This year marks the 30-year anniversary of the Patented Medicines (Notice of Compliance) Regulations (Regulations), introduced in 1993 to prevent patent infringement by linking the regulatory approval of generic or biosimilar drugs with the patent rights of innovators.
Since their genesis, the Regulations have been the focal point of most of the pharmaceutical patent litigation in Canada. We have had the privilege of arguing many of the landmark cases on behalf of our clients. Here, we summarize how the Regulations work, how they have evolved, and offer some reflections – in brief – on where we are now.
How the Regulations work
Although the Regulations have evolved considerably over the past 30 years, their overall framework has remained the same. Under the Regulations, an innovator can list certain patents against its approved drug on the Patent Register. The listed patents must be addressed by the manufacturer of a generic or biosimilar drug before its drug can receive a Notice of Compliance (NOC) and be sold in Canada.
There are three ways that a listed patent can be addressed: (i) obtain the patent owner’s consent; (ii) wait for the patent to expire; or (iii) challenge the validity and/or infringement of the patent by serving the innovator with a Notice of Allegation (NOA), which then allows the innovator to assert the patent in a court proceeding under section 6 of the Regulations.
In a section 6 proceeding:
- a “statutory stay” prevents Health Canada from issuing an NOC for up to 24 months, providing time for the parties to litigate the listed patent;
- if the innovator is successful, the NOC will not issue until the patent expires;
- if the generic or biosimilar manufacturer is successful in addressing all listed patents, it can then obtain an NOC (subject to meeting regulatory requirements) and seek compensation for being kept off the market by bringing an action under section 8 of the Regulations.
Evolution of the Regulations
Coming into force (1993–1997). The original Regulations came into force on March 12, 1993, alongside changes to the Patent Act that abolished compulsory licenses for medicines and created an early-working exception to patent infringement. The early-working exception allows generic or biosimilar manufacturers to work a patented invention “for uses reasonably related” to obtaining regulatory approval. The Regulations were meant to counterbalance the early-working exception by providing innovators with an enforcement tool to prevent patent infringement prior to generic or biosimilar market entry. As of October 1993, more than 40 proceedings under the Regulations were underway.
The Regulations were held to be “imperfectly drafted” and much of the early litigation concerned basic questions about how the Regulations should function. For example, in 1993, the Federal Court of Appeal (FCA) held that section 6 proceedings would run as applications, meaning that discovery was generally unavailable and cases would be heard on only a written record, without a trial. In 1994, the FCA found that, given their summary nature, applications could not provide a final determination of whether a patent was invalid or infringed.
As a result, if an innovator was unsuccessful under the Regulations and the generic or biosimilar drug came to market, the same patent could be asserted again under the Patent Act. This was often the innovator’s only recourse as innovators were typically unable to appeal unfavourable judgments under the Regulations.
Frequent amendments (1998–2016). The Regulations became a moving target for the innovative and generic pharmaceutical industries, being amended seven times between 1998 and 2016. Many of the amendments were meant to address interpretations of the Regulations that, in the government’s view, disrupted the desired balance between patent rights and timely generic/biosimilar entry. For example:
- Reduced stay. The first major set of amendments in 1998 reduced the duration of the statutory stay from 30 to 24 months.
- Revised section 8 damages. The original version of section 8 proved “particularly obscure in its meaning”. This provision was replaced in 1998, and further amended in 2006 to confirm that generic and biosimilar manufacturers could not seek a disgorgement of innovators’ profits instead of their own damages.
- “Frozen” register. The 2006 amendments introduced a rule that a generic or biosimilar manufacturer did not need to address any patents listed after the filing date of its drug submission.
- Patent listing eligibility. A series of amendments specified, with increasing precision and restriction, the types of patents that could be listed on the Patent Register. The most significant change came in the 2006 amendments, which required that a listed patent contain a claim for the approved drug’s medicinal ingredient, formulation, dosage form, or use of the medicinal ingredient. These provisions were further amended in 2015 to clarify the level of product specificity required for combination drugs and formulations.
Full actions (2017–present). The most significant amendments came into force in September 2017, when the Regulations were completely overhauled (discussed here). Section 6 proceedings became full actions with binding judgments on patent infringement and invalidity. The first section 6 actions under the amended Regulations were started in December 2017 (discussed here). The first trial was decided in April 2020 (discussed here).
Where we are now
Staying power. Six years after the 2017 amendments, the 24-month statutory stay remains a cornerstone of the Regulations. This is likely because interlocutory injunctions to prevent patent infringement before trial are rarely granted in actions brought outside of the Regulations. Even though the 2017 amendments made the stay optional – allowing innovators to renounce the stay when bringing a section 6 action to avoid the possibility of section 8 liability (discussed here) – few have done so.
Fast-paced. Following the 2017 amendments, section 6 actions have routinely gone to trial in about 21 months, with decisions issuing before the statutory stay expires at 24 months. By contrast, in the 1998–2016 period, actions brought under the Patent Act would often take five or more years to get to trial. The amended Regulations promote faster litigation, including provisions for mandatory case management, early discovery of key documents, limits on interlocutory appeals, and a requirement that parties act diligently or risk having the statutory stay shortened or extended.
More efficient? By eliminating the “costly and inefficient practice of dual litigation”, the 2017 amendments were meant to provide “greater overall efficiency”. It is unclear whether this goal has been achieved.
- The Courts have taken a strict view of a new provision prohibiting the joinder of actions concerning different generic/biosimilar defendants or submissions (discussed here). Keeping individual actions separate increases the likelihood that each individual case will be decided within 24 months. However, it can also result in duplication of effort and multiple sequential trials with overlapping issues.
- Although the intent was to end “dual litigation”, the amended Regulations still allow for multiple tracks of litigation against the same generic/biosimilar defendant. This may occur if the defendant serves multiple NOAs, or if the innovator asserts infringement of unlisted patents under section 8.2 of the Regulations (discussed here). It also may occur when a party moves for summary disposition of an issue, which is likely to proceed in parallel with the main action in order to accommodate the stay (discussed here).
Section 8. There have been no judgments under the amended section 8. This is perhaps unsurprising as the first judgment under the original section 8 took more than 15 years to appear. This could leave important questions about liability for future losses unanswered for some years to come.
Early strategy and preparation. For all of the above reasons, the 2017 amendments require innovators to consider early how to best protect their Canadian patent rights. Innovators must carefully consider which patents to list on the Patent Register, as this effectively commits them to litigation under the Regulations. Once section 6 litigation is on the horizon, all parties benefit from early preparation and a clear strategy to manage the demanding schedule required to complete a complex patent case in less than 24 months.
We provide updates on the Regulations and other industry developments here at Pharma in Brief. Please also see our most recent Guide to Canada’s Pharmaceutical Intellectual Property Regime or contact a member of our patent litigation team.
 Bayer AG v. Canada (Minister of National Health & Welfare), 1993 CarswellNat 322, 51 C.P.R. (3d) 329 (FCA) [Bayer], at para. 4.
 Bayer, supra, at para. 12.
 Merck Frosst Canada Inc. v. Canada (1994), 55 CPR (3d) 302 at 316 (FCA).
 Regulatory Impact Analysis Statement, Regulations Amending the Patented Medicines (Notice of Compliance) Regulations, 2017.