Second Person Not Limited to Invalidity Allegations in NOA

Recently, in the context of an action pursuant to subsection 6(1) of the Patented Medicines (Notice of Compliance) Regulations (the "Regulations"), the Federal Court granted a motion by the second person to amend its Statement of Defence to add allegations of invalidity that were not contained in its notice of allegation (NOA). In Sunovion Pharmaceuticals v. Taro Pharmaceuticals, 2021 FCA 113, the Federal Court of Appeal ("FCA") has now confirmed that this is the correct approach.

The FCA noted that the Regulatory Impact Assessment Statement ("RIAS") accompanying the Regulations acknowledges the requirement that the NOA must include a detailed statement of any grounds of invalidity that are alleged, but states that “[t]his requirement does not circumscribe or otherwise limit the issues and arguments that may be raised in a proceeding brought under the Regulations”. The FCA indicated that this passage from the RIAS "is telling as to the intent of the provision".

The FCA noted that there were sufficient incentives for a second person to include all invalidity allegations in its NOA that Sunovion's concerns regarding strategic case-splitting by second persons were likely more theoretical than real.

In particular, when it comes to potential exposure to section 8 damages, subsection 8(6) of the Regulations provides the Court with the opportunity to " take into account all matters that it considers relevant to the assessment of the amount...including any conduct of the parties that contributed to delay the disposition of the action". Hence, a second person's hypothetical decision to intentionally hold back invalidity allegations from the NOA and only add them later by way of pleading amendment would carry at least some potential risk that a section 8 damages award would be partially reduced.

Further, given the Court always retains its discretion to grant or dismiss a motion to amend a pleading, a second person's hypothetical decision to intentionally hold back invalidity allegations from the NOA and only add them later by way of amendment would carry at least some potential risk that the amendment would be denied.

Given the foregoing, the FCA dismissed Sunovion's appeal and awarded Taro with costs in the amount of $5,000.

Author: Jordan Scopa