T-1350-97
Fournier Pharma Inc. (Applicant)
v.
The Attorney General of Canada and The Minister of Health (Respondents)
and
Novopharm Limited (Intervener)
Indexed as: Fournier Pharma Inc.v. Canada (Attorney General) (T.D.)
Trial Division, Teitelbaum J."Montréal, September 28; Ottawa, October 16, 1998.
Patents — Patented medicines — Application for mandamus directing Minister to file applicant's patent lists in register, declaration Patented Medicines (Notice of Compliance) Regulations, s. 4(3), (5) (now s. 4(4)) ultra vires Patent Act, s. 55.2(4) — S. 4(3) requiring patent list be submitted at same time as submission for notice of compliance (NOC) — S. 4(4) stipulating patent list must be filed within 30 days of issuance of patent where submission for NOC already filed — Patent Act, s. 55.2(4) conferring on Governor in Council authority to make such regulations as considers necessary for preventing patent infringement — Applicant waiting until 1997 to submit patent lists for patents granted in 1993 — Health Canada refusing to register patent lists on ground not complying with s. 4(3), (5) — S. 55.2(4) discretion, authority sufficiently broad to embrace enactment of s. 4(3), (4) — Evidence not demonstrating subsections unreasonable, unfair, unnecessary, constituting abuse of power — Subsections in conformity with purpose of Regulations, objects of Patent Act to strengthen position, rights of patentees while protecting consumers by ensuring availability of reasonably priced medicine — Evidence not providing basis to find Regulations ultra vires.
This was an application for an order of mandamus directing the Minister of National Health and Welfare to file the applicant's patent lists in the patent register, and a declaration that subsections 4(3) and 4(5) (now subsection 4(4)) of the Patented Medicines (Notice of Compliance) Regulations are ultra vires subsection 55.2(4) of the Patent Act. Subsection 4(3) requires that a patent list be submitted at the same time as a submission for a notice of compliance. Subsection 4(4) stipulates that a patent list must be filed within 30 days of the issuance of a patent where a submission for a notice of compliance has already been filed.
In August 1992 and July 1995 respectively the applicant filed submissions to obtain a notice of compliance relating to two patented drugs for which it is the exclusive licensee. Notices were issued, but the applicant waited until 1997 to submit its patent lists, which referred to patents granted in 1993, to the Health Protection Branch of Health Canada. Registration of the patent lists was refused on the ground that they should have been filed together with the submissions for the notice of compliance, in accordance with subsections 4(3) and 4(5) (as it then was) of the Regulations.
The issues were: (1) whether subsections 4(3) and 4(4) of the Regulations, as amended, are ultra vires Patent Act, subsection 55.2(4); and (2) whether the Minister's refusal to register the applicant's patent lists was reviewable, and is an order of mandamus warranted?
Held, the application should be dismissed.
The Regulations are not unreasonable, unfair or unnecessary. Where no evidence is adduced to demonstrate that the exercise of a regulatory power is unreasonable, unnecessary, unfair or amounts to an abuse of power, the regulations must be held valid. This is consistent with the presumption of validity and good faith. Subsection 55.2(4) confers upon the Governor in Council the authority to "make such regulations as the Governor in Council considers necessary for preventing the infringement of a patent". The Governor in Council's discretion and authority are sufficiently broad to embrace the enactment of subsections 4(3) and 4(4) of the Regulations. The evidence did not demonstrate that the subsections were unreasonable, unfair and unnecessary or constituted an abuse of power.
Where a regulating authority has a broad discretionary power as that of the Governor in Council by virtue of Patent Act, subsection 55.2(4), the only avenue for inquiry by the Court is whether the Regulations by their terms, relate to the statutory purposes of the enabling legislation. The Regulations provide "first persons" with a qualified right to register a patent list within time limits. This is consistent with and supports the attainment of the competing objectives of the Patent Act to strengthen the position and rights of patentees, while protecting the interests of Canadian consumers in ensuring the availability of reasonably priced medicine. These competing objectives are achieved by means of the right to register patent lists and the time limits which work together in preserving a balance sought by the legislator. The registration of a patent list extends patent protection to reward innovation and encourages research and development, while the time limits prevent extended monopolies from precluding generics from entering the market, and ensure access to reasonably priced medicine. Furthermore, the qualified right to register a patent list within time limits is clearly in pursuance of and connected with the prevention of patent infringement. The qualified right to file a patent list within time limits was not contrary to the purpose of the Regulations or the Patent Act. In any event, the authority to adopt strict time limits can be inferred by necessary inference or implicit delegation. The time limits are necessary to give effect to the intention of the legislator to strengthen the position of patentees and to ensure the availability of reasonably priced medicine for Canadian consumers. Without such time limits, "first persons" could extend their monopoly and the balance sought by the legislator would not be preserved.
As the Regulations are intra vires, the order of mandamus should not issue. The applicant failed to file its patent lists within the time limits provided under the Regulations. Furthermore, the Regulations do not confer upon the Minister any discretion to accept patent lists submitted outside the time frame allotted to do so. Therefore there was no duty owed to the applicant to accept and register the patent lists, and mandamus should not issue.
statutes and regulations judicially considered
Federal Court Act, R.S.C., 1985, c. F-7, ss. 18 (as am. by S.C. 1990, c. 8, s. 4), 18.1 (as enacted idem, s. 5), 18.2 (as enacted idem).
Immigration Appeal Board Act, R.S.C. 1970, c. I-3, s. 7(3).
Immigration Appeal Board Rules, SOR/67-559, Rule 19.
Patent Act, R.S.C., 1985, c. P-4, s. 55.2(4) (as enacted by S.C. 1993, c. 2, s. 4).
Patent Act Amendment Act, 1992, S.C. 1993, c. 2, s. 4.
Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, s. 4 (as am. by SOR/98-166, s. 3).
War Measures Act, R.S.C. 1927, c. 206, s. 3.
cases judicially considered
applied:
Apotex Inc. v. Canada (Attorney General), [1997] 1 F.C. 518; (1996), 48 Admin. L.R. (2d) 109; 71 C.P.R. (3d) 166; 123 F.T.R. 161 (T.D.); Lemoyne (Ville) v. Bessette (1995), 129 D.L.R. (4th) 697 (Que. C.A.).
distinguished:
Alvarez v. Minister of Manpower and Immigration, [1979] 1 F.C. 149; (1978), 128 D.L.R. (4th) 385; 189 N.R. 175 (C.A.); R. v. Greenbaum, [1993] 1 S.C.R. 674; 10 Admin. L.R. (2d) 161; 79 C.C.C. (3d) 158; 19 C.R. (4th) 347; 14 M.P.L.R. (2d) 1; 149 N.R. 114; 61 O.A.C. 241; Dumont c. R., [1977] C.A. 114 (Que.).
considered:
Reference as to the Validity of the Regulations in relation to Chemicals, [1943] S.C.R. 1; [1943] 1 D.L.R. 248; (1943), 79 C.C.C. 1; Alaska Trainship Corporation et al. v. Pacific Pilotage Authority, [1981] 1 S.C.R. 261; (1981), 120 D.L.R. (3d) 577; 35 N.R. 271; ICN Pharmaceuticals, Inc. v. Canada (Staff of the Patented Medicine Prices Review Board), [1997] 1 F.C. 32; (1996), 138 D.L.R. (4th) 71; 68 C.P.R. (3d) 417; 200 N.R. 376 (C.A.).
referred to:
Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), [1997] 3 F.C. 752; (1997), 74 C.P.R. (3d) 307; 133 F.T.R. 184 (T.D.); Barreau du Québec c. Morin, [1988] R.J.Q. 2629; (1988), 18 Q.A.C. 291 (C.A.); Québec (Procureur général) c. Fortier, [1990] R.J.Q. 1280 (C.A.); Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231; (1994), 110 D.L.R. (4th) 1; [1994] 3 W.W.R. 609; 88 B.C.L.R. (2d) 145; 20 Admin. L.R. (2d) 202; 41 B.C.A.C. 81; 20 M.P.L.R. (2d) 1; 163 N.R. 81; 66 W.A.C. 81; Canada (Attorney General) v. Young, [1989] 3 F.C. 647; (1989), 27 C.C.E.L. 161; 89 CLLC 14,046; 100 N.R. 333 (C.A.).
APPLICATION for an order of mandamus directing the Minister of National Health and Welfare to file the applicant's patent lists in the patent register, and a declaration that subsections 4(3) and 4(5) (now subsection 4(4)) of the Patented Medicines (Notice of Compliance) Regulations are ultra vires subsection 55.2(4) of the Patent Act. Application dismissed.
appearances:
André Bégin and Luise Bauer for applicant.
André Lespérance for respondents.
Edward J. B. Hore for intervener.
solicitors of record:
Lette & Associés, Montréal, for applicant.
Deputy Attorney General of Canada for respondents.
Hazzard & Hore, Toronto, for intervener.
The following are the reasons for order rendered in English by
Teitelbaum J.:
INTRODUCTION
In this application for judicial review pursuant to sections 18 [as am by S.C. 1990, c. 8, s. 4], 18.1 [as enacted idem, s. 5] and 18.2 [as enacted idem] of the Federal Court Act [R.S.C., 1985, c. F-7], the applicant, Fournier Pharma Inc. (Fournier), seeks an order of mandamus directing the Minister of National Health and Welfare (the Minister) to file Fournier's patent lists in the patent register, and a declaration that subsections 4(3) and 4(5) (now 4(4)) of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 [as am. by SOR/98-166, s. 3], (the Regulations), are ultra vires subsection 55.2(4) of the Patent Act, R.S.C., 1985, c. P-4, as enacted by the Patent Act Amendment Act, 1992, S.C. 1993, c. 2, s. 4.
FACTS AND BACKGROUND
The facts which give rise to this application are not in dispute and can be summarized as follows. In 1993, the legislative scheme under the Patent Act was amended. While the Patent Act Amendment Act, 1992 came into force in February 1993, section 55.2 of the Patent Act together with the Regulations came into force on March 12, 1993. Under this new scheme, the Minister is responsible for the issuance of notices of compliance (NOC) and the maintenance of the patent register. Under the Regulations a "first person" may file, within time limits, a patent list identifying patents covering a medicine or a claim for the use of a medicine. Where such a list is registered, a "second person" applying for a notice of compliance must notify the "first person", whose patent it could infringe upon, of the allegations of non-infringement. Then, the "first person" may contest these allegations by means of judicial review before the Federal Court which in turn may result in a prohibitive injunction preventing the Minister from issuing a NOC to a "second person". Conversely, failure to file a patent list in a timely fashion may result in the grant of a NOC to a "second person" notwithstanding the existence of a patent for the drug. For a broader overview of the process under this scheme see: Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) , [1997] 3 F.C. 752 (T.D.).
In August 1992 and July 1995 respectively, the applicant, who is the exclusive licensee of the Canadian Patent No. 1322529 with respect to the drugs Fenofibrate and Fenofibrate (micronized), filed submissions to obtain a NOC relating to the said drugs, which notices were issued by Health Canada. However, Fournier waited until 1997 to submit its patent lists, which referred to patents granted in October 1993, to the Health Protection Branch of Health Canada. Health Canada refused to register the patent lists on the ground that the patent lists should have been filed together with the submissions for the notice of compliance, in accordance with subsections 4(3) and 4(5) of the Regulations. Further to the Minister's refusal to register the patent lists, Fournier filed this application for judicial review seeking an order of mandamus directing the Minister to register the patent lists and a declaration of invalidity regarding subsections 4(3) and 4(5) of the Regulations, upon which the said decision is based.
In its memorandum of argument, Fournier argued that subsections 4(3) and 4(5) of the Regulations are ultra vires subsection 55.2(4) of the Patent Act, on the basis that they are unreasonable, unfair and not necessary. In support of its position, Fournier states three general principles of law: (1) delegated legislation must conform to the enabling legislation, and must not go beyond the objectives of such legislation; (2) regulations must not conflict with legislative dispositions in any way that would modify or restrict its effects; and (3) regulations must not constitute an abuse of power or be unreasonable. More specifically, Fournier argues that the enabling provision, subsection 55.2(4) of the Patent Act, which is stated in general terms, does not permit the regulating authority to add conditions to the law which would restrain its effects, take away rights or add obligations. And that as such, the Regulations would constitute an abuse of power, be unreasonable and contrary to the enabling legislation. Furthermore, Fournier argues that the strict time limits imposed upon a "first person" under the Regulations deprive patent owners and licensees of the full protection of the Act.
However, at the hearing before me, Fournier argued that what it takes issue with is not the time limits for the filing of a patent list per se, but rather that the strict time limits do not allow for a grace period or an extension of time and thus interfere with their rights to be protected under the Act.
Subsequent to Fournier's application attacking the validity of the Regulations, Novopharm Limited applied to the Court for leave to intervene and was granted intervener status by order dated October 31, 1997.
RELEVANT STATUTORY PROVISIONS
In this application for judicial review, the applicant attacks the validity of subsections 4(3) and 4(5) of the Regulations enacted pursuant to subsection 55.2(4) of the Patent Act, which read as follows:
55.2 . . .
(4) The Governor in Council may make such regulations as the Governor in Council considers necessary for preventing the infringement of a patent by any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) or (2) including, without limiting the generality of the foregoing, regulations
(a) respecting the conditions that must be fulfilled before a notice, certificate, permit or other document concerning any product to which a patent may relate may be issued to a patentee or other person under any Act of Parliament that regulates the manufacture, construction, use or sale of that product, in addition to any conditions provided for by or under that Act;
(b) respecting the earliest date on which a notice, certificate, permit or other document referred to in paragraph (a) that is issued or to be issued to a person other than the patentee may take effect and respecting the manner in which that date is to be determined;
(c) governing the resolution of disputes between a patentee or former patentee and any person who applies for a notice, certificate, permit or other document referred to in paragraph (a) as to the date on which that notice, certificate, permit or other document may be issued or take effect;
(d) conferring rights of action in any court of competent jurisdiction with respect to any disputes referred to in paragraph (c) and respecting the remedies that may be sought in the court, the procedure of the court in the matter and the decisions and orders it may make; and
(e) generally governing the issue of a notice, certificate, permit or other document referred to in paragraph (a) in circumstances where the issue of that notice, certificate, permit or other document might result directly or indirectly in the infringement of a patent.
[Regulations]
4. (1) A person who files, or before the coming into force of these Regulations has filed a submission for or has been issued, a notice of compliance in respect of a drug that contains a medicine may submit to the Minister a patent list.
(2) A patent list submitted pursuant to subsection (1) must be certified by the person to be accurate, and must set out
(a) any Canadian patent that is owned by the person, or in respect of which the person has an exclusive licence or has obtained the consent of the owner of the patent for the inclusion of the patent on the patent list, that contains a claim for the medicine itself or a claim for the use of the medicine and that the person wishes to have included on the patent list;
(b) a statement that, in respect of each patent, the person applying for a notice of compliance is the owner, has an exclusive licence or has obtained the consent of the owner of the patent for the inclusion of the patent on the patent list;
(c) the date on which the term limited for the duration of each patent will expire pursuant to section 44 or 45 of the Patent Act; and
(d) the address in Canada for service on the person of any notice of an allegation referred to in paragraph 5(3)(b), or the name and address in Canada of another person on whom service may be made, with the same effect as if service had been made on the person.
(3) Subject to subsections (4) and (5), a person submitting a patent list shall do so at the time the person files a submission for a notice of compliance.
(4) Subject to subsection (5), a person who has already filed a submission for, or has been issued, a notice of compliance before the coming into force of these Regulations and who wishes to submit a patent list shall do so within 30 days after the day on which these Regulations come into force.
(5) At any time after the date of filing of the submission for a notice of compliance, the first person may submit a patent list that includes, or amend an existing patent list to include, the information referred to in subsection (2) in respect of a patent that issued within the previous 30 days on the basis of an application filed before the date of filing of the submission.
However, after Fournier filed its application and before the hearing took place, amendments to the Regulations came into force on March 11, 1998. Both subsections were reworded and subsection 4(5) was replaced by subsection 4(4). For ease of reference, I reproduce below subsections 4(3) and 4(4) of the Regulations, as amended by SOR/98-166.
4. . . .
(3) Subject to subsection (4), a person who submits a patent list must do so at the time the person files a submission for a notice of compliance.
(4) A first person may, after the date of filing of a submission for a notice of compliance and within 30 days after the issuance of a patent that was issued on the basis of an application that has a filing date that precedes the date of filing of the submission, submit a patent list, or an amendment to an existing patent list, that includes the information referred to in subsection (2).
ISSUE
The pleadings raise two issues:
Are subsections 4(3) and 4(4) of the Regulations, as amended, ultra vires subsection 55.2(4) of the Patent Act?
Is the Minister's refusal to register Fournier's patent lists reviewable and is an order of mandamus warranted?
DISCUSSION
I will deal first with the issue of the validity of the Regulations upon which the decision of the Minister is based in order to determine whether the relief ultimately sought by Fournier, the order of mandamus directing the Minister to register Fournier's patent list, should issue.
In its memorandum, Fournier submits that subsections 4(3) and 4(4) of the Regulations should be declared invalid because of unreasonableness, unfairness and not necessary. In support of this contention, Fournier submitted at the hearing that the strict time limits are sine qua non conditions not authorized by the enabling legislation; that the strict time limits have the effect of precluding "first persons" from the protection of the Act, which is contrary to the purpose of the Regulations and the Patent Act to prevent the infringement of patents; and that the strict time limits provided under subsection 4(3), which requires that a patent list be submitted at the same time as a submission for a notice of compliance, and under subsection 4(4), which stipulates that a patent list must be filed within 30 days of the issuance of a patent where a submission for a notice of compliance has already been filed, are unreasonable, unfair and unnecessary because they do not include a grace period or the opportunity to obtain an extension of time for the filing of a patent list.
The new patent scheme, which comprises the Patent Act and the Regulations, has been considered by the Federal Court, namely, in Apotex Inc. v. Canada (Attorney General), [1997] 1 F.C. 518 (T.D.), where the Court considered the validity of the Regulations.
In Apotex, some of the issues are virtually identical to the present case. The Court considered, inter alia, whether the Regulations were ultra vires the authority of the Governor in Council pursuant to subsection 55.2(4) of the Patent Act. Further, the Court also considered Apotex's arguments that the Regulations had been enacted without necessity and for collateral or ulterior motives, and that it was discriminatory. Mr. Justice MacKay found these arguments non-persuasive and dismissed the application.
In coming to this conclusion, Mr. Justice MacKay considered the scope of the regulatory powers conferred upon the Governor in Council by virtue of subsection 55.2(4) of the Patent Act and found that subsection 55.2(4) of the Patent Act conferred upon the Governor in Council ample discretion and authority to enact these Regulations. I have also reviewed the regulatory powers conferred upon the Governor in Council set out in subsection 55.2(4), in light of Fournier's arguments to the effect that the strict time limits are conditions which are not authorized by the enabling statute and are in effect unreasonable, unfair and unnecessary. In my view, Justice MacKay addressed some of these issues in Apotex. I quote and adopt the following passage from Justice MacKay's decision, at page 552:
These submissions, in my view, mistake the purport of the words "as the Governor in Council considers necessary". Those words grant discretion to the Governor in Council to which a court defers, recognizing that Parliament has left discretion to the Governor in Council. The exercise of that discretion would only be upset if it were established, and there is no such evidence here, that the Governor in Council did not consider the Regulations necessary. There is no onus on the Governor in Council to demonstrate necessity or even that necessity was considered. The mere act of adopting regulations establishes that they were considered necessary by the Governor in Council, at least so far as this Court's review is concerned. The words used relate to a matter for determination by the Governor in Council, whose beliefs are not subject to review. The words do not raise any question of an objective standard of necessity to be met or even considered.
Mr. Justice MacKay went on to review the decision in Reference as to the Validity of the Regulations in relation to Chemicals, [1943] S.C.R. 1. In Chemicals, the validity of the regulations had been challenged on the basis that the Governor in Council was not empowered by virtue of the enabling provision to adopt the Regulations in relation to chemicals. The Supreme Court of Canada reviewed section 3 of the War Measures Act [R.S.C. 1927, c. 206] which conferred upon the Governor in Council authority to pass the Regulations. Section 3 stipulated that "[t]he Governor in Council may do and authorize such acts and things, and make from time to time such orders and regulations, as he may . . . deem necessary or advisable for the security, defence, peace, order and welfare of Canada". Mr. Justice MacKay in Apotex , supra, at page 552, quoted a passage from the Supreme Court of Canada's decision in Chemicals, supra, where Chief Justice Duff said, at page 12:
. . . when Regulations have been passed by the Governor General in Council in professed fulfilment of his statutory duty, I cannot agree that it is competent to any court to canvass the considerations which have, or may have, led him to deem such Regulations necessary or advisable for the transcendant objects set forth.
In my view, the above-mentioned cases clearly show that a court should hesitate to interfere with the Governor in Council's broad discretionary powers and authority. In this respect, counsel for Fournier argued at the hearing that the strict time limits under the said subsections allow generic drug manufacturers to enter the market despite a patent or licence for the said drugs, and adduced evidence by way of affidavit"application record, tab 3, affidavit of Tom Brogan"to the effect that the entry of generic drugs on the market can have substantial financial and commercial repercussions, most specifically on Fournier because it only manufactures the two mentioned drugs for which registration of a patent list was refused.
I am not persuaded by Fournier's arguments or evidence that the Regulations are unreasonable, unfair or unnecessary. In my view, where no evidence is adduced to demonstrate that the exercise of a regulatory power is unreasonable, unnecessary, unfair or amounts to an abuse of power, as I find is the case here, to substantiate Fournier's position that the said subsections are ultra vires, the regulations must be held valid. This is consistent with the presumption of validity and good faith (Apotex Inc. v. Canada (Attorney General), supra and Lemoyne (Ville) v. Bessette (1995), 129 D.L.R. (4th) 697 (Que. C.A.)).
In Apotex, supra Mr. Justice MacKay states, at pages 552-553:
I note that in this case, the recital of the Regulations in question clearly refers to action "pursuant to subsection 55.2(4) of the Patent Act", in making the annexed Regulations respecting a notice of compliance pertaining to patented medicines.
Thus, the submission that neither necessity nor the consideration of necessity is here shown, is not persuasive that the Governor in Council, in adopting the Regulations, failed to meet the requirements of subsection 55.2(4). In the circumstances, absent any evidence that they were unnecessary, the Governor in Council, by adopting the Regulations, must be taken to have considered them as necessary at the time they were adopted. Where that is so, the only avenue for inquiry by the Court is whether the Regulations by their terms, relate to the statutory purposes of the enabling legislation. (See Teal Cedar Products (1977) Ltd. v. Canada, [1989] 2 F.C. 158 (C.A.), at page 171, per Pratte J.A.)
In Lemoyne, supra, the Quebec Court of Appeal held that a municipal by-law which fixed the hours of operations of amusement halls and restricted admission to persons older than 18 years of age was invalid. Before dealing with the issues of whether the by-law was discriminatory, unfair, oppressive and adopted in bad faith, Mr. Justice Gendreau, with whom Mr. Justice Fish concurred, said the following about the presumption of validity and good faith, at page 702:
I would like to make two observations. First, it is wrong to state that it was up to the Town to show that it was acting in the public interest. On the contrary, a municipal corporation, when it regulates an activity, is presumed to be acting in the general interest and in good faith (Montreal (City) v. Arcade Amusements, supra; Corporation municipale de Dollard-des-Ormeaux v. Amusements Pinocchio Inc., [1994] R.J.Q. 895, 63 Q.A.C. 21, 46 A.C.W.S. (3d) 1164), and it is up to the party seeking to have it annulled for abuse of rights to prove it.
As I mentioned above, subsection 55.2(4) confers upon the Governor in Council the authority to "make such regulations as the Governor in Council considers necessary for preventing the infringement of a patent". The Governor in Council's discretion and authority are sufficiently broad to embrace the enactment of subsections 4(3) and 4(4) of the Regulations which impose time limits on the registration of patent lists. I find that the evidence adduced by counsel for Fournier does not demonstrate that the subsections in question are unreasonable, unfair and unnecessary, or constitute an abuse of power.
However, this does not dispose of the application. There remains one issue to be determined which stems from Fournier's contention that the strict time limits neither conform with the purpose of the Regulations nor are consistent with the general objects and purpose of the Patent Act. In this respect, I refer to Justice MacKay's conclusion in Apotex, supra at page 553, that where a regulating authority has a broad discretionary power as that of the Governor in Council by virtue of subsection 55.2(4) of the Patent Act, "the only avenue for inquiry by the Court is whether the Regulations by their terms, relate to the statutory purposes of the enabling legislation".
Fournier argued that the effect of subsections 4(3) and 4(4) which preclude "first person" from filing a patent list is to allow the entry of a generic drug into the Canadian market which in turn can cause substantial and irreparable losses, but that is not the intent of the Act. As for the respondent intervener, Novopharm, it was argued that the extraordinary procedure provided under the Regulations gives brand name companies a huge advantage in planning its responding market strategy and allows "first persons" to delay the entry of generic drug manufacturers on the market. Without the time limits for the filing of a patent list a "first person" could extend perpetually their monopoly.
In support of its contention, Fournier relied on the following propositions: the regulation-making power is circumscribed by the requirement that the regulations must be in pursuance of or in conformity with its objects: Alaska Trainship Corporation et al. v. Pacific Pilotage Authority, [1981] 1 S.C.R. 261, at page 268; the regulations must be consistent with the general purpose and objects of the enabling statute: Barreau du Québec c. Morin, [1988] R.J.Q. 2629 (C.A.); Dumont c. R., [1977] C.A. 114; Québec (Procureur général) c. Fortier, [1990] R.J.Q. 1280 (C.A.); Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231; and R. c. Greenbaum, [1993] 1 S.C.R. 674.
The purpose and objects of the Regulations and the Patent Act have been considered in Apotex, supra and in ICN Pharmaceuticals, Inc. v. Canada (Staff of the Patented Medicine Prices Review Board), [1997] 1 F.C. 32 (C.A.). In Apotex, supra, Justice MacKay reviewed the legislative history of the patent scheme and said, at page 547, that the regulatory powers conferred upon the Governor in Council by virtue of subsection 55.2(4) "must be construed in light of the purposes of the amending Act and within the context of that Act."
The most comprehensive analysis of the purpose and objectives of the Patent Act and Regulations as an integrated scheme can be found in ICN Pharmaceuticals, supra. Mr. Justice Robertson, speaking for the Court of Appeal, wrote that the legislative objective is twofold, at pages 40-41:
The purpose of extending patent protection to medicines is to reward innovation and provide an incentive for pharmaceutical manufacturers to expend further resources in the research and development of new drugs. At the same time, it is believed that that objective must not overtake the need to ensure that Canadians have access to patented medicines which are reasonably priced. Two legislative frameworks for striking this balance have been pursued in Canada this century. The first in time involves a system of compulsory licensing. The second is a system of price regulation.
In ICN Pharmaceuticals, supra, Justice Robertson also considered the purpose of the Regulations in light of the legislative history of the patent scheme. At pages 43-45, he states:
The most recent legislation affecting patented medicines were enacted in 1993: Patent Act Amendment Act, 1992, S.C. 1993, c. 2, and the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (the NOC Regulations). A primary motivation for these amendments was Canada's involvement in GATT and NAFTA negotiations: see Horton, at pages 150-153; and Marusyk, at page 162. As Canada was the only major industrialized nation to have a system of compulsory licensing, it was felt that its patent laws should be brought into line with those of other industrialized countries: see Horton, at page 153; and Government of Canada News Release, NR-10770/92-21, at page 3.
The 1993 amendments to the Act and the enactment of the NOC Regulations affected the system in three major ways. The first two served to strengthen the position and rights of patentees. The third sought to protect the interests of Canadian consumers.
First, the compulsory licensing regime was abolished, thereby eliminating the possibility of achieving price control through competition in the marketplace. Patentees now have market exclusivity for the entire duration of their patent, 20 years from the date of filing of the application: see section 44 (as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 16) of the Act. However, generics can proceed with product development before the expiration of a patent for the limited purpose of enabling them to enter the marketplace as soon as the relevant patent expires.
Second, under the new NOC Regulations, a scheme was created to restrict the ability of generic manufacturers to obtain a notice of compliance with respect to a drug which might infringe the patent held by a brand name drug manufacturer. Without a notice of compliance a medicine cannot be marketed in Canada: see Food and Drugs Act, R.C.S., 1985, c. F-27 (the Food and Drugs Act). Under the scheme, a patentee's rights are strengthened, but narrowed in scope. With respect to the strengthening of a patentee's right, the scheme permits them to list their patents on a "patent list", but only if those patents contain a claim for a medicine, or a claim for the use of a medicine, pursuant to paragraph 4(2)(a ) of the NOC Regulations. If a generic seeks a notice of compliance with respect to a drug and a comparison is made to one which is contained on a patent list, the patentee is notified. The patentee can then apply to the Court for an order prohibiting the Minister of Health and Welfare from issuing a notice of compliance to the generic. This is an extraordinary remedy and dispenses with the need of a patentee to initiate an action for patent infringement and obtain injunctive relief during the currency of the patent in question. As a result, if an order of prohibition issues, the generic cannot receive a notice of compliance and is precluded from marketing its product for the duration of that patent's life. The patentee's term of exclusivity is thereby preserved. However, as noted, the amendments also serve to narrow the scope of patents to which this extraordinary remedy applies. The protection is restricted to patents for a medicine or for the use of a medicine. "Medicine" is defined in section 2 of the NOC Regulations as a "substance intended or capable of being used for the diagnosis, treatment, mitigation or prevention of a disease", thereby excluding, for example, intermediates: see Eli Lilli and Co. v. Apotex Inc. (1995), 63 C.P.R. (3d) 245 (F.C.T.D.); affd [1996] F.C.J. No. 638 (C.A.) (QL) [now reported at (1996), 68 C.P.R. (3d) 126]. From the foregoing, it is apparent that the Regulations seek to achieve two competing objectives. One is to extend full protection to patentees in thwarting the ability of generic manufacturers to introduce medicines which might infringe their patents. The other is to limit that protection to a narrow class of medicines.
Are subsections 4(3) and 4(4) in pursuance of or in conformity with the purpose and objects of the Regulations and the Patent Act?
In Alaska Trainship, supra, the Chief Justice indicated that what is required is that the enacted regulation "can fairly be said to be a matter of or connected with" the objects of the authority of the enabling statute, at page 275:
The short question is whether conditioning the claim for exemption on a ship's flag, here registration in Canada, and similarly, the claim for waiver, here registration in the United States, can fairly be said to be a matter of or connected with safety in realization of the objects of the Authority under s. 12.
In Greenbaum, supra, upon which Fournier places reliance, the Supreme Court of Canada considered the validity of a municipal by-law prohibiting the exposing of goods on a road allowance without lawful authority. The effect of the by-law was to draw a distinction between free-standing street vendors and owners/occupants of abutting property. As licensing was only available for sidewalk use to owners or occupiers of abutting property, the Chief Justice found the by-law invalid and held that a distinction must be absolutely necessary to the exercise of a regulatory power for the Court to find that the power to adopt the said distinction may be inferred from the enabling legislation by necessary inference or implicit delegation, at page 695:
I am not persuaded that, in the case at bar, to draw a distinction between free-standing street vendors and owners/occupants of abutting property was absolutely necessary to the exercise of the licensing power such that the power to draw such a distinction must be inferred from the enabling legislation (s. 90 of the Municipality of Metropolitain Toronto Act) by necessary inference or implicit delegation.
In Dumont, supra, relied upon by Fournier for the proposition that sine qua non conditions not authorized by the regulatory grant of power are invalid unless it can be shown that they were necessary. Justice Bernier, writing for the Court of Appeal, states at page 116:
[translation] I am of the opinion that section 13.03 of the Regulations could not be based on such a vague provision without first showing that, in the context of the Act, this "was necessary for the enforcement of the Act". The Crown has failed to establish this.
Also, Fournier relied on the decision in Alvarez v. Minister of Manpower and Immigration, [1979] 1 F.C. 149 (C.A.), where a provision imposing a 30-day deadline was held ultra vires. In Alvarez, supra, Rule 19 of the Immigration Appeal Board Rules [SOR/67-559] stipulated that requests to the Board to give reasons for its disposition of the appeal shall be filed with the Registrar within 30 days of the date of the disposition of the appeal. The Federal Court of Appeal found it ultra vires the Immigration Appeal Board Rules, on the ground that it was inconsistent with subsection 7(3) of the Act. Mr. Justice Le Dain reasoned and concluded as follows, at page 151:
Rule 19, quoted above, purports to have been made in the exercise of this authority. It must be conceded that the Rule is broadly speaking one "governing the activities of the Board and the practice and procedure in relation to appeals", but in my opinion it is one that is inconsistent with section 7(3) in so far as it limits the time within which a request for reasons may be made, and as such is ultra vires . It abridges the right which is conferred in unqualified terms by section 7(3). Rule 19 suggests that a request for reasons may be made only after the disposition of an appeal. This in itself is clearly inconsistent with section 7(3), which implies no such limitation. Had Parliament intended that there be a time limit within which a request for reasons may be made it would presumably have expressly authorized the Board to fix such a limit as it did in section 19 of the Act with respect to notice of appeal. It may well be desirable, from a practical point of view, that there be such a time limit, but the power to fix one cannot in my opinion be found in the terms of section 8(1).
In my view, Alvarez, supra, should be distinguished from the present case. In Alvarez, supra, the 30-day deadline for requesting reasons from the Board provided under the Immigration and Appeal Board Rules limited the right to request reasons pursuant to subsection 7(3) of the Immigration Appeal Board Act [R.S.C. 1970, c. I-3] . Subsection 7(3) stipulated that "The Board may, and at the request of either of the parties to the appeal shall, give reasons for its disposition of the appeal". In this sense, section 19 limited the parties' right to request reasons conferred in unqualified terms by subsection 7(3) of the enabling statute.
In the present case, the obligation to file the patent list together with the submission for a NOC under subsection 4(3), and the 30-day deadline under subsection 4(4) of the Regulations do not limit or restrict any right conferred by the enabling statute as it did in Alvarez, supra. Also, in this case the right provided under the Regulations to file patent lists is limited and qualified by the time limits, where in Alvarez, supra, the right provided under the enabling statute was unqualified. In my view, the time limits under subsections 4(3) and 4(4) of the Regulations does not take away or limit any right under the Patent Act or otherwise. Where the legislation creates no entitlement to a benefit there can be no conflict: Canada (Attorney General) v. Young, [1989] 3 F.C. 647 (C.A.), at pages 664-665.
The Regulations provide "first persons" with a qualified right to register a patent list within time limits. In my view, this is consistent with and supports the attainment of the competing objectives of the Patent Act to strengthen the position and rights of patentees, while protecting the interests of Canadian consumers in ensuring the availability of reasonably priced medicine. These competing objectives are achieved by means of the right to register patent lists and the time limits which work together in preserving a balance sought by the legislator. The registration of a patent list extends patent protection to reward innovation and encourages research and development, while the time limits prevent extended monopolies from precluding generics from entering the market and ensure access to reasonably priced medicine.
Further, notwithstanding the fact that I am unable to find that the time limits for the registration of patent lists constitute distinctions or prohibitions as that considered in Greenbaum, supra, and Dumont, supra, I find that the qualified right to register a patent list within time limits is clearly in pursuance of and connected with the prevention of patent infringement. I cannot help but disagree that the time limits actually affect its purpose to the extent that it can be said that the qualified right to file a patent list within time limits is contrary to the purpose of the Regulations or the Patent Act. And if I were wrong in determining that the time limits are in pursuance of or connected to the objects of the Regulations and the Patent Act, I find that the authority to adopt strict time limits can be inferred by necessary inference or implicit delegation. In ICN Pharmaceuticals, supra, the Court outlined the objectives of the patent scheme. In my view, the time limits are necessary to give effect to the intention of the legislator to strengthen the position of patentees and to ensure the availability of reasonably priced medicine for Canadian consumers. Without such time limits, "first persons" could extend their monopoly and the balance sought by the legislator would not be preserved.
In light of my finding that the Regulations are intra vires, I must also find that the order of mandamus directing the Minister to register Fournier's patent lists should not issue. Fournier failed to file its patent lists within the time limits provided under the Regulations. The patents described in the patent lists were granted in October 1993 and the patent lists were submitted in April 1997. Further, the Regulations do not confer upon the Minister any discretion to accept patent lists submitted outside the time frame allotted to do so. Therefore, there was no duty owed to Fournier to accept and register the patent lists, and mandamus should not issue.
CONCLUSION
I conclude that Fournier's application for an order declaring the subsections 4(3) and 4(4) of the Regulations are ultra vires and for an order of mandamus directing the Minister to register Fournier's patent lists is dismissed. I am satisfied that the Governor in Council had ample authority and discretion to adopt the said subsections and that the subsections are in pursuance of or in conformity with the specific purpose of the Regulations and the general objects of the Patent Act. In this respect, I was not persuaded by Fournier's arguments and in my view, the evidence adduced by way of affidavit by Fournier does not provide a basis to find the Regulations ultra vires or otherwise unlawful.
Thus, the application is dismissed with costs in favour of the respondents.