[2016] 2 F.C.R. D-7
Patents
Practice
Appeals from Federal Court judgments (2014 FC 501, 2014 FC 502) allowing judicial reviews brought by respondents Sandoz Canada Inc. (Sandoz), ratiopharm inc. (ratiopharm) from Patented Medicine Prices Review Board (Board) decisions (PMPRB-10-D2-SANDOZ, PMPRB-08-D3-ratio-Salbutamol HFA, PMPRB-08-D3-ratiopharm) — Central issue in both appeals whether Federal Court properly holding that respondents falling outside jurisdiction of Board since respondents not “patentees” within meaning of Patent Act, R.S.C., 1985, c. P-4, s. 79(1) — Ratiopharm selling ratio-salbutamol HFA (ratio HFA), generic equivalent of brand name, patented anti-asthmatic drug manufactured, sold in Canada by pharmaceutical company — Pharmaceutical company selling ratio HFA to ratiopharm, granting it exclusive licence to set price, sell drug in Canada while keeping patent ownership — Sandoz wholly owned subsidiary of pharmaceutical company in Canada, selling medicines covered by patents owned by pharmaceutical company or wholly owned subsidiary thereof — No licence agreement existing between Sandoz, owners of patents in question — Board staff filing application for order that ratiopharm provide certain sales, pricing information regarding certain medicine ratiopharm selling; alleging ratiopharm having sold, in manner contrary to Act, ss. 83, 85, ratio HFA product in Canada at excessive prices — Similar proceedings undertaken against Sandoz regarding certain medicines Sandoz selling — Board allowing applications, determining, inter alia, that: Act, ss. 79, 103 constitutionally valid; person need not own patent over particular medicine to constitute “patentee” in respect of medicine within meaning of Act, s. 79(1); both respondents constituting Act, s. 79(1) “patentee[s]” within meaning thereof in relation to medicines at issue despite not holding patents thereover; Sandoz selling medicines at issue pursuant to implied licences from patent holders in question — Board also rejecting constitutional argument that Board’s enabling provisions, including definition of “patentee” in Act, s. 79(1) ultra vires Parliament — Federal Court concluding Board’s construction of word “patentee” in Act, s. 79(1) unreasonable since definition cannot include party holding neither patent nor monopoly in respect of medicine in question; determining that Board erring in holding that respondents “patentees” in respect of any medicines at issue; concluding that price control scheme devised by Parliament constitutionally valid when applied to brand name medicine or medicine sold by owner of patent pertaining thereto — Whether Federal Court right in applying standard of reasonableness to Board’s interpretation of Act, s. 79(1); whether open to Federal Court to set aside Board’s conclusion that person need not own patent or hold monopoly over medicine person selling to be “patentee” within meaning of Act, s. 79(1); whether Board erring in finding that Sandoz selling medicines in question pursuant to implied licence; whether Act, s. 79, as construed by Board, could withstand constitutional scrutiny — Federal Court properly concluding that Board’s interpretation of Act, s. 79(1) to be reviewed on standard of reasonableness — In overturning Board’s interpretation of Act, s. 79(1), Federal Court substituting own view of legislative purpose of Act, s. 79(1) without considering whether Board’s characterization meeting threshold of acceptability, defensibility separating unreasonable decisions from reasonable ones — As such, Federal Court misapplying standard of reasonableness — While both Federal Court, Board agreeing that mischief targeted by provisions at issue being excessive pricing of patented medicines, Federal Court focussing on persons in position to cause mischief; losing sight of ultimate goal of provisions in question; failing to appreciate that mischief sought to be prevented could be caused without patent owner itself charging excessive prices — Federal Court also overturning Board’s interpretation of Act, s. 79(1) given concern that interpretation might be unconstitutional — However, reasoning ignoring standard of review of reasonableness governing question in present case —Reasonableness review not inviting Court to prioritize all possible answers to question, identifying best among them but rather requiring determination as to whether conclusion decision maker reaching meeting threshold of acceptability, defensibility —To extent legislation reasonably capable of bearing interpretation given by Board, Federal Court precluded from substituting own view for Board’s view — Not open to Federal Court to construe Act, s. 79(1) narrowly on basis construction adopted by Board might be unconstitutional since notice of constitutional question filed, constitutional validity of Act, s. 79(1), as construed by Board, for Court to decide — In interpreting Act, s. 79(1), Federal Court considering impact of French text thereof; determining that French text tying definition of “patentee” more closely to rights of patent holder than English text; thus, preferring French text — However, Federal Court’s reasoning in construing definition not adding anything to one found in Act, s. 2 (“person for the time being entitled to the benefit of the patent”); thereby imposing redundancy offending presumption Parliament does not speak in vain — Federal Court never considering whether Sandoz having implied licence regarding patents in question since reaching decision on other basis — Regarding constitutional challenge, Federal Court, Board correctly holding that control of prices charged for patented medicines coming within jurisdiction conferred on Parliament over patents under Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.) (as am. by Canada Act 1982, 1982, c. 11 (U.K.), Schedule to the Constitution Act, 1982, Item 1) [R.S.C., 1985, Appendix II, No. 5], s. 91(22) when applied to patent holder or owner — However, necessary to determine whether price control scheme retaining constitutional validity when applied to non-patent holders — Harm Act seeking to prevent arising by reason of existence of patent pertaining to medicine being sold; therefore, nothing turning on fact that person exercising selling rights not holding patent itself — Board thus correctly holding that including persons who exercise selling rights under specific patent within ambit of Act, s. 79 not bringing provision outside scope of Constitution Act, 1867, s. 91(22) — Appeals allowed.
Canada (Attorney General) v. Sandoz Canada Inc. (A-302-14, A-303-14, 2015 FCA 249, Noël C.J., judgment dated November 6, 2015, 58 pp.)