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Birds of a Feather Will Not Flock Together: Section 6.02 of PM(NOC) Regulations Prohibits Trials of Common Issues Absent Consent

The Federal Court of Appeal set aside a Federal Court order requiring a trial of common issues from two separate actions initiated by Bayer against four pharmaceutical generics companies. It found that a trial of common issues cannot be ordered under section 6.02 of the PM(NOC) Regulations without consent of all implicated parties.

Bayer, the manufacturer of a patented medicine containing rivaroxaban, launched separate actions under the Regulations in late 2018 against generics Teva and Apotex, then in early 2019 against Taro and Sandoz in response to Notices of Allegation concerning the same patents. The Federal Court’s decision requiring a hearing of validity and claim construction issues common to the four actions together concluded that it was in the interests of justice to avoid inconsistent rulings on similar issues.

Section 6.02 of the Regulations provides that “No action may be joined to a given action brought under subsection 6(1) during any period during which the Minister shall not issue a notice of compliance because of paragraph 7(1)(d)…” [emphasis added]. However, Rule 105 of the Federal Courts Rules states that “The Court may order, in respect of two or more proceedings, (a) that they be consolidated, heard together or heard one immediately after the other…” [emphasis added]. The main issue was whether the term “joined” in section 6.02 carried the same meaning as the term “consolidated” employed in Rule 105.

The Court of Appeal considered the Regulatory Impact Analysis Statement (RIAS), which sets out the Government’s patent policy underlying the Regulations and explains the prohibition in section 6.02 as being “necessary to restrict the number of issues in dispute to facilitate resolution within 24 months. It is also necessary to avoid further complicating the assessment of damages arising from delayed market entry”.

The Court considered the practical issues that would arise in holding trials of common issues for subsection 6(1) proceedings, and noted that Rule 102 (“Multiple persons joined as parties”), which is found under the common heading “Joinder” with Rule 105, requires parties to be represented by the same counsel. The Court found:

[…] consolidation of subsection 6(1) actions under the Regulations is not possible, for all intents and purposes, without common counsel, because the practical difficulties that it would occasion are utterly prohibitive of such an arrangement. It would simply never happen. In other words, where there are multiple proceedings pursuant to subsection 6(1) and the parties are represented by different lawyers, consolidation will never be the means taken by the Court to advance those proceedings.

[…] if, as the Prothonotary found, the word “joined” in section 6.02 of the Regulations is merely coextensive with the word “consolidated” in Rule 105, and has no broader meaning, then, in my view, the section 6.02 prohibition is completely useless.

In support of its conclusion, the Court pointed out that the English text read alongside the French text of section 6.02 supports a broader prohibition encompassing all forms of joinder. Based on the French translation of the word “join” as “réunir”, it cannot be limited to formal consolidation of two proceedings into a single proceeding. The Court further noted that “consolidate” is translated as either “réunir” or “joindre” in the French Rules, and that the English definition of “consolidate” does not “necessarily entail, with respect to the constituent components of a thing that has been consolidated, the loss of identity and wholesale assimilation”.

The Court distinguished the underlying objective of section 6.02 from that of Rule 105, in concluding:

[…] in my view, the hearing together of the four trials on the common issues is counter to the prohibition found in section 6.02. More particularly, I have no doubt that ordering that four cases be tried together on the issue of invalidity is counter to the raison d’être of the prohibition in that, as the Judge himself recognized at paragraph 35 of his Reasons, “[a]dding two defendants to the trial of the common issues will likely add some time to that trial.” Needless to say, the effect of having the four actions heard together on the common issue will not only lengthen that trial but will inevitably delay the appellants’ trials in regard to the infringement issue. More particularly, Teva’s trial (Teva being the first generic to serve its NOA on Bayer) with regard to infringement will only proceed in October 2020, i.e. a number of weeks after the completion of the trial of the common issues. Thus, I am satisfied that the impugned Order runs afoul of the prohibition in section 6.02.

The Federal Court decision was set aside and costs awarded to the appellants.

A copy of the Court of Appeal’s decision can be found here.