Vol. 132, No. 7 — April 1, 1998

Registration
SOR/98-166 12 March, 1998

PATENT ACT

Regulations Amending the Patented Medicines (Notice of Compliance) Regulations

P.C. 1998-366 12 March, 1998

His Excellency the Governor General in Council, on the recommendation of the Minister of Industry, pursuant to subsection 55.2(4) (see footnote a) of the Patent Act, hereby makes the annexed Regulations Amending the Patented Medicines (Notice of Compliance) Regulations.

REGULATIONS AMENDING THE PATENTED
MEDICINES (NOTICE OF COMPLIANCE)
REGULATIONS

AMENDMENTS

1. Section 2 of the Patented Medicines (Notice of Compliance) Regulations (see footnote 1) is amended by adding the following in alphabetical order.

"register" means the register maintained by the Minister under section 3. (registre)

2. (1) Subsection 3(1) of the Regulations is replaced by the following:

3. (1) The Minister shall maintain a register of any information submitted under section 4. To maintain it, the Minister may refuse to add or may delete any information that does not meet the requirements of that section.

(2) Section 3 of the Regulations is amended by adding the following after subsection (3):

(4) For the purpose of deciding whether information submitted under section 4 should be added to or deleted from the register, the Minister may consult with officers or employees of the Patent Office.

3. Section 4 of the Regulations is replaced by the following:

4. (1) A person who files or has filed a submission for, or has been issued, a notice of compliance in respect of a drug that contains a medicine may submit to the Minister a patent list certified in accordance with subsection (7) in respect of the drug.

(2) A patent list submitted in respect of a drug must

(a) indicate the dosage form, strength and route of administration of the drug;

(b) set out any Canadian patent that is owned by the person, or in respect of which the person has an exclusive licence or has obtained the consent of the owner of the patent for the inclusion of the patent on the patent list, that contains a claim for the medicine itself or a claim for the use of the medicine and that the person wishes to have included on the register;

(c) contain a statement that, in respect of each patent, the person applying for a notice of compliance is the owner, has an exclusive licence or has obtained the consent of the owner of the patent for the inclusion of the patent on the patent list;

(d) set out the date on which the term limited for the duration of each patent will expire pursuant to section 44 or 45 of the Patent Act; and

(e) set out the address in Canada for service on the person of any notice of an allegation referred to in paragraph 5(3)(b) or (c), or the name and address in Canada of another person on whom service may be made, with the same effect as if service had been made on the person.

(3) Subject to subsection (4), a person who submits a patent list must do so at the time the person files a submission for a notice of compliance.

(4) A first person may, after the date of filing of a submission for a notice of compliance and within 30 days after the issuance of a patent that was issued on the basis of an application that has a filing date that precedes the date of filing of the submission, submit a patent list, or an amendment to an existing patent list, that includes the information referred to in subsection (2).

(5) When a first person submits a patent list or an amendment to an existing patent list in accordance with subsection (4), the first person must identify the submission to which the patent list or the amendment relates, including the date on which the submission was filed.

(6) A person who submits a patent list must keep the list up to date but may not add a patent to an existing patent list except in accordance with subsection (4).

(7) A person who submits a patent list or an amendment to an existing patent list under subsection (1) or (4) must certify that

(a) the information submitted is accurate; and

(b) the patents set out on the patent list or in the amendment are eligible for inclusion on the register and are relevant to the dosage form, strength and route of administration of the drug in respect of which the submission for a notice of compliance has been filed.

4. (1) The portion of subsection 5(1) of the Regulations before paragraph (a) is replaced by the following:

5. (1) Where a person files or has filed a submission for a notice of compliance in respect of a drug and wishes to compare that drug with, or make reference to, another drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the register in respect of the other drug,

(2) Subparagraph 5(1)(b)(i) of the Regulations is replaced by the following:

(3) Subsection 5(2) of the Regulations is replaced by the following:

(2) Where, after a second person files a submission for a notice of compliance, but before the notice of compliance is issued, a patent list or an amendment to a patent list is submitted in respect of a patent pursuant to subsection 4(4), the second person shall amend the submission to include, in respect of that patent, the statement or allegation that is required by subsection (1).

(4) Subsection 5(3) of the Regulations is amended by striking out the word "and" at the end of paragraph (a) and by replacing paragraph (b) with the following:

(b) if the allegation is made under any of subparagraphs (1)(b)(i) to (iii), serve a notice of the allegation on the first person;

(c) if the allegation is made under subparagraph (1)(b)(iv),

(d) serve proof of service of the information referred to in paragraph (b) or (c) on the Minister.

5. (1) Subsection 6(1) of the Regulations is replaced by:

6. (1) A first person may, within 45 days after being served with a notice of an allegation pursuant to paragraph 5(3)(b) or (c), apply to a court for an order prohibiting the Minister from issuing a notice of compliance until after the expiration of a patent that is the subject of the allegation.

(2) Section 6 of the Regulations is amended by adding the following after subsection (4):

(5) In a proceeding in respect of an application under subsection (1), the court may, on the motion of a second person, dismiss the application

(a) if the court is satisfied that the patents at issue are not eligible for inclusion on the register or are irrelevant to the dosage form, strength and route of administration of the drug for which the second person has filed a submission for a notice of compliance; or

(b) on the ground that the application is redundant, scandalous, frivolous or vexatious or is otherwise an abuse of process.

(6) For the purposes of an application referred to in subsection (1), where a second person has made an allegation under subparagraph 5(1)(b)(iv) in respect of a patent and where that patent was granted for the medicine itself when prepared or produced by the methods or processes of manufacture particularly described and claimed or by their obvious chemical equivalents, it shall be considered that the drug proposed to be produced by the second person is, in the absence of proof to the contrary, prepared or produced by those methods or processes.

(7) On the motion of a first person, the court may, at any time during a proceeding,

(a) order a second person to produce any portion of the submission for a notice of compliance filed by the second person relevant to the disposition of the issues in the proceeding and may order that any change made to the portion during the proceeding be produced by the second person as it is made; and

(b) order the Minister to verify that any portion produced corresponds fully to the information in the submission.

(8) A document produced under subsection (7) shall be treated confidentially.

(9) In a proceeding in respect of an application under subsection (1), a court may make any order in respect of costs, including on a solicitor-and-client basis, in accordance with the rules of the court.

(10) In addition to any other matter that the court may take into account in making an order as to costs, it may consider the following factors:

(a) the diligence with which the parties have pursued the application;

(b) the inclusion on the certified patent list of a patent that should not have been included under section 4; and

(c) the failure of the first person to keep the patent list up to date in accordance with subsection 4(6).

6. (1) Paragraph 7(1)(a) of the Regulations is repealed.

(2) Paragraphs 7(1)(c) to (e) of the Regulations are replaced by the following:

(c) subject to subsection (3), the expiration of any patent on the register that is not the subject of an allegation,

(d) subject to subsection (3), the expiration of 45 days after the receipt of proof of service of a notice of any allegation pursuant to paragraph 5(3)(b) or (c) in respect of any patent on the register,

(e) subject to subsections (2), (3) and (4), the expiration of 24 months after the receipt of proof of the making of any application under subsection 6(1), and

(3) Subsections 7(4) and (5) of the Regulations are replaced by the following:

(4) Paragraph (1)(e) ceases to apply in respect of an application under subsection 6(1) if the application is withdrawn or discontinued by the first person or is dismissed by the court hearing the application.

(5) If the court has not yet made an order under subsection 6(1) in respect of an application, the court may

(a) shorten the time limit referred to in paragraph (1)(e) on consent of the first and second persons or if the court finds that the first person has failed, at any time during the proceeding, to reasonably cooperate in expediting the application; or

(b) extend the time limit referred to in paragraph (1)(e) on consent of the first and second persons or, if the court finds that the second person has failed, at any time during the proceeding, to reasonably cooperate in expediting the application.

7. The heading before section 8 of the Regulations is repealed.

8. Section 8 of the Regulations is replaced by the following:

8. (1) If an application made under subsection 6(1) is withdrawn or discontinued by the first person or is dismissed by the court hearing the application or if an order preventing the Minister from issuing a notice of compliance, made pursuant to that subsection, is reversed on appeal, the first person is liable to the second person for any loss suffered during the period

(a) beginning on the date, as certified by the Minister, on which a notice of compliance would have been issued in the absence of these Regulations, unless the court is satisfied on the evidence that another date is more appropriate; and

(b) ending on the date of the withdrawal, the discontinuance, the dismissal or the reversal.

(2) A second person may, by action against a first person, apply to the court for an order requiring the first person to compensate the second person for the loss referred to in subsection (1).

(3) The court may make an order under this section without regard to whether the first person has commenced an action for the infringement of a patent that is the subject matter of the application.

(4) The court may make such order for relief by way of damages or profits as the circumstances require in respect of any loss referred to in subsection (1).

(5) In assessing the amount of compensation the court shall take into account all matters that it considers relevant to the assessment of the amount, including any conduct of the first or second person which contributed to delay the disposition of the application under subsection 6(1).

TRANSITIONAL PROVISIONS

9. (1) Subsection 4(4) does not apply to an allegation if, before the coming into force of these Regulations, it was served on the first person, if proof of that service was served on the Minister and if the first person has commenced a proceeding under subsection 6(1).

(2) Subsections 6(5) and (9) and paragraphs 6(10)(a) and (b) of the Regulations, as enacted by section 5, apply to an application pending on the coming into force of these Regulations.

(3) Subsections 6(6) to (8) and paragraph 6(10)(c) of the Regulations, as enacted by section 5, apply to an application commenced on or after the coming into force of these Regulations.

(4) Paragraph 7(1)(e) of the Regulations, as enacted by subsection 6(2), applies to an application made on or after the coming into force of these Regulations. Paragraph 7(1)(e) of the Regulations as it read before the coming into force of these Regulations, continues to apply to an application pending at the time of that coming into force.

(5) Subsection 7(5) of the Regulations, as enacted by subsection 6(3), applies to an application pending on the coming into force of these Regulations.

(6) Section 8 of the Regulations, as enacted by section 8, applies to an application pending on the coming into force of these Regulations.

COMING INTO FORCE

10. These Regulations come into force on March 11, 1998.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The Patented Medicines (Notice of Compliance) Regulations were introduced to allow patent issues to be dealt with at the same time as the Minister of Health assesses the safety and efficacy of a generic version of a patented drug. A list of patents relating to the brand name version of the drug, filed by the patentee, is maintained by the Minister of Health. A generic manufacturer may wish to make reference to a patentee's drug that is already marketed in Canada in applying for approval (the NOC) to market a generic version of that patented drug. In such circumstances, the generic manufacturer must either agree to await patent expiry for its NOC to issue, or file a notice of allegation (the NOA) explaining why its product would not infringe the patents listed for the drug. The patentee, if it disagrees with the generic's allegation, may seek a court order prohibiting the Minister of Health from granting the NOC until patents listed for the drug have expired. If such an application is commenced, there is a stay preventing the Minister from issuing the NOC for a specified period. If the patent issues are decided by the court in favour of the generic manufacturer, the Minister of Health may issue the NOC for the generic as soon as it is ready. If the patent issues are decided in favour of the patentee, the NOC cannot issue until expiry of all relevant listed patents.

The following improvements to the NOC Regulations are enacted:

Reducing length of stay: The stay preventing the Minister from issuing an NOC while patent issues are resolved is reduced to 24 months from the 30 months currently provided. The government is committed to ensuring that the length of the stay continues to be appropriate, taking into account the time it takes the court to decide patent issues, given the expected impact of the Federal Court Rules, and the time it takes Health Canada to assess a drug's safety and efficacy.

Lengthening or shortening stay: The lengthening or shortening of the stay is allowed on consent of both parties. Also, the court's discretion to lengthen or shorten the stay is modified such that delay at any time during the proceeding would be taken into account.

Specifying circumstances in which damages or costs can be awarded: A clearer indication is given to the court as to the circumstances in which damages could be awarded to a generic manufacturer to compensate for loss suffered by reason of delayed market entry of its drug, and the factors that may be taken into account in calculating damages. The court may also award costs to either a generic manufacturer or a patentee, including solicitor and client costs, as appropriate, consistent with Federal Court Rules.

Ensuring a product-specific patent list: Patentees are required to certify that the patents submitted on the list for a drug are relevant to that particular version of the drug. This will ensure that patents that do not apply to the particular version of the drug will not impede the generic's market entry.

Expressly confirming the authority of the Minister of Health to audit the patent list: The Minister of Health's authority to audit the patent list and to refuse to add and to remove ineligible patents from the patent list is expressly confirmed.

Fuller disclosure: The court has the explicit capacity to order disclosure to the patentee of portions of a generic manufacturer's NOC submission where it is relevant to resolving issues in the proceeding. The Regulations provide that the disclosed information must be treated confidentially, under the same terms as would apply to similar disclosure orders made under the authority of the Federal Court Rules.

More specificity with an NOA: When an allegation relating to non-infringement (NOA) is submitted, a generic manufacturer is required to indicate to the patentee the specific version of the medicine it intends to market.

No premature NOA: An NOA relating to non-infringement may only be served on a patentee by a generic manufacturer when or after it has filed a submission for an NOC with the Minister of Health.

Burden of proof: A generic manufacturer seeking to make a version of the patentee's drug and alleging non-infringement of a product-by-process patent on the patent list has the onus of proving that the patent would not be infringed.

Dismissal of the case at an early stage: A generic manufacturer will be able to seek dismissal of the patentee's case, at an early stage, in certain circumstances.

Coming into Force

Changes to the Regulations came into force on March 12, 1998. Specific transitional rules deal with how the amended Regulations will apply to existing and new proceedings.

Alternatives

The changes to the Regulations respond to the April, 1997 report of the Standing Committee on Industry reviewing the Patent Act Amendment Act, 1992, which called for changes to the regulatory framework to address stakeholder concerns regarding fairness, effectiveness, and reduction of unnecessary litigation. They also address issues raised during consultations with stakeholders relating to proposed changes pre-published in the Canada Gazette Part I on January 24, 1998.

Benefits and Costs

The link between the patent status of a drug and approval for a generic version of the drug is being maintained, to provide effective enforcement of patent rights, while at the same time ensuring that generic drugs can enter the market as soon as possible; either as soon as it is determined that they are not covered by a patent, or, where they are covered by a patent, immediately after the expiry of the patent. Overall, since the amendments are designed to make the Regulations fairer and more effective, and reduce unnecessary litigation, compliance costs to private sector parties should be reduced. The amendments will not significantly alter the costs of administering, or adjudicating cases under the Regulations.

The amendments reinforce the balance between providing a mechanism for the effective enforcement of patent rights and ensuring that generic drug products enter the market as soon as possible.

Consistent with maintaining this balance, certain changes will further facilitate market entry of generic drugs: for example, reducing the length of the stay, clarifying the court's discretion to shorten the stay, and providing a mechanism for early dismissal of a case. The government intends to ensure that the length of the stay continues to be appropriate, taking into account the time it takes the Minister of Health to approve generic drugs and the time it takes the court to decide patent issues, and how this latter time may be affected by the Federal Court Rules, 1998, that will come into effect on April 25, 1998.

Certain changes would make the system for protecting patent rights more effective: for example, clarifying the court's discretion to lengthen the stay.

Other changes are designed to reduce unnecessary litigation and streamline the litigation process: specifying the circumstances in which parties can be awarded damages and factors that may be taken into account in calculating damages; specifying some of the circumstances in which costs may be awarded; ensuring a product-specific patent list; expressly confirming the authority of the Minister of Health to audit patent lists; placing the burden of proof on manufacturers seeking to produce a generic version of a drug covered by a product-by-process patent; permitting the court to order disclosure portions of a generic manufacturer's Notice of Compliance submission if it is relevant to resolving the issues by the court (the information must be treated confidentially); requiring more specificity with a Notice of Allegation and allowing early dismissal of a patentee's case in circumstances where listed patents are irrelevant or ineligible for inclusion on the patent register.

Consultation

Extensive consultations were undertaken with stakeholders. In particular, comments on proposed changes to the Regulations pre-published in the Canada Gazette Part I were received from the Canadian Drug Manufacturers Association (CDMA), the Pharmaceutical Manufacturers Association of Canada (PMAC), the industrial biotechnology association (BIOTECanada), consumer groups, various sectors of the health care industry, and provincial governments. Issues raised during the course of these consultations have been taken into account in the final amendments, which improve the balance and effectiveness of the Regulations.

Compliance and Enforcement

The courts and the Minister of Health will continue to exercise jurisdiction over these matters to ensure compliance, since they relate to various aspects of the regulatory framework for granting marketing approval to generic versions of drugs and disputes involving patent rights.

Contact

Vinita Watson
Director General
Corporate Governance Branch
Industry Canada
5th Floor, West Tower
235 Queen Street
Ottawa, Ontario
K1A 0H5

Footnote a

S.C. 1993, c. 2, s. 4

Footnote 1

SOR/93-133

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