The Federal Court of Appeal has reversed the Federal Court’s decision to add two additional generic defendants (Taro Pharmaceuticals Inc. and Sandoz Canada Inc.) to an upcoming common trial under the Patented Medicines (Notice of Compliance) Regulations. The common trial will determine patent validity issues in Bayer Inc.’s actions against Teva Canada limited and Apotex Inc. concerning generic versions of XARELTO® (rivaroxaban).
This is an appeal by Teva and Apotex from a decision of the Federal Court allowing Taro and Sandoz to join Teva and Apotex in a trial of common validity issues. As we reported, the Federal Court agreed to add Taro and Sandoz as defendants to the hearing of common validity issues for two main reasons:
- Taro and Sandoz were ready to proceed in accordance with the schedules set for the first two generic defendants (Teva and Apotex); and
- the interests of justice favoured hearing the evidence and submissions of all of the parties before making ruling on claims construction and invalidity.
In a later decision, the Federal Court denied a motion by a fifth generic (Dr. Reddy’s Laboratories Ltd.) to join the common trial. As we reported, the Federal Court’s reasons focused on the need to determine actions against the earlier generic defendants within the respective 24-month stays of generic approval provided by the Regulations, as well as the possibility that the outcome of the earlier actions could help narrow the issues in Dr. Reddy’s action.
Meanwhile, Teva and Apotex appealed the decision adding Taro and Sandoz to the common trial.
Section 6.02 of the Regulations prohibits more than just consolidation
On appeal, Teva and Apotex argued that the common trial of validity issues raised by four generics violated the rule against joinder of actions in section 6.02 of the Regulations. The Court agreed.
Following an extensive bilingual analysis of the legislation, the Court held that the prohibition on joinder of section 6 actions “captures more than just the consolidation of proceedings”. It also captures other procedural arrangements that could make it less likely that a section 6 action be determined within its 24-month deadline. Here, the Court considered that hearing four generic defendants together would likely lengthen the duration of the common trial issues and delay Teva’s and Apotex’s trials on infringement issues.
In reaching its conclusion on this issue, the Court noted that the Regulations place the burden on the parties to move those actions as expeditiously as possible and to cooperate in “attempting to have [them] determined within the 24-month period.” The Court should assist the parties in meeting this aim through case management. Although the Court of Appeal commented that there is no absolute obligation in this regard, it confirmed that the Court’s goal should nonetheless be to decide cases in 24 months.
No entitlement to first-mover advantage in Canada
Teva and Apotex had also argued that the Federal Court failed to consider the prejudice they would suffer as a result of the common trial order, i.e., the loss of their first-mover advantage.
The Court acknowledged that prejudice can be an important factor when deciding whether to exercise the power to consolidate actions or hear them consecutively. However, the Court confirmed that Teva and Apotex are not entitled to a first-mover advantage. Nothing in the Regulations supports the entitlement to a first-mover advantage in Canada.
The case is Apotex Inc. v. Bayer Inc., 2020 FCA 86.