Apotex appeal: cold feet in Canada

On November 4, 2014, the Supreme Court of Canada was due to hear an appeal by generic drugs company Apotex against a decision that found it to have infringed a patent covering the blockbuster drug Plavix (clopidogrel bisulfate). The drug is a platelet aggregation inhibitor developed and marketed by Sanofi, as patentee, and Bristol-Myers Squibb (BMS), as licensee.

The Supreme Court was widely expected to clarify and lower the utility requirement in Canadian patent law, which in recent years has led to valuable patents on several top-selling drugs being found invalid, therefore making it easier for pharmaceutical patentees generally to show utility.

Perhaps with this in mind, Apotex decided to pull the plug on its appeal the day before the hearing. The late discontinuance was not only a surprise, but a disappointment to many.

A lack of utility has been one of the most popular attacks on the validity of pharmaceutical patents in Canada in recent years. In assessing utility, a court typically begins by analysing whether the inventor has made an explicit “promise” of a specific result in the patent. If there is such a promise, utility is measured against that promise. But if there is no promise, the test for utility is a “mere scintilla” of utility.

If there is a promise, the patentee must have demonstrated that promised utility by the Canadian filing date; if not, the patentee must have had a sound prediction of utility by that date. Where promised utility has not been demonstrated, the doctrine of sound prediction requires: (i) a factual basis; (ii) a sound line of reasoning; and (iii) proper disclosure. The courts have held that proper disclosure requires that both the factual basis and sound line of reasoning be disclosed in the patent.

The promise doctrine and the disclosure requirement for a sound prediction have both been particularly challenging for pharmaceutical patentees in recent years.

Generic drug manufacturers typically allege a promise of elevated utility—for example the effectiveness of the drug treatment against a particular disease in humans—even in the case of compound patents such as the one protecting Plavix.

However, actual utility in humans is normally confirmed only by clinical studies that are completed well after the filing of the patent application. Consequently, the problem for patentees in Canada is that the current law requires any utility promised by a patentee to be demonstrated or soundly predicted by the Canadian filing date, at which time only in vitro or in vivo animal studies have, typically, been completed.

Combined with the current sound prediction requirement, that has put Canada’s utility standard out of step with those in other jurisdictions.

Background to the discontinued appeal

While Sanofi, the patentee, ultimately won this case, it illustrates the potential problems with the utility test in Canada.

The Canadian patent relevant to Plavix in this dispute, no. 1,336,777 (‘777), relates to clopidogrel bisulfate, which is a dextrorotatory enantiomer. The racemic mixture had been disclosed earlier.

In 2003, Apotex unsuccessfully made invalidity and non-infringement allegations regarding the ‘777 patent under the Patented Medicines (Notice of Compliance) Regulations, which are similar to those of the US Hatch-Waxman Act. The company’s appeals to the Federal Court of Appeal and Supreme Court were unsuccessful. Accordingly, the minister of health was prohibited from approving Apotex’s clopidogrel product for sale in Canada until the ‘777 patent expired.

To try to get around the prohibition, Apotex started a court action in which it claimed the ‘777 patent was invalid. Sanofi disputed this and alleged infringement.

The trial judge found that based on the language in the patent, the invention “can be described as a compound which is useful in inhibiting platelet aggregation, has greater therapeutic effect and less toxicity than the other compounds” and makes an “explicit promise for use of the compound in humans”.

The judge then evaluated whether this promised utility had been either demonstrated or soundly predicted by Sanofi by the Canadian filing date. Sanofi, the judge found, had neither demonstrated nor soundly predicted the promised utility in humans by the relevant date.

Although Sanofi had obtained results in studies to factually show a prediction that the invention could be used in humans, and there was a “track record” of information which, in turn, provided a sound line of reasoning for such a prediction, the underlying factual basis and line of reasoning that grounded the prediction were not disclosed in the patent. Therefore, the claims were found invalid for lack of utility.

The case came down to the twin problems of a high promise of usefulness and the disclosure requirement for sound prediction measured against this high promise. The judge also found the patent claims obvious. Sanofi appealed.

The Federal Court of Appeal (FCA) reversed the decision, finding the patent valid. It said that when properly interpreted, the patent met the utility requirement and was not obvious, as the properties of the separated enantiomers could not be predicted before testing.

On utility, the sticking point, in this case as in many others, was what the promise of the patent was, if any.

The FCA noted that courts should not strive to find ways to defeat otherwise valid patents. Rather, it said, “where the language of the specification, upon a reasonable view of it, can be so read as to afford the inventor protection for that which he has actually in good faith invented, the court, as a rule, will endeavour to give effect to that construction”.

The FCA determined that any promised utility must be explicit. The trial judge had erred by finding an “explicit promise” for use in humans, based on inferences from the patent disclosure. The ‘777 patent described a compound having advantages (including the absence of disadvantages) over the compounds of another patent and those advantages were disclosed in the patent specification.

Because the trial judge had found that those advantages were demonstrated at the time of the patent application, the patent was not invalid for lack of utility.

On to Apotex’s appeal

Apotex obtained leave from the Supreme Court to appeal against the FCA decision.

Six organisations—Fédération internationale des conseils en propriété intellectuelle, Canada’s Research-Based Pharmaceutical Companies, Centre for IP Policy, International Association for the Protection of IP, BIOTECanada and the Canadian Generic Pharmaceutical Association—were granted intervener status to assist the Supreme Court in understanding the broader implications of the “utility” requirement to life science companies and the public in Canada.

On November 3, 2014, the day before the highly anticipated hearing in the Supreme Court, Apotex filed a notice of discontinuance “on a without costs basis on consent”. This means that Sanofi agreed that Apotex did not have to reimburse it for any costs incurred by Apotex’s appeal—relatively insignificant in the context of the litigation as a whole.

The practical effect of Apotex’s discontinuance is that its appeal will not be decided and the Supreme Court no longer has an opportunity, in this case, to give guidance and clarification on the existing utility requirements for patentability in Canada.

However, the discontinuance also means that the FCA’s decision finding the ‘777 patent valid and infringed is now the final word in the Apotex v Sanofi dispute over Plavix. This is not a minor matter given the substantial volume of Apotex’s import and formulation of clopidogrel bisulfate for export, including to the US.

While Apotex’s discontinuance is sure to be good news for Sanofi, the bringing of the Canadian law on utility more in line with that of other jurisdictions will have to wait for another day, and another case.

Gunars Gaikis is a partner at Smart & Biggar/Fetherstonhaugh. He can be contacted at: ggaikis@smart-biggar.ca