Canada: Federal Court Of Appeal Sets Aside Order For Common Trial Across Multiple Actions Under PMNOC Regulations

An interesting procedural question under the amended Patented Medicines (Notice of Compliance) Regulations (PMNOC Regulations) is the extent to which separate actions against multiple generic manufacturers can proceed together, including at trial. While the Federal Court has ordered a few cases to be tried together (see for example our brief here regarding the fampridine trial decision involving Taro and Pharmascience), on May 14, 2020, the Federal Court of Appeal (FCA) considered this procedural question for the first time. The FCA overturned the Federal Court's order that patent validity issues common to four separate actions be heard in a concurrent trial: Apotex Inc and Teva Canada Limited v Bayer Inc, 2020 FCA 86, rev'g 2019 FC 1039. The FCA held that the decision below was inconsistent with the prohibition against joinder of actions under section 6.02 of the PMNOC Regulations.

Decision below

As previously reported, in actions relating to Bayer's XARELTO (rivaroxaban), the Federal Court ordered common validity issues in actions against Apotex and Teva to be heard concurrently (Bayer v Apotex; Bayer v Teva, 2019 FC 191; see brief here). Actions against Taro and Sandoz were commenced respectively four and six months later, and the Federal Court subsequently ordered these actions to be added to the Teva/Apotex trial (Bayer v Teva, 2019 FC 1039). This Order was appealed.

On appeal, Apotex and Teva argued that the decision failed to appropriately consider Rule 105 of the Federal Courts Rules, and the prejudice that flowed, including the loss of the 'first mover' advantage in the generic rivaroxaban market. The appellants also argued that the decision was contrary to section 6.02 of the PMNOC Regulations, which prohibits joinder of actions except in limited circumstances.

No protection for "first mover" advantage

Rule 105 provides that the Court may, in its discretion, order that two or more proceedings be "consolidated, heard together, or heard one immediately after the other." The FCA agreed that Rule 105 applied and the Court was required to consider whether prejudice will result from the order, but disagreed that Apotex and Teva would be prejudiced by the concurrent trial. In contrast to the Hatch-Waxman Act in the United States, which grants an advantage to the generic first-mover, nothing in the PMNOC Regulations supports any protection of the individual commercial interests of the first generic(s) to serve a notice of allegation.

Unnecessary to consider possibility of section 6.08 summary dismissal as alternative to concurrent trial

The appellants argued that if they are successful in their actions, Taro and Sandoz could bring motions for summary dismissal of their actions pursuant to section 6.08 of the Regulations, as was the case under the pre-amended PMNOC Regulations under section 6(5)(b). The FCA held that "it is not a foregone conclusion" that the summary dismissal jurisprudence will apply under the current Regulations. Further, Taro and Sandoz would likely have to wait to bring such motions until determination of the appeals.

Section 6.02 prohibition on joining actions is broader than a prohibition on consolidation

Section 6.02 provides that, with limited exceptions, no action may be joined to an action commenced under subsection 6(1) in the 24-month statutory stay period. The Regulatory Impact Analysis Statement accompanying the amended PMNOC Regulations stated that this prohibition was to facilitate the resolution of actions commenced under subsection 6(1) within the 24-month period and to avoid complicating the assessment of damages under section 8.

The FCA considered whether the statement in section 6.02 of the PMNOC Regulations that "[n]o action may be joined" only prohibited proceedings from being "consolidated" within the meaning of Rule 105, or whether the prohibition applies more broadly to other arrangements for multiple proceedings.

The FCA held that the language of the section suggests that "actions are joined whenever they are brought together, connected or brought into close association". The language was not limited to the joining of more than two proceedings into one, but rather is broad enough to include the decision below ordering a concurrent trial.

The purpose of section 6.02 is to "promote the expediency of one action, and one action only, instituted pursuant to subsection 6(1), in the context of the 24-month time period within which that action is meant to be determined". This is in contrast to Rule 105, which promotes the most expedient and least expensive determination of multiple proceedings before the Court that share similar issues.

A prohibition on common hearings fits easily within the meaning of the words used in section 6.02 and is entirely consistent with the purpose of the prohibition. On the facts, Teva's trial would be delayed because of the Order: the common trial will be lengthier because of the additional parties and Teva's trial on the infringement issues will proceed a number of weeks after the common trial.

The FCA therefore held that the Federal Court's Order of the hearing together of the four trials on the common issues (and indeed the earlier Order ordering the Teva/Apotex cases to be heard together) is counter to the prohibition found in section 6.02.

The FCA also held that the Federal Court's Order, in its effects, consolidated the actions (the four generics had joint discoveries and joint pre-trial motions resulting in a cumbersome and inefficient manner of proceeding) and therefore ran afoul of section 6.02 even if that section were interpreted narrowly to only prohibit consolidation.

Requirements imposed on the Federal Court in the 24-month period

The FCA also stated in obiter that the PMNOC Regulations do not require the Federal Court to render a judgment within 24 months. The FCA noted that section 6.09 imposes an obligation on the parties to diligently expedite the proceeding and to cooperate to have the action determined with the 24-month period. However, while the Court should not deal "flippantly" with the 24-month guideline, disposing of cases within that timeline is a goal rather than an obligation imposed on the Court.

If any of the parties wish to appeal, they will have to seek leave to appeal to the Supreme Court of Canada.

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Originally published 30 May, 2020