Judgments

T-1878-02

2005 FC 234

AB Hassle, AstraZeneca AB and AstraZeneca Canada Inc. (Applicants)

v.

Apotex Inc. and The Minister of Health (Respondents)

Indexed as: AB Hassle v. Apotex Inc. (F.C.)

Federal Court, Layden-Stevenson J.--Vancouver, December 14, 15, 16 and 17, 2004; Ottawa, February 14, 2005.

Patents -- Practice -- Drug patent holder seeking declaration letter from generic producer not notice of allegation (NOA) within Patented Medicines (Notice of Compliance) Regulations -- Patent for enteric coated omeprazole, ulcer treatment -- Invention disclosed inert subcoating between core, outer coating -- Generic previously made NOA, alleging non-infringement but F.C. Judge held NOA non-compliant, prohibited Minister from issuing notice of compliance (NOC) -- Decision affirmed by F.C.A. -- Generic made fresh NOA, alleging non-infringement, invalidity of patent -- Nature of Regulations, s. 6 application -- Sufficiency of NOA -- Submitted that NOA silent on argument now raised, generic could not expand grounds by evidence, argument -- Generic's assertion: its product in accordance with prior art -- Generic had put patent's construction into play -- Contents of NOA, detailed statement, considered -- Generic made no reference in NOA to non-infringing subcoat in context now brought forward -- F.C.A. having construed patent, generic seeking to revisit matter in lower Court -- NOA, as framed, turned on construction since determined against it by F.C.A. -- Generic not allowed to supplement NOA by evidence for which no basis in NOA -- Detailed consideration of issue estoppel, ground argued by applicant, AstraZeneca -- Whether infringement issue determined in earlier proceeding -- Generic failing to explain why did not put best foot forward in earlier proceeding -- Splitting case not permitted -- Not entitled to second chance -- As to whether Court should exercise discretion not to apply issue estoppel, Court having regard to public interest in finality of litigation, preservation of justice system's credibility -- Apart from issue estoppel, generic's NOA also amounted to abuse of process -- Application allowed.

Judges and Courts -- Patented medicine litigation -- Court's power to prevent relitigation extending beyond res judicata doctrine -- Judges have inherent, residual discretion to prevent abuse of Court's process that is not encumbered by issue estoppel requirements -- Concern for principles of judicial economy, consistency, finality, integrity of justice administration -- Case at bar not one in which relitigation would enhance, not impeach, integrity of judicial system.

By correspondence, purporting to constitute a notice of allegation (NOA), dated September 26, 2002 respondent, Apotex, informed AstraZeneca it had filed a new drug submission (NDS) in respect of magnesium omeprazole tablets for oral administration. AstraZeneca sought a declaration that the letter was not a NOA within the contemplation of the Patented Medicines (Notice of Compliance) Regulations or, in the alternative, an order prohibiting the Minister from issuing a notice of compliance (NOC) until patent expiry.

The application for the patent at issue upon the hearing of this application--the ´693 patent--had been filed in April, 1987 and claimed priority from a U.K. application filed in Apri l 1986. The patent issued in late 1991, and will expire in 2008. The patent is for an enteric coated form of omeprazole which is used to treat gastric and duodenal ulcers and is marketed by AstraZeneca under the trade name "Losec". The enteric coating prev ents the omeprazole's degradation in the stomach, allowing its release in the small intestine. If this coating were applied directly to the omeprazole, the latter would decompose causing the tablets to become discoloured and impairing storage stability. Th e invention disclosed in the patent was an inert subcoating between the omeprazole core and the enteric outer coating.

Apotex had previously made a NOA with respect to the ´693 patent. Its position was that its tablets would not infringe as they contained no subcoating, the enteric coating being applied directly to the cores. But Kelen J. held that the NOA letter did not comply with the Regulations and prohibited the Minister from issuing a NOC; this decision was sustained by the Federal Court of Appeal. Apotex then prepared the NOA here at issue, alleging both non-infringement and the ´693 patent's invalidity.

AstraZeneca's application was brought under section 6 of the Regulations. Proceedings under that section are not to be likened to validity or infri ngement actions. They are judicial review proceedings, meant to be dealt with expeditiously and their scope limited to administrative purposes (issuance of a NOC). An action must be commenced should a trial as to validity or infringement be required.

The first of three threshold issues was the sufficiency of the NOA and detailed statement. AstraZeneca argued that the NOA strictly frames the issues and may not be expanded upon by the generic during the proceeding and that the NOA herein was silent on the argument now raised: non-infringement on the basis that its subcoat was neither continuous nor inert. The NOA made no mention of the possibility of an in situ subcoat. Apotex argued that its formulation did not involve a subcoat within the meaning of the ´69 3 patent and that the evidence failed to demonstrate the contrary. The Apotex product would contain a core with an enteric coating disposed on the core rather than a subcoating as contemplated by the patent. According to its NOA, its product was in accordance with prior art.

Held, the application should be allowed.

Repeated readings of Apotex' NOA and detailed statement, led to the conclusion that it was the construction of the ´693 patent that Apotex had put into play. Its detailed stateme nt claimed that the patent requires that the subcoating be "distinct material placed between the core and the enteric coating so as to avoid their coming into contact". All of Apotex' non-infringement allegations in its NOA flowed from this fundamental pos ition. Yet, in argument, Apotex took the position that it did not restrict itself to a construction of the ´693 patent that was limited to a formulation having a separately applied coat. The entire detailed statement revolved around Apotex' characterizatio n of subcoat yet the allegation referencing the ´495 patent (a European patent application of 1984, relied upon by Apotex as prior art teaching) makes no mention of a subcoat. The NOA and detailed statement did not contain any allegation that should the ´6 93 patent encompass a subcoating arising from a reaction between the core material and the enteric coating when the two are brought into contact, the reactive layer will not be continuous, inert, film-forming and polymeric. It is settled law that when a generic makes an allegation, it must provide a detailed statement of the legal and factual basis for the allegation, to which it is limited. The allegation and detailed statement are intended to fully inform the first person of the case to be met. Whether a detailed statement is adequate depends upon the facts and law relied upon in the detailed statement itself. Apotex did not allude to a non-infringing subcoat in its NOA in the context in which it now discusses it. The Federal Court of Appeal has already construed the patent as "a pharmaceutical preparation which . . . contains a subcoating or separating layer between the core and enteric coating, however, the subcoating or separating layer is formed". Apotex questioned that Court's construction of the paten t, but this Court is bound by the higher Court's interpretation. The NOA, as framed, turns on a construction issue that was determined after its drafting. It did not allege that the Apotex reactive material was non-infringing because it is not continuous, inert and polymeric; rather, it alleged non-infringement in that the ´693 patent does not contemplate a layer of reactive material at all--a construction that was incorrect in the opinion of the Federal Court of Appeal.

The Court did not accept respondent's argument, that in advancing the position that its reactive layer is non-infringing as not inert, continuous or polymeric, it is merely answering the case put forward by AstraZeneca and that the latter's conduct was such as to estop it from arguing that t he NOA failed to disclose any allegation to that effect. The respondent's written memorandum was silent in that regard. Apotex was not entitled, at the hearing, to raise arguments not found in its written argument and of which the other side did not have n otice. As to AstraZeneca's conduct, it was not incumbent upon AstraZeneca, in circumstances where its notice of application specifically relied upon two delineated bases of attack regarding the allegation of non-infringement and an alternative third basis, to bring a motion to strike the Apotex evidence. AstraZeneca did not lead Apotex down the garden path. Apotex had clear notice of AstraZeneca's attack and of the alternative basis. It is settled law that the entire factual basis must be set forth in the d etailed statement, not revealed piecemeal when some need happens to arise in a section 6 proceeding.

While the Court was not prepared to grant the declaration asked--that Apotex' letter was not a NOA as unsupported by a detailed statement of the legal and factual basis for its non-infringement allegation--it could not permit Apotex to supplement its NOA and seek to establish non-infringement by evidence for which no basis was indicated in the NOA. The NOA was deficient in containing a non-infringement allega tion based on incorrect patent construction and, not having advanced an allegation in the NOA that the reactive material in its product is not inert, continuous and polymeric, it could not now do so by either evidence or argument.

AstraZeneca relied also upon the issue estoppel doctrine. It maintained that the respondent's concession that patent ´693 extends to an in situ subcoat, together with the Federal Court of Appeal's construction determination, was dispositive.

The issue estoppel question demanded detailed consideration. AstraZeneca asserted was that the question of infringement itself was the subject of issue estoppel and that a finding of infringement was implicit in the order emanating from the previous proceeding. It was further urged that the failure by Apotex in the previous proceeding to furnish samples for testing estopped it from now relying upon it. It was argued that Apotex, as a litigation strategy in the earlier proceeding, elected to base its case upon patent construction but was unsuccessful and was not now entitled to try again. In deciding to allege only non-infringement, Apotex had accepted the patent's validity. For its part, Apotex submitted that neither Kelen J. nor the Court of Appeal had made a finding as to infringement. Finally, Apotex suggested that, even if the issue estoppel requirements were met, the Court should exercise its discretion not to apply it as that would go against the public interest: AstraZeneca should not be allowed to use the Regulations to preserve its monopoly absent an infringement determination.

The scheme of the Regulations is not designed for res judicata determinations of the scope or validity of patents. As for estoppel--a public policy doctrine desi gned to advance the interests of justice--the question was whether the infringement issue could be said to have been determined necessarily, if not explicitly, in the earlier proceeding. Kelen J. found it impossible "to determine whether the allegation of non-infringement is justified based on speculation and conjecture by the experts" and the Court of Appeal found it unnecessary to address the infringement issue. Still, the Court could only have concluded that the non-infringement allegation was unjustifie d and that was fundamental to the substantive decision: the prohibition order.

But there was yet a further ground supporting the application of issue estoppel: the general rule that a party may not raise an issue that it could and should have raised in a previous proceeding between the parties. Apotex referred to cases wherein the Court rejected the first person's argument that a second person was estopped by the res judicata doctrine from making a new allegation but they were distinguishable as cases in which an order of prohibition had not been made. Apotex advanced no explanation for its failure to put its best foot forward in the earlier proceeding and it should not be permitted to split its case. The conditions for issue estoppel on the infringement issue had been met. The same reasoning applied to the invalidity issue.

Turning to the question of whether the Court should, in the exercise of its discretion, not apply the issue estoppel doctrine, it was necessary to consider interests that transcend those of the parties. In embarking upon this fact-specific exercise, it was first observed that the previous proceeding was tainted by neither fraud nor dishonesty and that there was no fresh evidence such as to impeach the original result. Furthermore, Apotex was no stranger to litigation and it made no suggestion that the stakes of the earlier proceeding were insufficient to attract its full attention. Other matters were considered by the Court, among them the public interest in the finality of litigation and the necessity for preserving the integrity and credibility of the justice system. There were no special circumstances that would justify the Court's refusal to apply issue estoppel. Ultimately Apotex should not have more than one full opportunity to alleg e non-infringement and invalidity with respect to the same patent and formulation.

The Court's power to prevent relitigation extends beyond the res judicata doctrine. Judges posses an inherent, residual discretion to prevent abuse of a court's process. This is a flexible doctrine and one that is not encumbered by the specific requirements for issue estoppel. Still, the policy considerations are the same: there should be an end to litigation, no one should be twice vexed in respect of the sam e cause, and there is a need to preserve the resources of both litigants and the court system. The focus of abuse of process is less on the parties' interests and more on the integrity of the adjudicative function of the courts. That being so, the motive o f the party seeking to relitigate cannot be a decisive factor. Relitigation would enhance rather than impair the credibility and integrity of the judicial system in the following situations: (1) when the initial proceeding is tainted by fraud or dishonesty; (2) where the original result is impeached by previously unavailable new evidence; and (3) when fairness dictates that the original result should not be binding in a new context. Even if issue estoppel did not apply herein, Apotex' NOA amounted to an abu se of process.

statutes and regulations judicially considered

Federal Courts Rules, SOR/98-106, rr. 1 (as am. by SOR/2004-283, s. 2), 400(3), Tariff B, Column III.

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

cases judicially considered

followed:

AB Hassle v. Apotex Inc. (2003), 29 C.P.R. (4th) 23; 312 N.R. 288 (F.C.A.); leave to appeal to S.C.C. denied [2003] S.C.C.A. No. 173 (QL).

distinguished:

Novartis AG v. Apotex Inc. (2001), 15 C.P.R. (4th) 417; 212 F.T.R. 161; 2001 FCT 1129; Pfizer Canada Inc. v. Apotex Inc. (2004), 31 C.P.R. (4th) 214; 245 F.T.R. 243; 2003 FC 1428; affd 2004 FCA 398; [2004] F.C.J. No. 1985 (QL); AGF Canadian Equity Fund v. Transamerica Commercial Finance Corp. Canada (1993), 14 O.R. (3d) 161 (Gen. Div.); Novartis Pharmaceuticals Canada Inc. v. RhoxalPharma Inc. (2004), 34 C.P.R. (4th) 218; 250 F.T.R. 218; 2004 FC 474.

considered:

AB Hassle v. Apotex Inc. (2002), 21 C.P.R. (4th) 173; 223 F.T.R. 43 2002 FCT 931; Gillette Safety Razor Co. v. Anglo American Trading Co. (1913), 30 R.P.C. 465 (HL); AB Hassle v. Apotex Inc. (2004), 33 C.P.R. (4th) 326; 2004 FC 761; 2004 FC 762; Procter & Gamble Pharmaceuticals Canada, Inc. v. Canada (Minister of Health), [2004] 2 F.C.R. 85; (2003), 33 C.P.R. (4th) 193; 313 N.R. 380; 2003 FCA 467.

referred to:

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.); David Bull Laboratories (Canada) Inc. v. Pharmacia Inc., [1995] 1 F.C. 588; (1994), 58 C.P.R. (3d) 209; 176 N.R. 48 (C.A.); Pfizer Canada Inc. v. Apotex Inc. (2001), 11 C.P.R. (4th) 245; 266 N.R. 371; SmithKline Beecham Pharma Inc. v. Apotex Inc., [2001] 4 F.C. 518; (2001), 14 C.P.R. (4th) 76; 208 F.T.R. 105; 2001 FCT 770; affd [2003] 1 F.C. 118; (2003), 219 D.L.R. (4th) 224; 21 C.P.R. (4th) 129; 291 N.R. 168; 2002 FCA 216; Novartis A.G. v. Apotex Inc. (2002), 22 C.P.R. (4th) 450; 298 N.R 348; 2002 FCA 440; 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. 229; Bristol-Myers Squibb Canada Inc. v. Canada (Attorney General) (2001), 11 C.P.R. (4th) 539; 266 N.R. 141 (F.C.A.); A.B. Hassle v. Canada (Minister of National Health and Welfare) (2000), 7 C.P.R. (4th) 272; 256 N.R. 172 (F.C.A.); Procter & Gamble Pharmaceuticals Canada, Inc. v. Canada (Minister of Health), [2003] 1 F.C. 402; (2002), 216 D.L.R. (4th) 376; 20 C.P.R. (4th) 1; 231 F.T.R. 320; 291 N.R. 339; 2002 FCA 290; Hoffman-La Roche Ltd. v. Apotex Inc. (1997), 72 C.P.R. (3d) 480; 130 F.T.R. 110 (F.C.T.D.); affd (1998), 82 C.P.R. (3d) 384; 234 N.R. 8 (F.C.A.); Bayer AG v. Canada (Minister of National Health and Welfare) (1995), 60 C.P.R. (3d) 129; 179 N.R. 122 (F.C.A.); Merck Frosst Canada Inc. v. Canada (Minister of Health) (2001), 12 C.P.R. (4th) 447; 274 N.R. 297; 2001 FCA 192; SmithKline Beecham Pharma Inc. v. Apotex Inc. (2001), 10 C.P.R. (4th) 338; 267 N.R. 101 (F.C.A.); Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460; (2001), 201 D.L.R. (4th) 193; 34 Admin. L.R. (3d) 163; 10 C.C.E.L. (3d) 1; 7 C.P.C. (5th) 199; 272 N.R. 1; 149 O.A.C. 1; 2001 SCC 44; Fidelitas Shipping Co. Ltd. v. V/O Exportchleb, [1965] 2 All E.R. 4 (C.A.); Maynard v. Maynard, [1951] S.C.R. 346; [1951] 1 D.L.R. 241; Green v. Weatherill, [1929] 2 Ch. 213; Toronto (City) v. C.U.P.E., Local 79, [2003] 3 S.C.R. 77; (2003), 232 D.L.R. (4th) 385; 17 C.R. (6th) 276; 311 N.R. 201; 179 O.A.C. 291; 2003 SCC 63; AB Hassle v. Canada (Minister of National Health and Welfare) (2000), 10 C.P.R. (4th) 38 (F.C.T.D.); affd (2002), 18 C.P.R. (4th) 558; 224 F.T.R. 121; 2002 FCA 147.

APPLICATION for a declaration that a letter from a generic drug company did not constitute a notice of allegation under the Patented Medicines (Notice of Compliance) Regulations or, in the alternative, an order prohibiting the Minister from issuing a notice of compliance until patent expiry. Order to go in favour of applicants, based on either issue estoppel or abuse of process.

appearances:

Gunars A. Gaikis and J. Sheldon Hamilton for applicants.

Harry B. Radomski, Andrew R. Brodkin and Rick Tuzi for respondent Apotex Inc.

No one appearing for respondent Minister of Health.

solicitors of record:

Smart & Biggar, Toronto, for applicants.

Goodmans LLP, Toronto, for respondent Apotex Inc.

Deputy Attorney General of Canada for respondent Minister of Health.

The following are the reasons for order rendered in English by

[1]Layden-Stevenson J.: By correspondence dated September 26, 2002, specifically stated to be a notice of allegation (NOA) pursuant to the Patented Medicines (Notice of Compliance) Regulations [SOR/93-133] (the Regulations) with respect to Canadian Patent Nos. 1292693 (the 693 patent), 1302891 (the 891 patent) and 2166483 (the 483 patent), the respondent Apotex Inc. (Apotex) informed AstraZeneca Canada Inc. (AstraZeneca) that Apotex had filed with the Minister of Health (the Minister) a new drug submission (NDS) for magnesium omeprazole tablets for oral administration in strengths of 10 and 20 mg.

[2]The patents referred to by Apotex are listed, for certain products, on the patent register maintained by the Minister. They were included on patent lists submitted by AstraZeneca and its corporate predecessor Astra Pharma Inc. (Astra) with the consent of AB Hassle (Hassle) and AstraZeneca AB, the owners of the patents. Thus, pursuant to the Regulations, Hassle and AstraZeneca AB, as owners, are parties to the application. I will refer to the applicants collectively as AstraZeneca. The Minister administers the Regulations and did not file submissions or participate in the hearing of this application.

[3]AstraZeneca, by notice of application dated November 8, 2002, requests a declaration that the Apotex letter of September 26, 2002, is not a NOA as contemplated by the Regulations and, in the alternative, an order prohibiting the Minister from issuing a notice of compliance (NOC) in respect of omeprazole magnesium tablets 10 and 20 mg until the expiration of the noted Canadian patents. AstraZeneca did not pursue its requested relief in relation to the 891 and 483 patents and at the hearing of this application, only the 693 patent was in issue.

THE 693 PATENT

[4]The application that resulted in the 693 patent was filed on April 29, 1987, claiming priority from a U.K. application filed on April 30, 1986 (priority date). The 693 patent issued on December 3, 1991 and it expires in 2008. The patent has as its objective the preparation of an enteric coated dosage form of omeprazole that is resistant to dissolution in acidic media, that dissolves rapidly in neutral to alkaline media, and that has good long-term storage stability.

[5]The pharmaceutical preparation is used to treat gastric and duodenal ulcers. The active medicinal ingredient is omeprazole or omeprazole magnesium. AstraZeneca markets its product under the trade name "Losec". The circumstances of the invention are contained in the 693 patent disclosure and are described by Mr. Justice Rothstein in AB Hassle v. Apotex Inc. (2003), 29 C.P.R. (4th) 23 (F.C.A.), at paragraphs 4-6; leave to appeal to S.C.C. dismissed March 25, 2004, [[2003] S.C.C.A. No. 173 (QL)]:

To be effective, the omeprazole must be released in the small intestine and not in the stomach. In order to prevent the omeprazole from being degraded by acidic gastric juices in the stomach, an enteric coating covering the omeprazole core is required. The enteric coating dissolves in the neutral to alkaline environment found in the small intestine after allowing the omeprazole to pass through the stomach unaltered.

However, if a conventional enteric coating is applied directly to the omeprazole core, the omeprazole rapidly decomposes, with the result that the pharmaceutical preparation (or, in everyday language for purposes of this case, a tablet) becomes badly discoloured and loses omeprazole content with the passage of time. This problem of storage stability can be addressed by including alkaline reacting constituents in the omeprazole core. However, when a tablet containing an alkaline core which is in direct contact with the enteric coating is ingested, some of the gastric juice in the stomach diffuses through the enteric coating into the omeprazole core during the time the tablet resides in the stomach before it is emptied into the small intestine. The gastric juice causes parts of the omeprazole core to dissolve which, in turn, interfere with and eventually dissolve the enteric coating.

The object of the invention disclosed in the relevant patents is to provide an enteric coated tablet of omeprazole which is resistant to dissolution in the stomach. This is obtained by having an inert subcoating between the omeprazole core and the enteric outer coating.

[6]The parties agree that, for all intents and purposes, it is claim 1 of the 693 patent that is relevant and at the hearing, only claim 1 was addressed. Claim describes an oral pharmaceutical preparation in the following terms:

1. An oral pharmaceutical preparation comprising: (a) a core region comprising an effective amount of material selected from the group consisting of omeprazole plus an alkaline reacting compound, an alkaline omeprazole salt plus an alkaline reacting compound and an alkaline omeprazole salt alone; (b) an inert subcoating which is soluble or rapidly disintegrating in water disposed on said core region, said subcoating comprising one or more layers of materials selected from among tablet excipients and polymeric film-forming compounds; and (c) an outer layer disposed on said subcoating comprising an enteric coating.

BACKGROUND

[7]This is not Apotex' first NOA with respect to the 693 patent. AstraZeneca's counsel advises that Apotex first alleged non-infringement in April 1993 and that the applicants' application in respect of that allegation was dismissed in May 1996, by consent order wherein Apotex agreed to an order for prohibition with respect to patents other than the 693 patent. There is no evidence in the record in this respect. On December 18, 1997, an Apotex NOA alleged non-infringement of the same Canadian patents that are listed in its NOA in relation to this proceeding on the basis that its product would not contain a subcoating between the core and the enteric coating. Rather, Apotex would apply enteric coating directly to the core. AstraZeneca in turn initiated an application for an order of prohibition (T-179-98). By order of Madam Justice Tremblay-Lamer dated May 18, 1999, the NOA was deemed to be withdrawn and the application was deemed to be discontinued. The recitals in the order indicate that Apotex wished to withdraw its NOA and that such a withdrawal would render the proceedings moot.

[8]On August 1, 2000, an Apotex NOA with respect to the same Canadian patents as those listed in its NOA in relation to this proceeding alleged 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 Apotex of its apo-omeprazole tablets for oral administration in strengths of 10, 20 and 40 mg. The crux of the legal and factual basis was that the Apotex tablets would not infringe because they would not contain a subcoating. The Apotex tablets would comprise cores containing the drug and an enteric coating applied directly to the cores. AstraZeneca filed a notice of application (T-1747-00) seeking the same relief sought in this proceeding. Following the hearing of the application, Mr. Justice Kelen declared that the Apotex letter dated August 1, 2000 [AB Hassle v. Apotex Inc. (2002), 21 C.P.R. (4th) 173 (F.C.T.D.), at paragraph 67] "does not comply with the Regulations, and therefore does not constitute a Notice of Allegation under the Regulations". Justice Kelen granted an order prohibiting the Minister from issuing a NOC. I will return to Mr. Justice Kelen's order later in these reasons.

[9]Apotex appealed (A-563-02) and on November 3, 2003, its appeal was dismissed. Mr. Justice Rothstein, in AB Hassle, construed claim 1 of the 693 patent at paragraph 17 and again at paragraph 24:

Claim 1 describes an "oral pharmaceutical preparation" or, in everyday language, a tablet. The tablet is described as having a core region, an inert subcoating and an outer layer or enteric coating. Claim 1 does not purport to place any limitations on the inert subcoating. It does not say that the inert subcoating must be created in any particular manner.

. . .

I conclude that patent claim 1 describes a pharmaceutical preparation which, in its finished product form, contains a subcoating or separating layer between the core and enteric coating, however the subcoating or separating layer is formed.

[10]On September 26, 2002, Apotex forwarded the NOA referred to at the outset of these reasons and AstraZeneca initiated this notice of application. The Apotex NOA alleges both non-infringement and invalidity with respect to the 693 patent. The latter attack is based on Gillette [Gillette Safety Razor Co. v. Anglo American Trading Co. (1913), 30 R.P.C. 465 (H.L.)] defence, anticipation, claims broader than the invention and inutility, insufficiency, ambiguity and obviousness.

[11]AstraZeneca's evidence on its application consisted of the affidavits of Mr. Oxhammar, Drs. Ymén, Lövgren, Burke, McGinity, Brenner and Bodmeier, Ms. Ripley and Ms. DeAbreu. Apotex' evidence consisted of the affidavits of Drs. Cima (Cima 1), Hopfenberg and Signorino and Mr. Tekie. Apotex' evidence included results from testing of the Apotex tablets. With leave of the court, Apotex filed further affidavits to establish the source and relevance of sample tablets and the formulations referred to in its evidence. AstraZeneca was granted leave to file an affidavit from Dr. Lindquist in reply to Cima 1 (Lindquist 1). With leave of the court, Apotex filed a further affidavit from Dr. Cima (Cima 2) in response to Lindquist 1. Following the cross-examination of Dr. Sherman (one of the affiants of Apotex' further affidavits), Apotex provided samples of its tablets to AstraZeneca and AstraZeneca was granted leave to file an affidavit of Dr. Lindquist regarding testing of Apotex' samples (Lindquist 2). Apotex was then granted leave to file further affidavits of Drs. Cima (Cima 3), Sodhi and Sherman and Mr. Ng-Chen-Hin. AstraZeneca was granted leave to file a responding affidavit of Dr. Lindquist (Lindquist 3).

THE NATURE OF THE PROCEEDING

[12]As earlier mentioned, this proceeding is brought under the Regulations. The history and scheme of the Regulations are well known and need not be repeated. Suffice it to say that when a second person (usually a generic manufacturer) seeks marketing approval (a NOC) for a drug, by comparing its drug to the drug of a first person (a patent holder) for the purpose of demonstrating bioequivalence, the generic will be required to address patents listed on the patent register by a first person. The generic or second person may do so by making an allegation of invalidity, or non-infringement, or both. The issues of validity and non-infringement between the patent holder and the generic originate with a NOA served on the first person by the second person setting out the second person's allegations, including a statement of the legal and factual basis for the allegation. Following receipt of a NOA, a first person may apply to the court for an order prohibiting the Minister from issuing a NOC until after the expiration of one or more of the patents. If the court finds that none of the generic's allegations is justified, the court shall grant an order of prohibition.

[13]Apotex, the generic drug producer or second person, under section 5 [as am. by SOR/98-166, s. 4; 99-379, s. 2] of the Regulations, provided its NOA to AstraZeneca regarding certain patents that AstraZeneca has listed under the provisions of section 4 [as am. by SOR/98-166, s. 3] of the Regulations. AstraZeneca's application, in response to the Apotex NOA, is brought under section 6 [as am. idem, s. 5; 99-379, s. 3] of the Regulations.

[14]Section 6 proceedings are not to be likened to actions for determining validity or infringement. They are proceedings in judicial review, to be held expeditiously, whose aim is to determine whether the Minister is free to issue the requested NOC. Their scope is confined to administrative purposes: Apotex Inc. v. Canada (Minister of National Health and Welfare) (1997), 153 D.L.R. (4th) 68 (F.C.A.). The determination must turn on whether there are allegations by the second person sufficiently substantiated to support a conclusion for administrative purposes (the issue of a NOC) that an applicant's patent would not be infringed if the second person's product is put on the market: David Bull Laboratories (Canada) Inc. v. Pharmacia Inc., [1995] 1 F.C. 588 (C.A.).

[15]The Regulations allow a court to determine summarily, on the basis of the evidence adduced, whether the allegations are justified. If a full trial of validity or infringement issues is required, this can be obtained in the usual way by commencing an action: Pfizer Canada Inc. v. Apotex Inc. (2001), 11 C.P.R. (4th) 245 (F.C.A.); SmithKline Beecham Pharma Inc. v. Apotex Inc., [2001] 4 F.C. 518 (T.D.); affd [2003] 1 F.C. 118 (C.A.); Novartis A.G. v. Apotex Inc. (2002), 22 C.P.R. (4th) 450 (F.C.A.). By merely commencing the proceeding, the applicant obtains what is tantamount to an interlocutory injunction without having satisfied any of the criteria a court would require before enjoining issuance of a NOC: Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), [1998] 2 S.C.R. 193; Bristol-Myers Squibb Canada Inc. v. Canada (Attorney General) (2001), 11 C.P.R. (4th) 539 (F.C.A.). By order dated June 4, 2004, the statutory stay in this proceeding has been extended to March 7, 2005.

ISSUES

[16]The issues are as follows:

1. Threshold Issues

(a) Is the NOA and detailed statement sufficient?

(b) Does issue estoppel apply to preclude Apotex from alleging non-infringement and invalidity?

(c) Does the doctrine of abuse of process operate to preclude Apotex from alleging non-infringement and invalidity?

2. Alternative Issues

(a) Is Apotex' allegation of non-infringement of the claims of the 693 patent justified?

(b) Is Apotex' allegation of invalidity of the 693 patent justified based on:

(i) the Gillette defence;

(ii) anticipation;

(iii) claims broader than in the invention disclosed and lack utility;

(iv) insufficiency of disclosure and/or ambiguity; and

(v) obviousness.

THRESHOLD ISSUES

Is the NOA sufficient?

Overview

[17]AstraZeneca, in its notice of application, maintains that the NOA is not a proper NOA and detailed statement and accordingly does not comply with the Regulations. Broadly stated, the argument is that since the NOA strictly frames the issues in the proceedings and may not be expanded upon by the generic during the proceeding, Apotex' allegation of non-infringement is not justified because its evidence of non-infringement rests upon the notion that its subcoat is not continuous and is not inert. The NOA contains no such statements. Rather, the NOA rests solely on the position that the Apotex subcoating is not a subcoating that is applied to the core and is then covered with the enteric outer layer. Since the NOA makes no mention of the possibility of an in situ subcoat and makes no statement regarding non-infringement with respect to an in situ subcoat (that it is not continuous and not inert), Apotex cannot expand its grounds by either evidence or argument.

[18]Apotex counters that its allegation of non-infringement is not premised entirely on a construction of the 693 patent that is limited to a formulation having a separately applied subcoating. Neither its NOA nor its evidence supports such limitation. Moreover, Apotex, for purposes of this proceeding, but without prejudice to its rights on appeal, accepts that the 693 patent extends to a subcoat created in situ, provided that such subcoat carries with it all of the characteristics of claim 1. Apotex strenuously contests that its formulation will contain such a subcoat and, on the basis of all the evidence, submits that it is clear that AstraZeneca has failed to establish that such a subcoat exists.

The NOA and Detailed Statement

[19]Paraphrasing, the detailed statement refers to the 693 patent by its title and to a description of it as a "pharmaceutical preparation containing omeprazole or its alkaline salts intended for oral use and to the use of these preparations in the treatment of gastrointestinal diseases". Apotex describes the "essence of the invention" and states "[t]he alleged solution to the problem is asserted in the patent to be the separation from contact of the core and the enteric coating by application of a subcoating within the meaning of the patent". Then, Apotex identifies the essential elements of the 693 patent: the core; the inert subcoating; and the outer layer.

[20]On this basis, Apotex states that the "subcoating" cannot mean material comprising a reaction product resulting from a reaction between the core material and the enteric coating when the core is brought into contact with the enteric coating. The inventors, says Apotex, intended the subcoating to be "distinct material placed between the core and the enteric coating so as to avoid their coming into contact".

[21]The detailed statement also states that the claims of the 693 patent cannot be construed to include formulations disclosed in the patent as prior art. Formulations comprising a core with an enteric coating disposed on the core which were prepared by direct application of the enteric coating onto an omeprazole and alkaline core cannot be construed as falling within the scope of the 693 patent, otherwise the patent would be invalid as failing to claim something new because it would have within its scope that which is old. Nor, contends Apotex, can the claims be construed to include formulations disclosed within the disclosure as examples of formulations used for comparison purposes and disclaimed from being within the scope of the invention.

[22]Apotex then states that it will not infringe claim 1 because its product will not contain a subcoating, "as discussed above" within the meaning of the 693 patent. The Apotex product will contain a core with an enteric coating disposed on the core. Specifically, the detailed statement reads:

In formulating our product, we will bring into contact the outer enteric coating with the core and will not place a subcoating within the meaning of the patent between the core and the enteric coating, so that our formulation will consist of only components (i) and (iii), not component (ii).

[23]Continuing, the NOA states that Apotex is manufacturing what is taught in the prior art, specifically European Patent Application No. 124495 (the 495 patent) published on November 7, 1984. It refers to example 12 of the 495 patent and alleges that its formulation is in accordance with the teachings of the 495 patent. Last, the NOA contains the statement that, should AstraZeneca assert that there is infringement of the 693 patent, the claims are invalid based on the Gillette defence. The remainder of the detailed statement is devoted to what is sub-titled "invalidity".

The Arguments

[24]As stated earlier, AstraZeneca's quarrel with the Apotex NOA, regarding non-infringement, is that the focus of the allegation is the subcoating and that it must be formed by a separate step in the process. Expanding on its position, AstraZeneca says that this is the entire basis for Apotex' allegation that its formulation will not contain a subcoating. Nowhere in the NOA does Apotex suggest, if its product has a subcoat between the core and the enteric coating that results from a reaction between the two, that such subcoating will not be inert or continuous. These allegations do not exist. They do not exist because the premise of the Apotex NOA is that the 693 patent cannot be interpreted to include an in situ subcoat, a matter that has been conclusively determined by the Federal Court of Appeal. AstraZeneca asserts that the issues that Apotex raises in this proceeding are simply not contained in its NOA and detailed statement. Since AstraZeneca does not allege "that the Apotex product infringes, no matter, the Gillette defence is not properly invoked with respect to infringement". AstraZeneca says that the claim requires a subcoat and if Apotex' product has a subcoat, it infringes. The circumstances under which Gillette applies are not in play.

[25]Apotex argues contra. It contends that there is no issue as to the nature of the reactive material at the interface of Apotex' product and that AstraZeneca is, in essence, saying that evidence regarding the nature of that reactive material goes beyond the NOA. The record, maintains Apotex, does not support AstraZeneca's contention that Apotex did not raise the issue that if it has any material between the enteric coating and the core that the material isn't "continuous, inert, film-forming and polymeric". In support of its position, Apotex points to the notice of application, and in particular to paragraphs 29, 30 and 31. It argues that, there, AstraZeneca says that the patent includes within its scope, a subcoating, regardless of how it was applied or generated and that, in view of Mr. Justice Kelen's decision, it is uncontroverted that Apotex will have a layer of material between the enteric coating and the core in its product. Most importantly, contends Apotex, AstraZeneca requests samples, formulation particulars, and process information relating to the Apotex NDS. Therefore, AstraZeneca knew what the issue was--does the Apotex product have reactive material that meets the confines of the patent?

[26]Examination of AstraZeneca's supporting affidavits, in Apotex' view, reveals that AstraZeneca knew what the issue was. The record that AstraZeneca placed before Apotex contained the affidavits of experts saying that the Apotex formulation could create an inert, polymeric, film-forming material. That was the case that Apotex had to answer and it answered by filing the affidavit of Dr. Cima.

[27]Apotex also refers to AstraZeneca's conduct subsequent to receipt of the Cima 1 affidavit. Never did it allege that Apotex had gone beyond its allegation. Rather, it moved for the right to file more evidence. There were several rounds that followed and not once did AstraZeneca ever say that the evidence was beside the point. To the contrary, it asserted that this evidence was fundamental to the final disposition of the case and that the evidence was so important that the whole case lay in the balance. AstraZeneca obtained orders to that effect. This argument, asserts Apotex, is a last-minute creation that cannot withstand the scrutiny of the record.

Analysis

[28]In my view, Apotex' position that AstraZeneca's argument is a last-minute creation is without merit. The notice of application, at paragraph 29, is unequivocal and states:

First, contrary to Apotex' proposed construction, the patents include within their scope a subcoating found in the finished dosage form, regardless of how it was applied or generated.

[29]I am not persuaded by Apotex' efforts to convince me that AstraZeneca's primary ground-- advanced in support of its position that the allegation of non-infringement is not justified--constitutes an indication that Apotex has addressed the existence of material, between the core and the enteric coating, that is not continuous, inert, film-forming and polymeric. To succeed on this point, Apotex must point to its detailed statement, not to AstraZeneca's notice of application. I will have more to say in relation to the notice of application later in these reasons.

[30]After repeated readings of Apotex' NOA and detailed statement, in my view, it is the construction of the 693 patent that Apotex puts into play. The detailed statement claims that the 693 patent requires that the subcoating be "distinct material placed between the core and the enteric coating so as to avoid their coming into contact". All of Apotex' non-infringement allegations in its NOA flow from this fundamental position. Yet, in argument, Apotex says it did not restrict itself to a construction of the 693 patent that is limited to a formulation having a separately applied coat.

[31]The detailed statement says that it (the 693 patent) "cannot mean material comprising a reaction product resulting from a reaction between the core material and the enteric coating when the core is brought into contact with the enteric coating". Yet, in argument, Apotex says that it accepts that the 693 patent extends to an in situ subcoat.

[32]The NOA states that Apotex' product will consist only of an enteric coat and a core and will not contain a subcoat. This statement is founded on the premise that a subcoat in the 693 patent does not mean a "layer" or a "subcoat" or an "interface" (these characterizations were used interchangeably during the oral argument) that results from a reaction. The entire detailed statement revolves around Apotex' characterization of subcoat yet the allegation referencing the 495 patent makes no mention of a subcoat at all.

[33]In short, the NOA and detailed statement simply do not contain any allegation that should the 693 patent encompass a subcoating arising from a reaction, between the core material and the enteric coating when the two are brought into contact, the reactive layer will not be continuous, inert, film-forming and polymeric. It is settled law that when a generic makes an allegation, it must provide a detailed statement of the legal and factual basis for the allegation, to which it is limited. The allegation and detailed statement are intended to fully inform the first person of the case to be met: AB Hassle v. Canada (Minister of National Health and Welfare) (2000), 7 C.P.R. (4th) 272 (F.C.A.) (AB Hassle-2); Procter & Gamble Pharmaceuticals Canada Inc. v. Canada (Minister of Health), [2003] 1 F.C. 402 (C.A.) (Procter & Gamble); Hoffman-La Roche Ltd. v. Apotex Inc. (1997), 72 C.P.R. (3d) 480 (F.C.T.D.); affd (1998), 82 C.P.R. (3d) 384 (F.C.A.); Bayer AG v. Canada (Minister of National Health and Welfare) (1995), 60 C.P.R. (3d) 129 (F.C.A.); Merck Frosst Canada Inc. v. Canada (Minister of Health) (2001), 12 C.P.R. (4th) 447 (F.C.A.). Stated succinctly, the NOA must be sufficient to make the first person fully aware of the grounds on which the second person claims that the patent would not be infringed if the NOC issues. Whether a detailed statement is adequate depends on the facts and law relied upon in the detailed statement itself: SmithKline Beecham Pharma Inc. v. Apotex Inc. (2001), 10 C.P.R. (4th) 338 (F.C.A.).

[34]The NOA is dated September 26, 2002. It was on November 3, 2003, in AB Hassle, that the Federal Court of Appeal construed the patent as "a pharmaceutical preparation which, in its finished form, contains a subcoating or separating layer between the core and enteric coating, however the subcoating or separating layer is formed". Apotex now indicates that, for purposes of this proceeding and without prejudice to its rights on appeal, the 693 patent extends to a subcoat created in situ, provided that it carries with it all of the requisite characteristics of claim 1. With respect, as I have stated, I can find nothing in the NOA to indicate such a position. To reiterate, the NOA states repeatedly that an in situ subcoat does not fall within the 693 patent.

[35]In its written submission, Apotex maintains that it "strenuously contests that its formulation will contain such a subcoat and, on the basis of all the evidence, submits that it is clear that Astra has failed to establish that such a subcoat exists". In oral argument, Apotex, having accepted, for purposes of this proceeding, that the patent could cover an in situ subcoat, nonetheless notes that the patent does not speak of an in situ subcoat and that the expert witnesses were left "trying to develop a system to determine infringement that the patent doesn't contemplate". Apotex does acknowledge, however, the existence of reaction material in its tablet but claims it is not an "infringing in situ subcoat" because "to infringe, it has to be continuous, inert and polymeric". I therefore take the reference in its written submissions to "such a subcoat" to mean one that infringes as a result of being continuous, inert and polymeric. I repeat myself--I can find no such statement, express or implied, in its detailed statement. Apotex does not allude to a non-infringing subcoat in its NOA in the context in which it now discusses it. Rather, it denies that reactive material is a subcoating within the meaning of the patent.

[36]It is apparent that Apotex questions the Federal Court of Appeal's construction of the 693 patent. That construction is binding on me and for that matter on Apotex for purposes of proceedings relating to it, pursuant to the Regulations.

[37]The NOA, as framed, turns on a construction issue that has been determined since the NOA was drafted. It does not (with respect to infringement) allege that the Apotex reactive material is non-infringing because it is not continuous, inert and polymeric; it alleges it does not infringe because the 693 patent does not contemplate a layer of reactive material at all. That construction is, in view of AB Hassle, incorrect.

[38]Apotex also argues that in putting forth its position that its reactive "layer" or "interface" or "subcoating" is non-infringing because it is not inert, continuous or polymeric, it is merely answering the case that AstraZeneca put forth and that "AstraZeneca's conduct in the proceeding estops AstraZeneca from arguing that the NOA does not disclose any allegation regarding the layer being continuous, inert or polymeric".

[39]I agree with AstraZeneca that, notwithstanding Apotex' vigorous oral arguments in this respect, the written memorandum is silent in this regard. Since Apotex maintains that the arguments are contained at paragraph 37 of its memorandum, I have carefully reviewed that paragraph. The paragraph does not mention that Apotex' evidence is a response to AstraZeneca's case nor does it refer to AstraZeneca's conduct in relation to this proceeding. Apotex is not entitled, at the hearing, to raise arguments that are not contained in its written argument and of which AstraZeneca has not had notice. Even if I were to conclude otherwise, I would find that Apotex could not succeed.

[40]The notice of application, in relation to the allegation of non-infringement in the NOA, says that the allegation is not justified on two premises. First, AstraZeneca states that Apotex' construction of the patent is flawed because the patent includes within its scope a subcoating found in the finished dosage form regardless of how it was applied or generated. Given the contents of the NOA and detailed statement, it is not surprising that this would be AstraZeneca's primary ground.

[41]Second, AstraZeneca states that, in view of Mr. Justice Kelen's decision, it is uncontroverted that Apotex will have a layer of material between the enteric coating and the core in its tablets. Since the previous proceeding between these parties with respect to this product had gone to a hearing and the noted finding was contained in the reasons of the applications judge, Apotex, in my view, should not be surprised that AstraZeneca relied upon the finding to support its assertion that Apotex' allegation is not justified. As things now stand, both of the grounds that AstraZeneca advanced are conceded.

[42]AstraZeneca then states further grounds in the alternative. While I have not reviewed all of the documents in relation to Court file No. T-1747-00, it would not surprise me if the alternative grounds are a mirror image of those advanced in the earlier proceeding.

[43]In my view, the oral arguments of Apotex fail to recognize that AstraZeneca's position regarding the disclosure of samples, formulation particulars, and process information relating to Apotex' NDS--to enable it to assess whether a subcoat is present and whether the allegation of non-infringement is justified on any of the other alternative bases asserted by Apotex--is an alternative position. It is expressly stated to be an alternative position and, as such, it does not detract from the primary grounds upon which AstraZeneca rests its case. It is open to AstraZeneca to provide evidence in support of both its primary and alternative grounds.

[44]I do not view the affidavits filed in support of the notice of application through the same lens as Apotex. AstraZeneca filed several affidavits in support of its application. Many of those affidavits are not relevant to this issue. For example, the affidavit of Karen Burke details information regarding the ownership of the patents, receipt of Apotex' NOA and the like. The affidavit of Daphne C. Ripley deals with the publication date for a particular reference. Dr. Kurt Lövgren, one of the inventors of the 693 patent, describes the development process of the omeprazole dosage form.

[45]The affidavits, material to this issue, are those of Drs. James W. McGinity, Gerald S. Brenner and Roland Bodmeier, all of whom were tendered as experts. No issue was taken with respect to the qualifications of any of these individuals and for present purposes it is not necessary to review their respective areas of expertise.

[46]Dr. McGinity's affidavit consists of 259 paragraphs, Dr. Brenner's affidavit contains 168 paragraphs and Dr. Bodmeier's affidavit includes 191 paragraphs. When viewed in isolation and at first blush, it could be said that one paragraph in the McGinity affidavit, one paragraph in the Brenner affidavit and two paragraphs of the Bodmeier affidavit invite additional evidence regarding infringement. The paragraphs cannot be construed in that manner when regard is had to the context in which they appear. The paragraphs noted by Apotex, when read fairly and in their context, relate to the construction of the 693 patent (whether it is a process or product patent) and to the matter of the insufficiency of the NOA and detailed statement (to enable a proper assessment of infringement to be conducted). The mere suggestion of possible testing processes for the purpose of demonstrating the deficiencies of Apotex' allegation do not put into play issues that enable Apotex to add, by evidence, to the substance of its detailed statement under the guise of responding to AstraZeneca's case.

[47]In relation to AstraZeneca's conduct, Apotex refers to the Application Judge's reasons in Novartis, reported at (2001), 15 C.P.R. (4th) 417 (F.C.T.D.). I do not find that authority to be of assistance here. The primary threshold issue in that case related to whether there was an abuse of process in circumstances where an NOA was withdrawn as a result of "problems regarding compliance with the Food and Drug Regulations". The case was concerned with prior art documents and it did not deal with alternative grounds. I do not think that it was incumbent upon AstraZeneca--in circumstances where its notice of application specifically relied upon two delineated bases of attack regarding the allegation of non-infringement and an alternative third basis--to bring a motion to strike the Apotex evidence. The record reveals that there was a motion in relation to the filing of that evidence and then some.

[48]Nor can I see any basis for Apotex alleging prejudice because of AstraZeneca's conduct. AstraZeneca did not lead Apotex down a garden path. Apotex had clear notice of AstraZeneca's attack regarding its allegation of non-infringement as stated in paragraphs 29 and 30 of its notice of application. It also had notice of the alternative basis. It was open to and prudent for AstraZeneca to cover all avenues in relation to its alternative ground. In so doing, it does not mean that it resiles from or forfeits its primary challenges.

[49]Apotex points to Pfizer Canada Inc. v. Apotex Inc. (2004), 31 C.P.R. (4th) 214 (F.C.) affd 2004 FCA 398 (Pfizer-2) but I fail to see how it is relevant to this matter. The Federal Court of Appeal upheld the Applications Judge who determined, there, that the NOA was sufficient to alert Pfizer to the basis of Apotex' allegation that it would not infringe because its azithromycin tablets would not contain a dihydrate even though it did not also state that the tablets would contain monohydrate. That is not the situation here. In this matter, the detailed statement is not only silent regarding the fact that an in situ subcoat is not inert or continuous, it states that no subcoat exists.

[50]I have also had regard to the decision of Justice von Finckenstein [AB Hassle v. Apotex Inc.] in relation to this proceeding which is reported at (2004), 33 C.P.R. (4th) 326 (F.C.). In my opinion, the reasons in that case indicate that the manner in which this proceeding unfolded is illustrative of the gamesmanship that is a recurring problem in this kind of proceeding as noted by Mr. Justice Evans in Pfizer-2 and detailed in the reasons of Justice von Finckenstein.

[51]At the end of the day, further court orders and the filing of evidence in response does not resolve the basic issue because, as Mr. Justice Stone stated in AB Hassle-2, [at paragraph 26] "[t]he question . . . remain[s] whether, given the scheme of the Regulations and the decided cases, it is proper to raise and rely upon new facts in the section 6 proceeding in addition to those relied upon in the . . . detailed statement". The law is settled that the entire factual basis is to be set forth in the detailed statement rather than revealed piecemeal when some need happens to arise in a section 6 proceeding. This requirement cannot be remedied by a court order, including an order under subsection 6(7) of the Regulations: Genpharm.

[52]In the result, I would not go so far as to grant the declaration sought by AstraZeneca--that Apotex' letter dated September 26, 2002, is not a notice of allegation as contemplated by the Regulations--because the notice of allegation does contain an allegation of non- infringement that is supported by a detailed statement of the legal and factual basis. However, Apotex cannot add to the contents of its NOA and purport to establish non-infringement by evidence for which no basis is stated in the NOA. To that end, the NOA is deficient because it contains an allegation of non-infringement that turns on what has proven to be an incorrect construction of the 693 patent. Not having raised the allegation in its NOA that the reactive material in its product (that it now accepts is present) is not inert, continuous and polymeric, it cannot do so by way of evidence or argument. Consequently, Apotex' allegation of non-infringement is not justified.

Does Issue Estoppel apply to preclude Apotex from alleging non-infringement and invalidity?

[53]AstraZeneca also relies on the doctrine of issue estoppel. AstraZeneca maintains that Apotex' allegation of non-infringement in its NOA in this proceeding turns on the construction of claim 1 as did its allegation of non-infringement in its NOA in the previous proceeding. The Federal Court of Appeal has determined the construction issue and Apotex is precluded from relitigating it. Apotex' concession, for purposes of this hearing, that the 693 patent extends to an in situ subcoat, in conjunction with the Federal Court of Appeal determination on construction, is dispositive. The conditions set out in Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460 (Danyluk) are met.

[54]In view of my reasons in relation to the issue regarding the sufficiency of the NOA, I am inclined to agree with AstraZeneca that issue estoppel applies, for the reasons stated by AstraZeneca, regarding Apotex' allegation of non-infringement. However, in the event my determination on the first issue is wrong, I will examine the question of issue estoppel in some detail.

The Arguments

[55]AstraZeneca asserts that the construction issue is dispositive with respect to the question of construction but, even if it were not, the question of infringement itself is the subject of issue estoppel. In the prior proceeding, the issue was whether Apotex' allegation of non-infringement of the 693 patent by reason that there was "no subcoating between the core and the enteric coating" was justified. The same question is raised in the NOA in this proceeding with respect to the same formulation. The construction of the 693 patent by the Federal Court of Appeal was premised on Apotex' acceptance that its tablets would contain an in situ subcoat, therefore, this fact was fundamental to the Federal Court of Appeal's decision and issue estoppel applies to preclude Apotex from arguing that its tablets will not contain a subcoat.

[56]Additionally, under the Regulations an order of prohibition can only be granted when an allegation is not justified. In the previous proceeding, AstraZeneca sought a declaration regarding Apotex' NOA and an order of prohibition in the alternative. The Court granted both. Because non-infringement was Apotex' only allegation, the order of prohibition had to be based on non-infringement. Hence a finding of infringement is implicit in the order emanating from the previous proceeding. The Federal Court of Appeal specifically recognized, in its reasons, that an order of prohibition existed and it dismissed the appeal. That order of prohibition is extant.

[57]AstraZeneca also argues that issue estoppel applies to preclude Apotex from relying on the testing results of its tablets, or to producing samples for such analysis, and from relitigating certain factual findings made by Mr. Justice Kelen. Apotex' failure to provide samples for testing in the previous proceeding, when it had the opportunity to put forth the evidence and chose not to, estops it from turning around and relying on it now. Additionally, it is bound by the findings of Mr. Justice Kelen that [at paragraph 51]: "[t]here will be a reactive material or `interface' spontaneously generated when the enteric coating, which consists of polymers, is sprayed on the core which contains omeprazole and alkaline materials"; and "the reactive material would insulate the core from dissolving and would serve the same purpose to an unknown extent as the sub-coating described in Claim 1 of the Patent".

[58]Relying on the reasoning of Mr. Justice Binnie in Danyluk, AstraZeneca maintains that Apotex is not entitled to a second bite at the cherry. Apotex chose a litigation strategy in the first proceeding and chose to put its case forth on the basis of construction of the patent. It lost. It cannot not now come forth and say we want to try again. AstraZeneca points to the decision of the Federal Court of Appeal in Procter & Gamble Pharmaceuticals Canada, Inc. v. Canada (Minister of Health), [2004] 2 F.C.R. 85 (C.A.) (P&G) and says that the test is whether the determination on which it is sought to found estoppel is so fundamental to the substantive decision that the former cannot stand without the latter. Fundamental to an order of prohibition, argues AstraZeneca, is a finding that an allegation of non-infringement is not justified.

[59]Regarding invalidity, AstraZeneca submits that Apotex is estopped from disputing the validity of the 693 patent on the basis of the reasoning in P&G. Additionally, the question of whether the patent is valid was necessarily fundamental to the decisions of Mr. Justice Kelen and the Federal Court of Appeal. Apotex, having chosen to allege only non-infringement, necessarily accepted the validity of the 693 patent because if the patent was not valid, Apotex' formulation could not infringe the patent.

[60]Apotex characterizes AstraZeneca's arguments as an attempt to rewrite history. It says that AstraZeneca's primary relief, in the previous proceeding, was a declaration that Apotex' letter did not constitute a notice of allegation contemplated by the Regulations. AstraZeneca succeeded and got its declaration. In obtaining the order of prohibition, AstraZeneca got the only order the Regulations permit, an order prohibiting the Minister from issuing a NOC to Apotex in respect of the pharmaceutical products omeprazole or omeprazole magnesium tablets in certain dosages until after the expiration of certain patents.

[61]There was no finding on the issue of infringement in the previous proceeding at either level of court. The issue was one of construction. The parties were divided on the question of how the patent should be construed. It was a bona fide issue. Apotex contends that a careful reading of Mr. Justice Kelen's order reveals that the Minister is prohibited from issuing a notice of compliance with respect to this "purported notice of allegation". According to Apotex, this makes it clear that there could be another allegation. Neither Mr. Justice Kelen nor the Court of Appeal made any finding with respect to infringement. Thus, the prerequisites of issue estoppel are not met.

[62]Referring to AGF Canadian Equity Fund v. Transamerica Commercial Finance Corp. Canada (1993), 14 O.R. (3d) 161 (Gen. Div.), Apotex says that the circumstances, there, are analogous to these circumstances and Justice Borins refused to apply the doctrine of issue estoppel when no decision had been taken on the merits. It is AstraZeneca that should be estopped from arguing that Apotex cannot rely on the testing of its samples in this proceeding when AstraZeneca took the opposite position in the previous proceeding and during the course of this proceeding. Moreover, argues Apotex, the jurisprudence "overwhelmingly establishes that, where an allegation is not decided on its merits, there is no estoppel that prevents a second person from transmitting a new allegation and advancing its case in the manner it sees fit".

[63]Last, Apotex submits that even if the conditions with respect to issue estoppel are met, I should exercise my discretion not to apply it because to do otherwise would potentially cause an injustice to Apotex. The doctrine is a tool for ensuring the due administration of justice, not for frustrating it. There is a public interest element here and it would be manifestly unfair to allow AstraZeneca to use the Regulations to preserve a monopoly without ever having obtained a determination by the court that Apotex' conduct would be infringing.

[64]Apotex did not make any submissions regarding AstraZeneca's argument that the doctrine of issue estoppel applies to Apotex' allegation of invalidity.

Analysis

[65]I begin by noting that my determination with respect to the application of the doctrines of res judicata, issue estoppel or abuse of process is confined to proceedings brought pursuant to the Regulations. The scheme of the Regulations is not designed for res judicata determinations of the scope or validity of patents: Novartis; Pfizer Canada Inc.

[66]Mr. Justice Binnie explains the rationale behind the doctrine of issue estoppel, a branch of res judicata, in Danyluk [at paragraphs 18-19]:

The law rightly seeks a finality to litigation. To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so. A litigant, to use the vernacular is only entitled to one bite at the cherry. . . . An issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner. A person should only be vexed once in the same cause. Duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided.

Finality is thus a compelling consideration and judicial decisions should generally be conclusive of the issues decided unless and until reversed on appeal. However, estoppel is a doctrine of public policy that is designed to advance the interests of justice.

[67]The preconditions to the operation of issue estoppel are: that the same question has been decided; that the judicial decision which is said to create the estoppel was final; and, that the parties to the judicial decision were the same persons as the parties to the proceedings in which the estoppel is raised: See P&G.

[68]It is common ground that the judicial decision (the order of prohibition) said to create the estoppel was final and that the same parties were involved. The disagreement arises with respect to whether the issue of "infringement" can be said to have been necessarily --even if not explicitly--determined in the earlier proceeding. In other words, is the issue of infringement so fundamental to the substantive decision that the latter cannot stand without the former?

[69]I appreciate AstraZeneca's position that Mr. Justice Kelen's order prohibiting the Minister from issuing a NOC--notwithstanding the reference "with respect to this purported notice of allegation"--must be taken to have implicitly decided that Apotex' allegation of non-infringement contained in its NOA was not justified. However, I have difficulty reconciling that position with Justice Kelen's statement that [at paragraph 51] "[i]t is not possible to determine whether the allegation of non-infringement is justified based on speculation and conjecture by the experts".

[70]In the Federal Court of Appeal, Apotex conceded that if claim 1 of the 693 patent was construed (as it was) as disclosing a tablet which contains a subcoating or separating layer between the core and enteric coating in its finished product form, however the subcoating or separating layer is formed, its appeal must fail. The Court of Appeal, in those circumstances, found it unnecessary to address the issue of infringement. Yet, had it done so, it would have had regard to Apotex' NOA. Apotex does not suggest that the conclusion could have been anything other than its allegation of non-infringement was not justified. Otherwise, it would have no reason to concede that construction of the patent was determinative.

[71]Therefore, in my view, since Apotex alleged only non-infringement and the Regulations mandate that an order of prohibition shall issue where none of the allegations is justified, it is not a leap of faith to conclude that a finding that the allegation of non-infringement is not justified is fundamental to the substantive decision--the order of prohibition.

[72]However, there is another reason why issue estoppel applies and it applies equally to the allegations of non-infringement and invalidity in this proceeding.

[73]The general rule, stated in P&G, is that a party in one proceeding is estopped from raising an issue that it could and should have raised in a previous proceeding between the parties. Although this form of estoppel is of the weaker variety, when the conditions are met, it is a matter of discretion as to whether the party should not be estopped. The basis for the rule is referenced in P&G, where the Court [at paragraph 25] cites Lord Denning in Fidelitas Shipping Co. Ltd. v. V/0 Exportchleb, [1965] 2 All E.R. 4 (C.A.):

The rule then is that each party must use reasonable diligence to bring forward every point which he thinks would help him. If he omits to raise any particular point, from negligence, inadvertence, or even accident (which would or might have decided the issue in his favour), he may find himself shut out from raising that point again, at any rate in any case where the self-same issue arises in the same or subsequent proceedings.

[74]The Supreme Court of Canada, in Maynard v. Maynard, [1951] S.C.R. 346 relied upon indistinguishable reasoning when it referred, at pages 358-359, to a passage from Green v. Weatherill, [1929] 2 Ch. 213:

I believe I state the rule of the Court correctly when I say that where a given matter becomes the subject of litigation in and of adjudication by a court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter [sic] which might have been brought forward as part of the subject in contest, but which was not brought forward only because they have from negligence, inadvertence or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation and which the parties, exercising reasonable diligence, might have brought forward at the time.

[75]Assuming that I were satisfied (and I am not) that, in addition to an allegation of invalidity, Apotex raises facts with respect to non-infringement in its NOA in this proceeding that it did not address in its NOA in the previous proceeding, the question (regarding both invalidity and non-infringement) is--could or should Apotex have raised those issues and facts in the previous proceeding?

[76]Apotex points to a number of cases where the Court has rejected the first person's argument that a second person is estopped, by the doctrine of res judicata or abuse of process, from transmitting a new allegation and advancing its case in the manner it sees fit. I have reviewed each of those authorities and conclude that they do not assist Apotex in the present circumstances. A summary of the jurisprudence regarding the filing of more than one NOA is contained in the reasons of Mr. Justice Blais in Novartis, and I need not review it in detail here. As I understand it, the jurisprudence holds that a subsequent NOA is permissible when a previous NOA has been withdrawn due to difficulties in meeting regulatory requirements or where the subsequent NOA is separate and distinct from the previous one (such as a new formulation) or where a procedural defect with respect to the previous NOA opens the door for the transmission of a subsequent NOA. In the cases advanced by Apotex, orders of prohibition had not been made in the previous proceedings, even where the matters had gotten to that stage. Here, an order of prohibition did issue and Apotex' appeal of that order was dismissed.

[77]AGF Canadian Equity Fund was concerned with an action. The plaintiff's statement of claim was struck without leave to amend. The plaintiff filed a new statement of claim and the Court held that the plaintiff was not precluded from so doing. The matter was not res judicata because there had never been a hearing, so there was no determination on the merits. There is no analogy to be drawn from that case. Apotex' previous NOA was not struck before the matter proceeded to a hearing. As noted, Apotex had both a hearing and an appeal with respect to its previous NOA. Nor is Mr. Justice Lemieux's decision in Novartis Pharmaceuticals Canada Inc. v. RhoxalPharma Inc. (2004), 34 C.P.R. (4th) 218 (F.C.), where he exercised his discretion not to apply issue estoppel, of relevance here. AstraZeneca's position with respect to sample production was pleaded in the alternative and has been consistent. That was not the situation before Justice Lemieux.

[78]The hurdle that Apotex has to get over is P&G. In that case, P&G submitted a reissued patent for inclusion on the patent register maintained pursuant to the Regulations. On its face, the patent had an issue date of June 11, 1996. Genpharm moved to dismiss P&G's application for an order of prohibition on the basis that the patent was not eligible for inclusion on the patent register as it had not been submitted within 30 days of issuance as required by subsection 4(4) of the Regulations. The Federal Court of Appeal's reasons deal with two discrete issues. It is only the question of issue estoppel that is pertinent to this matter. P&G argued that the question--whether the patent in question was eligible for inclusion on the patent register--was res judicata and subject to the doctrine of issue estoppel because in prior litigation between the same parties in relation to the same patent, the matter was or could have been raised. The Federal Court of Appeal agreed.

[79]Apotex does not argue that it could not have alleged (in its previous NOA), in addition to its product not containing a subcoat, that its product would not, in any event, contain an interface or layer that was inert, continuous and polymeric. Rather, it says that its NOA in the previous proceeding raised a construction issue, that "construction" was the only issue and that it was a "bona fide issue" warranting determination. I do not disagree that the construction of claim 1 of the patent was a bona fide issue. Construction of a patent or specific claims of a patent is an issue in all cases.

[80]It seems to me that Apotex' submission begs the question. It did, in the previous proceeding, allege non-infringement. Thus, it put the issue of "infringement" into play. It does not advance any explanation for its failure to put its best foot forward in the previous proceeding. To accept its submission, in my view, is tantamount to allowing it to split its case. It enables Apotex to test the waters on the construction of the patent and then, if unsuccessful (as it was), to recast its case and get a second bite at the cherry. While I would not go so far as to say (using the words of Mr. Justice Evans in P&G) that Apotex has hidden in the weeds, holding back a defence for use in subsequent litigation, it certainly put all its eggs in one basket. This omission is not of a procedural or technical nature; it is substantive. Apotex has not persuaded me that the conditions for issue estoppel have not been met regarding the issue of "infringement".

[81]In so far as invalidity is concerned, Apotex makes no submissions in that regard. I am proceeding on the assumption that Apotex considers, since it did not raise invalidity in the previous proceeding, that the issue was not determined and therefore issue estoppel does not apply. AstraZeneca's position--that Apotex, by alleging only non-infringement in the previous proceeding, necessarily accepted the validity of the 693 patent because if the patent was not valid, Apotex' formulation could not infringe the patent--stands uncontroverted. Apotex does not suggest that it could not or should not have raised invalidity in the previous proceeding. Moreover, in view of counsel's response to my question in this respect (See: Transcript, at pages 1130-1133), it appears, on this issue, that Apotex may very well have been hiding in the weeds. I accept AstraZeneca's argument and my comments regarding splitting the case apply with equal force to the issue of invalidity. That issue is deemed to have been decided.

[82]I turn now to the question of whether, notwithstanding that issue estoppel applies, I should exercise my discretion not to apply the doctrine. Both AstraZeneca and Apotex insist that justice is achieved by the position that each asserts. My task, as I see it, is to view the matter from a broader perspective and look to interests that transcend those of the immediate parties.

[83]In considering whether to exercise my discretion in Apotex' favour, I embark upon a fact-specific exercise involving consideration of a number of factors. My first observation is that there is no suggestion that the previous proceeding was tainted by fraud or dishonesty or that there exists fresh new evidence, previously unavailable, that conclusively impeaches the original result: Toronto (City) v. C.U.P.E., Local 79, [2003] 3 S.C.R. 77 (CUPE). Apotex does not suggest that the record it seeks to have adjudicated in this proceeding was not available to it (or could not have been available to it) in the previous proceeding. I have also considered that Apotex does not suggest that the stakes of the previous proceeding did not warrant its full attention: CUPE. Apotex is not a stranger to litigation.

[84]I have considered the nature of section 6 proceedings and the fact that their scope is confined to administrative purposes and that they are to be held expeditiously: See: paragraphs 12-15 herein.

[85]I have considered that the Regulations are a public regulatory scheme for regulating the marketing of new medicines and that their purpose is to effect a balance between protection of a patentee's rights and the public interest in the encouragement of research on the one hand and the public interest in competition and cheaper medicines on the other hand: P&G per Mr. Justice Evans.

[86]I have considered that the public policy in question must be of substantial importance in order to override the public interest in the finality of litigation and that the litigation, here, is between two private parties: Ibid, per Mr. Justice Rothstein for the majority.

[87]I have considered the interests of those collaterally affected, in other words, the interests of those who have chosen to advance the grounds relied upon in a NOA (rather than splitting the case) and have been unsuccessful: AB Hassle v. Canada (Minister of National Health and Welfare) (2000), 10 C.P.R. (4th) 38 (F.C.T.D.); affd (2002), 18 C.P.R. (4th) 558 (F.C.A.).

[88]I have considered the public interest in the finality of litigation and specifically the uncertainty created in not knowing when it is over. I have considered the integrity and credibility of the justice system, judicial and administrative resources and costs. I have considered that this proceeding brings into question Mr. Justice Kelen's order of prohibition notwithstanding that Apotex' appeal with respect to the order was dismissed.

[89]I am guided by the principle that although I have a discretion to refuse to apply issue estoppel, in the context of court proceedings, as contrasted with proceedings of administrative tribunals, such discretion is very limited in application and confined to narrow "special circumstances": P&G.

[90]I am not satisfied that this matter falls within the special circumstances exception. It boils down, in the end, to a question of whether Apotex should have more than one full opportunity to allege non-infringement and invalidity with respect to the same patent and the same formulation. I think not. The doctrine of issue estoppel applies and Apotex is estopped from alleging non-infringement and invalidity in its NOA.

Does the doctrine of abuse of process operate to preclude Apotex from alleging non-infringement and invalidity?

[91]The Court's power to prevent relitigation extends beyond the limits of the res judicata doctrine. In CUPE, Madam Justice Arbour discussed the three related doctrines of issue estoppel, abuse of process and collateral attack. A synopsis of the commentary in CUPE regarding abuse of process is provided in the paragraphs that follow. Reference to citations is omitted.

[92]Judges have an inherent and residual discretion to prevent an abuse of the Court's process. The doctrine is used in a variety of legal contexts. It is a flexible doctrine unencumbered by the specific requirements of concepts such as issue estoppel. Courts have applied the doctrine of abuse of process to preclude relitigation in circumstances where the strict requirements of issue estoppel are not met, but where allowing the litigation to proceed would nonetheless violate such principles as judicial economy, consistency, finality and the integrity of the administration of justice.

[93]The policy grounds supporting abuse of process by relitigation are the same as the essential policy grounds supporting issue estoppel. The policy grounds include that there will be an end to litigation and that no one should be twice vexed by the same cause as well as grounds whose aim is to preserve the courts' and litigants' resources, to uphold the integrity of the legal system in order to avoid inconsistent results, and to protect the principle of finality so crucial to the proper administration of justice.

[94]While critics have argued that when the doctrine of abuse of process is used as proxy for issue estoppel it obscures the true question, while adding nothing but a vague sense of discretion, that is not so. In all of its applications, the primary focus of the doctrine of abuse of process is the integrity of the adjudicative function of courts. The focus is less on the interests of the parties and more on the integrity of judicial decision making as a branch of the administration of justice. When the focus is properly on the integrity of the adjudicative process, the motive of the party who seeks to relitigate cannot be a decisive factor.

[95]From the system's point of view, relitigation causes serious detrimental effects and should be avoided unless the circumstances dictate that relitigation is necessary to enhance the credibility and the effectiveness of the adjudicative process as a whole. Instances where relitigation will enhance, rather than impeach, the integrity of the judicial system include: (1) when the first proceeding is tainted by fraud or dishonesty; (2) where fresh new evidence, previously unavailable, conclusively impeaches the original results; and (3) when fairness dictates that the original result should not be binding in the new context.

[96]The discretionary factors that apply to prevent the doctrine of issue estoppel from operating in an unjust or unfair way are equally available to prevent the doctrine of abuse of process from achieving a similar undesirable result. The bar against relitigation would create unfairness in circumstances where the stakes in the original proceeding were too minor to generate a full and robust response while the subsequent stakes were considerable. Fairness would dictate that the administration of justice would be better served by permitting the second proceeding to go forward than by insisting that finality should prevail. An inadequate incentive to defend, the discovery of new evidence in appropriate circumstances, or a tainted original process may all overcome the interest in maintaining the finality of the original decision.

[97]The doctrines of issue estoppel, collateral attack and abuse of process comprehensively address the concerns that arise when finality in litigation must be balanced against fairness to a particular litigant.

[98]If I am wrong in my determination that issue estoppel applies, then I conclude that Apotex' NOA constitutes an abuse of process for substantially the same reasons provided under the issue estoppel section of these reasons. I reject Apotex' suggestion that the frequency of the occasions upon which it is forced to respond to an allegation of abuse of process diminishes the merits of the submission in this matter.

[99]Having concluded as I have with respect to the threshold issues, I need not deal with the alternative issues. AstraZeneca has been successful and will have its costs. I have considered the submissions of counsel and the pertinent factors in subsection 400(3) [Federal Courts Rules, SOR/98-106, r. 1 (as am. by SOR/2004-283, s. 2)] and I award costs to be assessed at the upper end of Column III of Tariff B. The assessment officer will be directed to assess second counsel fees for attendance at the cross-examinations and the hearing as well as reasonable disbursements with respect to their attendance.

[100]AstraZeneca, in consultation with Apotex, shall submit a draft order, reflecting the appropriate disposition in accordance with these reasons, on or before February 18, 2005. In the event that they cannot agree on the terms of the order, AstraZeneca shall serve and file written submissions and its proposed draft order not later than February 18. Apotex shall serve and file responding submissions and its proposed draft order not later than February 23. Written submissions shall not exceed two pages, double-spaced.