In a recent pleadings amendment motion under the Patented Medicines (Notice of Compliance) Regulations (the Regulations), the Federal Court gave the generic a choice: either (a) abandon proposed new grounds of invalidity or (b) accept that the scheduled trial date will be adjourned, with a commensurate extension of the 24-month statutory stay preventing approval of the generic’s abbreviated new drug submission.
The Court’s decision highlights the prejudice to innovators that can result when generics change the focus of their defences within tight procedural timelines imposed by the 24-month stay.
Bayer Inc. and Adverio Pharma GmbH (Bayer) and Sandoz Canada Inc. (Sandoz) are engaged in litigation under the Regulations relating to Bayer’s drug, ADEMPAS (riociguat). In its notice of allegation (NOA), Sandoz only alleged non-infringement and the Gillette defence. Accordingly, Sandoz did not seek early production of invention documents from Bayer. In its Statement of Defence, Sandoz repeated the allegations from its NOA.
Following exchange of affidavits of documents and oral discovery plans, Sandoz changed counsel. Sandoz’s new counsel proposed to amend its Statement of Defence to add several new grounds of invalidity, among other changes. At the time of Sandoz’s proposal, the case had been underway for over six months and was less than 15 months from its scheduled trial date.
Bayer consented to some of the amendments, but argued that there was insufficient time to reasonably defend several of the new invalidity allegations before the trial date. Sandoz argued that there was sufficient time within the existing schedule.
Extend the stay to account for delay
Sandoz bore the burden of showing that its amendments should be permitted. In doing so, Sandoz was required to show that Bayer would not be prejudiced. The Court held that Sandoz had failed to meet this burden, rejecting a proposed compromise to fit the new issues within the existing schedule.
Given that the case was previously focussed on infringement, the Court held that an entirely new defence of invalidity would place significant strain on Bayer and its litigation team. The Court recognized the need to develop a coherent theory on both infringement and validity and potential difficulties relating to matters such as witness availability and testing.
Bayer argued that Sandoz’s motion should be dismissed. The Court disagreed, holding that there was no evidence Sandoz had withheld its amendments in order to gain a strategic advantage. Although Sandoz probably could have raised the new invalidity allegations in its NOA, there was no evidence that it was aware of them at the time.
Instead, the Court held that any procedural or substantive prejudice to Bayer could be cured by adjourning the trial and granting a commensurate extension of the 24-month statutory stay. Sandoz argued that such an extension was prejudicial to it. The Court held that Sandoz could choose to either forego the disputed amendments or accept that the stay will be extended until the trial is re-scheduled.
Link to decision: Bayer Inc. v Sandoz Canada Inc., 2022 FC 1187