The Federal Court of Appeal (FCA) has confirmed that in an infringement action under the Patented Medicines (Notice of Compliance) Regulations, the "second person" (i.e., generic/biosimilar) is not precluded from pleading invalidity allegations in its Statement of Defence beyond those that were raised in its notice of allegation (NOA). While new allegations may not be appropriate in every case, nor without consequence for the second person in a subsequent section 8 claim, they are not categorically prohibited.

Background

The underlying Federal Court (FC) decision concerned a motion by a section 6 infringement defendant seeking leave to amend its Statement of Defence. The defendant wished to add allegations of invalidity that were not found in its NOA, but that had been pleaded in the Statement of Defence of another generic in a parallel proceeding. As we reported, the FC allowed the motion.

The Regulations do not limit a defendant to the allegations in the NOA

The FCA upheld the Federal Court's decision allowing the pleading amendments. Notwithstanding that the NOA must include "a detailed statement of any grounds of invalidity", the Regulatory Impact Analysis Statement accompanying the amendments also states that this "does not not circumscribe or otherwise limit the issues and arguments that may be raised in a proceeding brought under the Regulations".

The Court has discretion to remedy unfairness

The plaintiffs argued that allowing the new invalidity allegations was unfair since their decision to risk section 8 liability by commencing the action was based on the generic's NOA.

The FCA rejected this argument, reiterating the FC's finding that the Regulations contain sufficient checks and balances to alleviate any such concern:

  • First, subsection 8(6) gives the court discretion to consider factors that could affect the amount of liability under section 8, including whether the "first person" (e.g., brand/patent owner) was improperly influenced to start an action due to an incomplete NOA.
  • Second, the court has the discretion to dismiss pleadings amendment motions that are not in the interests of justice, which allows it to deny amendments to introduce allegations that the moving party was aware of when the NOA was served.

Finally, the plaintiffs argued that any new invalidity allegations should be made through a counterclaim rather than a defence, on the basis that a counterclaim is a distinct proceeding from the section 6 infringement action and would not affect section 8 liability. The FCA rejected this argument. It held that there was nothing in the text, context or purpose of the Regulations to support the proposed distinction between the action and counterclaim.

Link to decision: Sunovion Pharmaceuticals Canada Inc. v Taro Pharmaceuticals Inc., 2021 FCA 113.

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