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Sandoz’s Choice: Extend the Statutory Stay and Adjourn Trial or Forego New Invalidity Defences

The Federal Court granted Sandoz Canada Inc. leave to amend its Statement of Defence in an action under the Patented Medicines (Notice of Compliance) Regulations brought by Bayer Inc. and Adverio Pharma GMBH, but only if the trial scheduled for September 25, 2023 was adjourned and the 24-month stay under the Regulations was extended by the length of the adjournment.

Context: Sandoz initially served a Notice of Allegation that only advanced a non-infringement defence and a Gillette defence. No additional defences were advanced in Sandoz’s Statement of Defence.

In June 2022, following a change of solicitors, Sandoz first advised and then moved to amend its Statement of Defence. Bayer vigorously opposed almost all amendments, including obviousness, insufficiency, lack of utility, claims broader than any invention disclosed, and ineligibility for listing.

At the motion, the Court found that Sandoz bore the burden of demonstrating that Bayer would not be prejudiced by the proposed amendments, but Sandoz had failed to file evidence from which a reasonable inference could be drawn that Bayer was already aware of the potential new allegations or had already marshalled information and documents relating thereto.

Bayer urged the Court to find Sandoz could and should have been aware of all facts giving rise to the new defences at the time it served its NOA, citing Sunovion Pharmaceuticals Canada Inc v Taro Pharmaceuticals Inc, 2021 FCA 113. Associate Justice Tabib rejected this argument, finding “nothing on the record to suggest that Sandoz was in fact aware of the invalidity allegations and that it withheld them with a view to gaining an advantage in a subsequent section 8 claim.”

Nonetheless, the Court considered “the strategic and tactical gains that a second person may seek to obtain from the late introduction of invalidity defences, by splitting its case and disrupting its opponents’ litigation schedule.” Associate Justice Tabib therefore proposed remedying any procedural or substantial prejudice by requiring an adjournment of the trial and a commensurate extension of the 24-month statutory stay if the contested amendments were made.  

The Court also noted its question to the parties whether ineligibility for listing could be raised as a defence outside the context of a motion under section 6.07 of the Regulations. While Associate Justice Tabib did not answer the question, she assumed ineligibility was a proper defense for the purpose of the motion. She also precluded Bayer from moving to strike that defence if Sandoz made that amendment, because Bayer had not argued this issue during the motion.

A copy of the decision can be found here.

Update: Sandoz filed an Amended Statement of Defence on August 17, 2022 that included only one of the contested amendments (a “claims broader” argument). Nonetheless, the trial date of September 25, 2023 was confirmed in a scheduling Order dated September 28, 2022, and the statutory stay was not extended.