The ONSC Dismisses Apotex’s Attempt to Revive the Promise Doctrine Under the Guise of Fraud

The ONSC Dismisses Apotex’s Attempt to Revive the Promise Doctrine Under the Guise of Fraud

Apotex Inc v Abbott Laboratories, Limited, 2018 ONSC 5199

In this decision, the Ontario Superior Court of Justice (“ONSC”) refused Apotex Inc’s (“Apotex”) attempt to revive the Promise Doctrine under the guise of insufficiency and fraud. The ONSC noted that the Federal Court (“FC”) had already addressed the issue, finding that the Promise Doctrine is dead once and for all – parties cannot change what was a promise-based pleading to an invalidity pleading under s. 27 or s. 53 of the Patent Act (“the Act”). [28] Since Apotex expressly admitted that its motion was brought merely to recycle the Promise Doctrine allegations, the ONSC dismissed Apotex’s request. [41, 28]

Background

This motion was brought in the context of an action between Apotex and Abbott Laboratories Limited (“Abbott”), Takeda Pharmaceuticals Company Limited and Takeda Pharmaceuticals America, Inc (collectively “Takeda”). Abbott and Takeda are the inventors of patented medicine Prevacid® (also known as Lansoprazole) and hold its patent rights. [1] A damage trial is set to commence on January 14, 2019, in which the ONSC will have to determine the validity of certain patents, and whether Apotex infringed those patents in its manufacture of Apolansoprazole. [2-3]

Apotex was seeking leave to file: (i) a Fresh as Amended Reply and Defence to Counterclaim to the Amended Amended Statement of Defence and Counterclaim of Abbott; and (ii) a Fresh as Amended Reply and Defence to Counterclaim to the Amended Amended Statement of Defence and Counterclaim of Takeda. [5]

Apotex sought the amendments to “reflect the substantive changes to patent law”, namely the Supreme Court’s (“SCC”) decision in AstraZeneca Canada Inc v Apotex Inc, 2017 SCC 36 [AstraZeneca], which put an end to the “promise of the patent doctrine”, also known as the Promise Doctrine. [6] Apotex argued that the SCC kept the doctrine alive “by determining that any false or unfulfilled promises in a patent specification should instead be addressed when assessing other established grounds of invalidity.” Apotex sought to amend its pleadings for “over-breadth and insufficiency”, contrary to s. 27 of the Act, and “the making of [willfully] misleading statements” in the petition or specification, contrary to s. 53 of the Act. [8]

Abbott and Takeda opposed the motion, claiming it is not legally tenable. [11] Abbott and Takeda argued that Apotex is “cloaking what are essentially untenable ‘Promise Doctrine’ allegations with a new appearance under newly asserted grounds” of patent invalidity under either or both ss. 27 and 53 of the Act. [15-16] Abbott and Takeda also contend that since AstraZeneca was decided, the FC has specifically rejected the efforts of generic drug manufacturers to advance Promise Doctrine allegations under the guise of insufficiency. [17] Apotex admitted there were no changes to the underlying facts, but while its allegations were no longer capable of supporting claims of patent invalidity under the Promise Doctrine, they may nevertheless support new claims of patent invalidity under ss. 27 and 53 of the Act. [18-19]

“Whack the zombies dead once and for all”

In this motion, the ONSC had to determine if, while the SCC abolished the Promise Doctrine, it intended for promised based claims of patent invalidity to be brought under ss. 27 and 53 of the Act. [22] The ONSC noted that there is superficial attraction to Apotex’s position, based on the “arguably permissive” language in AstraZeneca and Eli Lilly Canada Inc v Teva Canada Limited, 2018 FCA 53. The ONSC finds however that “[h]aving specifically overruled the Promise Doctrine as bad law, it is not evident and indeed is counterintuitive that the Supreme Court intended that promise based arguments would simply be imported into claims of overbreadth or misrepresentation under those sections […] it does not logically make sense that having pronounced the Promise Doctrine ‘dead’ once and for all, the Supreme Court would have had in mind having it resurrected in another guise.” [27, 29]

The ONSC accepted that a cause of action under s. 53 of the Act could survive even if the misrepresentation happens to be a “promise”, as long as the necessary elements of that cause of action are covered. [32] However, “a mere repackaging of a Promise Doctrine based pleading will not meet the factual requirements of a s. 53 breach.” [33] Fraud allegations are serious and need to satisfy a higher threshold than other pleadings – the elements of the allegation must be strictly pleaded. [34-35] Furthermore, the FC jurisprudence has specifically recognized the gravity of s. 53 allegations, and that a misrepresentation made under this section must have been “willfully made for the purpose of misleading.” [36] Since AstraZeneca, the FC consistently rejected attempts to recast Promise Doctrine allegations as s. 53 fraud allegations. [38-40] The ONSC found Apotex’s s. 53 fraud allegations deficient, because Apotex merely recycled its Promise Doctrine allegations, and because it submitted inconsistent arguments in its amendment. [41, 43] In light of the reasons summarized above, the ONSC dismissed Apotex’s motion for leave to plead the Contested Amendments. [48]

Commentary

After the SCC’s decision in AstraZeneca, there was some uncertainty around promise-like arguments made through s. 53 of the Act. Along with the FC jurisprudence, this decision confirms that Promise Doctrine arguments may not be repackaged under insufficiency and fraud arguments. [27, 33] Nonetheless, the ONSC did mention, as pointed out above, that if a party pleads a cause properly, covering all the necessary elements of that cause of action under the provision, then the pleading could still survive even if the misrepresentation happens to be what someone might call a “promise”. [32]

patent rules