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Editor's note: This article was updated to reflect recent developments; a prior version of this article was published on August 6, 2020.

A vague queasiness may come over you when the envelope lands on your desk with an emphatic thump and you pull out the 100+ pages explaining why the patents on your key pharmaceutical or biologic product are under challenge. Welcome to patent actions under Canada’s Patented Medicines (Notice of Compliance) Regulations (“Regulations”). Fast-paced – 21 months to trial – and carrying significant commercial risks – loss of exclusivity, exposure to damage claims – actions under the Regulations present a significant litigation-management challenge. An understanding of the key facets of the Regulations can help you avoid pitfalls and calm your nerves. Here are ten topics that in-house counsel need to know about the Regulations. For a comparison to US Hatch-Waxman regime, see here.

          1.    Service
Actions under the Regulations are triggered by service of a notice of allegation (NOA) by a generic drug company.  Service is made either personally (a process server drops off the allegation) or by registered mail. The NOA addresses patents listed by the patentee/first person on the Patent Register maintained by the Minister of Health. Generics are required to make one or more prescribed allegations in relation to the listed patents, including non-infringement and invalidity.   

The timeline for starting an action is tight – 45 days from service – and non-extendable. Ensuring that an NOA comes to your attention as soon as possible is a critical early step.  Patent lists filed with the Minister of Health include addresses for service which should be reviewed and updated, as necessary.

          2.    Use it or lose it
If the patentee (and the first person listing the patent) does not sue the generic on the patents addressed in an NOA within 45 days, they will lose their right to assert the patents in relation to that generic regulatory submission, absent a reasonable basis for not bringing the action.

          3.    Imposed confidentiality obligations
If the generic alleges non-infringement in the NOA, the generic is required to provide relevant portions of their submission (e.g., formulation or manufacturing details). The generic may also impose reasonable rules for maintaining confidentiality on the first person or patentee in relation to the disclosure. 

While you may wish to immediately report out an NOA to a related company in another jurisdiction, take a moment to review the rules imposed by the generic or consult with outside counsel to avoid any allegations of breach of the confidentiality rules.   

          4.    45 days go by fast
The Regulations require that an action be started within 45 days of service of the NOA. During that period, in-house counsel may need to align with the business, retain outside counsel, and review draft pleadings. If outside counsel has not been retained, the timeline becomes even more compressed. Ideally, steps should be taken prior to receipt of the NOA, including collection of potentially relevant documents required for early document production (see #6 below) and retention of counsel.

          5.    Two years go by fast 
The Regulations and the Federal Court Case and Trial Management Guidelines contemplate a decision prior to the expiry of the 24 month statutory stay.  Trials are typically scheduled between 20 and 21 months after the action is started. This timeframe can place significant burdens on in-house counsel, including responding to discovery requests, considering expert evidence, and aligning positions across multiple jurisdictions. While the steps are largely unavoidable, pre-NOA planning can reduce these stresses.

          6.    Early document production
The Regulations permit a generic to request early production of documents that may be relevant to allegations of invalidity. Patentees/first persons are required to serve such documents in response to such a request at the time the claim is served or otherwise provide an explanation for not providing such documents.

Given documents may be archived or in offices of inventors, this is another step that should be undertaken before service of an NOA.

          7.    Waiver of 24-month statutory stay
A statutory stay of up to 24 months is imposed at the beginning of the action, precluding the Minister of Health from issuing a notice of compliance for the generic or biosimilar product. The patentee/first person may rely on the stay (and risk a possible claim for damages by the generic under section 8 of the Regulations, see #10 below) if the action fails.

The statutory stay can however be waived when an action is brought.

          8.    Inventor (and no expert) discovery
In addition to documentary productions, actions under the Regulations include the right to discover a corporate representative (whose answers can be introduced at trial by the defendant) and inventors. The inventor discovery cannot normally be used at trial (save to impeach a witness).

In contrast to the United States’ procedure, expert discovery is not permitted, meaning the first opportunity to cross-examine an expert will be at trial.  The Court can order that opposing experts confer in advance of trial, although this practice is rarely used. 

          9.    10-day trial
The Federal Court Guidelines governing trials under the Regulations provides for trials of up to 10 days (regardless of the number of patents at issue). The Court has exercised its discretion and permitted longer trials, e.g., when different dosage forms of the same drug are at issue.

          10.   Expanded liability under Section 8?
Section 8 of the Regulations permits a generic to recover losses suffered as a result of a proceeding keeping the generic off the market beyond the date the generic would otherwise be approved (the IP hold date). Damages run from the later of the date the NOA was served and the IP hold date.  The Regulations no longer prescribe an end date for the losses, meaning a generic may try to claim compensation for loss of first mover advantage.  This latter head of damage was not recoverable under the prior version of the Regulations.

Potential exposure to Section 8 claims should be evaluated upon receipt of an NOA and over the course of the proceeding to avoid unpleasant surprises. 

The fast pace and high stakes of life sciences patent litigation in Canada can make for a stomach churning ride. Advance planning will not slow the timetable but will smooth out bumps and potholes. Taking steps before the NOA is served to implement an internal communication plan, collect documents, interview inventors, spot issues and identify experts will not only smooth out the ride, but also significantly enhance the chances of success.

Sheldon Hamilton and Nancy Pei are Principals at Smart & Biggar’s Toronto office.

Smart & Biggar is widely recognized as Canada’s leading intellectual property firm, with offices in Montréal, Ottawa, Toronto, Vancouver and Calgary. We are leaders in intellectual property and have been serving clients for over a century. Smart & Biggar operates as part of the IPH Limited group, under its own brand and independent from other IPH member firms.

Region: Canada
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