a patent must also address the validity of the patent. Under the PM(NOC) Regulations, parties must include both allegations of non-infringement and invalidity in their NOAs if they intend to raise these defences. It will ordinarily be an abuse of process for a party to raise a defence in a second NOA that it could have raised in a first NOA.
• Parties under the PM(NOC) Regulations must put their best foot forward. While the PM(NOC) Regulations do not prevent a party from serving successive NOAs in respect of the same patent and the same medicine, this is subject to the Court’s inherent power to prevent misuses of its procedure through the doctrine of abuse of process. Successive NOAs will usually only be appropriate in specific circumstances, for example, where the law or the facts change, a situation limits the scope or application of an existing prohibition order, or a new decision is issued in respect of the validity or construction of the patent. Parties should carefully consider any strategic decision not to allege invalidity or non-infringement in a first NOA since failure to do so may prevent them from raising these defences in the future.

Background and summary judgment decision

Apotex sought to market a generic version of Janssen’s paliperidone palmitate (marketed as INVEGA SUSTENNA), used to treat schizophrenia and other disorders. In 2020, Apotex served Janssen with an NOA in which it alleged it would not infringe Janssen’s 335 Patent. Apotex did not allege that the patent was invalid. Following a summary trial, the Federal Court found that Apotex would infringe the 335 Patent (see 2022 FC 107) and granted an injunction preventing it from marketing its generic version of INVEGA until the expiry of the 335 Patent. Following that decision, Apotex served Janssen with new NOAs (some of which related to a different submission with different dosages), this time alleging the 335 Patent is invalid.

Janssen sued Apotex under the new NOAs and moved for summary judgment. It argued (among other things) that Apotex’s subsequent NOAs were an abuse of process. In 2023 FC 912, the Federal Court rejected Janssen’s argument that Apotex should have raised the invalidity claim alongside the non-infringement claim in the prior action. It disagreed with Janssen and concluded that the scheme of the PM(NOC) Regulations permitted more than one NOA in relation to the same patent. While it would have been an abuse of process for Apotex to have alleged one ground of invalidity of the 335 Patent in the original NOA and a different ground of invalidity in the subsequent NOA, it was not inappropriate to separately allege non-infringement and invalidity through successive NOAs. Janssen’s motions for summary judgment were therefore dismissed at first instance.

Federal Court of Appeal finds abuse of process in repetitive NOAs

The Federal Court of Appeal overturned the Federal Court’s decision and concluded that the subsequent NOAs were an abuse of process. The Court looked at the Regulatory Impact Analysis Statement (RIAS) that was issued alongside the 2017 amendments to the PM(NOC) Regulations and held that a primary aim of the amendments was to prevent duplicative litigation and a multiplicity of proceedings. It also concluded that the 2017 amendments meant that an action under the PM(NOC) Regulations was intended to proceed much like a normal patent infringement action. As a result, it concluded that the same principles would apply. In a normal infringement action under the Patent Act, a defendant would not be permitted to raise invalidity after defending solely on the basis of non-infringement and losing. It, therefore, concluded that, while second or subsequent NOAs may be appropriate in some cases (e.g., following the discovery of new facts, a change in law, or a definitive decision addressing the validity or construction of the patent), a patentee remains free to challenge the second NOA as an abuse of process. A party should, as a general principle, raise all of its allegations in its first NOA and refrain from holding some of its case in reserve pending the outcome of litigation.

What this means for patent litigants

This case suggests that second persons must carefully consider the potential implications of alleging only invalidity or non-infringement in an NOA, since they may be prevented by the doctrine of abuse of process from asserting other allegations in the future.