FCA Upholds Validity and Infringement of Merck's Drug Patent

Merck & Co., Inc. and its licensees, Merck Frosst Canada & Co., Merck Frosst Canada Ltd. (Merck), Syngenta Limited, AstraZeneca UK Limited and AstraZeneca Canada Inc. (AstraZeneca), received a decision from the Federal Court of Appeal, upholding the earlier finding of Justice Roger Hughes that Merck's patent for lisinopril was valid and infringed by Apotex Inc.

Apotex's appeal from the April 26, 2006 decision was allowed in part on issues relating to limitation periods for exemptions to infringement and estoppel. The cross-appeal of Merck and AstraZeneca was partially successful, with the matter of election of profits or damages being denied.

At issue in the appeal was the validity and infringement of a Merck patent that covers and claims a class of compounds, including lisinopril, used in the treatment of hypertension. Lisinopril belongs to a class of drugs known as angiotensin converting enzymes (ACE) inhibitors. Merck patented a number of these compounds in divisional patents. The relationship of the sibling divisional patents to the patent at issue figured prominently in the appeal. Justices Linden, Sexton and Malone rendered the reasons for judgment on October 10, 2006.

The pivotal question on appeal was whether Merck had acquired multiple patents for a single invention by breaching a statutory provision during patent prosecution, and, if so, whether one of those patents should be invalidated. The FCA held that the patent was valid. The court found that Merck was entitled to separate patents for lisinopril and its related divisionals patents. The FCA further held that improper divisional applications do not give rise to a loss of patent rights in the absence of double patenting. The FCA followed the reasoning of the earlier decisions of the Supreme Court of Canada in Boehringer and Hoechst and found the UK decision of May & Baker Limited v. Boots Pure Drug Company Limited distinguishable.

Having found that lisinopril and the related divisional patents were not one invention, the court held that neither cause of action estoppel nor issue estoppel were applicable any longer. The estoppel argument advanced the position that if there was only one invention, Apotex should and could have raised its allegations of invalidity vis-à-vis the lisinopril patent, in the earlier enalapril litigation.

On the matter of willful delay, the FCA upheld Justice Hughes's findings. Given that no underlying delay was shown in this case, this was not an appropriate case in which to consider adopting the US concept of prosecution delay into Canadian law.

On appeal, Apotex alleged that a permanent injunction should not have been granted, relying in large measure on recent US case law. The court held, pursuant to section 44 of the Patent Act, that a valid patent entitles the patentee to the exclusive right to make, construct, use and sell its invention. Therefore an injunction preventing Apotex from selling lisinopril until the expiry of the patent is necessary to protect Merck and its licensee's rights.

Although Apotex admitted infringement prior to trial, it sought to limit its liability on the basis of several statutory or common-law exemptions. Of particular interest was a six-year limitation period that Justice Hughes imposed. The FCA found that limitation periods do not apply to any of the exemptions asserted by Apotex.

Remedies were also addressed by the FCA in regard to a number of issues, including delivery up or destruction. Justice Hughes had permitted Apotex to retain certain lisinopril products until after patent expiry, rather than requiring destruction or delivery up of such product. The FCA found that such retention was a de facto stockpiling exception running counter to Canada's obligations under the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS). As to the matter of election of profits, the FCA upheld Justice Hughes's decision that Merck was not entitled to elect profits, rather than damages, as a remedy to Apotex's infringement. At trial it was estimated that Apotex's sales were in excess of $250 million.

Merck was represented by a litigation team at Ogilvy Renault LLP that included Judith Robinson, Patrick Kierans, Jordana Sanft, Kenneth Sharpe, Leigh Walters and Julie Dallaire. AstraZeneca was represented by Smart & Biggar/Fetherstonhaugh by a team that included Gunars Gaikis, J. Sheldon Hamilton, Nancy Pei and Denise Lacombe. Apotex was represented by Goodmans LLP by a team that included Harry Radomski, David Scrimger, Nando De Luca and Miles Hastie and by Ivor Hughes.