Federal Court rejects pre-trial determination of a question of law about the nature of the section 8 but-for world

As previously reported, the Federal Court found Janssen’s Canadian Patent No. 2,661,422 (422 patent) – which relates to treatment of prostate cancer in humans by co-administration of abiraterone acetate (Janssen’s ZYTIGA) and prednisone – invalid in actions under the Patented Medicines (Notice of Compliance) Regulations (Regulations) against Apotex, Dr. Reddy’s, and Pharmascience. The Federal Court of Appeal upheld the invalidity of the 422 patent on appeal.

Dr. Reddy’s seeks damages from Janssen pursuant to the amended section 8 of the Regulations for its lost sales of abiraterone acetate. As previously reported, Justice Southcott recently decided three previous motions in section 8 actions relating to abiraterone acetate.

In this fourth motion, Dr. Reddy’s requested the Federal Court’s determination of a question of law prior to trial as to the nature of the section 8 but-for world. On December 5, 2022, Justice Southcott dismissed the motion: Dr. Reddy’s v Janssen, 2022 FC 1672.

The issue

In the real world, Janssen did not renounce the statutory stay against Dr. Reddy’s, Apotex and Pharmascience. The Minister was therefore precluded from granting marketing approval until resolution of Janssen’s section 6 actions.

In defence of the section 8 action, Janssen asserts that if Dr. Reddy’s entered the market earlier than its date of approval in the real world, other generic pharmaceutical companies – including Apotex and Pharmascience – would have done so as well.

In response to Janssen’s defence, Dr. Reddy’s sought a determination prior to trial of the following question:

Under the [Regulations], when a patentee has exercised its right to a section 7 statutory stay against generic entry, and never resolved or renounced that right in relation to certain generics in the real world, does that same obstacle to entry by those generics prevail in the section 8 but-for world (other than the section 8 claimant)?

Early determination of a question of law under Rule 220 is typically conducted in two stages. First, the Court must determine whether it is appropriate for the proposed question to be addressed in a pre-trial motion. If the answer at the first stage is affirmative, the motion proceeds to the second stage to determine the legal question.

The present motion is related to the first stage only. Justice Southcott held that “circumstances of this matter do not favour the Court exercising its discretion to determine the proposed question as a preliminary matter in advance of trial.”

Test under Rule 220(1)(a) is satisfied, subject to the Court’s residual discretion

Justice Southcott found that Dr. Reddy’s met the requirements under the Federal Courts Rules for a determination of a question of law prior to trial:

1. there is no dispute as to any fact material to the question of law to be determined;
2. what is to be determined is a pure question of law; and
3. its determination will be conclusive of a matter in dispute so as to eliminate the necessity of a trial or, at least, shorten or expedite the trial.

Discretionary analysis does not favour preliminary determination

However, Justice Southcott noted that “early determination of a question of law is an exceptional procedure” and based on the following discretionary factors, dismissed the motion:

1. Agreement of the parties – None.
2. Difficulty and importance of the proposed question – The question is important and may have a significant impact on calculation of damages and as precedent.
3. Desirability of answering the question in a vacuum – The Court could benefit from the “full factual context provided by a trial,” in view of the potential impact on the present case, related cases (including section 8 cases by Apotex and Pharmascience) and future cases.
4. Possibility that the determination of the question before trial might, in the end, save neither time nor expense – Dr. Reddy’s did not provide evidence of time or expense that would be saved; it is not sufficient to argue that such savings are self-evident. Additionally, this process could add work for the parties, who are six months from trial.  

Dr. Reddy’s may appeal as of right to the Federal Court of Appeal.

Should you have any questions, please do not hesitate to contact a member of the Pharmaceutical Litigation Group.

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