Judgments

[1997] 1 F.C. 32

A-173-96 (T-2541-95)

ICN Pharmaceuticals, Inc. and ICN Canada Limited (Appellants) (Applicants)

v.

The Staff of the Patented Medicine Prices Review Board, the Attorney General of Canada and The Minister of Consumer and Corporate Affairs (Respondents) (Respondents)

and

The Patented Medicine Prices Review Board (Respondent) (Intervenor)

Indexed as: ICN Pharmaceuticals, Inc. v. Canada (Staff of the Patented Medicine Prices Review Board) (C.A.)

Court of Appeal, Stone and Robertson JJ.A. and Gray D.J.—Toronto, May 21; Ottawa, August 7, 1996.

Patents — Appeal from dismissal of application for judicial review of Patented Medicine Prices Review Board decision Board having jurisdiction to determine Canadian prices charged by ICN for Virazole excessive — Ribavirin only active ingredient in Virazole — ICN holding three patents pertaining to ribavirin — Patent Act, s. 83(1) providing where Board finding patentee of invention pertaining to medicine selling medicine in Canada at excessive price, may order patentee to reduce price — S. 79(2) providing invention pertaining to medicine if intended or capable of being used for medicine or for preparation or production of medicine — S. 83(1) conditions precedent for Board’s jurisdiction met: (1) ICN patentee of inventions; (2) inventions pertaining to a medicine; (3) ICN selling the medicine in Canada — Subrequirements of second condition: pharmaceutical end product qualifying as medicine; rational connection between invention, medicine — Having regard to use in treatment of severe respiratory infections in infants, children, ribavirin/Virazole medicine — No need to go beyond face of patent to establish connection — Broad language in ss. 83(1), 79(2) indicating connection could be of merest slender thread — Chemical formulation of ribavirin/Virazole same — Connection established — Board having jurisdiction to examine pricing of Virazole until disclaimer filed.

Practice — Parties — Standing — Patent Act authorizing Patented Medicine Prices Review Board to hire staff — Act not conferring independent legal status on Board staff, unlike party status conferred on federal, provincial health ministers — Board de facto deciding to operate independently of staff, who have assumed responsibility for pursuing cases — Board required to act as both prosecutor, judge to fulfil legislated mandate.

This was an appeal from the dismissal of an application for judicial review of the Patented Medicine Prices Review Board decision that it had jurisdiction to determine that the Canadian prices charged by ICN for its medicine Virazole were excessive. Patent Act, subsection 83(1) provides that where the Board finds that the patentee of an invention pertaining to a medicine is selling the medicine in Canada at an excessive price, it may order the patentee to reduce the price. Subsection 79(2) provides that an invention pertains to a medicine if it is intended or capable of being used for medicine or for the preparation or production of medicine.

The only active ingredient in Virazole is “ribavirin”. Virazole is used to treat severe respiratory infections in infants and children. ICN held three Canadian patents pertaining to ribavirin. The first two, which had expired prior to the hearing before the Board, disclosed processes for the production of ribavirin. ICN continues to manufacture ribavirin based on one of the processes outlined in the first patent. The process described in the second patent is not suitable for producing sufficient quantities of ribavirin for pharmaceutical applications. The Board issued a notice of hearing to determine whether ICN, while patentee of the first two patents, had sold Virazole at excessive prices, and if so, to determine what remedial action should be taken. ICN brought a motion to determine whether the Board had jurisdiction to proceed with the hearing. The day before the hearing of that motion, the Board learned for the first time of the existence of the third patent, which disclosed a method of using ribavirin for the treatment of various viral diseases. ICN had previously denied the existence of any other patents relating to Virazole. The notice of hearing was amended to include the third patent. The Board concluded that it possessed the requisite jurisdiction. Subsequently ICN filed a disclaimer in connection with the third patent, disclaiming the use for which Virazole is approved for sale in Canada. Subsection 48(1) allows the filing of a disclaimer where, by mistake or inadvertence, a patent specification has been drafted too broadly and provided it is not made with the intent of defrauding the public. Subsection 48(4) states “no disclaimer affects any action pending at the time when it is made”. Counsel for the Board advised ICN that the disclaimer would not deprive the Board of jurisdiction. ICN sought judicial review of the Board’s decision and brought an originating notice of motion for a declaration as to the effect of the disclaimer. The Trial Judge held that: (i) the word “capable” in subsection 79(2) of the Act must be given its plain and ordinary meaning and, accordingly, the second process patent was capable of being used for the preparation or production of the medicine, ribavirin; (ii) the word “medicine” in subsection 79(2) was not limited to drugs for which a notice of compliance had issued and, accordingly, the third patent was intended for the preparation or production of the medicine ribavirin; and (iii) the Board’s jurisdiction was not terminated by the disclaimer because the invention described by the third patent continued to pertain to ribavirin within the meaning of subsection 79(2).

The issues were: (1) whether the Board had the jurisdiction to determine whether the Canadian prices charged by the appellants for its medicine “Virazole” were excessive; (2) whether the disclaimer was invalid; and (3) whether the Board Staff had independent legal status.

Held, the appeal should be dismissed.

All three conditions precedent in subsection 83(1) for the Board to acquire jurisdiction were satisfied: (1) ICN was a patentee of two inventions; (2) those inventions pertained to a medicine; (3) ICN was selling the medicine in Canada. As to the first condition, where a patent has expired, the Board retains jurisdiction to determine whether excessive prices were being charged for the medicine prior to the expiration date. The second condition is composed of two subrequirements: (i) the pharmaceutical end product, whether ribavirin or Virazole, must qualify as a medicine and, (ii) there must be a rational connection between the invention and the pharmaceutical end product, i.e. between the invention and the medicine being sold in Canada. As to the first subrequirement, the word “medicine” in subsection 83(1) should be interpreted in the same manner as it was under the old section 39, i.e. broadly and in its ordinary sense. The interpretation of the word “medicine” and the phrase “intended or capable of being used for” as used in the NOC Regulations has no relevance to their interpretation under subsections 79(2) and 83(1) of the Act. The NOC Regulations are part of a separate regime with a distinct purpose. Consequently, the term medicine cannot be restricted to products for which a notice of compliance has been issued. Having regard to its use in the treatment of severe respiratory infections in infants and children, ribavirin/Virazole is a medicine as that term is used in subsection 83(1). The two patents in issue pertain to a substance which is a medicine. The requirement that there be a rational connection between the invention outlined in a patent and the medicine which is being sold in Canada was necessary to establish Parliament’s constitutional authority to enact price control legislation. Parliament’s competence to legislate in this sphere arises from its jurisdiction to legislate with respect to patents. The broad language in subsections 83(1) and 79(2) clearly evinces Parliament’s intention that it is unnecessary to go beyond the face of a patent when establishing the required nexus, a conclusion which is reinforced by the fact that the Board’s statutory mandate was limited to the pricing of patented medicines. Its members have neither the experience nor the expertise to engage in the task of patent construction. Furthermore, a narrow rational connection test based on patent construction does not recognize that the matter of patent or claims construction is a question of law to be decided by the Court. As the Board is charged with both the prosecution (through its staff) and adjudication of each case as opposed to being a neutral arbiter of evidence presented by two opposing parties, such a test would be impractical. It also fails to appreciate that the task of construing the claims of a patent cannot be confused with the task of assessing its validity. Because of the broad scope of the terms “pertaining to” and “pertains to” in subsections 83(1) and 79(2), the nexus can be one of the merest slender thread. Once it is found that it is impermissible to go beyond the face of the patent in establishing the required nexus, nothing turned on whether the medicine is described as ribavirin as opposed to Virazole. The patents are for the production and use of ribavirin. Ribavirin is clearly intended or capable of being used for, and as, a medicine, regardless of what the end product is called. There is no substantive difference between Virazole and ribavirin. The chemical formulation outlined in the patents and the names ribavirin and Virazole were synonymous and interchangeable, thus establishing the nexus between the second and third patents and the medicine sold in Canada, i.e. ribavirin was the rational connection.

As to the motion pertaining to the validity of the disclaimer, it would have been preferable had ICN asked the Board to make a formal ruling rather than accepting the opinion of Board counsel. Pursuant to Federal Court Act, section 18.1 an application for judicial review envisages the review of a decision, order, act or omission of a federal board or tribunal. The Court had reservations as to whether the Trial Judge should have entertained the judicial review application with respect to the disclaimer issue. As the evidence lead to the conclusion that no mistake or inadvertence existed, but no such finding of fact was made below, the Court refused to rule on whether subsection 48(1) was applicable. Subsection 48(4) does not render disclaimers invalid, but merely confirms that a disclaimer cannot have retroactive effect on proceedings previously begun. The Board maintained jurisdiction to examine the pricing of Virazole until the date the disclaimer was filed, but the disclaimer will have the prospective effect of terminating the Board’s jurisdiction. Simply because the patent did not pertain to the use for which a medicine is presently being sold in Canada did not mean that its existence will not have a deterrent effect on potential competitors. And it is that potential deterrent effect which is the basis of the Board’s jurisdiction.

ICN’s failure to reveal the existence of the ’265 patent had no impact on the jurisdictional issue, but went to the bona fides of ICN’s conduct. Pharmaceutical manufacturers run the risk of undermining their credibility, and that of their witnesses, before the Board, not to mention running afoul of their statutory obligations under the Act and its Regulations, when they make a unilateral determination as to the relevance of a patent and its effect on the Board’s jurisdiction. Adverse findings of credibility by the Board will not easily be displaced upon judicial review or appeal.

The Patent Act authorizes the Board to hire necessary staff. It does not give the so-called Board Staff legal status distinct from that of the Board, unlike the party status conferred on federal and provincial ministers of health. The Board has de facto decided to operate independently of its staff who have assumed responsibility for pursuing cases. The Board’ś enabling legislation did not, however, accord the Board Staff a legal status independent of that of the Board. The Board is required to act as both prosecutor and judge in order to fulfil its legislated mandate.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

An Act to amend the Patent Act and to provide for certain matters in relation thereto, S.C. 1987, c. 41.

An Act to amend the Patent Act, the Trade Marks Act and the Food and Drugs Act, S.C. 1968-69, c. 49, s. 41(4).

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).

Food and Drugs Act, R.S.C., 1985, c, F-27.

Food and Drug Regulations, C.R.C., c. 870.

Patent Act, R.S.C., 1985, c. P-4, ss. 39(4), 44 (as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 16), 48(1) (as am. idem, s. 17), (4), 79 (as enacted by S.C. 1993, c. 2, s. 7), 80 (as enacted idem), 81 (as enacted idem), 82 (as enacted idem), 83 (as enacted idem), 84 (as enacted idem), 85 (as enacted idem), 86 (as enacted idem; S.C. 1995, c. 1, s. 62), 87 (as enacted by S.C. 1993, c. 2, s. 7; 1995, c. 1, s. 62), 88 (as enacted by S.C. 1993, c. 2, s. 7), 89 (as enacted idem), 90 (as enacted idem), 91 (as enacted idem), 92 (as enacted idem), 93 (as enacted idem), 94 (as enacted idem), 95 (as enacted idem), 96 (as enacted idem), 97 (as enacted idem), 98 (as enacted idem), 99 (as enacted idem), 100 (as enacted idem), 101 (as enacted idem), 102 (as enacted idem), 103 (as enacted idem).

Patent Act Amendment Act, 1992, S.C. 1993, c. 2.

Patent Act, The, S.C. 1923, c. 23, s. 17.

Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, ss. 2 “medicine”, 4(2)(a).

Patented Medicines Regulations, SOR/88-474.

Public Service Employment Act, R.S.C., 1985, c. P-33.

CASES JUDICIALLY CONSIDERED

APPLIED:

Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557; [1994] 7 W.W.R. 1; (1994), 92 B.C.L.R. (2d) 145; 4 C.C.L.S. 117; Eli Lilly and Co. v. Apotex Inc. (1995), 63 C.P.R. (3d) 245 (F.C.T.D.); affd Eli Lilly and Co. v. Apotex Inc., [1996] F.C.J. No. 638 (C.A.) (QL); Dableh v. Ontario Hydro, [1996] 3 F.C. 751(C.A.).

CONSIDERED:

Genentech Canada Inc. (Re) (1992), 44 C.P.R. (3d) 317 (P.M.P.R.B.); Can. Celanese Ltd. v. B.V.D. Co., [1939] 2 D.L.R. 289; (1939), 56 R.P.C. 122; [1939] 1 All E.R. 140 (P.C.).

REFERRED TO:

Wellcome Foundation Ltd. v. Apotex Inc. (1991), 39 C.P.R. (3d) 289; 47 F.T.R. 81 (F.C.T.D.); revd Wellcome Foundation Ltd. v. Apotex Inc. (1995), 60 C.P.R. (3d) 135; 187 N.R. 284 (F.C.A.); Parke, Davis & Co. v. Fine Chemicals of Canada Ltd., [1959] S.C.R. 219; (1959), 17 D.L.R. (2d) 153; 30 C.P.R. 59; 18 Fox Pat. C. 125; Merck & Co. Inc. v. S. & U Chemicals Ltd., Attorney General of Canada, Intervenant (1971), 65 C.P.R. 99 (Ex. Ct.); Novocol Chemical Mfg. Co. of Canada Ltd. v. Aktiebolaget Astra, Apotekarnes Kemiska Fabriker (1963), 41 C.P.R. 117; 24 Fox Pat. C. 172 (Pat. Comm.); affd Aktiebolaget Astra, Apotekarnes Kemiska Fabriker v. Novocol Chemical Mfg. Co. of Canada Ltd., [1964] Ex. C.R. 955; (1964), 45 D.L.R. (2d) 662; 44 C.P.R. 15; 27 Fox Pat. C. 156; Imperial Chemical Industries Ltd. v. The Commissioner of Patents, [1967] 1 Ex. C.R. 57; (1966), 51 C.P.R. 102; 33 Fox Pat. C. 153; Manitoba Society of Seniors Inc. v. Canada (Attorney-General) (1991), 77 D.L.R. (4th) 485; 70 Man. R. (2d) 141; 35 C.P.R. (3d) 66 (Q.B.); affd Manitoba Society of Seniors Inc. v. Canada (Attorney-General) (1992), 96 D.L.R. (4th) 606; 81 Man. R. (2d) 159; 45 C.P.R. (3d) 194; 30 W.A.C. 159 (C.A.); Northern Elec. Co. Ltd. et al. v. Brown’s Theatres Ltd., [1940] Ex. C.R. 36; [1939] 3 D.L.R. 729; (1939), 1 C.P.R. 180; affd Northern Electric Co. Ltd. v. Brown’s Theatres Ltd., [1941] S.C.R. 224; [1941] 2 D.L.R. 105; (1940), 1 C.P.R. 203; 2 Fox Pat. C. 22; TRW Inc. v. Walbar of Canada Inc. (1991), 39 C.P.R. (3d) 176; 132 N.R. 161 (F.C.A.); Monsanto Company v. Commissioner of Patents, [1979] 2 S.C.R. 1108; (1979), 100 D.L.R. (3d) 385; 42 C.P.R. (2d) 161; 28 N.R. 181; Monsanto Inc. v. Commissioner of Patents, [1976] 2 F.C. 476 (1976), 28 C.P.R. (2d) 118; 13 N.R. 56 (C.A.); Trubenizing Process Corporation v. John Forsyth Ltd., [1942] O.R. 271; [1942] 2 D.L.R. 539; (1941), 2 C.P.R. 89; 2 Fox Pat. C. 128 (C.A.); Eli Lilly and Co. v. Nu-Pharm Inc., [1997] 1 F.C. 3(C.A.).

AUTHORS CITED

Canada. Commission of Inquiry on the Pharmaceutical Industry. The Report of the Commission of Inquiry on the Pharmaceutical Industry. Toronto: Minister of Supply and Services, 1985. (Commissioner: H. C. Eastman).

Fox, Harold G. The Canadian Law and Practice Relating to Letters Patent for Inventions, 4th ed. Toronto: Carswell, 1969.

Gallini, N. T. and M. Trebilcock. “Intellectual Property Rights and Competition Policy: An Overview of the Legal and Economic Issues”, April 1996. (Not yet published).

Government of Canada News Release, NR-10770/92-21.

Horton, J. “Pharmaceuticals, Patents and Bill C-91: The Historical Perspective” (1993), 10 Can. Intell. Prop. Rev. 145.

Kuharchuk, T. N. “Compulsory Licensing of Medicines in Canada: Bill C-91” (1993), 17 Law Now 1.

Marusyk, R. and M. Swain. “Price Control of Patented Medicines in Canada” (1993), 10 Can. Intell. Prop. Rev. 159.

Mathewson, F. et al. The Law and Economics of Competition Policy, Vancouver: The Fraser Institute, 1990.

Takach, G. F. Patents: A Canadian Compendium of Law and Practice. Edmonton: Juriliber, 1993.

APPEAL from Trial Division judgment (ICN Pharmaceuticals, Inc. v. Canada (Patented Medicine Prices Review Board), [1996] F.C.J. No. 206 (T.D.) (QL)) holding that the Patented Medicine Prices Review Board had the requisite jurisdiction to determine whether Canadian prices charged by the appellants for its medicine “Virazole” were excessive. Appeal dismissed.

COUNSEL:

Alfred S. Schorr and Joseph I. Etigson for appellants (applicants).

Donald B. Houston and Michael Meredith for respondents (respondents).

Gordon K. Cameron for intervenor (respondent).

SOLICITORS:

Alfred S. Schorr, Markham, Ontario, and Hughes, Etigson, Thornhill, Ontario, for appellants (applicants).

Stikeman, Elliott, Toronto, for respondents (respondents).

Blake, Cassels & Graydon, Ottawa, for intervenor (respondent).

The following are the reasons for judgment rendered in English by

Robertson J.A.: This appeal is the first of its kind and, most likely, not the last. It stems from a judgment of the Trial Division [[1996] F.C.J. No. 206 (QL)] dismissing an application for judicial review of a decision rendered by the Patented Medicine Prices Review Board (the Board) dated November 30, 1995. Narrowly stated, the issue is whether the Board possesses the jurisdiction to determine whether the Canadian prices charged by the appellants (ICN), for its medicine “Virazole”, are excessive. In turn, the answer to that jurisdictional question hinges largely on the proper construction of subsections 83(1) [as enacted by S.C. 1993, c. 2, s. 7] and 79(2) [as enacted idem ] of the Patent Act, R.S.C., 1985, c. P-4 as amended (the Act) which read as follows:

79. …

(2) For the purposes of subsection (1) and sections 80 to 101, an invention pertains to a medicine if the invention is intended or capable of being used for medicine or for the preparation or production of medicine.

…

83. (1) Where the Board finds that a patentee of an invention pertaining to a medicine is selling the medicine in any market in Canada at a price that, in the Board’s opinion, is excessive, the Board may, by order, direct the patentee to cause the maximum price at which the patentee sells the medicine in that market to be reduced to such level as the Board considers not to be excessive and as is specified in the order.

ICN maintains that both the Board and the Trial Judge erred in concluding that the Board possesses the requisite jurisdiction. It is common ground, however, that the proper standard of appellate review is correctness. That conclusion, in my opinion, accords with the principles established by the Supreme Court of Canada in Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557. My analysis begins with a brief historical overview of the legislative schemes by which Parliament has sought to ensure the reasonableness of prices paid for “patented medicines” being sold in Canada.

I           LEGISLATIVE OVERVIEW

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.

The enactment of The Patent Act, S.C. 1923, c. 23, section 17 introduced for the first time references to pharmaceuticals and provided for the compulsory licensing for the manufacture, use and sale of patented processes for food and drugs. Patentees were to be compensated for the ensuing reduction in market share by the payment of a royalty fee by the licensee. The legislation did not, however, allow for compulsory licensees to import patented substances. This had the effect of limiting the usefulness of compulsory licences, as witnessed by the few applications filed prior to 1969: see The Report of the Commission of Inquiry on the Pharmaceutical Industry, H. C. Eastman Commissioner, (Ottawa: Minister of Supply and Services Canada, 1985), at pages 1-2 (the Eastman Report) and J. Horton, “Pharmaceuticals, Patents and Bill C-91: The Historical Perspective” (1993), 10 Can. Intell. Prop. Rev. 145, at page 146 (Horton).

In 1969, the Patent Act was amended (S.C. 1968-69, c. 49 [An Act to amend the Patent Act, the Trade Marks Act and the Food and Drugs Act]). The impetus for the revision was Parliament’s belief that Canadian drug prices were too high, at least when compared to those being paid in other countries: see Eastman Report, at page 2; and Horton, at page 146. The most critical amendment was, arguably, the addition of subsection 41(4) (later subsection 39(4) in the R.S.C., 1985 consolidation, hereinafter referred to as subsection 39(4) to conform with the Trial Judge’s reasons). That subsection extended the compulsory licensing system to include the right to import ingredients, and through judicial interpretation extended the licensing provisions to embrace chemical intermediates. Chemical intermediates are substances intended for, and necessary to, the synthesis and production of medicines, but which are not medicines in and of themselves: see generally Wellcome Foundation Ltd. v. Apotex Inc. (1991), 39 C.P.R. (3d) 289 (F.C.T.D.); Parke, Davis & Co. v. Fine Chemicals of Canada Ltd., [1959] S.C.R. 219; and Merck & Co. Inc. v. S & U Chemicals Ltd., Attorney General of Canada, Intervenant (1971), 65 C.P.R. 99 (Ex. Ct.). Moreover, under the amendments, a compulsory licence could not be refused unless the Commissioner of Patents found a “good reason” not to grant the licence. Apparently, refusals were rare: see Horton, at page 147; and T. N. Kuharchuk, “Compulsory Licensing of Medicines in Canada: Bill C-91” (1993), 17 Law Now 16, at page 17 (Kuharchuk). As a result, applications for compulsory licences increased greatly: Horton, at page 146. The issuance of compulsory licences had the effect of stimulating competition between licensors and licensees, during what would otherwise have been the patentee’s monopoly period. It is generally accepted that the compulsory licensing system eventually led to the growth of the generic drug industry in Canada: see G. F. Takach, Patents: A Canadian Compendium of Law and Practice (Edmonton: Juriliber, 1993), at page 114. Their presence in the marketplace helped to keep drug prices down by fostering competition: Eastman Report, at page xviii.

By 1987, the Government questioned the value of compulsory licensing as a means of ensuring the reasonableness of Canadian drug prices. Parliament adopted the position that the compulsory licensing system had encroached too far into the patentees’ sphere of exclusivity, resulting in a decrease in research and development of new medicines in Canada. Generic companies could jump into the market almost immediately with a cheaper and comparable drug. Furthermore, the 4% royalty fee typically awarded was considered insufficient compensation by patent holders. To redress this situation, and to increase the incentive for pharmaceutical research and development, the Patent Act was amended: An Act to amend the Patent Act and to provide for certain matters in relation thereto, S.C. 1987, c. 41; see R. Marusyk and M. Swain, “Price Control of Patented Medicines in Canada” (1993), 10 Can. Intell. Prop. Rev. 159, at page 160 (Marusyk).

One of the most relevant changes wrought by these amendments was that although compulsory licences could still be issued immediately, the use of the licence by the generic was deferred for periods ranging from 7 to 20 years after the issuance of the patent. The patentee was thereby ensured a significant period of exclusivity in the marketplace, during which time it could set its price high enough to recoup its research, development and marketing expenses. Another critical change was the establishment of the Patented Medicines Price Review Board. Between 1987 and 1993 the Board’s function was to ensure that patentees of medicines did not charge excessive prices during the deferral period in which a licensee could not make use of its licence: see Kuharchuk, at page 18; and Marusyk, at page 160. The Board was also charged with the responsibility of collecting information from pharmaceutical companies with respect to their research and development expenditures, in order to ascertain the industry’s level of investment in Canada: Horton, at page 148. In time, however, even these amendments would be deemed inadequate.

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.S.C., 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 Lilly 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). 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.

Third, the amendments to the Act strengthened the Board’s remedial and punitive powers. No doubt this was done in order to fill the vacuum created by the abolition of the compulsory licensing scheme. The Board’s powers now include the ability to impose penalties and/or price reductions in response to excessive pricing, to better control introductory prices for new patented drugs, and to provide for fines or imprisonment for failure to comply with the Board’s orders. The Board’s orders carry the same force and effect as those of the Federal Court. In summary, the purpose of these changes is to empower the Board to influence the pricing of patented medicines to much the same extent that the competition fostered by compulsory licensing used to influence it: Government of Canada News Release, NR-10770/92-21, at page 1.

II          FACTUAL BACKGROUND

Virazole is the brand name of a medicine sold in Canada by ICN. It is comprised of only one ingredient—the active ingredient “ribavirin”. Virazole is used in the treatment of critically ill infants (neonates) and children with severe respiratory infections. With respect to this particular use there is no available substitute. Virazole is supplied in 100 ml glass vials of sterile lyophilized powder containing 6 grams of ribavirin. It is also provided in capsule form pursuant to the Emergency Drug Release Program (the EDRP). Pursuant to that program Health Canada may authorize the use and sale of a quantity of a medicine for which no notice of compliance has been issued under the Food and Drugs Act, or in the case of a medicine for which a notice of compliance has issued, a use which is not authorized by that notice of compliance.

ICN is, or was, the holder of three Canadian patents pertaining to ribavirin. Canadian Patent No. 997756 (the ’756 patent) discloses several chemical processes for the production of ribavirin. While the ’756 patent expired on September 28, 1993, ICN continues to produce ribavirin based on one of the processes outlined in that patent. The actual process being used remains subject to a confidentiality order. Canadian Patent No. 1028264 (the ’264 patent) discloses an enzymatic (biochemical) process for creating ribavirin. That patent expired on March 21, 1995. The third patent, Canadian Patent No. 1261265 (the ’265 patent) discloses a method of using ribavirin for the treatment of various viral diseases. The ’265 patent does not expire until September 26, 2006.

On August 4, 1988, as required under the Patented Medicines Regulations, SOR/88-474 (the Regulations), ICN filed a form with the Board indicating that both the ’756 patent and the ’264 patent pertained to the medicine Virazole. As of that date, the ’265 patent had not issued. ICN then filed price and sales information for Virazole as required by the Regulations, from November 14, 1988 to the expiry of the ’756 patent on September 28, 1993. In February 1994, ICN informed the Board that it would no longer be filing price and sales information as required by the Regulations because of the expiry of the ’756 patent and because the ’264 patent was, in ICN’s opinion, “irrelevant to the medicine Virazole being marketed in Canada by ICN”. ICN made no reference to the existence or relevance of the ’265 patent at this point.

In 1992 Virazole sold for as low as $365 per vial. As of September 1993, the price stood at $409. In the course of a treatment a minimum of six vials of ribavirin is required. Thus, as of September 1993, the cost of a minimum course of treatment was $2,454. By late 1994, the price of ribavirin had risen to as much as $1,540, per vial and, accordingly, the cost of a minimum treatment rose to $9,240.

From February 1994 to June 1995, the Board received complaints from hospital pharmacists and other purchasers in regard to the prices being charged by ICN for Virazole. In response to these complaints, and to ICN’s refusal to provide further price and sales information respecting Virazole, the Board issued a notice of hearing dated August 15, 1995. The purpose of the hearing was to determine whether ICN, while patentee of the ’756 and ’264 patents, had sold Virazole in any market in Canada at a price that, in the Board’s opinion, was excessive, and if so, to determine what remedial action should be taken. However, prior to the Board’s hearing on the merits ICN brought a motion to the Board, returnable September 27, 1995, to determine whether it had the requisite jurisdiction to proceed with the hearing.

On September 26, 1995, one day prior to the hearing scheduled to address preliminary matters, including ICN’s motion, the Board learned of the ’265 patent when a member of the Board staff obtained a copy of that patent from the Patent Office. This revelation came as a surprise to the Board and its staff. At a meeting of Board staff and ICN representatives held on June 26, 1995, the Board staff asked ICN whether it was a patentee of any other patents relating to Virazole. At that meeting ICN gave a negative response. After the ’265 patent came to light, ICN indicated that it had not revealed its existence to the Board staff as, in ICN’s opinion, that patent does not pertain to Virazole within the meaning of the Act. (Board’s reasons, at page 15).

Upon learning of the ’265 patent, the hearing with respect to ICN’s motion was adjourned and the Board’s notice of hearing amended to include, inter alia, the ’265 patent. ICN’s motion was heard in November 1995 and on November 30, 1995 the Board released its decision rejecting ICN’s contention that the Board lacked jurisdiction. In its reasons the Board alluded to the fact that, with respect to the ’265 patent, ICN had not “disclaimed” that patent. Subsequently, and prior to the hearing of the judicial review application, ICN filed a disclaimer with the Patent Office in connection with the ’265 patent, specifically disclaiming the use for which Virazole is approved for sale in Canada. ICN forwarded a copy of the disclaimer to counsel for the Board seeking his opinion as to whether the disclaimer would, from the date of its issuance, have the effect of depriving the Board of jurisdiction. ICN was advised that it did not. The Patent Office confirmed the filing of the disclaimer on December 15, 1995.

In January of 1996, ICN sought judicial review of the Board’s decision. As well, ICN brought an originating notice of motion before the Trial Division for a declaration with respect to the effect of the disclaimer. The judicial review application and ICN’s notice of motion were heard together. On January 12, 1996, ICN filed with the Board further sales and price information “under protest”. The judicial review application was heard on the last three days of January, 1996. The Trial Judge’s decision was issued on February 15 of that year.

Since this appeal comes before the Court as a matter of first impression and as ICN’s arguments have been refined at each stage of the adjudicative process, it is instructive to retrace the issues as pursued before the Board and the Trial Judge.

III         THE DECISIONS BELOW

ICN’s position before the Board and the Trial Judge was that the Board is without jurisdiction to make any order in relation to Virazole because neither the ’264 patent nor the ’265 patent pertain to Virazole within the meaning of the Act. In support of that position ICN advanced two arguments relating to the meaning to be attributed to the term “medicine” as used in subsection 83(1) of the Act.

First, ICN argued that subsection 79(2) is limited in scope to medicines for which a notice of compliance has issued. As noted earlier, pursuant to the provisions of the Food and Drugs Act, a notice of compliance must be issued before a medicine can be sold in Canada. The notice of compliance includes the “product monograph” for the medicine. A product monograph describes the essential characteristics of the medicine, including matters such as the chemicals in the medicine, the illnesses it is effective in treating, the proper dosages, the method of administering the medicine to patients and its side-effects. In short, ICN argued that ribavirin is only a “medicine” for purposes of sections 79 to 100 of the Act [sections 79-100 enacted by S.C. 1993, c. 2, s. 7] when it is supplied in the precise form and quantities prescribed by the notice of compliance in regard to Virazole. Within this context, ICN argued that both the ’264 and ’265 patents must be for an invention which is intended or capable of being used for, or for preparing, 6 grams of pure 100% ribavirin in lyophilized powder to be delivered in the manner stipulated in the notice of compliance.

The Board rejected the foregoing argument on several grounds. First, the language of subsection 79(2) is not restricted in the manner suggested by ICN. The only qualification in that subsection is that the invention must be intended or capable of being used for medicine or its production. The Trial Judge agreed.

Second, the Board noted that such an interpretation would have a dramatic and adverse effect on the Board’s ability to fulfil its mandate. Specifically, it would have the effect of excluding the review of prices for medicines released under the EDRP. The Trial Judge found that, on the facts of this case, the EDRP issue was a “red-herring”.

Third, ICN argued that for an invention to pertain to a medicine within the meaning of subsection 79(2) of the Act, that medicine must be for a substance which itself has therapeutic value. In response, the Board simply noted that Virazole is comprised exclusively of a substance with therapeutic value. It went on, however, to point out that there are many cases in which a patented invention relates to only one of several active ingredients and others which relate solely to the process for administering a medicine to a patient, or to a part of a process for producing a medicine. The Board noted that, in each instance, patentees would have the ability to produce or to prevent the production of a central part of a medicine and, yet, according to ICN’s argument the Board would be prevented from regulating prices deemed to be excessive.

At this juncture, the Board concluded that for purposes of subsection 79(2) the word “medicine”, as used in the phrase “intended or capable of being used for medicine or for the preparation and production of medicine”, means ribavirin. The Trial Judge concluded that the term medicine should be given the same interpretation as it was given under the former compulsory licensing provisions of the “old” Patent Act as the language of subsection 79(2) is “lifted” from subsection 39(4) [rep. by S.C. 1993, c. 2, s. 3] of the old Patent Act .

At this point in their analyses, both the Board and the Trial Judge turned to the arguments directed at the ’264 264 and ’265 patents respectively. With respect to the ’264 patent, ICN argued that the Board lacked jurisdiction as ICN was not using the process outlined in that patent to make ribavirin. Rather, it was still using one of the processes described in the expired ’756 patent. ICN tendered the affidavit evidence of Robert Orr and Dr. Cottam to support the understanding that it is not possible to use the process described in the ’264 patent to make ribavirin in quantities sufficient for pharmaceutical applications. Mr. Orr stated that the world-wide supply of one of the chemical substances required to produce ribavirin is insufficient to produce a single dose of Virazole. Furthermore, he concluded that even if that chemical substance were available in sufficient quantities the cost of such would be prohibitive. Dr. Cottam was of the view that the process described in the ’264 was suitable only for producing amounts of ribavirin for research purposes. As well, he was of the view that that chemical substance was too difficult and costly to store even if it were available in sufficient quantities. Having regard to this evidence, ICN argued that ’264 patent cannot be considered to pertain to Virazole within the meaning of the Act.

The Board and the Trial Judge concluded that whether a patentee is making use of the patent in question is irrelevant to the legal question of whether that patent pertains to a medicine within the meaning of the Act. Noting that the test established in subsection 79(2) is whether the patent is “intended or capable of being used for medicine”, the Board reasoned that the utilization of those words clearly broadens their scope beyond actual usage. The respondent, The Staff of The Patented Medicine Prices Review Board (the Board Staff), did not seek evidence to counter ICN’s affidavit evidence as to the efficacy of the ’264 patent on the ground that it considered such matters to be irrelevant. The Trial Judge noted that the Board has no power to investigate and determine whether a patent is actually being used, and that the interpretation advanced by ICN, if accepted, could result in the jurisdiction of the Board being circumvented easily by a patentee declaring that it was not using a particular patent. For the same reasons, the Board and Trial Judge considered that the relative efficacy of a patent in producing commercial quantities of a medicine is irrelevant to the issue of whether a patent pertains to a medicine for purposes of the Act.

With respect to the ’265 patent, ICN argued that the use claims set out in that patent cannot be construed as including the use for which Virazole is approved for sale in Canada, pursuant to the notice of compliance. Relying on the affidavit evidence of Dr. Biedermann, ICN argued that the use of ribavirin for the treatment of severe respiratory syncytial virus infection in neonates and infants, as set out in the ’265 patent and described in the Virazole notice of compliance, was part of the “prior art” relevant to the ’265 patent and therefore its claims should be read down so as to exclude that use. Otherwise, the ’265 patent would be open to attack on the ground of invalidity due to anticipation. With respect to that patent, Board Staff filed the affidavit evidence of Drs. Corrin and Cooper. Their evidence was to the effect that the claims for the uses of ribavirin asserted in the ’265 patent were identical to, or inclusive of, the uses of the ribavirin described in the Virazole notice of compliance.

With respect to the foregoing argument, the Board concluded that it was inappropriate for it to engage in the task of claim construction. The Board observed that its statutory mandate requires it to have experience in the pricing of “patented medicines”. In the opinion of the Board, it does not have the further mandate, nor the necessary experience and expertise, to undertake the type of analysis being advocated by ICN. The Trial Judge held that the Board was correct in finding that it should not go beyond the face of the patent to construe the use claims before determining whether they correspond to the uses stipulated in the notice of compliance for Virazole. On its face the ’265 patent is intended for the preparation or production of the medicine, ribavirin, and that finding, alone, is sufficient to establish the Board’s jurisdiction.

In the alternative, the Board concluded that the uses of ribavirin described in the Virazole notice of compliance were not part of the prior art relevant to the ’265 patent. Therefore, if it were necessary for the Board to rule on the issue it would have construed the claims in the ’265 patent without reference to such. Accordingly, the Board concluded at page 18: “that the ’265 Patent pertains to Virazole because it describes uses for ribavirin, the active and only ingredient in Virazole”. Noting that there was a dispute as to the publication dates of the alleged prior art, the Trial Judge declined to resolve the issue in light of the other conclusions he had reached.

The final issue addressed by the Trial Judge, and which was not before the Board, turned on the validity of the disclaimer filed by ICN with the Patent Office on December 6, 1995. Before the Trial Judge, ICN argued that as of that date the Board was without jurisdiction to deal with the ’265 patent, as the disclaimer had the effect of disclaiming the uses for which Virazole is approved for sale in Canada and, therefore, there was no longer a nexus between that patent and the medicine being sold in Canada. In response, the Board Staff advanced three counterarguments.

First, it was argued that even if the disclaimer is valid the Board’s authority would not terminate because the claims of the ’265 patent not disclaimed by ICN continue to pertain to ribavirin within the meaning of subsection 79(2) of the Act. The Trial Judge accepted this submission, but went on to deal with the other grounds of attack.

Second, the Board Staff argued that the disclaimer was invalid for failing to comply with subsection 48(1) [as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 17] of the Act. That subsection allows the filing of a disclaimer, but only in circumstances where a patentee has made a specification too broad by reason of “any mistake, accident or inadvertence, and without any wilful intent to defraud or mislead the public”. While the Board Staff argued that ICN’s sole motivation in filing the disclaimer was to avoid the jurisdiction of the Board, the Trial Judge found [at page 43] “nothing objectionable in such an action”. In his opinion, it is permissible for a patentee to organize his or her affairs for the purposes of avoiding price regulation by the Board. The Trial Judge went on to conclude that, in any event, the disclaimer does not change the fact that the ’265 patent [at pages 43-44] “continues to be an invention intended for medicine and, accordingly, it remains in the Board’s jurisdiction”.

Third, the Board Staff maintained that as the disclaimer was not filed until after the Board issued its notice of hearing, and after it had rejected ICN’s challenge to its jurisdiction, the disclaimer can have no effect. The Board Staff invoked subsection 48(4) of the Act which states in part “[n]o disclaimer affects any action pending at the time when it is made”. The Trial Judge agreed with this submission, but declined to pursue it in depth in light of his earlier findings.

In summary, the Board concluded that, with respect to both the ’264 and ’265 patents, ICN is a patentee for inventions which pertain to the medicine “ribavirin”, which is “Virazole”. Accordingly, it held that it possessed the requisite jurisdiction. In his reasons the Trial Judge articulated three basic conclusions. First, the word “capable” in subsection 79(2) of the Act must be given its plain and ordinary meaning and, accordingly, the ’264 patent is capable of being used for the preparation or production of the medicine, ribavirin. Second, the word “medicine” in subsection 79(2) of the Act is not limited to drugs for which a notice of compliance has issued and, accordingly, the ’265 patent is intended for the preparation or production of the medicine ribavirin. Finally, the Board’s jurisdiction was not terminated by the disclaimer filed on December 6, 1995 because the invention described by the ’265 patent continues to pertain to ribavirin within the meaning of subsection 79(2) of the Act. For those reasons the application for judicial review, as well as the motion concerning the validity of the disclaimer, were dismissed.

IV        ICN’S ARGUMENTS ON APPEAL

On appeal, the arguments advanced by ICN and the errors alleged to have been committed by both the Board and Trial Judge were refined and directed at the ’264 and ’265 patents respectively. During the hearing of the appeal two ancillary matters were pursued: the relevance of ICN’s failure to disclose the existence of the ’265 patent and the legal standing of one of the respondents, the Board Staff. Although neither of these matters bears on the outcome of the appeal, they will be dealt with following the substantive analysis on the main issues raised on appeal. I turn now to the arguments advanced by ICN.

With respect to the ’264 patent, ICN maintains that the Trial Judge erred in construing the term “the medicine”, as found in subsection 83(1) of the Act, to mean ribavirin, rather than Virazole. ICN maintains that, as the NOC Regulations and the provisions of the Act relating to patented medicines deal with the same scheme and subject-matter and, therefore, are presumed to have been drafted with one another in mind, a coherent and consistent treatment of the subject must be applied. The word “medicine” in subsection 83(1) of the Act refers to the medicine being sold in Canada. This is the same medicine to which the NOC Regulations and Food and Drugs Act and its Food and Drug Regulations, C.R.C., 1978, c. 870, as amended apply, and therefore, the definition of “medicine” in the NOC Regulations should apply to that term under the Act as well: that is to say, medicine should be defined as Virazole (see appellant’s memorandum of fact and law, at paragraphs 78-79).

ICN also argues that the Board’s jurisdiction to review and regulate prices must be based upon a rational relationship between the patent in question and the medicine sold in Canada. ICN asserts that the burden of establishing that a patent is for an invention pertaining to a medicine is on the Board. According to ICN, the only rational way in which to establish that nexus is to compare the claims of the patent, once properly construed, to the medicine Virazole. If, and only if, the conduct of the defendant in producing and marketing the medicine falls within the scope of the patent’s claims, once properly construed, is the nexus established. (See appellant’s memorandum of fact and law, at paragraph 81.)

In the case of the ’264 patent, ICN maintains that the evidence supports the conclusion that the method of the ’264 patent is not “intended [to be] used for medicine or for the preparation or production of the medicine”, as contemplated by subsection 79(2) of the Act, because it is a research and development process. Furthermore, the process outlined in that patent is not “capable of being used for … the preparation or production of [the] medicine”, Virazole, sold in Canada because it is only capable of producing 1/1,000,000 of a single dose. In the opinion of ICN, there is no “exclusionary right” flowing from the claims of ’264 patent which could conceivably allow ICN to charge excessive prices. Accordingly, it submits that the claims of the ’264 patent, when properly construed, are not rationally related to the medicine Virazole being sold in Canada, and therefore, the Board’s jurisdiction cannot be predicated on that patent.

I pause here to note that ICN did not pursue the argument that a patentee must be using the patented process before the Board acquires jurisdiction. In my opinion, ICN acted wisely in abandoning that argument in light of and for the reasons given by both the Board and Trial Judge. ICN now takes the position that the patented process must be either “intended” or “capable” of being used to make the medicine in question in order for the Board to acquire jurisdiction. It is not that ICN is not using the process described in the ’264 patent that ousts the Board’s jurisdiction, but that it is impossible to use that process to make the medicine Virazole: see appellant’s memorandum of fact and law, at paragraph 39.

With respect to the ’265 patent, ICN’s argument rests once again on the premise that the medicine referred to in subsection 83(1) of the Act is Virazole, not ribavirin, and that the claims of that patent, when properly construed, are not rationally related to the medicine Virazole being sold in Canada. The essence of ICN’s position, as I understand it, may be summarized as follows. Prior to the filing of the disclaimer, the ’265 patent made claim to the use for which Virazole was and is being sold in Canada. However, as that particular use was already known at the time of the application for that patent, it could be held invalid on the ground of anticipation. Prior knowledge of the use of ribavirin in the treatment of serious viral infections in infants and children was said to be found in two publications, allegedly published more than two years before the application was made for the ’265 patent. Accordingly, ICN submits that the claims of the ’265 patent must be construed so as to exclude the anticipated use, which is the use for which Virazole is being sold in Canada. Once the ’265 patent is so construed, there is no rational connection between it and the medicine Virazole. In short, Virazole is used for treating serious viral infections in infants and children, while the ’265 patent, properly construed, does not embrace that use.

Finally, ICN relies in the alternative on the use disclaimer filed December 6, 1995. As noted earlier, that disclaimer relates to the use for which Virazole is approved for sale in Canada. ICN asserts that, given the patent construction test it advocates for the assessment of the required nexus, if the disclaimer is valid then the ’265 patent can no longer be viewed as pertaining to Virazole as it will not encompass the use for which Virazole is sold in Canada. This argument is much the same as that advanced with respect to the alleged prior art.

V         ANALYSIS

At the heart of ICN’s argument is the proposition that there must be a rational connection or nexus between the patent and the medicine in question in order for the Board to acquire jurisdiction. In furtherance of its argument, ICN cast the pivotal issue in terms of whether “the medicine” referred to in subsection 83(1) of the Act should be construed as ribavirin, as held by the Board and Trial Judge, or as referring to the medicine Virazole which continues to be sold in the Canadian market. As I see it, ICN perceives this issue to be of critical significance because if the medicine is deemed to be the chemical substance ribavirin, to which the patents clearly pertain, then presumably there is no need to construe the claims of the respective patents and compare them with the medicine Virazole being sold in Canada pursuant to the notice of compliance and the product monograph issued under the Food and Drugs Act and Food and Drug Regulations. On the other hand, if the medicine is deemed to be Virazole, ICN would have us conclude that there is no rational connection between that medicine and the ’264 patent because it is impossible to use the process described in that patent to make Virazole and, therefore, competitors are not being excluded from the market. Similarly, with respect to the ’265 patent, ICN asserts that there is no rational connection between that patent and the medicine Virazole because the patent no longer creates a monopoly with respect to the use for which Virazole is being sold in Canada. The true thrust of ICN’s argument is that neither patent precludes competitors from entering the market in which Virazole is being sold in Canada. Neither patent can be said to vest an “exclusionary right” in ICN so as to enable it to exercise market power for the purpose of extracting non-competitive or excessive prices.

I agree with counsel for ICN that there must be a rational connection or nexus between a patent and the medicine in question in order for the Board to acquire jurisdiction. The true issue is to identify the proper rational connection test. I do not accept the one advocated by ICN, which embraces a restrictive definition of medicine and the need to engage in patent or claims construction. That test, in my view, does not conform with the one specified in subsections 83(1) and 79(2) of the Act. From those two subsections I draw two major conclusions. First, one does not have to, and ought not, go beyond the face of a patent to establish the required nexus. Second, because of the broad scope of the terms “pertaining to” and “pertains to” as used in those subsections, the nexus can be one of the merest slender thread. On the facts of this case, the rational connection between the ’264 and ’265 patents and the medicine being sold in Canada, that is to say Virazole, is ribavirin. Thus, the Board’s jurisdiction is clearly established. I turn now to the more difficult task of demonstrating that the above conclusions are justified in law and logic.

My analysis begins with the understanding that for the Board to acquire jurisdiction three condition precedents must be satisfied. First, the Board must determine that a party such as ICN is a patentee of an invention. Second, the patentee’s invention must pertain to a medicine. As will be explained, this condition precedent consists of two subrequirements. Third, the patentee must be selling the medicine in any market in Canada. These condition precedents can be extracted readily from subsection 83(1) of the Act, which bears repeating:

83. (1) Where the Board finds that a patentee of an invention pertaining to a medicine is selling the medicine in any market in Canada at a price that, in the Board’s opinion, is excessive, the Board may, by order, direct the patentee to cause the maximum price at which the patentee sells the medicine in that market to be reduced to such level as the Board considers not to be excessive and as is specified in the order. [Emphasis added.]

The necessity for the first condition is not contested. I address it because of its relevance to the continuing jurisdiction of the Board. It is to be noted that although subsection 83(1) speaks of an existing patent, the Board’s jurisdiction is not terminated simply because the patent in issue has expired. In such cases the Board retains the jurisdiction to determine whether excessive prices were being charged for the medicine prior to the expiration date. That jurisdiction is preserved by virtue of subsection 83(3) of the Act, but is subject to subsection 83(7) which dictates that the Board must commence proceedings within three years of the date the former patentee ceased to be entitled to the benefit of the patent.

In the present case the Board’s jurisdiction to monitor ICN sales and prices until September 28, 1993, the date the ’756 patent expired, is not contested. The position of ICN is that after that date the Board lost its jurisdiction as neither the ’264 patent nor the ’265 patent pertains to the medicine Virazole within the meaning of the Act. Assuming that argument fails, ICN’s alternative position is that, if the disclaimer filed with respect to the ’265 patent is held to be valid, then the Board’s jurisdiction to monitor ICN sales and prices for Virazole ceased as of December 6, 1995, the date the disclaimer became effective. If that alternative argument fails then the Board’s jurisdiction is preserved until September 26, 2006, the date the ’265 patent expires. That, of course, is the position of the Board. Thus, there is no question that ICN is, or has been, a patentee of an invention. It is simply a matter of ascertaining the date on which the Board’s continuing jurisdiction did, or will, cease.

Under subsection 83(1) of the Act, the second condition precedent is that the invention must pertain to a medicine. In turn, this condition precedent can be broken down into two subrequirements. First, the pharmaceutical end product in question, whether it be described as ribavirin or Virazole, must qualify as a medicine. Second, there must be a rational connection between the invention and the pharmaceutical end product. That is to say between the invention and the medicine being sold in Canada. At this point it is appropriate to focus on the first sub-requirement. I take it for granted that not every item sold, for example, by a pharmacist will be characterized as a medicine even though it may be a patented product.

For purposes of the patented medicine provisions of the Act (sections 79 to 103) the word medicine remains undefined. This was also true in respect of section 39 of the old Patent Act which, until its repeal, authorized the issuance of compulsory licences (see discussion infra, at page 65). The jurisprudence with respect to section 39 made it clear that the word “medicine” was not to be regarded as a term of art and was to be interpreted broadly and in its ordinary sense: see generally H. G. Fox, The Canadian Law and Practice Relating to Letters Patent for Inventions, 4th ed., (Toronto: Carswell, 1969), at page 49; Parke, Davis, supra; Novocol Chemical Mfg. Co. of Canada Ltd. v. Aktiebolaget Astra, Apotekarnes Kemiska Fabriker (1963), 41 C.P.R. 117 (Pat. Comm.); affd [1964] Ex. C.R. 955; and Imperial Chemical Industries Ltd. v. The Commissioner of Patents, [1967] 1 Ex. C.R. 57.

Having regard to the earlier jurisprudence and the fact that the compulsory licensing provisions served the very same purposes that the Patented Medicines Prices Review Board provisions are intended to serve, it seems obvious to me that the word “medicine” as employed in subsection 83(1) should be interpreted in the same manner as it was under the old section 39: that is to say, interpreted broadly, and not narrowly as advocated by ICN. While both the 1993 amendments to the Patent Act and the NOC Regulations were enacted at the same time, and while both legislative schemes have an effect on “medicines”, their purposes and application are significantly different. ICN, however, suggests that the similarity of wording and subject-matter in the two schemes requires that the word medicine be interpreted the same way under both schemes. A similar argument was advanced in Eli Lilly and Co. v. Apotex Inc., supra. In that case, it was suggested that the word “medicine” in section 2 of the NOC Regulations should be interpreted in the same manner as it was under subsection 41(4), later 39(4), of the Patent Act. This contention was rejected by Simpson J., and in turn by the Court of Appeal. Simpson J. found at pages 249-250 that the language of subsection 41(4):

… speaks of an “invention intended … for medicine” whereas s. 2 of the Regulations speaks of a “substance … intended or capable of being used for the diagnosis, treatment, mitigation or prevention of disease”. The uses to which the invention and the substance are to be put are entirely different. Section 41(4) requires use for medicine and s. 2 requires use for treatment, etc. Accordingly, although the phrase “intended or capable of being used for” is repeated, it is repeated in the Regulations in an entirely different context which creates a new meaning.

In my view, that rationale is equally applicable herein. The interpretation of the word “medicine” and the phrase “intended or capable of being used for” as used in section 2 of the NOC Regulations has no relevance to their interpretation under subsections 79(2) and 83(1) of the Act. The NOC Regulations are part of a separate regime with a distinct purpose. Consequently, for example, the term medicine cannot be restricted to products for which a notice of compliance has been issued. Such a restrictive interpretation would remove from the Board’s jurisdiction products placed on the market via the EDRP process and, for example, the sale of an intermediate product by a patentee to a wholesaler for inclusion in a composition drug. The wording in subsections 83(1) and 79(2) does not support such a conclusion. The question remains, however, as to what is a medicine. The Board defines medicine at page 30 of its Eighth Annual Report (for the year ending December 31, 1995) as follows:

Any substance or mixture of substances made by any means, whether produced biologically, chemically, or otherwise, that is applied or administered in vivo in humans or in animals to aid in diagnosis, treatment, mitigation or prevention of disease, symptoms, disorders, abnormal physical states, or modifying organic functions in humans and or animals, however administered.

For greater certainty, this definition includes vaccines, topical preparations, anaesthetics and diagnostic products used in vivo, regardless of delivery mechanism … This definition excludes medical devices, in vitro diagnostic products and disinfectants that are not used in vivo …

While this definition is not binding on either the Board or the Court, it clearly encompasses products that one would typically consider to be “medicines” as that term is used in the vernacular, and it encompasses ribavirin/Virazole. In my view, it is beyond doubt that ribavirin or Virazole is a medicine as that term is used in subsection 83(1). The assumption is not difficult to justify once regard is had to the fact it is used in the treatment of severe respiratory infections in infants and children. Thus, we begin with the understanding that the two patents in issue pertain to a substance or product which is rightly characterized as a medicine. This leads us to consider the rational connection requirement.

That there must be a rational connection or nexus between the invention outlined in a patent and the medicine which is being sold in Canada cannot be doubted. Without such a statutory requirement the constitutional authority of Parliament to enact price control legislation would be in issue. The competence of Parliament to enact legislation which seeks to regulate the prices of goods, which legislation would otherwise intrude upon the legislative competence of the provinces to enact legislation affecting property and civil rights, arises from Parliament’s jurisdiction to legislate with respect to patents: see Manitoba Society of Seniors Inc. v. Canada (Attorney General) (1991), 77 D.L.R. (4th) 485 (Man. Q.B.); affd (1992), 96 D.L.R. (4th) 606 (Man. C.A.). The question this Court must address is what is the rational connection required, and, in particular, whether the nexus is to be established without going beyond the face of the ’264 and ’265 patents. In my opinion, the answer lies in the meaning or scope to be attributed to the word pertaining found in subsection 83(1) of the Act, and its extended meaning set out in subsection 79(2).

Putting aside legal arguments for a moment, it seems to me that there are two competing views on the impact of a patent on competition in the marketplace. One view is founded on the premise that where it appears that a patent confers exclusivity with respect to a portion of the market relating to the medicine being sold in Canada, there is a presumption that its mere existence confers market power by distorting the competitive process. Competitors are dissuaded from entering the marketplace by the unpalatable prospect of incurring significant research costs only to run afoul of an existing patent. As a result, the patentee is left with a field of relative exclusivity in the market. This market power in turn translates into the ability to increase prices, perhaps excessively, which establishes the Board’s jurisdiction to regulate. The other view is compatible with ICN’s position. That view rejects the foregoing presumption and replaces it with one which permits the adducing of evidence to demonstrate that the patent cannot reasonably be said to confer market power on the patentee, and that there is therefore no basis or need for the Board to assume jurisdiction: see generally F. Mathewson et al., The Law and Economics of Competition Policy (Vancouver: The Fraser Institute, 1990), at pages 46-50; and N. T. Gallini and M. Trebilcock, “Intellectual Property Rights and Competition Policy: An Overview of the Legal and Economic Issues”, April, 1996 (not yet published).

Whatever the outcome of that academic debate may be, it is clear to me that the position adopted by ICN is incompatible with that adopted by Parliament. In my opinion, subsection 83(1) of the Act is concerned only with the existence of a related patent and not its potential or actual effect on the ability of potential competitors to enter a market, or for that matter the ability of patent holders to exercise market power. In my view, the phrase, “an invention pertaining to a medicine” [underlining added], and in particular the word pertaining, evinces a clear intention that the nexus between the patent and the medicine is of broad import. For example, there is no requirement that the patent actually be used in the production of the medicine. Nor could subsection 83(1) be reasonably construed to support such a construction. Furthermore, the Board’s jurisdiction extends not only to patents which contain product claims (a claim for the medicine itself), but also patents which contain “process” and “use” claims. The law might be otherwise if subsection 83(1) had been drafted to read, for example, “an invention for a medicine”. That the word pertaining invites a broad construction is reinforced by subsection 79(2) which expands upon the notion of when a patent pertains to a medicine. That subsection reads as follows:

79. …

(2) For the purposes of subsection (1) and sections 80 to 101, an invention pertains to a medicine if the invention is intended or capable of being used for medicine or for the preparation or production of medicine.

It cannot be denied that the wording of subsection 79(2) tracks the wording of the old subsection 39(4) which reads as follows:

39. …

(4) Where, in the case of any patent for an invention intended or capable of being used for medicine or for the preparation or production of medicine, an application is made by any person for a licence to do one or more of the following things as specified in the application, namely,

…

the Commissioner shall grant to the applicant a licence to do the things specified in the application except such, if any, of those things in respect of which he sees good reason not to grant a licence. [Emphasis added.]

The purpose of the foregoing provision was to expose patentees to competition through the compulsory licensing scheme. The object of the legislation was to ensure the reasonableness of drug prices. Though the compulsory licensing scheme came to an end in 1993, it is of significance that it was replaced with a scheme for monitoring drug prices and that the same broad language found in the old subsection 39(4) would find its way into subsection 79(2). The legal effect of the latter provision is to clarify and broaden the scope of subsection 83(1) and to expand, not narrow, the nexus between the patent and the medicine being sold. In my view, as outlined below, the jurisprudence surrounding old subsection 39(4) is directly relevant to the interpretation of subsection 79(2), and in turn, subsection 83(1).

The meaning to be attributed to the old subsection 39(4) has been the subject of much judicial comment. In Smith, Kline & French Laboratories Ltd. v. Frank W. Horner (1983), 1 C.I.P.R. 183 (F.C.A.), it was held that the sole purpose of that provision was to reduce the prices of medicines by introducing competition and that the attainment of this purpose by the grant of the compulsory licence was subject only to giving the patentee “his due reward” for the research leading to the invention. In order to meet these objectives, it was deemed necessary that the subsection be defined broadly, so as to encompass as many of the patented elements necessary to the development and marketing of medicines as possible. It is in this context that the courts were prepared to recognize that chemical intermediates, although in and of themselves not suitable for therapeutic or clinical uses as medicines can be within “intended” or “capable” of being used for the preparation or production of medicine: see Wellcome Foundation Ltd., supra at pages 318-325, appeal allowed another point (1995), 60 C.P.R. (3d) 135 (F.C.A.). Under the 1993 amendments to the Patent Act, the price review powers of the Board are intended to achieve the same result, with respect to the same spectrum of inventions. Thus, the broad interpretation of subsection 39(4) accepted by the courts is equally applicable to the present subsection 79(2). There is nothing to suggest that it is to be interpreted restrictively, as suggested by ICN. There need only be a slender thread of a connection between a patented invention and the medicine sold in Canada in order to satisfy the test for a nexus. The legislative reason for this is simple. Requiring a stronger nexus would provide a window of opportunity for pharmaceutical companies to avoid the jurisdiction of the Board, and would limit the ability of the Board to protect Canadian consumers from excessive pricing.

In conclusion, I am of the opinion that the broad language found in subsections 83(1) and 79(2) of the Act clearly evinces an intention on the part of Parliament that it is unnecessary to go beyond the face of a patent when establishing the required nexus. The validity of this conclusion is reinforced by the fact that the Board’s statutory mandate is limited to the pricing of patented medicines. Its members have neither the experience nor the expertise to engage in the task of patent construction. Furthermore, ICN’s argument fails to appreciate that the matter of patent or claims construction is a question of law to be decided by the Court. It is simply unrealistic to expect the Board to engage the services of expert witnesses for the purpose of assessing evidence proffered by parties such as ICN, and then for the Board itself to assess opposing expert evidence. Recognizing that the Board is charged with both the prosecution (through its staff) and adjudication of each case as opposed to being a neutral arbiter of evidence presented by two opposing parties, ICN’s rational connection test (based on patent construction) is impractical. ICN’s argument is also flawed in another material respect.

In my opinion, ICN has failed to distinguish between the task of construing the claims of a patent in order to determine whether the activities of a defendant infringe the patent’s claims and the task of assessing a patent’s validity. The two tasks are separate and distinct. In effect, ICN is challenging the validity of the 264 patent on the basis of inutility and the ’265 patent on the basis of anticipation. Strictly speaking, it is unnecessary to deal with ICN’s arguments focussing on patent or claims construction. I do so not only to show that its arguments are fundamentally flawed, but to demonstrate that Parliament chose the word “pertaining” carefully, to avoid the type of analysis in which I am about to engage. In short, it is hoped that the following analysis will reinforce the validity of the “slender thread” test outlined above. I shall deal with each patent in turn.

On its face, the ’264 patent does not teach that it is intended to serve solely as a research and development process or that it is only capable of producing minute quantities of ribavirin. One need only look at the affidavit evidence of Mr. Orr and Dr. Cottam to realize that the purpose of their evidence was to establish that the ’264 patent could not be used to make commercial quantities of ribavirin. Specifically, the findings that the world-wide supply of one of the chemical substances required to produce ribavirin is insufficient to produce even one dose of Virazole, and that the cost of that rare substance was prohibitive and in any event it is too difficult and costly to store, are not conclusions dependent on the proper construction of the claims of the ’264 patent. They are conclusions which, in the hands of ICN’s competitors, could be invoked as a legal basis for declaring that patent invalid on the ground of inutility: see generally Northern Elec. Co. Ltd. et al. v. Brown’s Theatres Ltd., [1940] Ex. C.R. 36; affd [1941] S.C.R. 224; TRW Inc. v. Walbar of Canada Inc. (1991), 39 C.P.R. (3d) 176 (F.C.A.); Monsanto Company v. Commissioner of Patents, [1979] 2 S.C.R. 1108. In my opinion, the Board Staff was correct in refusing to file affidavit evidence to counter that tendered by ICN. On its face the ’264 patent outlines an enzymatic process which is “intended” to produce ribavirin. According to subsection 79(2) it is not necessary that a patent be “capable” of producing that chemical substance, as long as that is the “intended” result.

Turning to the ’265 patent, ICN’s argument is that the claims of that patent must be read down so as to exclude the use of ribavirin in the treatment of severe respiratory infection in neonates, otherwise the ’265 patent would be deemed invalid. If the ’265 patent is construed in that manner, then it is ICN’s position that there is no rational relationship between that patent and the use for ribavirin outlined in the Virazole notice of compliance. In my view, this argument is as flawed as that offered with respect to the ’264 patent. Once again, ICN has failed to appreciate that the task of construing the claims of a patent cannot be confused with the task of assessing its validity. Above all it is impermissible to construe claims having regard to the possibility that a claim or patent might be deemed invalid if a certain construction is not adopted. It is well established that the claim of a patent cannot be redrafted by the Court for the purpose of ensuring its validity. As was stated most recently in Dableh v. Ontario Hydro, [1996] 3 F.C. 751(C.A.), at pages 773-774:

The appellant maintains that in construing claim 1 by reference to prior art and the concept of obviousness the Trial Judge has confused the task of determining a patent’s validity with that of claim construction. We agree. Whether a claim is invalid for obviousness or lack of novelty is irrelevant to its proper construction. Claim construction must be done before, and independent of, assessing whether the defence of invalidity is sustainable. As was stated in American Cyanamid Co. v. Berk Pharmaceuticals Ltd.:

The claims should be considered without reference to the effect that the giving of any particular meaning may have on any issue infringement, without reference to the result and effect so far as the attach on validity is concerned. [Emphasis added, footnote omitted]

The foregoing analysis does not address directly ICN’s argument that the word medicine found in subsection 83(1) of the Act refers to Virazole, and not ribavirin. In my view this argument is truly a “red-herring”. Admittedly, the medicine being sold in Canada is Virazole. Undoubtedly, Virazole is the label by which hospital pharmacists referred to the drug at the time they lodged the complaints with the Board. The Board, in turn, refers throughout its reasons to whether or not the patents “pertain to Virazole”, implicity assuming the medicine in question to be Virazole. This is understandable, as Virazole is simply the brand name for a chemical formulation which itself had to be labelled ribavirin (see discussion infra). But the real question is whether anything should turn on whether the medicine is described as ribavirin as opposed to Virazole. In my opinion, the proper answer to that question is positively, no. Once it is found that it is impermissible to go beyond the face of the patent in establishing the required nexus, this argument becomes a non-issue. The patents are for the production and use of ribavirin. Ribavirin is clearly intended or capable of being used for, and indeed as, a medicine, whether the end product is called ribavirin, or by its trade name, Virazole. In any event, it happens that in this case there is no substantive difference between Virazole and ribavirin. They are one and the same.

Having rejected all of ICN’s arguments, other than the legal effect of the disclaimer, it remains necessary to establish the required nexus between the ’264 and ’265 patents and the medicine being sold in Canada. I admit that this is rather a pedantic exercise, at least from the Board’s perspective, but it is one required at law.

If we examine the ’756 patent, which expired on September 28, 1993, it discloses several chemical processes to produce a substance with the chemical formulation 1-8-D-ribofuranosyl-1,2,4-triazole-3-carboxamide. The ’756 patent lists this chemical formulation as the preferred nucleoside of the ’756 invention. The ’264 describes a method for the enzymatic synthesis of the same formulation and makes explicit reference to the ’756 patent. Neither patent, however, contains the word “ribavirin”. However, the ’265 patent outlines several uses of the same chemical formulation, and refers to it as “Ribavirin (non-proprietary name adopted by the United States Adopted Names Council)”: see Appeal Book, Vol. 1, at page 81. Turning to the notice of compliance and product monograph both refer to Virazole as the registered trade name for ribavirin. As is obvious, it is not difficult to establish a nexus between the two patents and the medicine being sold in Canada. For all intents and purposes, the chemical formulation outlined in the patents and the names ribavirin and Virazole are synonymous and interchangeable. Hence, all three conditions precedent outlined above have been satisfied: ICN is a patentee of two inventions; those inventions pertain to a medicine that ICN is selling in Canada.

The final argument advanced by ICN is with respect to the validity and effect of the disclaimer filed on December 6, 1995. I must admit that I harbour serious reservations with respect to whether the Trial Judge should have entertained ICN’s notice of motion (judicial review application) pertaining to this issue. In my respectful view, it would have been preferable had ICN asked the Board to make a formal ruling, rather than accepting the opinion of counsel for the Board. Though this Court owes no deference to decisions of the Board involving jurisdictional questions, it is not to be assumed that its opinion should be viewed as an irrelevancy. Curial deference may be accorded a tribunal’s decision, not only because that is what the Supreme Court teaches, but because it is earned. In addition, under section 18 of the Federal Court Act, R.S.C., 1985, c. F-7 [as am. by S.C. 1990, c. 8, s. 4], declaratory relief against a federal board is available only on judicial review. Pursuant to section 18.1 [as enacted idem, s. 5], an application for judicial review envisages the review of a decision, order, act or omission of such tribunals. As noted, with respect to the validity and effect of the disclaimer, no such decision or order had been rendered prior to the Trial Judge’s examination of the issue. Nor has there been any “omission” on the part of the Board since it was not asked to make a formal ruling with respect to the validity or effect of the disclaimer. Nonetheless, since my concerns were not raised below, I feel compelled to deal with the issue as pursued by the parties. In the circumstances, I will assume that the arguments advanced by counsel for the Board Staff fairly reflect the position of the Board had it been asked to make a formal ruling.

There are two bases on which the Board Staff asserts that the disclaimer has no effect on the Board’s jurisdiction to assess whether ICN has charged excessive prices for its medicine Virazole. First, it is argued that the disclaimer is invalid on the ground that it contravenes subsection 48(1) of the Act, and that even if valid it can have no effect on the Board’s jurisdiction by virtue of subsection 48(4). Alternatively, the Board Staff maintains that, even if the above provisions are inapplicable and the disclaimer is valid and has the effect of narrowing the scope of the invention in the ’265 patent, the remaining claims of that invention continue to pertain to ribavirin within the meaning of the Act. Subsections 48(1) and (4) read as follows:

48. (1) Whenever, by any mistake, accident or inadvertence, and without any wilful intent to defraud or mislead the public, a patentee has

(a) made a specification too broad, claiming more than that of which the patentee or the person through whom the patentee claims was the inventor, or

(b) in the specification, claimed that the patentee or the person through whom the patentee claims was the inventor of any material or substantial part of the invention patented of which the patentee was not the inventor, and to which the patentee had no lawful right,

the patentee may, on payment of a prescribed fee, make a disclaimer of such parts as the patentee does not claim to hold by virtue of the patent or the assignment thereof.

…

(4) No disclaimer affects any action pending at the time when it is made, unless there is unreasonable neglect or delay in making it.

Subsection 48(1) allows for the filing of a disclaimer where, by mistake or inadvertence, a patent specification has been drafted too broadly and provided it is not made with the intent of defrauding or misleading the public. However, the fact that the Patent Office has accepted a disclaimer is not determinative of whether the foregoing requirement has been met: see generally Monsanto Company v. Commissioner of Patents, [1976] 2 F.C. 476(C.A.); and Trubenizing Process Corporation v. John Forsyth Ltd., [1942] O.R. 271 (C.A.).

On judicial review, the Board Staff alleged that ICN was able to persuade the Patent Office at the time ’265 patent was being prosecuted that the earlier publications were not prior art, and would not render the patent invalid on the ground of anticipation: see Appeal Book, Vol. VI, at pages 762-865. Prosecution file history of Canadian Letters Patent No. 1261265. Accordingly, the Board Staff is at a loss to explain why ICN would take the position that the inclusion of the use claim in issue had been inserted due to mistake or inadvertence. On the evidence, the Board Staff submits that the only reasonable inference to be drawn is that ICN’s sole motivation in filing the disclaimer was to avoid the Board’s jurisdiction. The finding by the Trial Judge was that there is nothing objectionable in a patentee organizing its affairs for the purpose of avoiding the Board’s jurisdiction. With due respect to the views of the Trial Judge, I find this conclusion troublesome for two reasons.

First, the Trial Judge’s observation that a patentee can arrange its affairs as it wishes in order to avoid the Board’s jurisdiction is troublesome in that it may impact on an issue not before us, namely the legal effect of a patentee dedicating its patent to the public. Within the last few years the Board has witnessed the sudden ideological conversion of Canadian drug manufacturers willing to dedicate their patents and their subsequent insistence that they are no longer subject to the Board’s jurisdiction, with respect to future sales and pricing. I note that the Board has taken the position that patent dedication does not remove its continuing jurisdiction to monitor drug prices: see Genentech Canada Inc. (Re) (1992), 44 C.P.R. (3d) 316 (P.M.P.R.B.), at page 327. While that issue is not before us, nothing that was said by the Trial Judge should be viewed as a tacit rejection of that conclusion. That the Act makes no express provision for the possibility of patent dedication is at least one other complication that will have to be dealt with at some future date.

Second, subsection 48(1) of the Act specifically mandates that the specification to be disclaimed have been included in the patent by mistake or inadvertence. Clearly, this restricts the circumstances in which the avenue of seeking a disclaimer is open to a patentee. The evidence leads to the conclusion that no mistake or inadvertence existed, but no such finding of fact was made below. In the circumstances, I am not prepared to rule on whether subsection 48(1) is applicable.

The other attack on the validity of the disclaimer rests on subsection 48(4) of the Act, which states, in part, “[n]o disclaimer affects any action pending at the time when it is made”. The purpose of the subsection has been the subject of judicial comment. In Can. Celanese Ltd. v. B.V.D. Co., [1939] 2 D.L.R. 289 (P.C.) it was held that the rights and liabilities of the parties to a pending action are to be ascertained on the footing that the party who disclaims can obtain no advantage in the action from having obtained a disclaimer.

At first blush, I thought it doubtful whether the word “action” used in subsection 48(4) of the Act could embrace proceedings before the Board: see Eli Lilly and Co. v. Nu-Pharm Inc., [1997] 1 F.C. 3(C.A.). On further reflection, I do not believe that that subsection is of any assistance to the Board even if I were to conclude otherwise. Subsection 48(4) does not purport to render disclaimers invalid. It merely serves to confirm that a disclaimer cannot have retroactive effect on proceedings previously begun. This accords with what I understand is ICN’s position. ICN accepts that the Board will maintain jurisdiction to examine the pricing of Virazole until at least December 6, 1995, the date the disclaimer was filed. At the same time, it asserts that the disclaimer will have the prospective effect of terminating the Board’s jurisdiction. In my view, this position is consistent with the spirit and intent of subsection 48(4). This leads me to consider the final argument on this issue.

Assuming the disclaimer to be valid, ICN maintains that the ’265 patent does not pertain to Virazole because it no longer encompasses a claim for the use for which Virazole is being sold in Canada. The Board Staff, however, maintains that even if the disclaimer is valid, it does not have the effect of terminating the Board’s jurisdiction. On its face, the remaining claims of the invention described by the ’265 patent would continue to pertain to ribavirin within the meaning of the Act. The Board Staff maintains that ICN would still have the exclusive right to sell Virazole in Canada for all but one of the uses covered by the ’265 patent. That, it says, is a sufficient nexus. I agree. On the face of that patent, it would still pertain to the medicine being sold under the trade name Virazole. It is not to be assumed, as is suggested by ICN, that simply because the patent does not pertain to the use for which a medicine is presently being sold in Canada its existence will not have a deterrent effect on potential competitors. This potential for a deterrent effect, irrespective of its actual or prospective effect on market power, is the basis of the Board’s jurisdiction. As discussed earlier, the broad language found in subsections 83(1) and 79(2) does not support the narrow rational connection test advocated by ICN.

VI        ANCILLARY MATTERS

During the hearing of the appeal, two matters were pursued and although neither bears upon its disposition they demand consideration. One matter stems from the failure of ICN to disclose to the Board the existence of the ’265 patent. The other pertains to the legal standing of the respondent, “The Staff of the Patented Medicine Prices Review Board”, otherwise referred to throughout these reasons as the Board Staff.

Obviously, the failure of ICN to reveal the existence of the ’265 patent, at the time the Board asked ICN if it held any other patents pertaining to ribavirin can have no impact on the jurisdictional issue presented by this appeal. Rather that failure goes to the bona fides of ICN’s conduct. It is one matter for a drug manufacturer to disclose the existence of a patent while refusing to provide sales information on the ground that the Board lacks jurisdiction. It is quite another to make a unilateral determination as to the relevance of a patent and its effect on the Board’s jurisdiction. Whatever the powers of the Board be, it seems to me that at the very least pharmaceutical manufacturers run the risk of undermining their credibility, and that of their witnesses, before the Board, (not to mention running afoul of their statutory obligations under the Act and its regulations). To the extent that the task of determining whether prices charged or being charged for a medicine is regarded as a question of fact, it follows that adverse findings of credibility by the Board will not easily be displaced, either on judicial review or on appeal. In my view, minimum standards of cooperation, informed by common sense, must be observed by those in the pharmaceutical industry. Otherwise, the Board will be unable to fulfil its legislated mandate. In making these observations I do not wish to be regarded as having made a finding of a lack of bona fides on the part of ICN. Ordinarily, that type of finding is one best left to the Board in its capacity as finder of fact. I take it for granted that, in future, it is also a matter deserving of due consideration by the pharmaceutical industry. I turn now to the remaining matter, the legal standing of the respondent Board Staff.

With the consent of the parties, the Trial Judge amended the style of cause to add the Board Staff as a respondent and to redesignate the Board’s status from that of respondent to intervenor. On appeal, this Court questioned the standing of the Board Staff and was referred to the Patented Medicine Prices Review Board Rules (the Rules) adopted under subsection 96(2) of the Act. That subsection provides that with the approval of the Governor in Council the Board may make general rules for specifying the number of members of the Board for quorum purposes and for regulating the practice and procedure before the Board. Pursuant to section 2 of the Rules a “party” is defined to include “officers, employees and persons appointed under subsection 94(1) or (3) of the Act”. Subsection 94(1) provides that officers and employees necessary for the proper conduct of the work of the Board shall be appointed in accordance with the Public Service Employment Act, R.S.C., 1985, c. P-33. Subsection 94(3) authorizes the Board to hire, on a temporary basis, persons with “technical or specialized knowledge”. The Rules also define a party to include a minister referred to in subsection 86(2) [as enacted by S.C. 1993, c. 2, s. 7; 1995, c. 1, s. 62] and a person who has been granted leave to intervene under section 19 [as am. by S.C. 1993, c. 44, s. 191] of the Act. Subsection 86(2) grants standing to the Minister of Industry (or such other minister designated by the regulations) and provincial ministers responsible for health issues. Within this legislative framework the Board Staff rests its right to be added as a respondent to the judicial review application. I cannot accede to this submission.

Simply stated, the enabling legislation authorizes the Board to hire necessary staff. It does not give the so-called Board Staff legal status distinct from that of the Board. This reality is to be contrasted with the fact that the Act expressly confers party status on federal and provincial ministers of health. From the materials placed before the Court it is apparent that the Board has de facto decided to operate independently of its staff who have assumed responsibility for pursuing cases, in the same way, for example, that the Director of Competition Policy pursues matters before the Competition Tribunal. The relationship between the Board and its staff was described by the majority of the Board in Genentech, supra, at page 320 as follows:

In conducting hearings with respect to the price of a patented medicine, the Board’s staff is segregated from the Board. The Board’s staff, through its own counsel, adduces evidence, tests evidence of other parties, and makes submissions on procedural, jurisdictional, legal, and substantive issues arising during the course of the proceeding.

Nonetheless, the fact is that the Board’s enabling legislation is not structured so as to accord the Board Staff the same independent status on judicial review that is accorded, for example, the Director of Competition. I am not suggesting that the distinct roles being assumed by the Board and its staff are somehow legally flawed. There is no suggestion that the Board has somehow delegated its statutory obligations or fettered its discretion. I am confident that the present system is administratively efficient. What I am saying is that the Board Staff does not have a legal status independent of that of the Board. The reality is that the Board is required to act as both prosecutor and judge in order to fulfil its legislated mandate.

VII       CONCLUSION

The appeal should be dismissed with costs.

Stone J.A.: I agree.

Gray D.J.: I agree.