Judgments

A-572-01

2002 FCA 454

Parke-Davis Division, Warner-Lambert Canada Inc. and Warner Lambert Company (Appellants) (Applicants)

v.

The Minister of Health and Apotex Inc. (Respondents) (Respondents)

Indexed as: Parke-Davis Division v. Canada (Minister of Health) (C.A.)

Court of Appeal, Linden, Sexton and Sharlow JJ.A.-- Toronto, October 23 and November 18, 2002.

Patents -- Dedication to public use -- F.C.T.D. Judge denying application for order prohibiting Minister from issuing a notice of compliance (NOC) for medicine atorvastatin calcium, holding Apotex justified in alleging invalidity of patent as dedicated to public use and dedication not revoked -- Warner-Lambert sending Canadian Intellectual Property Office long list of patents for public use dedication -- List including patent 768 for drug in question -- Dedication published in Patent Office Record -- Warner-Lambert's Parke-Davis Division granted NOC for "Lipitor" (trade-name for drug in question) -- "Lipitor" becoming best seller -- Warner-Lambert paying annual maintenance fees for 768 patent -- Apotex, in reliance on public use dedication, wishing to develop, market competing product -- Serving notice of allegation 768 patent invalid -- Appellants discovering mistake, having notice published in Patent Office Record patent 768 rights not waived -- F.C.T.D. Judge holding once dedicated to public use, all patent rights terminate, cannot be revived -- Judge correct in holding Parke-Davis had status to seek prohibition as exclusive licensee -- Judge erred in rejecting argument notice of allegation unjustified, Apotex not having filed new drug submission -- F.C.A. interpreting PMNOC Regulations, explaining their relationship to Food and Drug Regulations -- Requirements of those proposing to market comparable drug -- F.C.T.D. Judge failing to consider validity of notice of allegation if new drug submission not filed by time of prohibition hearing -- Pointless to entertain prohibition application if Minister not yet asked to issue NOC -- That Patent Act silent on whether patent rights can be surrendered by public use dedication not determinative -- American, U.K. law discussed -- Transaction recognized at common law may affect patent rights if not contradicting Act -- Public, patent regime not harmed by recognition patent rights could be extinguished by public use dedication -- In fact, dedication has become established practice relied upon by business community -- Public use dedication can be accomplished by publishing notice in Patent Office Record -- Dedication, like gift, irrevocable but dedication invalid if due to mistake -- T.D. Judge found dedication herein "deliberate, arising out of confusion or miscommunication" -- Step so taken not deliberate -- Circumstantial and other evidence inconsistent with intention to dedicate 768 patent.

This was an appeal from an order of Madam Justice Dawson denying an application for an order under the Patented Medicines (Notice of Compliance) Regulations prohibiting the Minister of Health from issuing a notice of compliance (NOC) to Apotex Inc. in respect of atorvastatin calcium until after expiration of the patent 1268768 (768 patent). This patent had been granted to Warner-Lambert--one of the appellants herein--on May 8, 1990 with an expiry date of May 8, 2007. In 1992 Warner-Lambert's Parke-Davis Division prepared a list of patents owned by Warner-Lambert which were of no use to it. Its plan was to surrender its rights to those patents by dedicating them to public use and thereby escape having to remit excess revenues under the price control jurisdiction of the Patented Medicine Prices Review Board. While "dedication to public use" is not recognized by the Patent Act, a practice has arisen whereby a patent owner communicates such intention to the Canadian Intellectual Property Office (CIPO) and notice of dedication is then published in the Canadian Patent Office Record. Warner-Lambert sent CIPO a list of a great many patents for public use dedication and the 768 patent was on that list. Notice of dedication of the 768 patent was published in the April 4, 1995 issue of the Patent Office Record. Even so, the annual maintenance fees, payable under Patent Act, section 46, were paid each year in respect of the 768 patent. On February 19, 1997 Parke-Davis secured an NOC from the Minister of Health for "Lipitor"--its trade-name for the cholesterol reducing medicine atorvastatin calcium--the drug described in the 768 patent. "Lipitor" went on to become Canada's second largest selling prescription drug.

The generic drug company Apotex, relying on the public use dedication of the 768 patent, began efforts to produce a marketable product containing atorvastatin calcium and on August 16, 1999 served Parke-Davis with a letter being a notice of allegation that the 768 patent was invalid as having been dedicated to the public. The position taken by appellants was that inclusion of the 768 patent in the list of patents for public dedication was a mistake which it discovered only in mid-1997. It wrote to the Commissioner of Patents advising of the error and requested that a retraction of the dedication appear in the Patent Office Record. A notice was published in the August 25, 1998 issue that Warner-Lambert had not waived its rights under the 768 patent.

Appellants sought an order (1) prohibiting the Minister from issuing an NOC to Apotex; (2) declaring the notice of allegation invalid; and (3) declaring the allegations in the notice of allegation unjustified. The Trial Division Judge refused the application, holding that once dedicated to public use, all rights in a patent are terminated and cannot be revived. The Judge found as a fact that the submission that the public use dedication was a mistake had not been established.

Held, the appeal should be allowed and a declaration made that the notice of allegation was without legal effect.

The Trial Division Judge did not err in concluding that Parke-Davis had status to seek prohibition as exclusive licensee. Although the Parke-Davis employee who swore an affidavit as to its exclusive licence refused, under cross-examination, to produce a copy of the licence, that was not fatal given that the patent's undisputed owner--Warner-Lambert--was a party to these proceedings.

The Judge did, however, err in rejecting the argument that the notice of allegation could not be justified in that Apotex had not filed a new drug submission. This Court interprets the PMNOC Regulations as requiring Apotex to have filed a new drug submission by the date of the hearing of the prohibition order application. The resolution of this issue raised a problem of statutory interpretation and answering the narrow question posed in this case required an understanding of the details of the regulatory scheme, in particular the relationship between the PMNOC Regulations and the Food and Drug Regulations. The requirement for a new drug submission existed prior to enactment of the PMNOC Regulations, and it still exists. A drug manufacturer that has filed a new drug submission or to whom a notice of compliance has been issued may submit a patent list under section 4 of the PMNOC Regulations and becomes the "first person" as defined in section 2. Section 7 of the PMNOC Regulations precludes the Minister from issuing an NOC for a drug comparable to another marketed under an NOC issued to a first person, and in respect of which a patent list has been submitted, unless section 5 of the Regulations is complied with. That section provides that anyone proposing to market a comparable drug must, in its new drug submission, state one of the following: (1) acceptance that an NOC will not issue until patent expiry; (2) that first person made a false statement; (3) the patent has expired; (4) patent is invalid; or (5) no claim for the medicine or its use would be infringed by the drug for which the NOC is sought. One required to comply with section 5 is a "second person" and must also set forth a detailed statement of the factual and legal basis for the allegation. In the case of a "non-infringement allegation", the second person must file its new drug submission before or when the notice of allegation is served on the first person. The latter may then seek prohibition under subsection 6(1) of the Regulations and bears the burden of establishing that the allegations in the notice of allegation are not justified. If the first person notifies the Minister of commencement of subsection 6(1) proceedings, there is a 24-month statutory stay upon issuing an NOC. There is no authority governing the situation where a prohibition application is based upon a notice of allegation made by one who has not yet filed a new drug submission when the application is heard. Prior to the 1998 amendments, the steps that a second person had to take could be done in any sequence. But paragraph 5(3)(c) now provides that, in case of a non-infringement allegation, the new drug submission must be filed before or at the time the notice of allegation is served on the first person. It may be inferred therefrom that the sequence remains irrelevant with regard to any other allegation and there was here no non-infringement allegation. That was not, however, an end of the matter. The Judge ought to have considered whether a notice of allegation is invalid if a new drug submission has not been filed by the date of the hearing. The PMNOC Regulations were drafted on the basis of a premise that a prohibition application would not take place until the second person has made the requisite statements and allegations in both the new drug submission and the notice of allegation. This view of the scheme is supported by the definition of "second person" in section 2 of the Regulations. It seemed incongruous that one who has not filed a new drug submission by the time of the hearing could be considered a "second person". While there was some merit in the arguments advanced by Apotex as to why, the language of the relevant provisions of the Regulations notwithstanding, a second person ought not have to file a new drug submission prior to the hearing, they were insufficiently compelling to ignore the wording of the Regulations. There is little point in entertaining a prohibition application if, by the time of the hearing, the Minister has not even been asked to consider issuing an NOC, the second person not having filed a new drug submission.

Had Apotex failed to file a new drug submission? The Judge below made no finding of fact on this, perhaps as unnecessary given her conclusion on the legal issue. The best evidence on this was provided by the cross-examination upon the affidavit of the CEO of Apotex: the company will file a new drug submission when it is ready. The Judge should not have dealt with the prohibition application but rather have issued a declaration that the notice of allegation was lacking in legal effect.

Appellants argued that the holder of a Canadian patent cannot relinquish its patent rights by dedicating the patent to public use in that patent rights are a creature of statute and the Act is silent on this. The law is otherwise in the U.K., where the Patents Act 1977 (U.K.) make provision for the surrender or voluntary termination of patent rights. In England, patents are sometimes surrendered in an out-of-court settlement in patent infringement cases. Again, in the U.S.A., under §253 of Title 35 of the United States Code, any patentee may disclaim or dedicate to the public the entire term, or any part of a patent granted or to be granted. The few Canadian cases on public dedication have tended to leave open the question as to whether patent rights can be terminated in that manner. The Act's silence was not determinative. As argued by Apotex, a transaction, recognized at common law, which does not contradict the Act, may affect patent rights. Counsel for appellants were unable to identify any harm to the public or the patent regime that would flow from the recognition that a patent can be dedicated to public use and that such dedication would extinguish all attached patent rights. The fact is that patents are frequently dedicated to public use and that this has become an established practice relied upon by the business community. Surely, Warner-Lambert would not have dedicated some 324 patents to public use if it believed such dedication was devoid of legal consequence. The Court was not persuaded that the termination of patent rights by dedication to public use was impossible as a matter of law. Assuming it is possible, publication of a dedication notice in the Patent Office Record is a method by which a dedication to public use can be accomplished.

There was no Canadian case law on the question whether a dedication to public use is revocable. It would seem that such a dedication is analogous to a gift which, once completed, is irrevocable. Indeed, the dedications in the case at bar were stated to be "irrevocable". Appellants say, however, that the 768 patent was included by mistake, in which case there would have been no valid dedication. As prohibition order applicant, Parke-Davis bore the burden of establishing, on the balance of probabilities, that no dedication had occurred. The Trial Division Judge found that this burden was not met and an appellate court could not interfere with such factual finding in the absence of overriding error. Such error may be found if assessment of the evidence was tainted by error of law. Dawson J. wrote that it could be inferred "that the dedication was deliberate arising out of confusion or miscommunication". A step taken on account of confusion or miscommunication cannot be deliberate. Even if the dedication documents were deliberately sent, that does not mean there was a deliberate intention to include the 768 patent in the list. There was evidence that those responsible for preparing the list of patents for dedication had noted the 768 patent as "active" and "keep". Warner-Lambert advised CIPO and the Minister of Health shortly after discovery of the error and the latter apparently accepted that the dedication had been made in error. There was also circumstantial evidence, such as the conduct by Parke-Davis of a Phase III clinical trial and payment of annual maintenance fees, that was inconsistent with an intention to dedicate the 768 patent to public use. It was significant that Apotex failed to challenge a principal Warner-Lambert witness upon cross-examination as to appellants' intention. There was no evidence on the record capable of casting any doubt on appellants' assertions that 768 patent was included in error. Accordingly, had this Court concluded that the notice of allegation served by Apotex was valid, it would have been held that the allegations that the 768 patent was invalid were unjustified and a prohibition order would have been granted.

statutes and regulations judicially

considered

Federal Court Rules, 1998, SOR/98-106, rr. 41, 42, 43, 44, 45, 46, Part 5.

Food and Drug Regulations, C.R.C., c. 870.

Interpretation Act, R.S.C., 1985, c. I-21, s. 12.

Patent Act, R.S.C., 1985, c. P-4, ss. 45 (as am. by S.C. 2001, c. 10, s. 1), 46 (as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 16; S.C. 1993, c. 15, s. 43), 48 (as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 17; S.C. 1993, c. 15, s. 44), 50 (as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 20).

Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, ss. 2 "first person", "second person" (as am. by SOR/99-379, s. 1), 3 (as am. by SOR/98-166, s. 2), 4 (as am. idem, s. 3), 5 (as am. idem, s. 4; 99-379, s. 2), 6(1) (as am. by SOR/98-166, s. 5), 7 (as am. idem, s. 6).

Patents, 35 U.S.C. § 253 (1994).

Patents Act 1977 (U.K.), 1977, c. 37, s. 29.

cases judicially considered

followed:

Housen v. Nikolaisen, [2002] 2 S.C.R. 235; (2002), 211 D.L.R. (4th) 577; [2002] 7 W.W.R. 1; 10 C.C.L.T. (3d) 157; 30 M.P.L.R. (3d) 1; 286 N.R. 1; 219 Sask. R. 1.

applied:

Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559; (2002), 212 D.L.R. (4th) 1; [2002] 5 W.W.R. 1; 166 B.C.A.C. 1; 100 B.C.L.R. (3d) 1; 18 C.P.R. (4th) 289; 93 C.R.R. (2d) 189; 287 N.R. 248; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), [1998] 2 S.C.R. 193; (1998), 161 D.L.R. (4th) 47; 80 C.P.R. (3d) 368; 227 N.R. 299; Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd. (2002), 211 D.L.R. (4th) 696; 17 C.P.R. (4th) 478; 288 N.R. 201 (F.C.A.); Browne v. Dunn (1893), 6 R. 67 (H.L.); Nernberg v. Shop-Easy Stores Ltd. (1966), 57 D.L.R. (2d) 741 (Sask. C.A.).

distinguished:

Genentech Canada Inc. (Re) (1992), 44 C.P.R. (3d) 316 (P.M.P.R.B.).

considered:

Apotex Inc. v. Canada (Minister of National Health and Welfare) (1997), 153 D.L.R. (4th) 68; 76 C.P.R. (3d) 1; 219 N.R. 151 (F.C.A.); Merck & Co. v. Canada (Minister of Health) (1998), 79 C.P.R. (3d) 57; 145 F.T.R. 27 (F.C.T.D.); affd sub nom. Reference re: Patented Medicines (Notice of Compliance) Regulations, (Can.), s. 7 (1999), 3 C.P.R. (4th) 77; 249 N.R. 110 (F.C.A.); Smithkline Beecham Pharma Inc. v. Canada (Minister of Health and Welfare) (1997), 77 C.P.R. (3d) 147; 138 F.T.R. 310 (F.C.T.D.); Novopharm Ltd. v. Merck & Co. (1992), 44 C.P.R. (3d) 13 (Comm. of Patents); Chris-Craft Industries, Inc. v. Monsanto, Co., 59 F.D.R. 282 (C.D. Cal. 1973); ICN Pharmaceuticals Inc. v. Canada (Staff of the Patented Medicine Prices Review Board), [1977] 1 F.C. 32; (1996), 66 C.P.R. (3d) 145 (C.A.).

referred to:

Glaxo Group Ltd. v. Canada (Minister of National Health and Welfare) (2001), 11 C.P.R. (4th) 417; 273 N.R. 166 (F.C.A.); Technimark, Inc. v. Crellin, Inc., 14 F.Supp. 2d 762 (M.D.N.C. 1998).

authors cited

Cornish, W. R. Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 4th ed. London: Sweet & Maxwell, 1999.

Chartered Institute of Patent Agents. Patent Law of the United Kingdom: Texts, Commentary and Notes on Practice, 3rd ed. London: Sweet & Maxwell, 1975.

Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.

Oxford English Dictionary, 2nd ed. Oxford: Clarendon Press, 1989, "deliberate".

Regulatory Impact Analysis Statement, C. Gaz. 1993.II.1387.

Reid, Brian C. A Practical Guide to Patent Law. Oxford: ESC Pub., 1984.

APPEAL from the Trial Division decision (Parke-Davis Division v. Canada (Minister of Health), [2002] 1 F.C. 517; (2001), 14 C.P.R. (4th) 335; 210 F.T.R. 265) dismissing an application for an order prohibiting the Minister of Health from issuing a notice of compliance in respect of a patented medicine containing atorvastatin calcium. Appeal allowed.

appearances:

Sheila R. Block, Andrew M. Shaughnessy, Cynthia L. Tape, and Conor D. M. McCourt for appellants (applicants).

Harry B. Radomski and Richard E. Naiberg for respondent (respondent) Apotex Inc.

No one appearing for respondent (respondent) Minister of Health.

solicitors of record:

Torys LLP, Toronto, for appellants (applicants).

Goodmans LLP, Toronto, for respondent (respondent) Apotex Inc.

Deputy Attorney General of Canada for respondent (respondent) Minister of Health.

The following are the reasons for judgment rendered in English by

The Court:

INTRODUCTION

[1]This is an appeal of the decision, now reported as Parke-Davis Division v. Canada (Minister of Health), [2002] 1 F.C. 517 (T.D.), dismissing the appellants' application for an order prohibiting the Minister of Health from issuing a notice of compliance to Apotex Inc. (Apotex) in connection with the medicine atorvastatin calcium until after the expiration of Canadian Patent No. 1268768 (the 768 patent).

FACTS

[2]The respondent Apotex is a Canadian company. The appellant Warner Lambert Company (Warner-Lambert) is a U.S. company The appellant Parke-Davis Division of Warner-Lambert Canada Inc. (Parke-Davis) is a Canadian subsidiary of Warner-Lambert

[3]The subject of this case is the 768 patent, which pertains to the medicine atorvastatin calcium. It was granted to Warner-Lambert on May 8, 1990, with an expiry date under section 45 [as am. by S.C. 2001, c. 10, s. 1] of the Patent Act, R.S.C., 1985, c. P-4, of May 8, 2007. However, the history of the case requires an understanding of certain events relating to other patents owned by Warner-Lambert and its related companies.

[4]In 1992, Parke-Davis learned that Warner-Lambert had patents relating to drugs that Parke-Davis was selling in Canada which brought the drugs within the price control jurisdiction of the Patented Medicine Prices Review Board (PMPRB) even though Parke-Davis was making no use of the patents. For instance, Warner-Lambert owned a Canadian patent pertaining to the medicine in Lopid, a drug sold by Parke-Davis in Canada. Parke-Davis had been treating Lopid as essentially unpatented because the patented process was not used in manufacturing Lopid. The PMPRB took the position that Lopid was nevertheless subject to price controls. As a result, Parke-Davis was obliged to remit excess revenues relating to Lopid of approximating $1.6 million.

[5]This experience prompted Parke-Davis to initiate a review of all active Canadian patents held by Warner-Lambert and its related companies. This review was conducted by James Rowan, Director of Government Affairs and Health Care Systems at Parke-Davis, Andrea Ryan, Vice-President and Associate General Counsel in Intellectual Property of Warner-Lambert, and Ron Daignault, a senior Warner-Lambert pharmaceutical patent lawyer.

[6]As a result of that review, a list was prepared showing all of the patents owned by Warner-Lambert and its related companies which were not considered to be of use to the appellants. It was planned to give up the rights to those patents by dedicating them to public use, the intended result being that they would not then attract the jurisdiction of the PMPRB.

[7]"Dedication to public use" is not a concept mentioned in the Patent Act. However, a practice has developed whereby a patent owner dedicates its patent to public use by communicating to the Canadian Intellectual Property Office (CIPO) its intention to do so. Notice of the dedication is then published in the Canadian Patent Office Record.

[8]On December 21, 1994, Warner-Lambert, through its Canadian patent agent, sent to the CIPO six documents entitled "Dedication", signed by Andrea Ryan and notarized on October 24, 1994. Attached to the dedications were schedules listing in total 324 patents owned by Warner-Lambert or related companies. The dedication relating to Warner-Lambert listed 278 patents. One of them was the 768 patent. (Warner-Lambert and Parke-Davis claim that the inclusion of the 768 patent was a mistake; more is said about that later.)

[9]In the cover letter, the patent agent requested that notice of the dedications be published in the Canadian Patent Office Record, and submitted that the filing of the dedications for publication constituted irrevocable dedication of the patents effective as of the date of filing, December 21, 1994.

[10]Notice of the dedication to public use of the 768 patent was published in the April 4, 1995 edition of the Canadian Patent Office Record. They were also noted on the "Key Index" maintained by the CIPO, which is open to the public.

[11]Despite publication of the notice of dedication to public use of the 768 patent, the annual maintenance fees payable under section 46 [as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 16; S.C. 1993, c. 15, s. 43] of the Patent Act were paid for the 768 patent on April 18, 1995 and annually thereafter.

[12]While the events described above were occurring, Parke-Davis was working toward obtaining the required approvals from the Minister of Health to market atorvastatin calcium in Canada as a cholesterol reducing medicine, under the trade-name "Lipitor". The approval of the Minister of Health requires a "new drug submission" to be filed under the Food and Drug Regulations, C.R.C., c. 870. The Minister's approval is signified by the issuance of a "notice of compliance". It is not clear when Parke-Davis submitted a new drug submission for Lipitor to the Minister of Health, but there is evidence that Phase III clinical trials, which would have preceded the filing of the new drug submission, began on or about March 25, 1994.

[13]On June 14, 1996, Parke-Davis, in anticipation of the issuance of a notice of compliance for Lipitor, submitted a patent list for Lipitor, in the form of 10, 20 and 40 mg tablets, pursuant to section 4 [as am. by SOR/98-166, s. 3] of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (PMNOC Regulations). The patent list named the 768 patent and Canadian Patent No. 2021546 (the 546 patent), the grant of which was then pending. The patent list was included in the patent register maintained by the Minister under section 3 [as am. idem, s. 2] of the PMNOC Regulations.

[14]On February 6, 1997, still in anticipation of the issuance of the notice of compliance, Parke-Davis submitted to the PMPRB a "Notification of Intention to Sell a Patented Medicine" with respect to Lipitor. That would have triggered the exercise of the price control jurisdiction of the PMPRB.

[15]Parke-Davis obtained a notice of compliance for 10, 20 and 40 mg Lipitor tablets on February 19, 1997.

[16]On April 29, 1997, Parke-Davis filed an amended patent list under section 4 of the PMNOC Regulations. The amended patent list is identical to the original except that it states the drug identification numbers for 10, 20 and 40 mg Lipitor tablets, and refers to the fact that the 546 patent was granted on April 29, 1997 with an expiry date of July 19, 2010.

[17]Lipitor soon became one of the most successful prescription drugs on the market, and Parke-Davis' top selling prescription drug. In 1999 it was the second largest selling prescription drug in Canada. It was the winner of the Prix Galien Canada Award as the most innovative drug product for 1999.

[18]In or about October of 1997, Apotex began to consider marketing atorvastatin calcium in Canada. Searches of the patent records and the file history of the 768 patent at that time led Apotex to conclude that the 768 patent had been dedicated to public use in 1994. It appears that Apotex did not check the public records at the CIPO disclosing that annual maintenance fees had been paid for the 768 patent after the purported dedication. Apotex claims to have expended money and resources in 1998 and 1999 in an attempt to produce a potentially marketable product containing the medicine atorvastatin calcium.

[19]As indicated above, the appellants say that the inclusion of the 768 patent in the schedule attached to the Warner-Lambert dedication was a mistake. They say that they did not discover the mistake until mid-1997. On October 31, 1997, Warner-Lambert's Canadian patent agent wrote to the Commissioner of Patents asking that notice of the error and a retraction of the dedication be published in the Canadian Patent Office Record and noted on the Key Index.

[20]The August 25, 1998 edition of the Canadian Patent Office Record contains a notice by Warner-Lambert stating that it "has not and does not waive" its rights under the `768 patent. On February 12, 1999, the Key Index was amended to note the "cancellation" of the dedication to public use of the `768 patent, and to refer to the August 25, 1998 notice. Apparently, Apotex did not check the Key Index after February 12, 1999.

[21]On or about August 16, 1999, Apotex served Parke-Davis with a letter that reads as follows:

This is a Notice of Allegation pursuant to the Patented Medicines (Notice of Compliance) Regulations in relation to tablets for oral administration containing atorvastatin calcium.

In relation to patent no. 1268768, we allege that the statement made by you pursuant to paragraph 4(2)(c) of the Regulations is false, and/or the patent has expired, and/or the patent is not valid.

The legal and factual basis for this allegation is that this patent was dedicated to the public.

[22]On September 28, 1999, Parke-Davis and Warner-Lambert commenced an application in the Trial Division under subsection 6(1) [as am. idem, s. 5] of the PMNOC Regulations for (a) an order prohibiting the Minister of Health from issuing to Apotex a notice of compliance in connection with the medicine atorvastatin calcium until after the expiry of the 768 patent, (b) an order declaring the notice of allegation to be invalid, and (c) an order declaring that the allegations in the notice of allegation are not justified.

[23]The Judge dismissed the application for a prohibition order on the basis of a number of legal and factual conclusions, all of which are challenged in this appeal. The Judge's conclusions may be summarized as follows:

(1) There was sufficient evidence of the claim of Parke-Davis that it was the exclusive licensee of the 768 patent, and thus Parke-Davis had the status to commence an application for a prohibition order under the PMNOC Regulations.

(2) The failure of Apotex to file a new drug submission did not render the notice of allegation invalid.

(3) The notice of allegation was valid despite the failure of Apotex to refer in the notice of allegation to the 546 patent.

(4) When a patent is dedicated to public use, all rights in the patent are terminated and cannot be revived. An allegation that a patent has been dedicated to public use is a proper ground of allegation for purposes of the PMNOC Regulations.

(5) Parke-Davis and Warner-Lambert failed to establish that the dedication of the 768 patent to public use was a mistake. It followed that the allegations in the notice of allegation were justified.

[24]Each of these issues is discussed below.

The status of Parke-Davis

[25]Apotex argued that Parke-Davis did not establish its entitlement to bring prohibition proceedings under subsection 6(1) of the PMNOC Regulations. To understand this argument, it is necessary to consider certain elements of the scheme of the PMNOC Regulations.

[26]A drug manufacturer who files or has filed a new drug submission for a patented medicine, or to whom a notice of compliance has been issued for a patented medicine, engages the PMNOC Regulations by submitting a patent list in respect of the drug pursuant to section 4 of the PMNOC Regulations. It thus becomes the "first person", as defined in section 2, in relation to the listed patents. The patent list must name any Canadian patent containing a claim for the medicine itself or for the use of the medicine (paragraph 4(2)(b)). It must also state that the first person is the owner or exclusive licensee of each listed patent, or has obtained the consent of the owner of the patent for the inclusion of the patent on the patent list (paragraph 4(2)(c)).

[27]In this case, when Parke-Davis filed its patent list for Lipitor, it claimed to be the exclusive licensee of the 768 patent. In the prohibition proceedings, Parke-Davis sought to establish its status as exclusive licensee through the affidavit of Mr. Rowan, an employee of Parke-Davis, sworn October 28, 1999. However, Mr. Rowan refused on cross-examination to produce a copy of the licence. Apotex argued that the status of Parke-Davis as exclusive licensee of the 768 patent could not be proved without the licence.

[28]The Judge did not consider the absence of the licence to be fatal to the application. She reviewed all of the evidence relevant to the interest of Parke-Davis in the 768 patent, noting in particular that the undisputed owner of the patent, Warner-Lambert, was a party to the proceedings. She concluded that Parke-Davis had adduced sufficient evidence to establish that it was the exclusive licensee. In our view, she made no error of law or fact in reaching that conclusion.

Whether the notice of allegation is invalid because Apotex did not file a new drug submission

[29]Parke-Davis and Warner-Lambert argued that the notice of allegation served by Apotex "could not be justified" because Apotex did not file with the Minister of Health a new drug submission for atorvastatin calcium. The Judge rejected that argument. For the reasons that follow, we interpret the PMNOC Regulations as requiring Apotex to have filed a new drug submission by the date of the hearing of the application for a prohibition order. Based on that interpretation, Parke-Davis and Warner-Lambert should have been granted an order declaring the notice of allegation to be invalid.

[30]This is a problem of statutory interpretation. The basic principle to be applied is stated as follows in Driedger, Construction of Statutes (2nd ed., 1983), at page 87:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

[31]This principle has been applied in numerous statutory contexts: Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559. In that case Iacobucci J., writing for the Court, also noted that Driedger's approach to statutory interpretation is buttressed by section 12 of the Interpretation Act, R.S.C., 1985, c. I-21, which provides that every enactment "is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects".

[32]The PMNOC Regulations were enacted in 1993 when the compulsory licensing system for patented medicines was repealed. Their purpose is explained as follows in the Regulatory Impact Analysis Statement, Canada Gazette Part II, Vol. 127, No. 6, page 1388:

As a general rule, judicial remedies are sufficient to address patent infringement. However, with the enactment of Bill C-91 [S.C. 1993, c. 2] the government has created an exception to patent infringement allowing generic competitors to undertake any activities necessary to work up a submission to obtain regulatory approval of a product. This removes a patent right that might have otherwise been available to patentees to prevent generic competitors from obtaining such regulatory approval of their products.

These Regulations are needed to ensure that this new exception to patent infringement is not abused by generic drug applicants seeking to sell their product in Canada during the term of their competitor's patent while nonetheless allowing generic competitors to undertake their regulatory approval work necessary to ensure they are in a position to market their products immediately after the expiry of any relevant patents.

[33]Consistent with this quotation is the statement of the Supreme Court of Canada that the purpose of the PMNOC Regulations is to prevent patent infringement by delaying the issuance of notices of compliance for generic drugs until such time as their implementation will not result in the infringement of a patent: Merck Frosst Canada v. Canada (Minister of National Health and Welfare), [1998] 2 S.C.R. 193, at paragraph 30.

[34]Recognizing the purpose of the PMNOC Regulations provides little assistance in answering the narrow question posed in this case. It is necessary to understand more details about the regulatory scheme, and in particular the relationship between the PMNOC Regulations and the Food and Drug Regulations.

[35]As stated above, no drug can be marketed in Canada without the approval of the Minister of Health in the form of a notice of compliance issued under the Food and Drug Regulations. An essential step in obtaining a notice of compliance is the filing of a "new drug submission" that meets the requirements of the Food and Drug Regulations.

[36]Parke-Davis, for example, could not have obtained a notice of compliance for Lipitor without having filed a new drug submission that contains the information stipulated in the Food and Drug Regulations. Similarly, Apotex cannot obtain a notice of compliance for a drug containing atorvastatin calcium unless it files a new drug submission that contains the stipulated information. The requirement for a new drug submission existed before the enactment of the PMNOC Regulations, and it still exists.

[37]As stated above, a drug manufacturer that files or has filed a new drug submission for a patented medicine, or to whom a notice of compliance has been issued for a patented medicine, may submit a patent list in respect of the drug pursuant to section 4 of the PMNOC Regulations. It thus becomes the "first person", as defined in section 2, in relation to the listed patents. The patent list must name any Canadian patent containing a claim for the medicine itself or for the use of the medicine (paragraph 4(2)(b)).

[38]Section 7 [as am. by SOR/98-166, s. 6] of the PMNOC Regulations precludes the Minister of Health from issuing a notice of compliance for a drug that is comparable in specified respects 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, unless section 5 [as am. idem, s. 4; 99-379, s. 2] of the PMNOC Regulations is complied with. The requisite comparability is determined under the opening words of subsection 5(1) or (1.1) of the PMNOC Regulations, which read as follows:

5. (1) Where a person files or has filed a submission for a notice of compliance in respect of a drug and compares that drug with, or makes reference to, another drug for the purpose of demonstrating bioequivalence on the basis of pharmaceutical and, where applicable, bioavailability characteristics and that other drug 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 . . . .

(1.1) . . . where [subsection 5(1)] does not apply and where a person files or has filed a submission for a notice of compliance in respect of a drug that contains a medicine found in 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 included on the register in respect of the other drug containing the medicine, where the drug has the same route of administration and a comparable strength and dosage form. . . .

[39]Under the remainder of subsection 5(1) or (1.1) of the PMNOC Regulations, as the case may be, anyone proposing to market a drug that is comparable to another drug within the meaning of either of those provisions must, in its new drug submission for the comparable drug, include one of the following statements with respect to each patent on the patent list for the existing drug:

(1) A statement accepting that the notice of compliance will not issue until the patent has expired: paragraph 5(1)(a) or 5(1.1)(a).

(2) An allegation that a statement made by the first person under paragraph 4(2)(c) of the PMNOC Regulations is false: subparagraph 5(1)(b)(i) or 5(1.1)(b)(i).

(3) An allegation that the patent has expired: subparagraph 5(1)(b)(ii) or 5(1.1)(b)(ii).

(4) An allegation that the patent is not valid: subparagraph 5(1)(b)(iii) or 5(1.1)(b)(iii).

(5) An allegation that no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed: subparagraph 5(1)(b)(iv) or 5(1.1)(b)(iv).

[40]A person who is obliged to comply with subsection 5(1) or 5(1.1) of the PMNOC Regulations is referred to in the PMNOC Regulations as a "second person" (see the definition of "second person" in section 2 [as am. by SOR/99-379, s. 1]).

[41]The second person, in addition to including one of the stipulated allegations in its new drug submission, must provide a detailed statement of the legal and factual basis for the allegation (paragraph 5(3)(a)) and must serve the notice of allegation on the first person (paragraph 5(3)(b) or (c)). In the case of an allegation under subparagraph 5(1)(b)(iv) or 5(1.1)(b)(iv), sometimes called a "non-infringement allegation", paragraph 5(3)(c) imposes the further requirement that the second person must file its new drug submission before or at the same time as the notice of allegation is served on the first person.

[42]Once the notice of allegation and the detailed statement are served on the first person pursuant to paragraph 5(3)(c), the first person may commence an application under subsection 6(1) of the PMNOC Regulations for an order prohibiting the Minister of Health from issuing a notice of compliance to the second person until the patent referred to in the notice of allegation has expired. The first person then has the burden of establishing that the allegations in the notice of allegation are not justified.

[43]If the first person provides the Minister of Health with a notice of the commencement of subsection 6(1) proceedings, the Minister is precluded from issuing a notice of compliance to the second person for a certain period of time. The period of this statutory stay runs for 24 months unless terminated earlier by the expiry of the patent (paragraph 7(2)(a)), by a declaration by the Court that the patent is not valid or that a non-infringement allegation is justified (paragraph 7(2)(b)), or by the withdrawal, discontinuance or dismissal of the prohibition proceedings (subsection 7(4)). The period may also be shortened or lengthened by the Court in certain circumstances (subsection 7(5)).

[44]We digress at this point to note that in Merck Frosst, supra, the statutory stay was characterized as "draconian" because it permits a first person to delay the entry of generic competitors into the market without having to establish even a prima facie case of infringement. It was suggested in that case that, because of the statutory stay, a second person should be permitted to engage the PMNOC Regulations as early as possible. Iacobucci J., writing for the Court, said this at paragraph 33:

. . . it would be manifestly unjust to subject generic drug producers to such a draconian regime without at least permitting them to protect themselves and reduce the length of the presumptive injunction by initiating the NOC [notice of compliance] process as early as possible.

[45]There is no authority dealing with a case where an application for prohibition under subsection 6(1) of the PMNOC Regulations is based on a notice of allegation made by someone who has not filed a new drug submission by the time the application is heard. The question is sometimes raised without an appropriate factual foundation, which prevents the issue from being properly considered (see, for example, Glaxo Group Ltd. v. Canada (Minister of National Health and Welfare) (2001), 11 C.P.R. (4th) 417 (F.C.A.)).

[46]In the case of proceedings governed by the PMNOC Regulations prior to the 1998 amendments, it has been established that the steps to be taken by a second person under section 5 can be taken in any sequence. That is, it has been held not to be necessary to file a new drug submission before serving a notice of allegation. In Apotex Inc. v. Canada (Minister of National Health and Welfare) (1997), 153 D.L.R. (4th) 68 (F.C.A.), Marceau J.A., writing for the Court, said this at page 79:

The Minister argues that the process [under the PMNOC Regulations] cannot be vitiated by the sole fact that the requirements of section 5 were complied with in an out-of-sequence manner. I fully agree. The basic purpose of the Regulations is to provide a means by which patents are noted and protected from possible infringement at the instance of the patent-holder. The Regulations thus ensure that an NOC [notice of compliance] is not issued without a patent-holder having the opportunity to defend its patent. This opportunity is not diminished by the fact that the notice of allegation is given first, if, as here, it contains sufficient information for the patent-holder to determine whether to seek a prohibition order and the Court can immediately proceed to determine its justification. If the sequence is held to be mandatory, the process would simply have to be commenced anew and this would cause a purposeless delay in the marketing of a drug in cases where the allegation proves to have been justified. The intent of the Regulations shows that compliance with section 5 in a manner inconsistent with the sequence set out should not be considered a defect sufficient to vitiate the process.

[47]To similar effect is Merck & Co. v. Canada (Minister of Health) (1998), 79 C.P.R. (3d) 57 (F.C.T.D.). An appeal from that decision was dismissed: (sub nom. Reference re: Patented Medicines (Notice of Compliance) Regulations, (Can.), s. 7) (1999), 3 C.P.R. (4th) 77 (F.C.A.). Marceau J.A., again speaking for the Court, said this at paragraph 4:

The Patented Medicines (Notice of Compliance) Regulations recently adopted pursuant to the Patent Act, R.S.C. 1985, c. P-4, ought not to be interpreted rigidly, without regard to their true intent and scope. The judicial process they introduced a few years ago following the abolition of the compulsory licensing system, with a view to bringing some protection to patent holders whose proprietary rights might be inadvertently but too easily affected, is separate and distinct from the long-standing administrative process imposed by the Food and Drug Regulations, C.R.C. 1978, c. 870, adopted pursuant to the Food and Drugs Act, whose purpose is to satisfy the requirements of safety and efficacy. Of course, both processes can only be triggered by a drug manufacturer who contemplates marketing a new product. But nothing requires that they be both set in motion at the same time. The judicial process has nothing to do with the administrative one and vice versa. These are parallel processes. Matching them is achieved only through their results: the Minister cannot issue a NOC [notice of compliance] without regard to the findings established by the two processes.

[48]Smithkline Beecham Pharma Inc. v. Canada (Minister of Health and Welfare) (1997), 77 C.P.R. (3d) 147 (F.C.T.D.), involved a second person that served a notice of allegation without first filing a new drug submission. The first person commenced an application for judicial review, seeking an order declaring that the notice of allegation did not comply with section 5 of the PMNOC Regulations, and prohibiting the Minister of Health from treating it as a notice of allegation or issuing a notice of compliance that treats the letter as a notice of allegation. The application was dismissed by McKeown J. on the basis of the principle established in the Apotex case, supra. However, he was not called upon to determine whether the second person was required to file its new drug submission prior to the hearing of the application for a prohibition order under subsection 6(1) of the PMNOC Regulations.

[49]The sequence of the steps to be taken by a second person under section 5 was the subject of the 1998 amendments to the PMNOC Regulations. Paragraph 5(3)(c) now says that in the case of a non-infringement allegation, the new drug submission must be filed before or at the same time as the notice of allegation is served on the first person. From that it may be inferred that in the case of any other allegation, the sequence of steps remains irrelevant.

[50]There are no non-infringement allegations in this case. For that reason, we agree with the following statement of the Judge, at paragraph 46 of her reasons:

. . . a [notice of allegation] is not invalidated solely on the basis that no [new drug submission ] or amended new drug submission has been filed by the time the [notice of allegation] is served.

[51]However, the Judge should have gone on to consider the next issue, which is whether a notice of allegation is invalid if no new drug submission is filed at all (at least, where it has not been filed by the date of the hearing, the last date on which a judge hearing a prohibition application could possibly determine the question).

[52]The PMNOC Regulations were drafted on the basis of a premise that a prohibition application under subsection 6(1) would not occur until the second person had made the requisite statements and allegations in both the new drug submission (which is filed with the Minister of Health under the Food and Drug Regulations) and the notice of allegation (which is served on the first person pursuant to the PMNOC Regulations).

[53]This view of the scheme of the PMNOC Regulations is reinforced by a consideration of the definition of "second person" in section 2 of the PMNOC Regulations. "Second person" is defined to mean "the person referred to in subsection 5(1) or 5(1.1), as the case may be". The opening words of both provisions state that they apply "where a person files or has filed a submission for a notice of compliance in respect of a drug [a new drug submission]" that meets certain conditions. Read literally, this would mean that only a person who files or has filed such a new drug submission can meet the definition of "second person" in the PMNOC Regulations. It seems incongruous that a person who has not filed a new drug submission by the date of the hearing should nevertheless be treated as a "second person".

[54]Counsel for Parke-Davis argued in favour of this literal interpretation. She submitted that if the PMNOC Regulations do not require a new drug submission to be filed as a condition precedent to obtaining the status of a "second person" under the PMNOC Regulations by the date of the hearing of the prohibition application, the proceedings would be an academic exercise and a waste of the resources of the first person and the Court, because there can be no assurance that a new drug submission will ever be filed. Courts generally will not consider problems that are hypothetical or moot.

[55]Counsel for Apotex suggested three reasons why, notwithstanding the language of subsections 5(1) and 5(1.1) of the PMNOC Regulations, a second person should not be required to file a new drug submission prior to the hearing.

[56]First, the only express stipulation in the PMNOC Regulations about the timing of the filing of a new drug submission is that, in the case of a non-infringement allegation, the new drug submission must be filed no later than the date on which the notice of allegation is served on the first person (paragraph 5(3)(c) of the PMNOC Regulations). Requiring this sequence of events for a non-infringement allegation makes sense because the second person's new drug submission is likely to contain information that would assist the Court in determining whether the non-infringement allegation is justified. However, it does not make sense for any other kind of allegation. That point is well illustrated by the present case. Apotex has alleged that Parke-Davis is not the exclusive licensee of the 768 patent, and that since the 768 patent was dedicated to public use, it has either expired or is not valid. No new drug submission that Apotex might file under the Food and Drug Regulations for an atorvastatin calcium medicine could possibly shed light on the merits of any of these allegations.

[57]Second, a first person is not permitted, in proceedings under the PMNOC Regulations, to call into question the adequacy of any new drug submission by the second person. The Minister of Health, although named as a party to these proceedings, did not appear. There is no reason to conclude that the work of the Minister of Health under the Food and Drug Regulations would be adversely affected if the new drug submission is not filed until after the conclusion of proceedings under subsection 6(1) of the PMNOC Regulations.

[58]Third, if a second person is not required to file a new drug submission before serving a notice of allegation, but must do so prior to the hearing of the prohibition application under subsection 6(1), it could be caught in a procedural trap. If, for example, its new drug submission is filed after the deadline for the filing of affidavit evidence under Part 5 of the Federal Court Rules, 1998 [SOR/98-106], the Court may not permit the second person to file evidence of the filing, especially if it is persuaded that the first person would be unfairly prejudiced. While events could unfold in that fashion, it seems to us that a second person could avoid such a trap by appropriately timing the steps it must take.

[59]We find no merit in the third argument made for Apotex. We acknowledge that there is some merit in the first and second of arguments, but we do not find them so compelling that we are prepared to ignore the opening words of subsections 5(1) and 5(1.1), thereby permitting potentially wasteful attempts to deal with a hypothetical or moot question. The object of an application for a prohibition order under subsection 6(1) is, after all, to prohibit the Minister of Health from issuing a notice of compliance to a second person for a drug that is, in some relevant respect, comparable to a patented medicine. We see little point in entertaining a prohibition application if, by the time of the hearing, the Minister has not even been asked to consider issuing a notice of compliance because the second person has filed no new drug submission.

[60]To return to the question: Is a notice of allegation invalid if no new drug submission is filed by the date of the hearing? The answer to that question is "yes".

[61]It must now be determined whether Apotex has in fact failed to file a new drug submission. The Judge did not state any conclusion on this point, perhaps because it was not necessary for her to do so given her conclusion on the legal issue. As all of the evidence is in the form of affidavits and transcripts of cross-examinations, we are in as good a position as the Judge to make that determination.

[62]Relevant evidence is found in paragraph 39 of the affidavit of Mr. Rowan, an officer of Parke-Davis, which reads as follows:

While I cannot determine this for sure because such submissions are not public, I believe that Apotex has not filed a submission for an NOC [notice of compliance] with Health Canada for atorvastatin calcium. The reason why I believe this is that the drug has not been available long enough for stability studies to be completed, a condition precedent for such a submission. I believe that an NOC [notice of compliance] cannot issue until all patents on the Patent Register for atorvastatin calcium have been made the subject of an NOA [notice of allegation] or the patents have expired. The `546 patent has not been made the subject of an NOA [notice of allegation], since such an NOA [notice of allegation] would need to be served on Parke-Davis.

[63]The affidavit of Dr. Bernard Sherman, chairman and chief executive officer of Apotex, sworn November 29, 1999, does not state that Apotex has filed or has an intention to file a new drug submission for atorvastatin calcium. In his cross-examination on February 3, 2000, Dr. Sherman indicated that Apotex would file a new drug submission but he would not stipulate a date, saying only that it would be filed when it is ready.

[64]Apotex is the only party that was in a position to present evidence that it had filed a new drug submission. The record contains no evidence that could support the conclusion that Apotex had filed a new drug submission. In our view, the evidence establishes on a balance of probabilities that Apotex had not filed a new drug submission by the date of the hearing.

[65]It follows that the Judge should not have dealt with the application for a prohibition order. She should have allowed the application of Parke-Davis and Warner-Lambert for an order declaring that the notice of allegation has no legal effect.

[66]Having reached that conclusion, it is not strictly necessary to consider the remaining issues. However, we will do so because they were dealt with by the Judge, they were fully argued before us, and they may arise again if Apotex files a new drug submission for an atorvastatin calcium medicine.

Whether the notice of allegation is invalid because it makes no allegations about the 546 patent

[67]We agree with the Judge that a notice of allegation need not deal with every patent on the patent list. Allegations relating to different patents on a single patent list may be the subject of separate notices of allegation and may be litigated separately.

The law relating to the dedication of a patent to public use

[68]Counsel for Parke-Davis and Warner-Lambert vigorously contended on appeal that it is legally impossible for the holder of a Canadian patent to relinquish its patent rights by dedicating the patent to public use. The premise of the argument is that, because patent rights are a creature of statute, nothing can affect a patent right unless the Patent Act specifically says so. The Patent Act provides for the expiration of the term of a patent by the passage of time (section 45) or the failure to pay fees (section 46), and for the disclaimer or assignment of patents (sections 48 [as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 17; S.C. 1993, c. 15, s. 44] and 50 [as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 20]), but it says nothing about terminating patent rights by dedicating the patent to public use.

[69]Sections 45, 46, 48 and 50 of the Patent Act read as follows:

45. (1) Subject to section 46, where an application for a patent is filed under this Act before October 1, 1989, the term limited for the duration of the patent is seventeen years from the date on which the patent is issued.

(2) Where the term limited for the duration of a patent referred to in subsection (1) had not expired before the day on which this section came into force, the term is seventeen years from the date on which the patent is issued or twenty years from the filing date, whichever term expires later.

46. (1) A patentee of a patent issued by the Patent Office under this Act after the coming into force of this section shall, to maintain the rights accorded by the patent, pay to the Commissioner such fees, in respect of such periods, as may be prescribed.

(2) Where the fees payable under subsection (1) are not paid within the time provided by the regulations, the term limited for the duration of the patent shall be deemed to have expired at the end of that time.

. . .    

48. (1) Whenever, by any mistake, accident or inadverten-ce, and without any wilful intent to defraud or mislead the public, a patentee has

(a) made a specification too broad, claiming more than that of which the patentee or the person through whom the patentee claims was the inventor, or

(b) in the specification, claimed that the patentee or the person through whom the patentee claims was the inventor of any material or substantial part of the invention patented of which the patentee was not the inventor, and to which the patentee had no lawful right,

the patentee may, on payment of a prescribed fee, make a disclaimer of such parts as the patentee does not claim to hold by virtue of the patent or the assignment thereof.

(3) [Repealed, 1993, c. 15, s. 44]

(4) No disclaimer affects any action pending at the time when it is made, unless there is unreasonable neglect or delay in making it.

(5) In case of the death of an original patentee or of his having assigned the patent, a like right to disclaim vests in his legal representatives, any of whom may exercise it.

(6) A patent shall, after disclaimer as provided in this section, be deemed to be valid for such material and substantial part of the invention, definitely distinguished from other parts thereof claimed without right, as is not disclaimed and is truly the invention of the disclaimant, and the disclaimant is entitled to maintain an action or suit in respect of that part accordingly.

. . .

50. (1) Every patent issued for an invention is assignable in law, either as to the whole interest or as to any part thereof, by an instrument in writing.

(2) Every assignment of a patent, and every grant and conveyance of any exclusive right to make and use and to grant to others the right to make and use the invention patented, within and throughout Canada or any part thereof, shall be registered in the Patent Office in the manner determined by the Commissioner.

(3) No assignment, grant or conveyance shall be registered in the Patent Office unless it is accompanied by the affidavit of a subscribing witness or established by other proof to the satisfaction of the Commissioner that the assignment, grant or conveyance has been signed and executed by the assignor and by every other party thereto.

[70]It is of some interest to note that other common law jurisdictions have statutory provisions for the surrender or voluntary termination of patent rights. For example, section 29 of the Patents Act 1977 (U.K.), 1977, c. 37, reads as follows:

29.--(1) The proprietor of a patent may at any time by notice given to the comptroller offer to surrender his patent.

(2) A person may give notice to the comptroller of his opposition to the surrender of a patent under this section, and if he does so the comptroller shall notify the proprietor of the patent and determine the question.

(3) If the comptroller is satisfied that the patent may properly be surrendered, he may accept the offer and, as from the date when notice of his acceptance is published in the journal, the patent shall cease to have effect, but no action for infringement shall lie in respect of any act done before that date and no right to compensation shall accrue for any use of the patented invention before that date for the services of the Crown.

[71]By virtue of subsection 29(2), the surrender of a patent is subject to opposition from third parties. Anyone who objects to a proposed surrender can make representations to the comptroller whose role it is to determine whether a patent may be surrendered. Because a surrendered patent is treated as if it never existed, the comptroller is not likely to accept an offer to surrender a patent if to do so would prejudice a third party such as a licensee (see W. R. Cornish, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 4th ed. (London: Sweet & Maxwell, 1999), at page 158).

[72]According to one commentator, English patents are sometimes surrendered in conjunction with an out-of-court settlement for a patent infringement (see Brian C. Reid, A Practical Guide to Patent Law (Oxford: ESC Pub., 1984), at page 109). Similarly, the Chartered Institute of Patent Agents notes that one of the benefits of a voluntary surrender is that it may enable a patentee to avoid expense if he is threatened with a revocation action (see Chartered Institute of Patent Agents, Patent Law of the United Kingdom, Texts, Commentary and Notes on Practice, 3rd ed. (London: Sweet & Maxwell, 1975), at page 186).

[73]In the United States, the disclaimer and dedication of patents is dealt with in § 253 of Title 35 (1994) of the United States Code, which reads as follows (emphasis added):

§ 253. . . .

Whenever, without any deceptive intention, a claim of a patent is invalid the remaining claims shall not thereby be rendered invalid. A patentee, whether of the whole or any sectional interest therein, may, on payment of the fee required by law, make disclaimer of any complete claim, stating therein the extent of his interest in such patent. Such disclaimer shall be in writing, and recorded in the Patent and Trademark Office; and it shall thereafter be considered as part of the original patent to the extent of the interest possessed by the disclaimant and by those claiming under him.

In like manner any patentee or applicant may disclaim or dedicate to the public the entire term, or any terminal part of the term, of the patent granted or to be granted.

[74]In Chris-Craft Industries, Inc. v. Monsanto, Co., 59 F.R.D. 282 (C.D. Cal. 1973) it was held that dedicating a U.S. patent to the public renders moot disputes concerning the validity of infringement. It appears that a dedication of a U.S. patent terminates a patentee's rights under a patent just as if the patent had expired (see Technimark, Inc. v. Crellin, Inc., 14 F.Supp. 2d 762 (M.D.N.C. 1998).

[75]The U.K. and U.S. laws demonstrate how dedications and similar transactions may be codified. Otherwise, they shed no light on the problem in this case. There is very little Canadian jurisprudence on the dedication of patents to public use. Of those cases which have touched on the subject, most have left open the question of whether patent rights may be terminated by a dedication of the patent to public use.

[76]For example, in Novopharm Ltd. v. Merck & Co. (1992), 44 C.P.R. (3d) 13 (Comm. of Patents), Merck Frosst dedicated one of its patents to public use after a generic drug manufacturer applied for a licence to import, make, use and sell a drug in respect of the dedicated patent. As a result of the dedication, Merck Frosst took the position that the applicant should have to refile its licensing application because the fundamental premise underlying its application had changed. The Commissioner of Patents, however, did not agree. In the only paragraph of Novopharm that deals with dedications, it was stated, at page 15:

. . . I agree with the Applicant that the fact that Merck Frosst has dedicated its patent to the public use has no effect on this application other than possibly on the royalty that may be set under any licence granted.

[77]Parke-Davis and Warner-Lambert argued that in Novopharm, the Commissioner of Patents declined to give the patent dedication any effect. That is an incorrect reading of the case. The Commissioner found only that the dedication did not abrogate proceedings that began before the dedication. Clearly the Commissioner was not inclined to ignore the dedication altogether. On the contrary, he suggested that the dedication could affect the resulting royalties.

[78]Another case that touches on the subject of patent dedication is Genentech Canada Inc. (Re) (1992), 44 C.P.R. (3d) 316 (P.M.P.R.B.). The PMPRB had sent a notice of hearing to a patentee who was alleged to be selling a patented drug at an excessive price. After receiving the notice of hearing, the patentee purported to dedicate its patent to public use, as of a date prior to the date of the hearing, in an attempt to circumvent the PMPRB's jurisdiction. The PMPRB found that the backdated dedication had no effect on the proceeding which had already begun. It stated, at page 324, that (emphasis added):

. . . the Board has concluded that it does have jurisdiction to continue this proceeding, to make a finding with respect to the price of Activase, and, if necessary to issue an order. The Board has concluded that the dedication by the respondents of Canadian patents Nos. 1,272,149 and 1,293,211, in the present circumstances, has not terminated its jurisdiction.

. . .

In addition, taking into account the scheme of the Act and Parliament's objectives as discussed below, the Board considers that dedication of any and all patents pertaining to an invention prior to the issuance of a notice of hearing by the Board may not have the effect of terminating the Board's jurisdiction to conduct a hearing into the price of a medicine and to issue a remedial order. On the same basis, the Board further considers that dedication of the relevant patents following an excessive price finding of the Board would not terminate the Board's jurisdiction to enforce an order made under either s. 39.15(3)(d)(ii) or (e) of the Patent Act flowing from such finding.

[79]This case relates only to the jurisdiction of the PMPRB in the facts of the case. It does not establish that it is impossible as a matter of law to surrender patent rights by means of a dedication to public use.

[80]In ICN Pharmaceuticals Inc. v. Canada (Staff of the Patented Medicine Prices Review Board), [1997] 1 F.C. 32 (C.A.), at paragraph 72, this Court stated: "That the Act makes no express provision for the possibility of a patent dedication is at least one other complication that will have to be dealt with at some future date."

[81]As suggested above, the preponderance of the argument against the recognition of patent dedications as terminating patent rights focussed on the fact that the Patent Act says nothing about patent dedication. The Act's silence on this matter, however, is not determinative. We agree with the submission of Apotex that a transaction recognized by common law, that does not contradict anything in the Patent Act, may affect patent rights. Counsel for Warner-Lambert and Parke-Davis could not identify any harm to the public or to the patent regime that would result from recognizing that a Canadian patent can be dedicated to public use and that the effect of such a dedication is to terminate all attached patent rights. Moreover, we cannot see that any provision of the Patent Act, or any of its underlying policies, would be frustrated by recognizing that patent rights may be terminated by a dedication to public use.

[82]We note also that the dedication of patents to public use occurs often, from which we infer that such dedications are relied on by the business community (see Bulletin, Issue 17, Oct. 1995, PMPRB, to the effect that 633 patents were dedicated between 1969 and 1995, 447 of them by drug companies). We agree with the Judge's decision that the dedication of patents to the public through notices published in the Canadian Patent Office Record has become an established practice.

[83]In this case, for example, Warner-Lambert purported to dedicate 324 patents to public use irrevocably by using the established procedure. It would defy common sense to conclude that Warner-Lambert believed that this act had no legal consequence. On the contrary, the evidence establishes that it intended to rely on the dedications to avoid the jurisdiction of the PMPRB, although it is an open question whether that intention was realized. The Genentech case is not on point because none of the Warmer-Lambert dedications were backdated. Nevertheless, the PMPRB may still take the position that it retains a price control jurisdiction. We express no opinion on that point.

[84]Although there is no provision in the Patent Act which governs the termination of patent rights by dedication to public use, we are not persuaded that such a thing is impossible as a matter of law. Assuming it is possible, publication of a dedication notice in the Canadian Patent Office Record is certainly a method by which a dedication to public use can be accomplished. As to whether a patent may be dedicated to public use by some other method, we make no comment.

[85]If a Canadian patent can be dedicated to public use in Canada, is the dedication revocable? That is another question that has yet to be considered in Canadian jurisprudence. However, it seems to us that the dedication of a patent to public use is analogous to a gift, in the sense that it is a unilateral act that results in a patent holder voluntarily depriving itself of patent rights. A valid gift, once completed, cannot be revoked. If the gift analogy is apt, the necessary conclusion is that a valid dedication cannot be revoked. In fact, the dedications in this case were stated to be "irrevocable".

[86]In this case, however, it is contended that Warner-Lambert did not dedicate the 768 patent to public use, because it did not possess the requisite intention to dedicate that particular patent. Warner-Lambert says that the 768 patent was included in the dedication documents by mistake. If that is so, then there is no valid dedication and the question of revocation does not arise. (This aspect of the case is discussed in the next section.)

[87]We note in passing the suggestion of Apotex that, if it is determined in this case that the 768 patent was not dedicated to the public, then Apotex may have a claim against Warner-Lambert or Parke-Davis or both in damages because it relied to its detriment on the notice of dedication. The merits of any such claim are not the subject of this case, and we express no opinion on that point.

Whether the 768 patent was in fact dedicated to public use

[88]For the purposes of this part of the discussion, we will assume that the notice of allegation served by Apotex was valid, and that it is possible as a matter of law to terminate patent rights by dedicating them to public use. In the notice of allegation, Apotex alleged that the 768 patent was not valid or that it had expired because it was dedicated to public use. The burden was on Parke-Davis, as the party applying for a prohibition order, to establish on a balance of probabilities that there was no such dedication, with the result that the allegations of invalidity and expiry were not justified. Parke-Davis sought to meet that burden by submitting evidence that the 768 patent was included in the dedication documents in error.

[89]The Judge concluded that the burden was not met. Her conclusion on that point is stated at paragraphs 76 and 77 of her reasons:

However, the burden is on Parke-Davis to satisfy the Court by admissible evidence that it was more probable than not that the dedication of the 768 patent was unintended notwithstanding that there was an undoubted intent to dedicate other patents listed on the schedule attached to the irrevocable dedication.

Counsel for Apotex was correct, in my view, that at least one other potential inference may be drawn: that the dedication was deliberate arising out of confusion or miscommunication. When I consider that possible explanation together with the fact that it was well within the ability of Parke-Davis to provide first-hand admissible evidence from Ms. Ryan who executed the dedication, and Ms. Barish to whom the error appears to have been attributed, I conclude that better evidence was required given the extraordinary nature of the relief sought in this proceeding. While this evidence may well be forthcoming in any subsequent infringement proceeding, on the evidence before me I am not satisfied that, on a balance of probabilities, I can find as a fact that the dedication was not intended in the sense of being contrary to the then express intent of Warner-Lambert.

[90]Counsel for Parke-Davis and Warner-Lambert argued that the Judge erred in reaching this conclusion.

[91]An appellate court may not intervene in factual findings in the absence of a palpable and overriding error: Housen v. Nikolaisen, [2002] 2 S.C.R. 235. Such an error may be found if the assessment of the evidence is tainted by an error of law: Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd. (2002), 211 D.L.R. (4th) 696 (F.C.A.).

[92]It is our view that such an error is disclosed in paragraph 77, where the Judge said, "at least one other potential inference may be drawn: that the dedication was deliberate arising out of confusion or miscommunication". The conclusion that the dedication arose out of confusion or miscommunication is antithetical to the conclusion that the dedication was deliberate. Indeed, it is axiomatic that a step taken on account of confusion or miscommunication cannot be deliberate. According to The Oxford English Dictionary (2nd ed.), an act is deliberate if it is "[w]ell weighed or considered; carefully thought out; formed, carried out, etc. with careful consideration and full intention; done of set purpose; studied; not hasty or rash." While it may be that the dedication documents were deliberately sent, this does not mean that there was a deliberate act or intention to include the 768 patent in the list of patents to be dedicated.

[93]Having reached that conclusion, it is incumbent on us to review the evidence relating to the purported dedication to determine afresh whether the evidence established that the inclusion of the 768 patent in the dedication documents was a mistake.

[94]The direct evidence relied upon by Warner-Lambert and Parke-Davis was contained in the affidavit of Mr. Rowan. He stated that he was the person in charge of the management of the Warner-Lambert patents in Canada, and had first-hand knowledge of the matter. He stated that there was no intention to dedicate the 768 patent to public use. In notes kept by Mr. Rowan and Ms. Ryan while making up the lists of patents to be dedicated, the 768 patent was listed as "active" by Mr. Rowan and "keep" by Ms. Ryan. The preliminary list of patents selected for dedication did not include the 768 patent. Warner-Lambert advised CIPO of the error soon after its discovery and submitted a request to correct the error. The Minister of Health was also advised, and apparently accepted, that the dedication was an error. Mr. Rowan described the steps he took to discover how the error had occurred. He explained that he was unable to determine that matter with certainty, but from the information he was able to find, he inferred that the inclusion of the 768 patent in the dedication documents was an error.

[95]Attached as an exhibit to Mr. Rowan's affidavit is a letter from Warner-Lambert's Canadian patent agents to CIPO dated October 31, 1997 indicating that the 768 patent had been included by mistake in the dedication and requesting that the mistake be corrected. Included with that letter was the affidavit of Ms. Ryan, who had signed the dedication documents, sworn on October 30, 1997. That affidavit stated as follows:

I AM, Andrea Ryan, Vice President and Associate General Counsel, Intellectual Property to Warner-Lambert Company, hereby make oath and say:

1.     THAT I was personally involved in the multiple dedication that was filed in the Canadian Patent Office on December 21, 1994 (copy attached) and therefore have knowledge in the maters hereinafter deposed to.

2.     THAT by error, Canadian Patent No. 1,268,768 was included in the above-mentioned list of dedicated patents.

3.     THAT it was not and never has been the intention of Warner-Lambert Company to dedicate Canadian Patent No. 1,268,768 to public use.

4.     THAT Warner-Lambert Company's intention to retain exclusive proprietary in Canadian patent No. 1,268,768 is clearly determinable from the fact that all maintenance fees have been paid including those which fell due after December 21, 1994 and the patent was listed with the Patented Medicines Prices Review Board and registered with the Health Protection Branch of the department of National Health and Welfare according to the Patented Medicines (Notice of Compliance) Regulation, SOR/93-133.

[96]In fact, this affidavit appears twice in the record (see exhibits M and O to the Rowan affidavit).

[97]Warner-Lambert and Parke-Davis also relied on circumstantial evidence to establish the plausibility of their assertion that the inclusion of the 768 patent in the dedication documents was a mistake. First, the 768 patent did not match the profile of the patents on the 1992 list that were earmarked for dedication (i.e., patents of no value). Second, there were a number of acts by Warner-Lambert and Parke-Davis after December 21, 1994 (the date of the request to CIPO by the appellants to dedicate the 768 patent) and before October 31, 1997 (the date of the request for the correction) that are not consistent with an intention to dedicate the 768 patent to public use:

(a) Before December 21, 1994, Parke-Davis was conducting a Phase III clinical trial of atorvastatin calcium. After that date, Parke-Davis continued to work toward obtaining a notice of compliance.

(b) All annual maintenance fees payable after December 21, 1994 for the 768 patent were paid.

(c) On June 28, 1996 and again on April 29, 1997, Parke-Davis submitted a patent list to the Minister of Health referring to the 768 patent. The contents of the patent lists were certified to be true, including the statement tha the 768 patent expired at the end of its term in 2007. Although the Minister initially questioned the notice of dedication, the 768 patent was maintained on the patent register after the error was explained.

(d) On February 6, 1997, Parke-Davis submitted a notification to the PMPRB, referring to the 768 patent, to subject Lipitor to price controls, although the object of dedicating the patents had been to avoid the price control jurisdiction of the PMPRB.

[98]The theory that the dedication was a deliberate act "arising out of confusion or miscommunication" originated with Apotex but it was not put to the appellants' witness, Mr. Rowan, on cross-examination. In our view, it was incumbent upon Apotex to challenge Mr. Rowan directly as to the intention of the appellants: Browne v. Dunn (1893), 6 R. 67 (H.L.), at pages 76-77:

To my mind nothing would be more absolutely unjust than not to cross-examine witnesses upon evidence which they have given, so as to give them notice, and to give them an opportunity of explanation . . . and, not having given them such an opportunity, to ask the jury [judge] afterwards to disbelieve what they have said, although not one question has been directed either to their credit or to the accuracy of the facts they have deposed to.

[99]The affidavits filed in support of the application by Parke-Davis did not include an affidavit from Ms. Ryan, who signed the dedications, Jean Barish who had some involvement in the preparation in the final list of patents for dedication, or Michael Atkins who discovered the mistake. However, as indicated above, the record did include an affidavit from Ms. Ryan, albeit as part of an exhibit to Mr. Rowan's affidavit. That affidavit must be taken into account, if not as evidence of the truth of its contents, at least as evidence that would bar an adverse inference from the lack of any affidavit being filed by Ms. Ryan in these proceedings.

[100]Counsel for Apotex argued that the affidavit of Ms. Ryan should be ignored because Ms. Ryan could not have been cross-examined. While this may be technically correct, it is an objection without much substance. Nothing prevented Apotex from attempting to obtain the evidence of Ms. Ryan pursuant to rules 41 to 46 of the Federal Court Rules, 1998.

[101]Quite apart from that, the affidavit of Mr. Rowan contains first-hand knowledge of the events in question. We do not consider it necessary to call every single witness who also had knowledge of these events: Nernberg v. Shop-Easy Stores Ltd. (1966), 57 D.L.R. (2d) 741 (Sask. C.A.), at page 745. Given that the truthfulness of Mr. Rowan was not challenged by Apotex, and that a large body of circumstantial evidence supported his assertions that the 768 patent was included in the dedication documents in error, it could not be said that evidence relating to all of the circumstances giving rise to the errors would have illuminated the facts already in evidence.

[102]Finally, we note that the record contains no evidence that is capable of casting any doubt on the assertions of Parke-Davis and Warner-Lambert that the 768 patent was included in the dedication documents in error.

[103]Having reviewed all of the evidence, we conclude that Parke-Davis and Warner-Lambert have met the burden of establishing on a balance of probabilities that the inclusion of the 768 patent in the dedication documents was a mistake. If we had concluded that the notice of allegation served by Apotex was valid, we would have held that the allegations that the 768 patent was invalid or expired were not justified, with the result that the application for a prohibition order would have been granted.

Conclusion

[104]This appeal should be allowed with costs, the order of the Judge should be set aside, and this Court should make an order declaring that the August 16, 1999 notice of allegation that Apotex served on Parke-Davis has no legal effect.