Bayer Inc. v. Fresenius Kabi Canada Ltd.

Bayer Inc. v. Fresenius Kabi Canada Ltd.
Court (s) Database
Federal Court Decisions
Date
2016-07-05
Neutral citation
2016 FC 581
File numbers
T-1440-14
Decision Content
Date: 20160705
Docket: T-1440-14
Citation: 2016 FC 581
Ottawa, Ontario, July 5, 2016
PRESENT: The Honourable Mr. Justice Brown
BETWEEN:
BAYER INC. and
BAYER INTELLECTUAL PROPERTY GmbH
Applicants
and
FRESENIUS KABI CANADA LTD. and
THE MINISTER OF HEALTH
Respondents
PUBLIC JUDGMENT AND REASONS
(Confidential Judgment and Reasons Released May 27, 2016)
I. Nature of the Matter and Summary of Disposition [1] This is an application by Bayer Inc. [Bayer] for an order pursuant to paragraph 6(5)(b) of the Patented Medicine (Notice of Compliance) Regulations [PM (NOC) Regulations] prohibiting the Minister of Health from issuing a notice of compliance [NOC] to Fresenius Kabi Canada Ltd. [Fresenius] for its proposed new drug for injection moxifloxacin hydrochloride [Fresenius-moxifloxacin]. Prohibition is sought on the basis of infringement of Bayer’s Canadian Patent No. 2,192,418 [the 418 Patent]. Bayer alleges that the Notice of Allegation [NOA] delivered by Fresenius dated May 5, 2014, is defective because it does not contain the “detailed statement” required by subparagraph 5(3)(b)(ii) of the PM (NOC) Regulations, and in any event, that the allegations in the NOA are not justified.
[2] Bayer’s original application sought prohibition until the expiry of three Bayer patents, namely, Canadian Patent Nos. 1,340,114 [the 114 Patent], the 418 Patent, and 2,378,424 [the 424 Patent]. However, portions of Bayer’s application concerning the 424 Patent were struck: Bayer Inc v Pharmaceutical Partners of Canada Inc, 2015 FC 388, which decision was upheld on appeal to this Court: Bayer Inc v Pharmaceutical Partners of Canada Inc, 2015 FC 797, and by the Federal Court of Appeal: Bayer Inc v Fresenius Kabi Canada Ltd, 2016 FCA 13.
[3] The 114 Patent expired on November 3, 2015. Infringement of the 114 Patent was not in issue.
[4] Therefore, the remaining issue is Fresenius’ allegation that its new drug does not infringe the 418 Patent. Fresenius seeks regulatory approval for its proposed new drug by comparison with Bayer’s AVELOX I.V.TM, an antibacterial for use by adults to treat certain bacterial infections including those relative to community acquired pneumonia. Currently, Bayer’s AVELOX I.V. TM is the only moxifloxacin hydrochloride injection product approved for sale in Canada. The 418 Patent is listed on the Patent Register in respect of Bayer’s AVELOX I.V. TM.
[5] Bayer alleges that infringement by Fresenius occurs during the manufacturing process of Fresenius-moxifloxacin, i.e., at an intermediate step or stage in the manufacturing process.
[6] The 418 Patent is presumed to be valid absent any proof to the contrary, of which there is none. Fresenius does not challenge the validity of the 418 Patent.
[7] For the reasons that follow, an order will issue prohibiting the Minister of Health from issuing a NOC to Fresenius for its proposed moxifloxacin hydrochloride product for injection until the expiry of the 418 Patent. The determinative issue is the sufficiency of the NOA; I have found the NOA defective, because it does not contain the “detailed statement of legal and factual basis” for the alleged non-infringement which is required by law, namely subparagraph 5(3)(b)(ii) of the PM (NOC) Regulations. Had I not found the NOA defective, I would have dismissed this application because Bayer failed to establish on a balance of probabilities that the allegations of non-infringement are not justified.
II. Facts The Patent [8] The relevant 418 Patent claims the monohydrate form of moxifloxacin hydrochloride, or 1-cyclopropyl-7-[(S,S)-2,8-diaza-bicyclo[4,3,0]non-8-yl]-6-fluoro-8-methoxy-1,4-dihydro-4-oxo-3-quinolinecarboxylic acid hydrochloride [CDCH], in the following terms:
CLAIMS:
1. A monohydrate of CDCH, of the formula […] which has a characteristic peak at 168.1 ppm in the 13C-NMR spectrum and a band at 2[θ]=26.7 in the X-ray diffractogram.
2. A monohydrate of CDCH according to claim 1 in the prismatic crystal form.
3. A process for the preparation of the CDCH monohydrate according to claim 1 or 2, wherein anhydrous CDCH is treated with an amount of water, which is at least sufficient for thorough mixing and hydration, until the stoichiometric content of water of crystallization has been absorbed and conversion of the crystals is complete, after which the crystals of the monohydrate thus obtained are separated off and the adsorbed water present is removed.
4. A process according to claim 3, wherein a suspension of the anhydrous CDCH .in an aqueous medium is stirred until hydration and conversion of the crystals is complete.
5. A process according to claim 3, wherein in preparing the monohydrate in the form of prisms, anhydrous CDCH or CDCH monohydrate in the form of needles is dissolved in a medium composed of water and a solvent which medium has a water content which is stoichiometrically sufficient but limited to 10% and the solvent is then removed.
6. A process according to claim 5, wherein the solvent component of the medium is ethanol.
7. A process according to claim 3, wherein anhydrous CDCH is exposed to humidity until the crystals have been converted quantitatively.
8. A medicament comprising a monohydrate of CDCH according to claim 1 or 2 together with a pharmaceutically acceptable diluent or carrier.
9. A medicament according to claim 8 for use in the treatment of bacterial infections.
10. An antibacterial composition comprising a monohydrate of CDCH according to claim 1 or 2 together with a suitable diluent or carrier.
11. An antibacterial composition according to claim 10 for the preservation of materials.
12. Use of a monohydrate of CDCH according to claim 1 or 2 for the treatment of bacterial infections.
13. Use of a monohydrate of CDCH according to claim 1 or 2 for the preservation of materials.
14. Use of a monohydrate of CDCH according to claim 1 or 2 in the preparation of a medicament for the treatment of bacterial infections.
[9] The NOA dated May 5, 2014, regarding the 418 Patent alleges that Claims 3-7, 11 and 13 are not relevant and need not be addressed under the PM (NOC) Regulations. With respect to the remaining claims, the NOA alleges, that no claims for the medicinal ingredient, formulation, dosage form and use of the medicinal ingredient in those claims would be infringed by Fresenius making, constructing, using or selling Fresenius-moxifloxacin.
The Notice of Allegation [10] Note that the NOA was originally delivered by Pharmaceutical Partners of Canada [PPC]. Fresenius has since stepped into the shoes of PPC.
[11] The relevant portions of the NOA are:
II. Non-infringement of claims 1, 2, 8, 9, 10, 12 and 14. No use of monohydrate
PPC alleges, pursuant to section 5(1)(b)(iv) of the NOC Regulations that no claim for the medicinal ingredient, formulation, dosage form or use of the medicinal ingredient in claims 1, 2, 8, 9, 10, 12 and 14 of the 418 Patent will be infringed by PPC making, constructing, using or selling PPC-moxifloxacin.
An essential element of all claims of the 418 Patent is CDCH monohydrate. The only independent claim, Claim 1 requires a monohydrate of CDCH which has a characteristic peak at 168.1 ppm in the 13C-NMR spectrum and a band at 2θ=26.7 in the X-ray diffractogram.
As PPC-moxifloxacin is a solution, it will not contain CDCH (moxifloxacin hydrochloride) in any crystalline form. Once the moxifloxacin is dissolved in solution, no crystal structure exists and the product will not have [essential patent claim C-NMR and XRPD spectra]. PPC-moxifloxacin will not contain moxifloxacin in crystalline form let alone in the claimed monohydrate form and therefore will not infringe any of the claims of the 418 Patent.
Further, characteristics of a crystalline form and differences in crystalline form have no bearing on the final product in solution. The solid form of the API used to produce PPC-moxifloxacin is therefore trivial and merely incidental to PPC-moxifloxacin.
In addition, PPC-moxifloxacin does not use the claimed monohydrate form of CDCH. Rather, it uses a different form of moxifloxacin. Specific details of the PPC formulation, API and product will be provided under a confidentiality agreement. PPC-moxifloxacin will not contain moxifloxacin monohydrate […]. Moxifloxacin monohydrate will not be used in the manufacture of PPC-moxifloxacin or in the manufacture of the moxifloxacin API used in the manufacture of PPC-moxifloxacin.
Finally, to the extent that Bayer may assert that the claims of the 418 Patent extend beyond the claimed monohydrate form of moxifloxacin to include other forms of moxifloxacin, PPC relies on the principle in Gillette Safety Razor Company v. Anglo American Trading Company (1913), 30 R.P.C. 465, such that should the claims include prior art uses, they are invalid for reading on the prior art. Specifically, the product PPC intends to sell will contain an old and known form of moxifloxacin. Thus, if PPC infringes the 418 Patent, then the 418 Patent is invalid.
Further, PPC does not use the prismatic crystal form of claim 2; nor does it use the processes of claims 3-7; nor does it seek approval for compositions and uses for the preservation of materials of claims 11 and 13.
Accordingly, no claim for the medicinal ingredient, formulation, dosage form or use of the medicinal ingredient in claims 1-14 of the 418 Patent will be infringed by PPC making, constructing, using or selling PPC-moxifloxacin.
[emphasis added]
[12] […………………………………..Redacted……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….].
[13] The NOA alleges Fresenius would not infringe the 418 Patent on the moxifloxacin hydrochloride monohydrate through making, constructing, using or selling Fresenius-moxifloxacin. Fresenius alleges its product is in solution form, which cannot contain the crystalline form required by Claim 1 of the 418 Patent. Moreover, Fresenius alleges it would not use the monohydrate moxifloxacin specified by the 418 Patent in its manufacturing of Fresenius-moxifloxacin or in the manufacture of the active pharmaceutical ingredient used in the manufacture of Fresenius-moxifloxacin.
Non Disclosure of Offshore Manufacture and Importation of Fresenius-moxifloxacin [14] Fresenius did not disclose in its NOA the fact that its proposed new drug is to be manufactured, processed and packaged offshore and imported into Canada. Instead, Fresenius disclosed its offshore manufacture and importation of Fresenius-moxifloxacin to Bayer only after Bayer commenced these proceedings, and then only after the parties entered into a confidentiality agreement.
[15] However, Fresenius in its NOA stated that the solid form of the active pharmaceutical ingredient used to produce Fresenius-moxifloxacin was “trivial and merely incidental” to Fresenius-moxifloxacin. Fresenius says the words “trivial and merely incidental” are words from which Bayer should have known that the drug in question would be manufactured offshore and imported into Canada. Fresenius says this because these words are found in decisions of this Court under the PM (NOC) Regulations and under the Patent Act, RSC 1985, c P-4, in which proposed new drugs were manufactured offshore for importation into Canada. These decisions interpret the Saccharin Doctrine to which Fresenius did not refer in its NOA, and which will be discussed in detail later in these Reasons.
III. Issues [16] There are essentially two issues in this application:
1. Whether Fresenius’ NOA dated May 5, 2014, is defective in that it does not contain the necessary “detailed statement” required by subparagraph 5(3)(b)(ii) of the PM (NOC) Regulations; and
2. In the alternative, whether Bayer has shown on a balance of probabilities that Fresenius’ allegations of non-infringement are not justified.
Issue 1: Whether Fresenius’ Notice of Allegation dated May 5, 2014, is defective [17] In my respectful view, Fresenius’ NOA is defective because it fails to satisfy the requirement of subparagraph 5(3)(b)(ii) of the PM (NOC) Regulations: the NOA does not contain “a detailed statement of the legal and factual basis” on which it was sought. The NOA fails to satisfy the legal tests established by this Court and by the Federal Court of Appeal construing what is meant by “detailed statement”.
[18] Specifically, while Fresenius alleges in its NOA that it will not infringe the 418 Patent, it does not say whether non-infringement will take place in Canada, or offshore where it will be made for importation into Canada. The essence of Fresenius’ allegation of non-infringement is as follows:
Moxifloxacin monohydrate will not be used in the manufacture of PPC-moxifloxacin [Fresenius-moxifloxacin] or in the manufacture of the moxifloxacin API [active pharmaceutical ingredient] used in the manufacture of PPC-moxifloxacin.
[19] Bayer, on the other hand and as noted, argues that Fresenius uses Bayer’s patented moxifloxacin hydrochloride monohydrate as part of or as an intermediate in the manufacturing process of Fresenius-moxifloxacin.
[20] Fresenius’ argument is that the drug to be sold in Canada does not itself infringe the 418 Patent, a point conceded by Bayer in that the imported drug for which the NOC is sought does not contain Bayer’s patented product.
[21] In the alternative however, Fresenius argues there is no infringement because the drug is manufactured outside Canada and imported into Canada. In addition, Fresenius argues that even if the patented substance is used or appears during the manufacturing process outside Canada, such use is a “trivial and merely incidental” use of the product which is insufficient for the Court to find infringement by importation.
[22] However, as noted above, Fresenius did not disclose in its NOA the facts of manufacture offshore and importation. It disclosed these facts only after Bayer initiated these proceedings and only then after a confidentiality agreement was obtained. This is a point of contention to which I will return. Fresenius’ NOA is dated May 5, 2014. Bayer’s Notice of Application is dated June 18, 2014 (amended July 31, 2014). A confidentiality order was issued July 21, 2014. Fresenius’ disclosure of the facts of manufacture abroad and importation took place when it sent Bayer material from its Abbreviated New Drug Submission [ANDS] on July 16, 2014 pursuant to the agreed upon confidentiality order.
[23] Fresenius’ disclosure of the offshore manufacture and importation of its proposed drug into Canada (albeit not made in its NOA) raises the so-called Saccharin Doctrine (after Saccharin Corp v Anglo-Continental Chemical Works, Ltd (1900), 17 RPC 307 (HCJ) [Saccharin]), by which importers of products manufactured outside of Canada infringe Canadian patents if there is a “strong link” between the use of the patented product abroad and the product imported into Canada: Pfizer Canada Inc v Canada (Health), 2007 FC 898 [Pfizer-Atorvastatin] at para 91. Infringement by importation arises even where the product ultimately imported into Canada does not infringe the Canadian patent. Indeed, the Saccharin Doctrine comes into play where there is no infringement by the imported product itself, in this case a drug, but where nonetheless the offshore manufacturing infringes the Canadian patent by using or producing the patented product offshore, after which the drug is then imported into Canada.
[24] The Supreme Court of Canada confirmed the application of the Saccharin Doctrine in Canadian patent law: Monsanto Canada Inc v Schmeiser, 2004 SCC 34 [Monsanto]. The Court said the rule is an “expansive” one, and at para 43 stated that “[i]nfringement through use is thus possible even where the patented invention is part of, or composes, a broader unpatented structure or process”. The dissent confirmed at para 155: “[i]t is well established that the use or sale of unpatented subject matter may still infringe a patent where the unpatented subject matter is made employing a patented process: Saccharin Corp v. Anglo-Continental Chemical Works, Ld. (1900), 17 R.P.C. 307 (H.C.J.); F. Hoffmann-Laroche, supra, at p. 415; Wellcome Foundation Ltd. v. Apotex Inc. (1991), 39 C.P.R. (3d) 289 (F.C.T.D.); American Cyanamid Co. v. Charles E. Frosst & Co. (1965), 29 Fox Pat. C. 153 (Ex. Ct.)” [emphasis in original]. The Saccharin Doctrine has been recognized to apply to infringement by importation: for example, Pfizer-Atorvastatin at paras 80-88.
[25] It is also well established that use of a patented substance at an intermediate step or stage in the production of a proposed new drug constitutes infringement for the purposes of “making, constructing, using or selling” in subparagraph 5(1)(b)(iv) of the PM (NOC) Regulations. See, for example, the Federal Court of Appeal’s decision in Abbott Laboratories v Canada (Minister of Health), 2006 FCA 187 at para 16:
The phrase “making, constructing, using or selling” in subparagraph 5(1)(b)(iv) describes a range of activities that is broader than merely including a patented substance in the proposed new drug. In my view, that phrase is broad enough to include the use of the patented substance at an intermediate stage in the production of the proposed new drug. I reach that conclusion based on the ordinary and grammatical meaning of the phrase. I see nothing in the purpose or object of the NOC Regulations that compels a narrower interpretation.
And to the same effect: Abbott Laboratories v Canada (Minister of Health), 2007 FCA 73 at para 4.
[26] There is no dispute that offshore manufacture and importation of Fresenius’ drug gives rise to different legal and factual tests relating to non-infringement by importation as per the Saccharin Doctrine, as opposed to the tests for non-infringement in Canada. Fresenius’ NOA did not set out any detail of the legal basis on which an allegation of non-infringement by importation could be based. However, a major argument advanced by Fresenius both in its written and oral pleadings was that the imported drug did not infringe by importation.
[27] In fact, given the new drug does not infringe the 418 Patent, a point Bayer conceded, infringement by importation became the major issue in this proceeding.
[28] This situation gives rise to the first issue on this Application: whether Fresenius should have alleged non-infringement by importation in its NOA with respect to its proposed importation into Canada of a new drug manufactured and processed offshore. That is, was Fresenius required to state the factual and legal details of the basis for its alleged non-infringement by importation in the required “detailed statement of the legal and factual basis” as interpreted in the case law? This requires an examination of the PM (NOC) Regulations and the authorities on point.
(1) The PM (NOC) Regulations require a “detailed statement” of all factual and legal issues in a NOA [29] The starting point are the PM (NOC) Regulations themselves of which in this context subsection 5(3) is most relevant:
5 (1) If a second person files a submission for a notice of compliance in respect of a drug and the submission directly or indirectly compares the drug with, or makes reference to, another drug marketed in Canada under a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the second person shall, in the submission, with respect to each patent on the register in respect of the other drug,
5 (1) Dans le cas où la seconde personne dépose une présentation pour un avis de conformité à l’égard d’une drogue, laquelle présentation, directement ou indirectement, compare celle-ci à une autre drogue commercialisée sur le marché canadien aux termes d’un avis de conformité délivré à la première personne et à l’égard de laquelle une liste de brevets a été présentée — ou y fait renvoi —, cette seconde personne doit, à l’égard de chaque brevet ajouté au registre pour cette autre drogue, inclure dans sa présentation :
(a) state that the second person accepts that the notice of compliance will not issue until the patent expires; or
a) soit une déclaration portant qu’elle accepte que l’avis de conformité ne sera pas délivré avant l’expiration du brevet;
(b) allege that
b) soit une allégation portant que, selon le cas :
(i) the statement made by the first person under paragraph 4(4)(d) is false,
(i) la déclaration présentée par la première personne aux termes de l’alinéa 4(4)d) est fausse,
(ii) the patent has expired,
(ii) le brevet est expiré,
(iii) the patent is not valid, or
(iii) le brevet n’est pas valide,
(iv) no claim for the medicinal ingredient, no claim for the formulation, no claim for the dosage form and no claim for the use of the medicinal ingredient would be infringed by the second person making, constructing, using or selling the drug for which the submission is filed.
(iv) elle ne contreferait aucune revendication de l’ingrédient médicinal, revendication de la formulation, revendication de la forme posologique ni revendication de l’utilisation de l’ingrédient médicinal en fabriquant, construisant, utilisant ou vendant la drogue pour laquelle la présentation est déposée.
…
…
(3) A second person who makes an allegation under paragraph (1)(b) or (2)(b) shall
(3) La seconde personne qui inclut l’allégation visée à l’alinéa (1)b) ou (2)b) doit prendre les mesures suivantes :
(a) serve on the first person a notice of allegation relating to the submission or supplement filed under subsection (1) or (2) on or after its date of filing;
a) signifier à la première personne un avis de l’allégation à l’égard de la présentation ou du supplément déposé en vertu des paragraphes (1) ou (2), à la date de son dépôt ou à toute date postérieure;
(b) include in the notice of allegation
b) insérer dans l’avis de l’allégation :
…
…
(ii) a detailed statement of the legal and factual basis for the allegation;
(ii) un énoncé détaillé du fondement juridique et factuel de l’allégation;
…
…
[emphasis added]
[soulignement ajouté]
[30] Subparagraph 5(1)(b)(iv) requires that a second person requesting a NOC in respect of a drug listed on the Patent Register “5(1)(b) … shall … allege that … (iv) no claim for the medicinal ingredient, no claim for the formulation, no claim for the dosage form and no claim for the use of the medicinal ingredient would be infringed by the second person making, constructing, using or selling the drug for which the submission is filed.”
[31] Further, and also material to the present discussion, where a NOA is filed, subparagraph 5(3)(b)(ii) requires that “(3) [a] second person who makes an allegation under paragraph (1)(b) … shall … (b) include in the notice of allegation… (ii) a detailed statement of the legal and factual basis for the allegation.”
[32] Stripped to their essentials, the PM (NOC) Regulations require Fresenius to set out “a detailed statement of the legal and factual basis for the allegation” of non-infringement. There is no dispute that Fresenius was obliged to set out such “detailed statement”. However, the parties dispute the application of this law to the present case. I turn to the authorities.
(2) Jurisprudence requires a “detailed statement”: i.e., factual and legal issues must be set out in a NOA A – The Jurisprudence [33] The requirement to set out “a detailed statement” of allegations of non-infringement has been considered on several occasions by this Court and the Federal Court of Appeal, as set out below.
[34] Bayer Inc v Cobalt Pharmaceuticals Company, 2013 FC 1061 [Cobalt], per Hughes J. stands for the proposition that a second person must raise “all the facts and legal arguments upon which it relies in support of its allegations.” Importantly, the decision says that the second person cannot craft new arguments, or raise new allegations or new facts or new prior art documents not set out in its NOA. This Court observed that this may seem draconian, but that it is equally draconian for the first person who decided to institute proceedings to face shifting allegations and facts:
GOING BEYOND THE NOTICE OF ALLEGATION
[34] It has been firmly established by the Court of Appeal that the second person, a generic such as Cobalt, has an obligation in its Notice of Allegation to raise all the facts and legal arguments upon which it relies in support of its allegations. It cannot craft new arguments, or raise new allegations or new facts or new prior art documents not set out in the Notice of Allegation. (AB Hassle v Canada (Minister of National Health and Welfare) (2000), 7 CPR (4th) 272, at paras 21-24; Proctor & Gamble Pharmaceuticals Canada, Inc v Canada (Minister of Health), 2002 FCA 290, at paras 21-26.
[35] While this may seem draconian since, undoubtedly, new matters may be raised as experts are consulted and evidence emerges, it is equally draconian for the first person who decides to institute proceedings to face shifting allegations and facts. The process is in need of change, but no interested person seems to be pressing for that change.
[36] As matters stand now, the Court must reject arguments based on facts or documents not set out in the Notice of Allegation nor can the Court address new allegations.
[emphasis added]
[35] AB Hassle v Canada (Minister of National Health and Welfare) (2000), 7 CPR (4th) 272 (FCA), per Stone JA [AB Hassle], is perhaps one of the most frequently cited cases of the Federal Court of Appeal regarding the required “detailed statement”. It stands for the proposition that the NOA is a pivotal step in the process, and puts the patentee on notice of the grounds on which the second person considers that the making, constructing, using or selling of the drug will not infringe. The theory of the regime is to enable the patentee to confidently decide whether to resist the issuance of a NOC. The NOA casts a long shadow over proceedings such as those before the Court now. Indeed it is upon the content of the NOA that patentees must decide whether or not to commence a section 6 proceeding and to assess its chances of success or failure. Therefore, the Federal Court of Appeal concluded that a second person must do what, in fact, paragraph 5(3)(a) requires, i.e., set forth in its NOA a “detailed statement” of “the legal and factual basis” for its allegation. The Court emphasized that the second person must do so in a sufficiently complete manner as to enable the patentee to assess its course of action in response to the allegation. The Court of Appeal said that the regulatory intent appears to be that the entire factual basis be set forth in the NOA, adding that the second person could not cure deficiencies nor add to the facts set forth in its “detailed statement”:
[19] The detailed statement is not a pleading per se but represents a pivotal step in the process leading up to the issuance of an NOC. By taking that step the second person puts the patentee on notice of the grounds on which he or she considers that the making, constructing, using or selling of the drug will not infringe the second person’s patent rights during the unexpired term of the patent. In theory, this procedure ought to enable the patentee to confidently decide within the 45-day time limit whether to resist the issuance of an NOC.
[20] While it is true that the detailed statement is not filed in a section 6 proceeding, it nevertheless casts a long shadow over that proceeding. Indeed, it is upon the content of that statement that the patentee must decide whether or not to commence a section 6 proceeding and to assess its chances of success or failure.
[21] In my view, all of these considerations suggest that a second person must do what, in fact, paragraph 5(3)(a) requires, i.e. set forth in the detailed statement “the legal and factual basis” for the paragraph 5(1)(b) allegation and to do so in a sufficiently complete manner as to enable the patentee to assess its course of action in response to the allegation. See Pharmacia Inc. v. Canada (Minister of National Health and Welfare) (1994), 58 C.P.R. (3d) 209 (F.C.A.) at 216, per Strayer J.A.
[23] The respondent suggests that the list of prior art in the detailed statement was not intended to be exhaustive, hence the presence of the word “including”, so that the way was left open to add to that list in the section 6 proceeding. I am of the view, however, that paragraph 5(3)(a) does not contemplate such possibility. The intent appears to be that the entire factual basis be set forth in the statement rather than be revealed piecemeal when some need happens to arise in a section 6 proceeding. This Court has cautioned persons in the position of the respondent that they assume a risk that a particular allegation may not be in compliance with the Regulations and that the deficiency cannot be cured by the Court in a section 6 proceeding.
[24] … This Court decided in Hoffmann-LaRoche Ltd. v. Canada (Minister of National Health and Welfare) (1996), 70 C.P.R. (3d) 1, that a second person could not in a section 6 proceeding add to the facts that were set forth in its detailed statement.
[emphasis added]
[36] Proctor & Gamble Pharmaceuticals Canada, Inc v Canada (Minister of Health), 2002 FCA 290 per Rothstein JA [Proctor & Gamble], is a further decision of the Federal Court of Appeal emphasizing that the second person’s NOA must provide all the facts it intends to rely upon in subsequent prohibition proceedings, and cannot rely on facts that exceed those laid out in its “detailed statement”:
[22] However, the notices of allegation and the detailed statement of legal and factual basis for the allegation must provide all the facts the generic producer intends to rely upon in subsequent prohibition proceedings. It cannot rely on facts that exceed those laid out in its detailed statement. See Merck Frosst Canada Inc. v. Canada (Minister of Health) (2002)12 C.P.R. (4th) 447 at paragraph 19 per Stone J.A.
[emphasis added]
[37] Astrazeneca AB v Apotex Inc 2005 FCA 183, per Evans JA [Astrazeneca], confirms that a NOA is insufficient if it leaves the patent holder having to guess at the real grounds for the allegation that the patent would not be infringed:
[12] Third, a detailed statement of the bases of an allegation must be sufficiently complete to enable a patentee to make an informed decision as to whether to respond to the allegation by instituting proceedings for an order of prohibition: AB Hassle v. Canada (Minister of National Health and Welfare) (2000), 7 C.P.R. (4th) 272 (F.C.A ) at para. 21. In SmithKline Beecham Inc. v. Apotex Inc. (2001), 10 C.P.R. (4th) 338 (F.C.A.) at para. 27, Noël J.A. held that the detailed statement in that case was not insufficient “in the sense that it left SmithKline having to guess at the real grounds for the respondents' allegation that the patent would not be infringed.”
[38] Novopharm Ltd v Pfizer Canada Inc, 2005 FCA 270, per Malone JA [Pfizer], is a further enunciation of the purpose of a NOA which is that a NOA must be sufficient to make the patentee fully aware of the grounds on which the generic claimed the patent would not be infringed if a NOC issued. In addition, there are limits to what must be disclosed. A second person is not required to anticipate all possible grounds of infringement including speculative theories:
[4] In its more recent jurisprudence, this Court has repeatedly stated that the test of the adequacy of a NOA is whether the detailed statement was sufficient to make the patentee (Pfizer) fully aware of the grounds on which the generic (Novopharm) claimed that the relevant patent would not be infringed if a NOC was issued by the Minister (see AB Hassle v. Canada (Minister of National Health and Welfare) (2000), 7 C.P.R. (4th) 272 (F.C.A.) at paragraph 17, per Stone J.A. (AB Hassle 1); SmithKline Beecham Inc. v. Apotex Inc. (2001), 10 C.P.R. (4th) 338 (F.C.A.) at paragraph 26, per Noël J.A.; and also Pfizer Canada Inc. v. Apotex Inc. (2004), 38 C.P.R. (4th) 400 (F.C.A.) at paragraph 24, per Evans J.A.).
…
[16] … The legal test of adequacy does not require [the generic] to anticipate all possible grounds of infringement, including [the first person’s] speculative theory that the dihydrate could be used in the process of manufacturing [the second person’s] bulk monohydrate. As noted by Evans J.A. in AstraZeneca v Apotex Inc. 2005 FCA 183 … :
A second person [the generic] should not be required to anticipate every theory of possible infringement, however speculative, in the detailed statement supporting its allegations.
[emphasis added]
[39] Bayer Inc v Cobalt Pharmaceuticals Company, 2015 FCA 116, on appeal from Hughes J.’s decision in Cobalt is the Federal Court of Appeal’s most recent statement on what must be included in the detailed statement required in a NOA. The Federal Court of Appeal held that it is not open for a second person in prohibition proceedings under the PM (NOC) Regulations to stray from its NOA.
[61] It is not open to Cobalt in prohibition proceedings under the NOC Regulations or appeals therefrom to stray from its notice of allegation: Procter & Gamble Pharmaceuticals Canada, Inc. v. Canada (Minister of Health), 2002 FCA 290, [2003] 1 F.C. 402 at paragraph 22. Therefore, Cobalt’s submission must be rejected.
[emphasis added]
B – Summary of the cases [40] From the foregoing, I conclude that Fresenius’ NOA must allege all the facts and legal arguments upon which it intends to rely in support of its allegations. In a word, Fresenius must do what paragraph 5(3)(a) requires it to do, namely to set out in its NOA a “detailed statement” of “the legal and factual basis” for its allegations. However, a second person is not required to anticipate every theory of possible infringement, however speculative, in its detailed statement. Those who file inadequate NOAs must assume their own risks when it comes to attacks on the adequacy of such allegations once prohibition proceedings are commenced.
[41] The test of the adequacy of a NOA is whether the detailed statement is sufficient to make the patentee fully aware of the grounds on which the generic claimed that the relevant patent would not be infringed if a NOC is issued. The first person must be informed in a sufficiently complete manner to enable it to confidently decide and assess its course of action and chances of success or failure.
[42] Conversely, the second party may not craft new arguments, or raise new allegations or facts not set out in the NOA. A second person may not cure deficiencies in the NOA. It may not stray from its NOA.
[43] The Courts have cautioned that second persons assume a risk that a particular allegation may not comply with the PM (NOC) Regulations and that such a deficiency cannot be cured by the Court in a section 6 proceeding. While this may seem draconian, it is equally draconian for the first person who decides to institute proceedings to face shifting allegations, legal arguments, and facts.
(3) Application of PM (NOC) Regulations and Case Law to the Fresenius NOA [44] With these principles in mind, I turn to the NOA in this case, the material parts of which state:
… PPC-moxifloxacin will not contain moxifloxacin in crystalline form let alone in the claimed monohydrate form and therefore will not infringe any of the claims of the 418 Patent.
Further, characteristics of a crystalline form and differences in crystalline form have no bearing on the final product in solution. The solid form of the API used to produce PPC-moxifloxacin is therefore trivial and merely incidental to PPC-moxifloxacin.
In addition, PPC-moxifloxacin does not use the claimed monohydrate form of CDCH. Rather, it uses a different form of moxifloxacin. Specific details of the PPC formulation, API and product will be provided under a confidentiality agreement. PPC-moxifloxacin will not contain moxifloxacin monohydrate […]. Moxifloxacin monohydrate will not be used in the manufacture of PPC-moxifloxacin or in the manufacture of the moxifloxacin API used in the manufacture of PPC-moxifloxacin.
[45] As noted already, Fresenius’ NOA does not detail the fact that the drug for which it seeks a NOC is manufactured and processed outside Canada. It does not set out the fact that the drug is imported into Canada from abroad. Fresenius does not set out in detail that it relies on the legal principles surrounding non-infringement by importation as developed in the Saccharin Doctrine.
[46] Given the law cited above, on the facts of this case, Fresenius’ NOA is defective on its face because it does not do what the PM (NOC) Regulations require it to do – it does not provide the necessary detailed statement either of the facts or of the law relied upon by Fresenius in relation to its alleged non-infringement by importation.
[47] Fresenius takes a different position and advances several reasons to support its argument that its NOA is not defective.
(4) Did Fresenius make adequate disclosure by use of “code words” for non-infringement by importation? [48] Fresenius says it made adequate disclosure by stating in the NOA that the “[s]olid form of the API used to produce PPC-moxifloxacin is therefore trivial and merely incidental to PPC-moxifloxacin.” Fresenius argues it was not required to make more fulsome disclosure in referring to non-infringement by importation than its use of these indirect allusions to what may or may not have been the infringement or non-infringement by importation rules. While Fresenius nowhere states its new drug is manufactured offshore, nor that the new drug is to be imported into Canada, and does not detail any factual or legal arguments concerning non-infringement by importation, it says Bayer, indeed anybody in the field, should have known from these words that the drug was manufactured abroad and imported into Canada. It says the use of what appear to be code words (“trivial and merely incidental”) gave sufficient notice of non-infringement by importation to Bayer.
[49] The words “trivial” and “merely incidental” do appear in patent cases relating to non-infringement by importation. The concepts of trivial and non-essential use appear in the decision of Justice Gauthier, as she then was, in Eli Lilly and Company v Apotex Inc, 2009 FC 991 at paras 327 and 355, where the Court reviews the law of infringement by importation and the Saccharin Doctrine. This decision was subsequently approved by the Federal Court of Appeal in Eli Lilly and Company v Apotex Inc, 2010 FCA 240 at para 19. These words also appear in the decision of Justice Snider in Pfizer-Atorvastatin at paras 77 (“merely incidental”) and 90 (“incidental, non-essential, or could readily be substituted”), as will be discussed later, as they do in the original Saccharin decision itself.
[50] However, in my respectful view, the use of code words in Fresenius’ NOA does not satisfy the statutory duty imposed on Fresenius by the PM (NOC) Regulations to set out a “detailed statement of the legal and factual basis” for its allegations. In my respectful view, these words provide no “detail” at all. They may constitute hints or clues as to the basis(es) which Fresenius might or might not be using to support an allegation of non-infringement. But in my view, giving clues is not enough to satisfy the mandatory and direct regulatory requirement to provide a “detailed statement”.
[51] Neither do these code words satisfy the jurisprudence. The authorities make it clear that all the facts and legal arguments must be set out in the “detailed statement”: Cobalt at para 34, AB Hassle at para 23, Proctor & Gamble at para 22, Pfizer at para 4. In my view, the material facts and legal arguments relating to non-infringement by importation should have been present in, but contrary to the PM (NOC) Regulations are absent from,