SUPREME COURT OF CANADA

Citation: Bristol‑Myers Squibb Co. v. Canada (Attorney General), [2005] 1 S.C.R. 533, 2005 SCC 26

Date: 20050519

Docket: 29823

Between:

Biolyse Pharma Corporation

Appellant

v.

Bristol-Myers Squibb Company, Bristol-Myers Squibb

Canada Inc., and Attorney General of Canada

Respondents

‑ and ‑

Canadian Generic Pharmaceutical Association,

Pfizer Canada Inc.

Interveners

Coram: McLachlin C.J. and Major, Bastarache, Binnie, LeBel, Deschamps, Fish, Abella and Charron JJ.

Reasons for Judgment:

(paras. 1 to 71)

Dissenting reasons:

(paras. 72 to 193)

Binnie J. (McLachlin C.J. and LeBel, Deschamps, Fish and Abella JJ. concurring)

Bastarache J. (Major and Charron JJ. concurring)

Bristol‑Myers Squibb Co. v. Canada (Attorney General), [2005] 1 S.C.R. 533, 2005 SCC 26

Biolyse Pharma Corporation Appellant

v.

Bristol‑Myers Squibb Company, Bristol‑Myers Squibb

Canada Inc. and Attorney General of Canada Respondents

and

Canadian Generic Pharmaceutical Association and

Pfizer Canada Inc. Interveners

Indexed as: Bristol‑Myers Squibb Co. v. Canada (Attorney General)

Neutral citation: 2005 SCC 26.

File No.: 29823.

2004: November 5; 2005: May 19.

Present: McLachlin C.J. and Major, Bastarache, Binnie, LeBel, Deschamps, Fish, Abella and Charron JJ.

on appeal from the federal court of appeal

Patents — Patented medicines — Notice of compliance — Whether new drug submission falls within scope of s. 5(1.1) of Patented Medicines (Notice of Compliance) Regulations, SOR/93‑133.

In the 1970s, information that the bark of the Pacific yew contained paclitaxel, an anticarcinogenic component, was discovered by the National Cancer Institute, a government‑funded organization in the United States, and put into the public domain. There were practical concerns that insufficient quantities could be made available for large scale pharmaceutical production, however, as the yew bushes died when stripped of their bark. In the 1980s the respondent BMS companies developed a drug containing paclitaxel, later marketed as Taxol. In the course of that work it obtained several Canadian patents covering new formulations and methods of administration of the medicine. None of the patents covered paclitaxel itself.

Working independently of BMS, the appellant, Biolyse, discovered that paclitaxel could be extracted from a different species of yew without killing it, and applied to the Minister of Health for a notice of compliance (“NOC”) in order to market its product. The Minister required Biolyse to submit a New Drug Submission (“NDS”) rather than an Abbreviated New Drug Submission (“ANDS”) because its different botanical source and its claims for new and different uses for the medicine prevented any reliance on BMS’s Taxol as a Canadian reference product. Biolyse prepared and submitted independent clinical studies. The Minister approved the safety and efficacy of the Biolyse product as a new drug and issued Biolyse a NOC in 2001. BMS sought to quash this NOC on the basis that its issuance depended on a finding of bioequivalence to the BMS product.

After repealing the former compulsory licencing system, Parliament wished to facilitate early market entry by generic manufacturers immediately after the expiry of a patent, by eliminating the usual regulatory lag of two years or so before a generic manufacturer could obtain an NOC. However, in order to prevent abuse of these “early working” and “stockpiling” exceptions by the generic companies the government also enacted the Patented Medicines (Notice of Compliance) Regulations (“NOC Regulations”). Under the NOC Regulations, a patent owner may submit a patent list in respect of any drug that contains a “medicine”. If another manufacturer subsequently applies for a NOC for the same drug this “second person” may allege that the patent list filed by the “first person” is not a proper bar. After being served with a Notice of Allegation, the innovator may apply for an order prohibiting the Minister from issuing a NOC until all of the listed patents have expired. This application for prohibition triggers a 24‑month statutory freeze on the issuance of a NOC.

On an application for judicial review, the motions judge found that Biolyse had neither applied for nor obtained regulatory approval on the basis of bioequivalence. He ruled that Biolyse was caught by s. 5(1.1) of the NOC Regulations however, because both the Biolyse and the BMS products contained paclitaxel, even though neither BMS nor Biolyse had any patent claim to paclitaxel. He quashed the NOC. The Federal Court of Appeal upheld that decision.

Held (Major, Bastarache and Charron JJ. dissenting): The appeal should be allowed.

Per McLachlin C.J. and Binnie, LeBel, Deschamps, Fish and Abella JJ.: The Minister was entitled to issue the NOC to Biolyse on the basis of its NDS without subjecting it to the statutory freeze. An interpretation of the NOC Regulations that confers on BMS a monopoly merely by demonstrating the presence of a public domain medicine like paclitaxel in its product would provide no value to the public in exchange for the monopoly BMS seeks. When the NOC Regulations are considered in their proper context, and in particular in light of the wording of the statutory power that authorized them, the NOC Regulations do not have the sweeping effect contended for by BMS. [4] [69]

Parliament enacted the legislation in question in order to protect the rights of patentees by preventing generic manufacturers from marketing “copy‑cat drugs” until the expiry of all relevant patents. Under the NOC Regulations the court hearing the prohibition application has no discretion to lift the stay even if it thinks the innovator’s case for interim relief is weak. Nor does the court have a discretion to leave the contending parties to their remedies under the Patent Act. The “second person’s” application for a NOC simply goes into deep‑freeze until the statutory procedures have played themselves out. [24] [45-46]

Section 5(1.1) of the NOC Regulations does not apply to innovative drugs. It should be confined to applications for generic copies of patented drugs in the circumstances contemplated by the regulator, namely, where a manufacturer makes a submission for an NOC for a drug which it purports to copy from another generic but in fact copies from the innovator company that has filed the patent list. Furthermore, since Biolyse did not rely on bioequivalence, its product did not fall within the scope of s. 5(1) of the NOC Regulations either. The product was properly treated as an innovator drug, rather than a copy‑cat drug, and neither ss. 5(1) nor 5(1.1) had any application. [69]

Applying the modern approach to statutory interpretation, the word “submission” in s. 5(1.1) cannot be isolated from this context and from the scope of the regulation making power in s. 55.2(4) of the Patent Act, which permits a generic manufacturer to work the patented invention within the 20‑year period (“the early working exception”) to the extent necessary to obtain a NOC at the time the patent(s) expired and to “stockpile” generic product towards the end of the 20‑year period to await lawful market entry. The grammatical and ordinary sense of the words and the precise scope of the word “submission” in s. 5(1.1) must be given a purposive interpretation within this context. Secondly, in analyzing the more specific schemes of the Patent Act and the Minister’s regulation‑making power, it is apparent that the NOC Regulations are directed to persons who are making use of the “patented invention” which is not necessarily co‑extensive with the patented drug or the patented claims. BMS has no patent on paclitaxel and the mere fact paclitaxel is found in the Biolyse product does not mean that Biolyse took advantage of BMS inventions for the purpose of “early working” a generic copy or “stockpiling” in anticipation of the expiry of the BMS patents. Moreover, the limiting words of s. 55.2(4) do not disturb the usual requirement that regulations must fall within the regulation making power. The “plain meaning” adopted by the Federal Court of Appeal in this case would suggest that s. 5(1.1) is ultra vires the very specific authority given by s. 55.2(4). Finally, the internal structure of the NOC Regulations supports a narrower interpretation. The word “submission” is also used in s. 4(1), which provides the template upon which s. 5(1.1) is modelled, and s. 4(1) has been held not to apply to all submissions. Any other interpretation of s. 4(1) would allow innovator companies to sidestep the time limits applicable to patent lists by the simple expedient of making corporate or technical changes to their filing by way of what is called a supplementary NDS. In this context, the courts have found that an unqualified and unrestricted interpretation of the word “submission” would be destructive of regulatory intent. [11] [41-61] [67]

The interpretation of s. 5(1.1) accepted by the courts below would lead to an absurd result. The “medicine” in the drug to which the patent list relates need not itself be patented, or indeed, owe anything to the ingenuity of the “first” person. So long as such “medicine” shows up as a component, however minor, in the chemical composition of the drug to which the patent list relates, the “second person” (including an innovator who is seeking to manufacture a new and useful drug) will be barred from proceeding to market by the automatic statutory freeze, and this bar will continue for so long as the patent list holder can evergreen its product by resort to patentable improvements to other components or additions. This would stifle competition and innovation in the pharmaceutical industry and produce a result at odds with what the regulator was trying to achieve. [66]

Per Major, Bastarache and Charron JJ. (dissenting): The Minister was not entitled to issue the NOC to Biolyse. Where, as here, s. 5 of the NOC Regulations applies to a drug manufacturer, a NOC cannot be issued by the Minister under s. 7 unless the manufacturer makes a submission and serves a Notice of Allegation (“NOA”) on the originating, innovator manufacturing company, to advise the latter that it is seeking approval of a drug containing a medicine found in the innovator company’s already approved drug. [74]

The ordinary and grammatical meaning of s. 5(1.1) is unambiguous and clearly indicates that Biolyse’s submission for a NOC falls within the purview of that provision. First, s. 5(1) did not apply to the current situation because Biolyse did not make reference to Taxol for the purpose of demonstrating bioequivalence. Second, Biolyse filed a submission for a NOC and it is settled law that “a submission for a notice of compliance” in s. 5(1.1) includes a NDS and an ANDS, as well as a supplement to either of these submissions. Third, s. 5(1.1) was triggered because Biolyse’s Paclitaxel contained the same medicine, employed the same route of administration and had a comparable strength and dosage form as Taxol, a drug already marketed in Canada pursuant to a NOC issued to BMS and in respect of which a patent list had been submitted. The term “medicine” in s. 5(1.1) is not limited to patented medicines. Biolyse therefore had to make an allegation in its submission pursuant to s. 5(1.1)(b) and, until it complied, the Minister was prohibited by s. 7(1)(b) from issuing a NOC in respect of Paclitaxel for injection. This legislative scheme cannot work without its main tool: the NOA. The ability to circumvent the NOA would render the patent list an empty shell. [107-121]

Furthermore, regarding the broader and external contexts of s. 5(1.1), the NOC Regulations, the regulation‑making power set out in s. 55.2 of the Patent Act and the legislative history of s. 5(1.1), all support the ordinary and grammatical meaning of that provision. This meaning is consistent with the purpose of the NOC Regulations and s. 55.2, which is to protect the rights of patent holders. Section 5(1.1) is also a proper exercise of regulatory power conferred under s. 55.2(4) of the Act as it strives to stop a second entry manufacturer from circumventing the NOC Regulations by forcing it to address the question of infringement. Lastly, the evolution of s. 5(1.1) demonstrates how the government was active in its efforts to transform and broaden the provision. [152-153] [159]

Section 5(1.1) cannot reasonably be restricted to an ANDS. Such an attempt to restrict the circumstances under which a NOA must be sent cannot possibly be in accordance with the purpose of the NOC Regulations and s. 55.2 of the Patent Act. Moreover, if s. 5(1.1) required a demonstration of bioequivalence, it would never be invoked because, where a comparison is made to demonstrate bioequivalence, the provisions of s. 5(1) apply. Accordingly, an interpretation that renders a section redundant should be rejected in favour of one that is consistent with s. 5 as a whole. [151] [179]

Cases Cited

By Binnie J.

Applied: Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42; distinguished: Nu‑Pharm Inc. v. Canada (Attorney General), 1998 19110 (FC), [1999] 1 F.C. 620; considered: Monsanto Canada Inc. v. Schmeiser, [2004] 1 S.C.R. 902, 2004 SCC 34; Bristol‑Myers Squibb Canada Inc. v. Canada (Attorney General) (2001), 2001 22128 (FC), 10 C.P.R. (4th) 318, aff’d (2002), 16 C.P.R. (4th) 425, 2002 FCA 32; Ferring Inc. v. Canada (Attorney General) (2003), 26 C.P.R. (4th) 155, 2003 FCA 274; Toba Pharma Inc. v. Canada (Attorney General) (2002), 21 C.P.R. (4th) 232, 2002 FCT 927; AstraZeneca Canada Inc. v. Canada (Minister of Health) (2004), 36 C.P.R. (4th) 58, 2004 FC 736; Merck & Co. v. Canada (Attorney General) (1999), 1999 9090 (FC), 176 F.T.R. 21, aff’d (2000), 2000 15094 (FCA), 5 C.P.R. (4th) 138; referred to: Whirlpool Corp. v. Camco Inc., [2000] 2 S.C.R. 1067, 2000 SCC 67; Free World Trust v. Électro Santé Inc., [2000] 2 S.C.R. 1024, 2000 SCC 66; Apotex Inc. v. Canada (Attorney General), 1993 3004 (FCA), [1994] 1 F.C. 742, aff’d 1994 47 (SCC), [1994] 3 S.C.R. 1100; Imperial Chemical Industries PLC v. Novopharm Ltd. (1991), 1991 14279 (FCA), 35 C.P.R. (3d) 137; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), 1998 792 (SCC), [1998] 2 S.C.R. 193; Francis v. Baker, 1999 659 (SCC), [1999] 3 S.C.R. 250.

By Bastarache J. (dissenting)

Merck & Co. v. Canada (Attorney General) (1999), 1999 9090 (FC), 176 F.T.R. 21, aff’d (2000), 2000 15094 (FCA), 5 C.P.R. (4th) 138, leave to appeal denied, [2000] 1 S.C.R. xvii; Nu‑Pharm Inc. v. Canada (Attorney General) (1998), 1998 7436 (FCA), 80 C.P.R. (3d) 74; Syntex (U.S.A.) L.L.C. v. Canada (Minister of Health) (2002), 20 C.P.R. (4th) 29, 2002 FCA 289; Canadian Pacific Ltd. v. Matsqui Indian Band, 1995 145 (SCC), [1995] 1 S.C.R. 3; Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 982; Pfizer Canada Inc. v. Minister of National Health and Welfare (1986), 1986 7719 (FCA), 12 C.P.R. (3d) 438; Reference re: Patented Medicines (Notice of Compliance) Regulations, SOR/93‑133, s. 7 (1999), 3 C.P.R. (4th) 77; Eli Lilly Canada Inc. v. Canada (Minister of Health), [2003] 3 F.C. 140, 2003 FCA 24; Novopharm Ltd. v. Canada (Minister of National Health and Welfare), 1998 9043 (FC), [1998] 3 F.C. 50; Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42; H.L. v. Canada (Attorney General), [2005] 1 S.C.R. 401, 2005 SCC 25; Marche v. Halifax Insurance Co., [2005] 1 S.C.R. 47, 2005 SCC 6; Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45, 2002 SCC 76; Chieu v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 84, 2002 SCC 3; Francis v. Baker, 1999 659 (SCC), [1999] 3 S.C.R. 250; United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City), [2004] 1 S.C.R. 485, 2004 SCC 19; Spar Aerospace Ltd. v. American Mobile Satellite Corp., [2002] 4 S.C.R. 205, 2002 SCC 78; R. v. McDonald (2002), 2002 NSCA 135, 209 N.S.R. (2d) 283; Canadian Pacific Air Lines Ltd. v. Canadian Air Line Pilots Assn., 1993 31 (SCC), [1993] 3 S.C.R. 724; Apotex Inc. v. Canada (Minister of Health) (1999), 1999 7834 (FC), 87 C.P.R. (3d) 271; Bristol‑Myers Squibb Canada Inc. v. Canada (Attorney General) (2001), 2001 22128 (FC), 10 C.P.R. (4th) 318, aff’d (2002), 16 C.P.R. (4th) 425, 2002 FCA 32; Toba Pharma Inc. v. Canada (Attorney General) (2002), 21 C.P.R. (4th) 232, 2002 FCT 927; Ferring Inc. v. Canada (Attorney General) (2003), 26 C.P.R. (4th) 155, 2003 FCA 274; AstraZeneca Canada Inc. v. Canada (Minister of Health) (2004), 36 C.P.R. (4th) 58, 2004 FC 736; GlaxoSmithKline Inc. v. Canada (Attorney General), (2004), 38 C.P.R. (4th) 27, 2004 FC 1302; Gerber Garment Technology Inc. v. Lectra Systems Ltd., [1997] R.P.C. 443; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1998), 1998 8936 (FC), 84 C.P.R. (3d) 492, aff’d (2000), 2000 15616 (FCA), 8 C.P.R. (4th) 48; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1994), 1994 19508 (FCA), 55 C.P.R. (3d) 302; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), 1998 792 (SCC), [1998] 2 S.C.R. 193; Merck Frosst Canada Inc. v. Apotex Inc., 1997 4806 (FCA), [1997] 2 F.C. 561; Willick v. Willick, 1994 28 (SCC), [1994] 3 S.C.R. 670; R. v. Ulybel Enterprises Ltd., [2001] 2 S.C.R. 867, 2001 SCC 56; RJR‑MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311; Friesen v. Canada, 1995 62 (SCC), [1995] 3 S.C.R. 103; Bayer Inc. v. Canada (Attorney General) (1999), 1999 8099 (FCA), 87 C.P.R. (3d) 293; Eli Lilly & Co. v. Novopharm Ltd., 1998 791 (SCC), [1998] 2 S.C.R. 129; R. v. McIntosh, 1995 124 (SCC), [1995] 1 S.C.R. 686; R. v. Hinchey, 1996 157 (SCC), [1996] 3 S.C.R. 1128; R. v. Proulx, [2000] 1 S.C.R. 61, 2000 SCC 5; Degelder Construction Co. v. Dancorp Developments Ltd., 1998 765 (SCC), [1998] 3 S.C.R. 90; Zeitel v. Ellscheid, 1994 82 (SCC), [1994] 2 S.C.R. 142; David Bull Laboratories (Canada) Inc. v. Pharmacia Inc., 1994 3529 (FCA), [1995] 1 F.C. 588.

Statutes and Regulations Cited

Federal Courts Act, R.S.C. 1985, c. F‑7, s. 18.1.

Food and Drug Regulations, C.R.C. 1978, c. 870 [am. SOR/95‑411], ss. C.08.001, C.08.002, C.08.002.1, C.08.003, C.08.004(1).

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

Interpretation Act, R.S.C. 1985, c. I‑21, ss. 2(1) “enactment”, 3(1), 12.

Patent Act, R.S.C. 1985, c. P‑4, ss. 39(4), (5), (14), 54(1), 55, 55.2 [am. 2001, c. 10, s. 2(1)], 60(1), (2), 65, 66.

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

Patented Medicines (Notice of Compliance) Regulations, SOR/93‑133 [am. SOR/99-379], ss. 2 “claim for the medicine itself”, “claim for the use of the medicine”, “first person”, “medicine”, “notice of compliance”, 3(1), 4(1), (2), (4), (6), 5(1), (1.1), (2), (3), 6, 7, 8, Regulatory Impact Analysis Statement.

Treaties and Other International Instruments

Agreement on Trade‑Related Aspects of Intellectual Property Rights, 1869 U.N.T.S. 299 (being Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization, 1867 U.N.T.S. 3), signed April 15, 1994.

North American Free Trade Agreement Between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, Can. T.S. 1994 No. 2, art. 1709(10).

Authors Cited

Barrigar, Robert H. Canadian Patent Act annotated, 2nd ed. Aurora, Ont.: Canada Law Book, 1994 (loose‑leaf updated November 2004).

Canada. Health Canada, Therapeutic Products Programme. Guidance for Industry — Patented Medicines (Notice of Compliance) Regulations. Ottawa: The Department, May 10, 2000.

Côté, Pierre‑André. The Interpretation of Legislation in Canada, 3rd ed. Scarborough, Ont.: Carswell, 2000.

Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.

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

Garland, Steven B., and Jeremy E. Want. “The Canadian Patent System: An Appropriate Balance Between the Rights of the Public and the Patentee” (1999), 16 C.I.P.R. 43.

Grenier, François M., et Catherine Lemay. “Le règlement sur les médicaments brevetés (avis de conformité)” (2003), 20 C.I.P.R. 51.

Henderson, Gordon F., ed. Patent Law of Canada. Scarborough, Ont.: Carswell, 1994.

Hore, Edward. “The Notice of Compliance Regulations Under the Patent Act: The First Two Years” (1995), 12 C.I.P.R. 207.

Hughes, Roger T., and John H. Woodley. Hughes and Woodley on Patents, loose‑leaf ed. Toronto: Butterworths, 1984 (loose‑leaf updated October 2004, Issue 60).

Kernochan, John M. “Statutory Interpretation: An Outline of Method” (1976), 3 Dal. L.J. 333.

Orlhac, Thierry. “The New Canadian Pharmaceutical Compulsory Licensing Provisions or How to Jump Out of the Frying Pan and Into the Fire” (1990), 6 C.I.P.R. 276, www.robic.ca/publications/pdf/167E‑TO.pdf.

Smith, Margaret. Patent Protection for Pharmaceutical Products (BP‑354E). Background Paper. Library of Parliament, Research Branch, Law and Government Division. Ottawa: November 1993.

Smith, Margaret. Patent Protection for Pharmaceutical Products in Canada — Chronology of Significant Events (PRB 99‑46E). Library of Parliament, Research Branch, Law and Government Division. Ottawa: March 30, 2000.

Sullivan, Ruth. Sullivan and Driedger on the Construction of Statutes, 4th ed. Markham, Ont.: Butterworths, 2002.

Takach, George Francis. Patents: A Canadian compendium of law and practice. Edmonton: Juriliber, 1993.

Wilcox, Peter R., and Daphne C. Ripley. “The Patented Medicines (Notice of Compliance) Regulations” (2000), 16 C.I.P.R. 429.

World Trade Organization. Report of the panel, Canada — Patent Protection of Pharmaceutical Products, complaint by the European Communities and their member States, WTO Doc. WT/DS114/R, March 17, 2000.

APPEAL from a judgment of the Federal Court of Appeal (Strayer, Nadon and Evans JJ.A.), [2003] 4 F.C. 505, 226 D.L.R. (4th) 138, 303 N.R. 63, 24 C.P.R. (4th) 417, [2003] F.C.J. No. 566 (QL), 2003 FCA 180, upholding a decision of Blanchard J. (2002), 224 F.T.R. 236, 22 C.P.R. (4th) 345, [2002] F.C.J. No. 1638 (QL), 2002 FCT 1205, granting an application for judicial review and setting aside a notice of compliance issued by the Minister of Health in respect of a drug. Appeal allowed, Major, Bastarache and Charron JJ. dissenting.

Andrew J. Roman, for the appellant.

Anthony G. Creber and Patrick S. Smith, for the respondents Bristol‑Myers Squibb Company and Bristol‑Myers Squibb Canada Inc.

No one appeared for the respondent the Attorney General of Canada.

Written submission only by Edward Hore, for the intervener the Canadian Generic Pharmaceutical Association.

John Terry and Conor McCourt, for the intervener Pfizer Canada Inc.

The judgment of McLachlin C.J. and Binnie, LeBel, Deschamps, Fish and Abella JJ. was delivered by

[1] Binnie J. — Our Court has often spoken of “the balance struck under the Patent Act” in which the public gives an inventor the right to prevent anybody else from using his or her invention for a period of 20 years in exchange for disclosure of what has been invented. As a general rule, if the patent holder obtains a monopoly for something which does not fulfil the statutory requirements of novelty, ingenuity and utility, then the public is short-changed. See Whirlpool Corp. v. Camco Inc., [2000] 2 S.C.R. 1067, 2000 SCC 67, and Free World Trust v. Électro Santé Inc., [2000] 2 S.C.R. 1024, 2000 SCC 66.

[2] In the present appeal, the Court is required to consider this “balance” in the much-litigated field of patented medicines, where Parliament is concerned not only with the balance between inventors and potential users, but between the protection of intellectual property on the one hand and, on the other hand, the desire to reduce health care costs while being fair to those whose ingenuity brought the drugs into existence in the first place.

[3] The drug in dispute contains a cancer-fighting medicine called paclitaxel. Paclitaxel was discovered by the National Cancer Institute in the United States, not the respondents Bristol-Myers Squibb Company and Bristol-Myers Squibb Canada Inc. (collectively “BMS”), but BMS has three subsisting patents related to its formulation and administration. The appellant, Biolyse Pharma Corporation (“Biolyse”), argues that the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (“NOC Regulations”), must be taken to refer to patented medicines, and points out that BMS can have no patent on paclitaxel itself. There is an unchallenged finding of fact by the motions judge that approval of the Biolyse product was not based on bioequivalence with the BMS product, but on its own clinical studies and “what was known to scientists in the public realm about paclitaxel” ((2002), 224 F.T.R. 236, 2002 FCT 1205, at para. 40).

[4] Nevertheless, BMS says that a literal application of the words in s. 5(1.1) of the NOC Regulations entitles it to the statutory injunction under s. 7 to keep a Biolyse product containing paclitaxel off the market despite the clear indication that an application of s. 5(1.1) would put the NOC Regulations in conflict with the terms of the regulation-making power under which they were issued. BMS contends that under the NOC Regulations the mere presence of the public domain medicine paclitaxel in the Biolyse formulation is enough. (Although there are other similarities between the Biolyse product and the BMS product, the only common component relevant to the NOC Regulations is the medicine paclitaxel.) The Federal Court of Appeal accepted this argument but in my opinion, with respect, it erred in doing so ([2003] 4 F.C. 505, 2003 FCA 180). An interpretation of the NOC Regulations that confers on BMS a monopoly merely by demonstrating the presence of a public domain medicine like paclitaxel in its product provides no value to the public in exchange for the monopoly BMS seeks. When the NOC Regulations are considered in their proper context, and in particular in light of the wording of s. 55.2(4) of the Patent Act, R.S.C. 1985, c. P-4, that authorized them, the NOC Regulations do not have the sweeping effect contended for by BMS. I would therefore allow the appeal.

I. Introduction

[5] Before addressing the specific issues raised by the appeal, it is useful to set out the regulatory context in which the dispute arises.

A. Innovator Drug Companies and Generic Drug Companies

[6] Over the years, Canada has developed a major sector of “generic drug” manufacturers described as companies that generally manufacture and distribute “drugs which were researched, developed and first brought to market by ‘innovator’ companies” (Apotex Inc. v. Canada (Attorney General), 1993 3004 (FCA), [1994] 1 F.C. 742 (C.A.), at p. 751, aff’d 1994 47 (SCC), [1994] 3 S.C.R. 1100). They produce what is sometimes known in the trade as “copy-cat” drugs.

[7] The success of the generic drug manufacturers has been a source of grievance to owners of patents for pharmaceutical medicines, who view monopoly profits conferred by patents as essential to recoup the cost of their research program as well as to earn a profit on their investment. Generic drug manufacturers, who generally do not have significant research costs in relation to a drug first brought to market by an innovator company, need only turn a profit on their manufacturing and distribution facilities. Generic drugs can therefore be sold at a discount to “brand name” products in the market place, at considerable savings to the public and at considerable cost to the profits of the innovator drug companies.

[8] Until 1993 the Minister of Health was not directly concerned with patent issues. Indeed, Parliament’s policy since 1923 had been to favour health cost savings over the protection of intellectual property by making available to generic manufacturers a scheme of compulsory licencing of an “invention intended or capable of being used for medicine or for the preparation or production of medicine” under s. 39(4) of the Patent Act. The compulsory licencing scheme gathered momentum after 1969 when it was extended to imported drugs. A compulsory licence could invariably be obtained from the Commissioner of Patents, and a notice of compliance (“NOC”) from the Minister of Health, providing the generic manufacturer could establish pharmaceutical equivalence of its product with the innovator drug (“the Canadian reference product”). In determining the terms of the licence and amount of royalty payable, the Commissioner of Patents was required to “have regard to the desirability of making the medicine available to the public at the lowest possible price consistent with giving to the patentee due reward for the research leading to the invention and for such other factors as may be prescribed” (s. 39(5)). The royalty payable to the patent owner was generally fixed at 4 percent to 5 percent of the net selling price of the drug in posological form, or 15 percent of the net selling price of the drug in bulk (T. Orlhac, “The New Canadian Pharmaceutical Compulsory Licensing Provisions on How to Jump Out of the Frying Pan and Into the Fire” (1990), 6 C.I.P.R. 276; G. F. Takach, Patents: A Canadian compendium of law and practice (1993), at p. 119; and see Imperial Chemical Industries PLC v. Novopharm Ltd. (1991), 1991 14279 (FCA), 35 C.P.R. (3d) 137 (F.C.A.), at pp. 139-40). Linking licence fees to the cost of the “research leading to the invention” did not cover the cost of massive research programs required by the innovators to produce the few “winners” from the many false starts and failed research projects that never came to market.

[9] Section 39(14) of the Patent Act simply required the Commissioner of Patents to notify the Department of National Health and Welfare of all compulsory licence applications.

[10] In a reversal of policy, Parliament in 1993 repealed the compulsory licence provisions of the Patent Act by what became known as Bill C-91 (S.C. 1993, c. 2) and extinguished all compulsory licences issued on or after December 20, 1991. In part, these changes flowed from international obligations accepted by Canada under the Agreement on Trade-Related Aspects of Intellectual Property Rights, 1869 U.N.T.S. 299 (“TRIPS”). More immediately, perhaps, it was thought that Canada’s compulsory licensing system would be declared incompatible with Canada’s obligations under the North American Free Trade Agreement, Can. T.S. 1994 No. 2, in particular art. 1709(10), signed at the end of 1992.

[11] However, having agreed to respect the 20-year monopoly granted by patents, Parliament wished to facilitate the entry of competition immediately thereafter. It acted to eliminate the usual regulatory lag of two years or more after expiry of a patent for the generic manufacturer to do the work necessary to obtain a NOC. Parliament did so by introducing an exemption from the owner’s patent rights under which the generic manufacturers could work the patented invention within the 20-year period (“the early working exception”) to the extent necessary to obtain a NOC at the time the patent(s) expired (s. 55.2(1)) and to “stockpile” generic product towards the end of the 20-year period to await lawful market entry (s. 55.2(2)). In order to prevent abuse of the “early working” and “stockpiling” exceptions to patent protection, the government enacted the NOC Regulations that are at issue in this appeal.

[12] The patent owner’s remedies under the NOC Regulations are in addition to all of the usual remedies for patent infringement under the Patent Act.

B. The Regulatory Approval Procedure

[13] The Food and Drugs Act, R.S.C. 1985, c. F-27, sets up a regulatory structure to ensure that before drugs are allowed on the Canadian market they meet rigorous health and safety requirements. Regulatory approval culminates in the issuance of a NOC by the Minister on the advice of his officials in the Therapeutic Products Program (“TPP”) of the federal Department of Health.

[14] The Food and Drug Regulations, C.R.C. 1978, c. 870 (“FDA Regulations”), and departmental policies require drug manufacturers to submit different types of new drug submission for different purposes. The two principal forms of submission are the New Drug Submission (“NDS”), filed by an innovative drug manufacturer for a new drug product, and the Abbreviated New Drug Submission, filed by a generic manufacturer that claims its product is the “pharmaceutical equivalent” of a previously approved “Canadian reference product” (s. C.08.002.1(1)(a)).

[15] A pharmaceutical company proposing to market a new drug in Canada must include in its NDS a description of the benefits claimed, the adverse reactions experienced, the chemical composition of the ingredients and the methods of manufacture and purification in sufficient detail to enable the Minister to assess the safety and effectiveness of the new drug as therein specified. The Minister and his departmental officials then proceed to examine the material, possibly require further studies, pose questions, and generally conduct a wide-ranging inquiry, all of which may consume several years.

[16] A “new drug” is defined in s. C.08.001 of the FDA Regulations as a drug which contains a substance which “has not been sold as a drug in Canada for sufficient time and in sufficient quantity to establish in Canada the safety and effectiveness of that substance for use as a drug”.

[17] Eventually the Minister, if so satisfied, “shall” issue a NOC (s. C.08.004(1)). The Minister must also be satisfied with the proposed arrangements of manufacture, quality control and so forth (s. C.08.002). The new drug may then go to market.

[18] The health issues and patent issues are now linked because the Minister is prohibited from issuing a NOC even if satisfied of the safety and efficacy of a drug until potential patent issues are addressed under the NOC Regulations (s. 7(1)).

C. The NOC Regulations

[19] Under the NOC Regulations, a patent owner may submit to the Minister a patent list in respect of any drug that contains a “medicine”, defined in s. 2 of the NOC Regulations as

a substance intended or capable of being used for the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or the symptoms thereof.

(The party filing the patent list is called the “first person”.) Paclitaxel is a medicine. As stated, it was given to the public domain by the U.S. National Cancer Institute.

[20] If another manufacturer subsequently applies for a NOC for the same drug, this “second person” has two options.

(i) It may state in its application that it accepts that the NOC will not issue until the patent(s) expires or

(ii) it may allege that by reference to a number of listed grounds, the patent list filed by the “first” person provides no obstacle because, contrary to the assertions in the patent list, the first person is not in fact the owner or exclusive licensee in Canada of the drug, or that the patent(s) have expired, are invalid, or that the applicant would not infringe any claim “for the medicine itself and no claim for the use of the medicine” (s. 5(1)(b)).

[21] The NOC Regulations do not use the term “generic manufacturer”, but a manufacturer that obtains a NOC on the basis of pharmaceutical equivalence to a “Canadian reference product” can conveniently be called by that name.

[22] Generally speaking, the “second person” intends to manufacture and distribute a “copy-cat” version of the active medicinal ingredient. If it copies the approved product, it can rely on the safety and efficacy data and the clinical studies submitted by the “innovator” first person. Such reliance reduces the amount of required supporting data and the approval time, and the shortened submission is therefore known as an Abbreviated New Drug Submission (“ANDS”).

[23] The innovator that filed the patent list may, within 45 days after being served with a Notice of Allegation, apply to the Federal Court for an order prohibiting the Minister from issuing a NOC until all of the listed patents have expired. Commencement of the application for prohibition automatically triggers a 24-month statutory freeze that stops the Minister from issuing a NOC unless within that period the prohibition application is finally disposed of by the court (see ss. 7(1) and 7(4) of the NOC Regulations). In practice the prohibition proceedings can easily drag on beyond the initial 24-month period.

[24] It is important to note that under this procedure, the court hearing the prohibition application has no discretion to lift the stay even if it thinks the innovator’s case for interim relief is weak. Nor does the court have a discretion to leave the contending parties to their remedies under the Patent Act. The “second person”’s application for a NOC simply goes into deep-freeze until the statutory procedures have played themselves out. For these reasons, Iacobucci J. described the regime as “draconian” in Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), 1998 792 (SCC), [1998] 2 S.C.R. 193, at para. 33.

II. Facts

[25] By 1970, the National Cancer Institute had discovered that the bark of the Pacific yew (taxus brevifolia) possessed anticarcinogenic properties. Research was carried forward funded by the U.S. government and in 1971 the active component (paclitaxel) was isolated. Because it was sourced in a slow-growing bush that died when stripped of its bark, there was concern that manufacturers would not be able to obtain sufficient quantities of the raw material for large-scale pharmaceutical production. Nevertheless, by 1979 the National Cancer Institute had not only identified the mechanism of paclitaxel’s therapeutic action as an antitumour drug, but further screening identified some highly desirable uses, particularly for the treatment of refractory ovarian cancer.

[26] BMS was brought into the picture by the U.S. National Cancer Institute to undertake clinical trials of paclitaxel in the 1980s. This work eventually earned BMS a number of Canadian patents, none of which cover paclitaxel itself (being a medicine put into the public domain by the National Cancer Institute). As stated, the BMS patents cover new and useful formulations and methods of administration, and its product Taxol is presently approved for the treatment of breast, ovarian and non-small-cell lung cancer.

[27] The abstracts appearing in the Patent Register with respect to Taxol state in part as follows:

Patent 2,086,874

Paclitaxel dosages of about 135 mg/m² or greater are administered via infusions of less than 6 hours duration; the method makes it possible to provide paclitaxel infusions on an out-patient basis to patients who do not otherwise require hospitalization. . . .

Patent 2,132,936

A stabilized pharmaceutical composition containing paclitaxel, teniposide, camptothecin or other antineoplastic agent susceptible to degradation during storage is produced using a solvent system containing a low carboxylate anion content. . . .

(Canadian Intellectual Property Office, Canadian Patents Database, CA 2086874 and CA 2132936)

It is thus claimed in these patents that the inventions render the product more stable, and it will not degrade as easily, thereby extending its shelf life. These patents expire in 2013 and 2014 respectively. The third patent abstract reads as follows:

Patent 2,189,916

This invention provides for novel dose regimen of paclitaxel to treat Kaposi’s sarcoma.

(Canadian Intellectual Property Office, Canadian Patents Database, CA 2189916)

It is common ground that Biolyse’s product is not tested or approved for treatment of Kaposi’s sarcoma. The Biolyse product is directed towards breast and lung cancer.

[28] In the 1980s, Biolyse became interested in the National Cancer Institute work on paclitaxel and, recognizing the supply shortage problem, it began research on alternative sources of paclitaxel. Biolyse eventually claimed that paclitaxel could be extracted from the needles and small regrowth branches of a different species of yew, the taxus canadensis. The advantage was that harvesting from taxus canadensis does not kill the host tree. Biolyse still uses its naturally sourced paclitaxel, while the BMS product uses a synthetic chemical compound.

[29] Biolyse also formed the opinion that paclitaxel was not only useful for treatment of refractory ovarian cancer (which was the use identified by the respondent BMS in its initial NDS to the Department of Health), but could also be useful in the treatment of non-small-cell lung cancer and forms of breast cancer. The officials at the Department of Health were concerned about the different botanical source of paclitaxel, and the claim of Biolyse for new and different uses for the medicine. The Department of Health therefore required independent clinical studies to be performed. In short, the officials at TPP regarded the Biolyse product as a substance which “has not been sold as a drug in Canada for sufficient time and in sufficient quantity to establish in Canada [its] safety and effectiveness” (emphasis added), and was therefore a “new drug” within the meaning of s. C.08.001 of the FDA Regulations.

[30] The TPP advised Biolyse in 1999 that its application must be submitted as a NDS and not an ANDS because the different botanical source and additional medical claims prevented any reliance on BMS’ Taxol as a “Canadian reference product”. The TPP examiner, Dr. Agnes Klein, wrote Biolyse as follows:

Based on the limited information that you have provided, I would like to make the following comments:

1- The submission you are proposing will be considered a NDS, rather than a ANDS.

2- You have a number of studies that will form the core of the clinical part of your submission. In addition, you should provide data from the public domain and link this information to the broader safety and efficacy of the product.

3- Please ensure that your Product Monograph for your Paclitaxel for injection reflects the general knowledge on the drug as well as your own data. [Emphasis added.]

[31] The Minister agreed with Dr. Klein’s view that the Biolyse product could not be considered a copy-cat generic product. In the Minister’s opinion, the Biolyse product was an “innovator” drug that required a NDS. It could not piggyback on the BMS work by using BMS Taxol as a “Canadian reference product” by way of an ANDS. The Attorney General of Canada intervened in support of Biolyse in the courts below but took no active part in the appeal to this Court.

[32] In due course, the Minister of Health approved the safety and efficacy of the Biolyse product as a new drug and issued Biolyse a NOC on September 20, 2001 for the treatment of advanced breast cancer and non-small-cell lung cancer.

III. Relevant Statutory Provisions

[33] Patent Act, R.S.C. 1985, c. P-4

55.2 (1) It is not an infringement of a patent for any person to make, construct, use or sell the patented invention solely for uses reasonably related to the development and submission of information required under any law of Canada, a province or a country other than Canada that regulates the manufacture, construction, use or sale of any product.

(4) The Governor in Council may make such regulations as the Governor in Council considers necessary for preventing the infringement of a patent by any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1), including, without limiting the generality of the foregoing, regulations

(a) respecting the conditions that must be fulfilled before a notice, certificate, permit or other document concerning any product to which a patent may relate may be issued to a patentee or other person under any Act of Parliament that regulates the manufacture, construction, use or sale of that product, in addition to any conditions provided for by or under that Act;

(b) respecting the earliest date on which a notice, certificate, permit or other document referred to in paragraph (a) that is issued or to be issued to a person other than the patentee may take effect and respecting the manner in which that date is to be determined;

(c) governing the resolution of disputes between a patentee or former patentee and any person who applies for a notice, certificate, permit or other document referred to in paragraph (a) as to the date on which that notice, certificate, permit or other document may be issued or take effect;

(d) conferring rights of action in any court of competent jurisdiction with respect to any disputes referred to in paragraph (c) and respecting the remedies that may be sought in the court, the procedure of the court in the matter and the decisions and orders it may make; and

(e) generally governing the issue of a notice, certificate, permit or other document referred to in paragraph (a) in circumstances where the issue of that notice, certificate, permit or other document might result directly or indirectly in the infringement of a patent.

(5) In the event of any inconsistency or conflict between

(a) this section or any regulations made under this section, and

(b) any Act of Parliament or any regulations made thereunder,

this section or the regulations made under this section shall prevail to the extent of the inconsistency or conflict.

Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, as amended by SOR/99-379

5. (1) Where a person files or has filed a submission for a notice of compliance in respect of a drug and compares that drug with, or makes reference to, another drug for the purpose of demonstrating bioequivalence on the basis of pharmaceutical and, where applicable, bioavailability characteristics and that other drug has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the register in respect of the other drug,

(a) state that the person accepts that the notice of compliance will not issue until the patent expires; or

(b) allege that

(i) the statement made by the first person pursuant to paragraph 4(2)(c) is false,

(ii) the patent has expired,

(iii) the patent is not valid, or

(iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed.

5. (1.1) Subject to subsection (1.2), where subsection (1) does not apply and where a person files or has filed a submission for a notice of compliance in respect of a drug that contains a medicine found in another drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent included on the register in respect of the other drug containing the medicine, where the drug has the same route of administration and a comparable strength and dosage form,

(a) state that the person accepts that the notice of compliance will not issue until the patent expires; or

(b) allege that

(i) the statement made by the first person pursuant to paragraph 4(2)(c) is false,

(ii) the patent has expired,

(iii) the patent is not valid, or

(iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed.

IV. Analysis

[34] As always, the facts are important. BMS sought to quash the NOC issued to Biolyse on the basis that its issuance depended on the Minister’s finding that the Biolyse product was “bioequivalent” to the BMS product. It was therefore a “copy-cat” drug which s. 5(1) of the NOC Regulations required the Minister to put into the statutory freeze. The BMS position was rejected both by the Minister and by the motions judge. It is useful to quote the language of the motions judge:

Biolyse did not compare its drug or make reference to another drug for the purpose of demonstrating bioequivalence. Biolyse did not apply for a declaration of equivalence nor was one granted.

On the evidence, the Biolyse submission contains clinical studies on sick patients; specifically those with advanced breast cancer unresponsive to usual treatments and those with locally advanced non-small-cell lung cancer. The safety and efficacy of the Biolyse product assessment was based on those studies and on what was known to scientists in the public realm about paclitaxel. This is consistent with the usual procedure for a NDS. [Emphasis added; paras. 39-40.]

This finding was not challenged by BMS in the Federal Court of Appeal (para. 15). We must therefore proceed on the basis that the Biolyse product was properly treated as an innovator drug rather than a copy-cat drug.

[35] The motions judge went on to rule that Biolyse was nevertheless caught by s. 5(1.1) of the NOC Regulations because both the Biolyse product and the BMS product contain paclitaxel, even though neither BMS nor Biolyse have any patent claim to paclitaxel, which, as stated, was put into the public domain by the U.S. government supported National Cancer Institute.

[36] We therefore come to the legal issue that lies at the heart of this appeal, namely the conflicting interpretations of s. 5(1.1) of the NOC Regulations. On the question of interpretation, the Minister’s opinion is not entitled to deference. The Federal Court quite properly said that the standard of review on that point is correctness.

[37] BMS argues that once it is established that paclitaxel is present in the Biolyse product, s. 5(1.1) bars the issuance of a NOC. Biolyse responds that the BMS approach is too simplistic. Biolyse invokes the modern approach to statutory interpretation, which it says is equally applicable to regulations, as set out in Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27. In that case, the Ontario Employment Standards Act provided for termination pay and severance pay for workers where their employment was terminated by an employer. Rizzo Shoes went bankrupt. The trustee disallowed the workers’ claims because their jobs had been terminated by the bankruptcy, not by the employer. The Ontario courts agreed with the trustee. This Court reversed, Iacobucci J. observing as follows:

At the heart of this conflict is an issue of statutory interpretation. Consistent with the findings of the Court of Appeal, the plain meaning of the words of the provisions here in question appears to restrict the obligation to pay termination and severance pay to those employers who have actively terminated the employment of their employees. At first blush, bankruptcy does not fit comfortably into this interpretation. However, with respect, I believe this analysis is incomplete.

. . . Elmer Driedger in Construction of Statutes (2nd ed. 1983) best encapsulates the approach upon which I prefer to rely. He recognizes that statutory interpretation cannot be founded on the wording of the legislation alone. At p. 87 he states:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

Although the Court of Appeal looked to the plain meaning of the specific provisions in question in the present case, with respect, I believe that the court did not pay sufficient attention to the scheme of the ESA, its object or the intention of the legislature; nor was the context of the words in issue appropriately recognized. I now turn to a discussion of these issues. [Emphasis added; paras. 20, 21 and 23.]

[38] The same edition of Driedger adds that in the case of regulations, attention must be paid to the terms of the enabling statute:

It is not enough to ascertain the meaning of a regulation when read in light of its own object and the facts surrounding its making; it is also necessary to read the words conferring the power in the whole context of the authorizing statute. The intent of the statute transcends and governs the intent of the regulation.

(Elmer A. Driedger, Construction of Statutes (2nd ed. 1983), at p. 247)

This point is significant. The scope of the regulation is constrained by its enabling legislation. Thus, one cannot simply interpret a regulation the same way one would a statutory provision. In this case, the distinction is crucial, for when viewed in that light the impugned regulation cannot take on the meaning suggested by BMS. Moreover, while the respondents’ argument draws some support from the language of s. 5(1.1) isolated from its context, it overlooks a number of significant aspects of the “modern approach”.

A. The Grammatical and Ordinary Sense of the Words

[39] For ease of reference, I repeat the triggering words of s. 5(1.1) of the NOC Regulations:

5. (1.1) Subject to subsection (1.2), where subsection (1) does not apply and where a person files or has filed a submission for a notice of compliance in respect of a drug that contains a medicine found in another drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent included on the register in respect of the other drug containing the medicine, where the drug has the same route of administration and a comparable strength and dosage form,

(a) state that the person accepts that the notice of compliance will not issue until the patent expires; or

(b) allege that

(i) the statement made by the first person pursuant to paragraph 4(2)(c) is false,

(ii) the patent has expired,

(iii) the patent is not valid, or

(iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed.

[40] The word “submission” provides the gateway into s. 5(1.1) but the term is not defined in the NOC Regulations.

[41] BMS argues that “submission” must include any submission including a NDS for an innovator drug. Using this interpretation, s. 5(1.1) would apply, even if the common component is an old medicine like aspirin used in a minor amount. The BMS drug Taxol contains paclitaxel. Paclitaxel is clearly a medicine. BMS has filed a patent list in relation to its formulation of Taxol. The Biolyse drug also contains paclitaxel. It is administered by the same route (injection) and is in “comparable strength and dosage form”. Therefore BMS argues that the statutory freeze should apply irrespective of what role, if any, BMS played in the discovery of paclitaxel.

[42] Biolyse contends that not all “submissions” to the Minister are caught by s. 5(1.1), and on this point it is supported by the intervener Pfizer Canada Inc., itself an innovator drug company. Pfizer argues that s. 5(1.1) does not apply to certain types of submissions (in its case Supplementary New Drug Submissions (“SNDS”)) which are outside the policy objective s. 5(1.1) was intended to implement. Biolyse agrees that s. 5(1.1) should be construed by reference to the policy objective, and in particular that it should not apply to an innovator drug NDS (as the motions judge found its product had correctly been classified by the Minister) but only to submissions for generic “copy-cat” drugs which use a “Canadian reference product” and are applied for under an ANDS.

[43] While at first blush the word “submission” would appear to be all inclusive, this Court held in Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42, that

one must consider the “entire context” of a provision before one can determine if it is reasonably capable of multiple interpretations. . . .

. . . It is necessary, in every case, for the court charged with interpreting a provision to undertake the contextual and purposive approach set out by Driedger, and thereafter to determine if “the words are ambiguous enough to induce two people to spend good money in backing two opposing views as to their meaning” . . . . [Emphasis added; paras. 29-30.]

[44] It is therefore necessary to suspend judgment on the precise scope of the word “submission” in s. 5(1.1) and turn to other elements of the Driedger approach. As Professor J. M. Kernochan puts it: “The precise words which are in issue in relation to the facts must be weighed in the light of successive circles of context” (“Statutory Interpretation: An Outline of Method” (1976), 3 Dal. L.J. 333, at pp. 348-49).

B. The General Context

[45] This Court has accepted the view that Parliament enacted Bill C-91 “with the intent of thwarting the possible appropriation by generic drug companies, such as Apotex, of the research and development initiatives of innovators, such as Merck” (Apotex v. Canada (Attorney General), per Robertson J.A., at p. 752 (emphasis added), whose reasons were substantially adopted by this Court at 1994 47 (SCC), [1994] 3 S.C.R. 1100).

[46] The Regulatory Impact Analysis Statement, which accompanied but did not form part of the NOC Regulations, confirms that this was the intention of the regulator. It says that following the abolition of the compulsory licensing system, the government enacted the NOC Regulations in order to protect the right of patentees by preventing generic manufacturers from marketing their products until the expiry of all relevant patents (Merck & Co. v. Canada (Attorney General) (1999), 1999 9090 (FC), 176 F.T.R. 21, at para. 51). The relevant portion of the Regulatory Impact Analysis Statement reads:

. . . As a general rule, judicial remedies are sufficient to address patent infringement. However, with the enactment of Bill C-91 the government has created an exception to patent infringement allowing generic competitors to undertake any activities necessary to work up a submission to obtain regulatory approval of a product. This removes a patent right that may have otherwise been available to patentees to prevent generic competitors from obtaining such regulatory approval of their products.

These Regulations are needed to ensure this new exception to patent infringement is not abused by generic drug applicants seeking to sell their product in Canada during the term of their competitor’s patent while nonetheless allowing generic competitors to undertake the regulatory approval work necessary to ensure they are in a position to market their products immediately after the expiry of any relevant patents. [Emphasis added.]

(Regulatory Impact Analysis Statement, SOR/93-133, Canada Gazette, Part II, vol. 127, No. 6, at p. 1388)

[47] In Francis v. Baker, 1999 659 (SCC), [1999] 3 S.C.R. 250, a case concerning the interpretation of the Federal Child Support Guidelines, Bastarache J., writing for the Court, notes, at para. 35, that “[p]roper statutory interpretation principles . . . require that all evidence of legislative intent be considered, provided that it is relevant and reliable.” It seems clear that the NOC Regulations were introduced to help generic drug companies and at the same time curb potential patent abuse by them. This was confirmed by Canada’s submissions to the World Trade Organization (“WTO”), whose decision on this point was relied on by BMS in this appeal. The European-based patent owners brought a complaint against Canada at the WTO that the exceptions in s. 55.2 of the Patent Act and the NOC Regulations violated their Canadian patent rights and the TRIPS agreement. This complaint was rejected: WTO, Report of the Panel “Canada — Patent Protection of Pharmaceutical Products”, Complaint by the European Communities and their member States, WTO Doc. WT/DS114/R, March 17, 2000. In effect, the WTO accepted Canada’s argument that Bill C-91 achieved a fair compromise between important social interests in health (represented by cheaper generic drugs) balanced against the interests of patentees. Canada argued that, while patent owners were entitled to enjoy a monopoly for the 20-year period of the patent, they had no entitlement to the regulatory time lag after expiry of the relevant patents in order to extend the term of the monopoly by a further period of years. (The WTO panel upheld a related complaint that in this respect Canada had discriminated unfairly by singling out pharmaceutical patents for exceptional treatment.)

[48] Canada’s explanation to the WTO of the purpose of Bill C-91, set out in the WTO report, included the following statements about generic manufacturers:

. . . the current legislation decisively strengthened patent protection by not only eliminating compulsory licensing but also providing a summary procedure for preventing patent infringement, under which the Minister of Health might be prohibited from issuing marketing approval for a new generic drug during the term of any applicable patent. [p. 40]

The use of generic medicines resulted in important economies for the public health care system, and so contributed to its viability and the protection of public health. [p. 26]

The legitimacy of measures to promote the use of generic drug products as means of protecting public health was endorsed by the World Health Organization (WHO). [p. 27]

Thus, society at large and individual and institutional consumers of the health care system had an undeniably legitimate, indeed essential, interest in assuring the availability of competitively priced generic medicines as soon after patent expiry as possible. [p. 27]

. . . The extension of market exclusivity which was lost because generic manufacturers were permitted to make regulatory submissions during the term was of course a post [patent]-expiry phenomenon. [p. 23]

(Emphasis added.)

[49] From this general context, we move more specifically to the scheme of the Patent Act and the NOC Regulations.

C. The Regulation-Making Power of the Patent Act

[50] Recognizing that the “early working” and “stockpiling” exceptions could be abused, Parliament balanced creation of these exceptions with creation of a summary procedure designed to strengthen the hand of patent owners against generic competitors within the 20-year patent period. This carrot and stick combination is found in s. 55.2 of the Patent Act as follows:

55.2 (1) It is not an infringement of a patent for any person to make, construct, use or sell the patented invention solely for uses reasonably related to the development and submission of information required under any law of Canada, a province or a country other than Canada that regulates the manufacture, construction, use or sale of any product. [The “early working” exception.]

(2) It is not an infringement of a patent for any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) to make, construct or use the invention, during the applicable period provided for by the regulations, for the manufacture and storage of articles intended for sale after the date on which the term of the patent expires. [The “stockpiling” exception.]

(3) The Governor in Council may make regulations for the purposes of subsection (2), but any period provided for by the regulations must terminate immediately preceding the date on which the term of the patent expires.

(4) The Governor in Council may make such regulations as the Governor in Council considers necessary for preventing the infringement of a patent by any person who makes, constructs, uses, or sells a patented invention in accordance with subsection (1) or (2) including, without limiting the generality of the foregoing, regulations

(a) respecting the conditions that must be fulfilled before a notice [e.g. of compliance] . . . may be issued . . .;

(b) respecting the earliest date on which a notice [e.g. of compliance] . . . may take effect . . .;

(c) governing the resolution of disputes between a patentee or former patentee and any person who applies for a notice [e.g. of compliance] . . . as to the date on which that notice . . . may be issued or take effect.

[51] It is convenient at this stage to emphasize a number of features of this regulation-making power.

[52] Firstly, the regulations are to be directed to persons who are making use of the “patented invention”. As pointed out by this Court in Monsanto Canada Inc. v. Schmeiser, [2004] 1 S.C.R. 902, 2004 SCC 34, the patented invention is not necessarily co-extensive with the patent claims. The distinction was critical in that case to the issue of remedy. While farmer Schmeiser had used the patented product (Roundup Ready Canola seed), he had not taken advantage of the patented invention (its herbicide resistant property) because he had not sprayed his crop with Roundup. The Court thus rejected Monsanto’s claim to Schmeiser’s profits from his canola crop.

The difficulty with the trial judge’s award is that it does not identify any causal connection between the profits the appellants were found to have earned through growing Roundup Ready Canola and the invention. On the facts found, the appellants made no profits as a result of the invention. [Emphasis in original; para. 103.]

The use of the expression “patented invention” in s. 55.2 is therefore an important clue to the scope of the regulations it authorizes to be made. BMS did not invent or discover paclitaxel.

[53] Secondly, it is not every use of the patented invention that will trigger the NOC Regulations. Section 55.2(4) is specifically directed to preventing infringement by persons who use “the patented invention” for the “early working” exception and the “stockpiling” exception set out earlier in ss. 55.2(1) and 55.2(2). That is all the Governor in Council is authorized to regulate. (The stockpiling exception was repealed by S.C. 2001, c. 10, s. 2(1); assented to June 14, 2001.)

[54] The fact paclitaxel is found in the Biolyse product does not mean that Biolyse took advantage of BMS inventions for the purpose of “early working” a generic copy or “stockpiling” in anticipation of the expiry of the BMS patents. On the contrary, the trial judge’s finding is that the Biolyse product was not approved on the basis of bioequivalence with the BMS product embodying its inventions.

[55] Thirdly, the limiting words of s. 55.2(4) are not affected by the so-called “paramountcy clause” set out in s. 55.2(5) which provides as follows:

(5) In the event of any inconsistency or conflict between

(a) this section or any regulations made under this section, and

(b) any Act of Parliament or any regulations made thereunder,

this section or the regulations made under this section shall prevail to the extent of the inconsistency or conflict.

This provision does not disturb the usual requirement that regulations must fall within — and to be valid construed to fall within — the regulation-making power.

[56] With these observations in mind, we next turn to the NOC Regulations themselves.

D. The Scheme of the NOC Regulations

[57] The word “submission” is used in various places in the NOC Regulations. In particular, the text of s. 4(1) provides the template on which s. 5(1.1) is modelled. The relevant words in s. 4(1) are:

4. (1) A person who files or has filed a submission for, or has been issued, a notice of compliance in respect of a drug that contains a medicine . . . .

[58] Section 4(2) permits a person who makes the “submission” to file at the same time a list of patents “that contains a claim for the medicine itself or a claim for the use of the medicine”. (There is a procedure to add after-acquired patents but otherwise the deadline is enforced.) The patent list becomes the minefield that the generic “copy-cat” manufacturer must navigate to obtain a NOC. The Federal Court has consistently held that the word “submission” in s. 4(1) does not include all submissions. It does not include a supplementary NDS. (Bristol-Myers Squibb Canada Inc. v. Canada (Attorney General) (2001), 2001 22128 (FC), 10 C.P.R. (4th) 318 (F.C.T.D.), at paras. 13, 19 and 21, aff’d (2002), 16 C.P.R. (4th) 425, 2002 FCA 32; Ferring Inc. v. Canada (Attorney General) (2003), 26 C.P.R. (4th) 155, 2003 FCA 274, at para. 18; Toba Pharma Inc. v. Canada (Attorney General) (2002), 21 C.P.R. (4th) 232, 2002 FCT 927, at para. 34; AstraZeneca Canada Inc. v. Canada (Minister of Health) (2004), 36 C.P.R. (4th) 58, 2004 FC 736, at paras. 39-40.)

[59] Applying a purposive interpretation, the Federal Court in these cases held that to read “submission” in s. 4(1) to include all NDSs would allow innovator companies to sidestep the time limits applicable to patent lists by the simple expedient of submitting a supplementary New Drug Submission (SNDS) making corporate or technical changes to their filing (Bristol-Myers, at para. 19). Such a result would not be consistent with the scheme of the NOC Regulations as a whole. In my view, this purposive approach is correct.

[60] The parallel words in s. 5(1.1) are:

5. (1.1) . . . where a person files or has filed a submission for a notice of compliance in respect of a drug that contains a medicine . . . .

[61] The text of s. 5(1.1) closely tracks the language of s. 4(1). It is a reciprocal provision in the sense that s. 4(1) sets up the patent list that the person subject to s. 5(1.1) must circumnavigate. Section 5(1.1) should therefore receive a similarly purposive interpretation. The word “submission” should also be construed so as to fulfill the purposes laid out in s. 55.2(4) of the Patent Act.

E. The Mischief Sought to Be Cured by Section 5(1.1)

[62] Section 5(1.1) was added in 1999 to deal with what turned out to be a non-existent problem. In Nu-Pharm Inc. v. Canada (Attorney General), 1998 19110 (FC), [1999] 1 F.C. 620 (T.D.), Cullen J. had held that a generic manufacturer could use as its “Canadian reference product” the product of another generic manufacturer without complying with the NOC Regulations. In his view no notice had to be given to the party truly interested, namely the manufacturer of the innovative drug from which that other generic had copied its product, even though the reality was that the supporting data for both generic manufacturers had been filed by the innovator drug company. This view was quickly corrected in Merck & Co. v. Canada (Attorney General) (1999), 1999 9090 (FC), 176 F.T.R. 21, aff’d (2000), 2000 15094 (FCA), 5 C.P.R. (4th) 138 (F.C.A.).

[63] In the case at bar, the Federal Court of Appeal acknowledged this to be “the mischief”:

There is no doubt much to be said for the view that subsection 5(1.1) was introduced in response to the situation in [Nu-Pharm]. Indeed, Blanchard J. (at paragraph 48) found that this was the reason for the amendment. . . . The problem was that generic drug companies were attempting to avoid triggering section 5 by submitting documents that took the form of a NDS, but in reality were disguised ANDSs because they relied heavily on data generated in connection with a drug that was approved, but without making a comparison to demonstrate bioequivalence. [para. 25]

[64] The motions judge in this case found Biolyse to have properly filed an NDS. It was not a “disguised AND[S]”. The Minister takes the position that s. 5(1.1) is restricted to the Nu-Pharm type situation and does not extend to the NDS filed by Biolyse in the present case.

F. Conclusion on the Issue of Interpretation

[65] The interpretation offered by BMS of s. 5(1.1) pushes the provision well beyond its stated purpose of preventing generic manufacturers from hiding their reliance on innovator drugs by putting forward as their reference drug another generic manufacturer’s product, in circumstances where both generics are simply copies of the innovator drug. If the approval of the generic drug is related to the work of another drug manufacturer in respect of which a patent list has been filed (as in the Nu-Pharm type situations), it will be caught by s. 5(1.1). However, in this case, as stated, the motions judge found that the Minister did not rely on the BMS work. He relied on work performed by Biolyse itself and “on what was known to scientists in the public realm about paclitaxel” (para. 40).

[66] The broad interpretation urged by BMS would lead to an absurd result. The “medicine” in the drug to which the patent list relates need not itself be patented, or indeed owe anything to the ingenuity of the “first” person. It could be a “medicine” whose usefulness was discovered by somebody else (as in the case of paclitaxel) or something in the public domain as common as penicillin. So long as such “medicine” shows up as a component, however minor, in the chemical composition of the drug to which the patent list relates, the “second person” (including an innovator who is seeking to manufacture a new and useful drug) is barred from proceeding to market by the automatic statutory freeze, and this “bar” will continue for so long as the patent list holder can evergreen its product by resort to patentable improvements to other components or additions, be they ever so minor. This would stifle competition and innovation in the pharmaceutical industry and produce a result at odds with what the regulator was trying to achieve.

[67] The “plain meaning” adopted by the Federal Court of Appeal in this case would suggest that s. 5(1.1) is ultra vires the regulation-making power which, as noted earlier, only authorizes regulations “necessary for preventing the infringement of a patent by any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) [the ‘early working’ exception] or (2) [the ‘stockpiling’ exception — now repealed]”. While there are other similarities between the Biolyse product and the BMS product, the decision of the Federal Court under s. 5(1.1) rests entirely on the presence of paclitaxel in both the BMS and the Biolyse products.

[68] The interpretation put forward by BMS should be rejected, based not only on the limiting language of s. 55.2 of the Patent Act but on the more fundamental objection that on such a view a “first person” could extend its monopoly far beyond the scope of any possible quid pro quo its own skill and ingenuity have contributed to the public.

V. Conclusion

[69] In my view, s. 5(1.1) does not apply to innovative drugs. It should be confined to applications for generic copies of patented drugs in the circumstances contemplated by the regulator, i.e., where a manufacturer makes a submission for a NOC for a drug which contains a medicine that it purports to copy from another generic but in fact copies from the innovator company that has filed the patent list. That is not this case. Where the applicant relies on bioequivalence, it will be caught by s. 5(1). On the facts here, neither s. 5(1) nor s. 5(1.1) applies. Accordingly, I conclude that the Minister was entitled to issue the NOC to the appellant Biolyse on the basis of its NDS without subjecting Biolyse to the statutory freeze.

[70] If BMS believes that the Biolyse product infringes its patent(s), it has recourse to the usual remedies under the Patent Act.

[71] The NOC ought not to have been quashed, and the appeal should be allowed with costs throughout.

The reasons of Major, Bastarache and Charron JJ. were delivered by

Bastarache J. (dissenting) —

I. Introduction

[72] While the appellant, Biolyse Pharma Corporation (“Biolyse”), raised a number of issues, only one, namely the determination of the scope of s. 5(1.1) of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (“NOC Regulations”), was dealt with in the courts below and requires our attention. This appeal arises following an application by the respondents, Bristol-Myers Squibb Company and Bristol-Myers Squibb Canada Inc. (collectively “BMS”), seeking an order quashing a notice of compliance (“NOC”) granted by the Minister of Health (“Minister”) to Biolyse in respect of Paclitaxel for injection, 6 mg/ml.

[73] Patent protection is crucial to the innovative pharmaceutical industry. Like other inventions, medicines are entitled to patent protection if they meet certain requirements (see M. Smith, Patent Protection for Pharmaceutical Products (November 1993), p. 1). The NOC Regulations with their intimate connection with the Patent Act, R.S.C. 1985, c. P-4, provide for the protection of private patent rights.

[74] Simply put, where s. 5 of the NOC Regulations applies to a drug manufacturer, a NOC cannot be issued by the Minister under s. 7 unless the manufacturer has complied with s. 5. Section 5 establishes a procedure by which a “second person”, a subsequent (entry) manufacturing company, in this case Biolyse, is required to make submissions and serve a notice of allegation (“NOA”) on the “first person”, the originating, innovative, manufacturing company, in this case BMS, to advise the latter that it is seeking approval of a drug containing a medicine found in the innovator company’s already approved drug.

[75] Biolyse believes that the result reached by the Federal Court of Appeal is unjust and unreasonable. It asks this Court to accept a different interpretation of the words used by the legislator and Governor in Council. The nature of the suggestion made by Biolyse is best understood by reading para. 86 of its factum. It writes:

Reading subsection 5(1.1) in the context of the Act and these other relevant sections of the Regulations, the courts below should have implied the words italicized below (or similar language) to provide an interpretation of subsection 5(1.1) that is faithful to the intent of the Act and the Regulations:

5(1.1) . . . where a person files of has filed a submission for a notice of compliance in respect of a drug that contains a patented active ingredient found in another drug or a patented process used in manufacturing that has been marketed in Canada pursuant to a notice of compliance issued to a first person who is the patent holder and in respect of which a patent list of that patent holder has been submitted, the person shall, in the submission, with respect to each patent included on the register in respect of the other drug containing the medicine, where the drug has the same route of administration and a comparable strength and dosage form, and where the same route of administration and a comparable strength and dosage form are patented, . . . [Emphasis in appellant’s factum.]

[76] The Court must be guided by the need to preserve the value and centrality of the scheme of the patent list system and its content. In my respectful view, this Court ought not lend support to a self-described “innovative” small family company by disregarding the rules of statutory interpretation and the true scheme of the NOC Regulations. This legislative scheme cannot work without its main tool: the NOA. The ability to circumvent the NOA would render the patent list an empty shell.

[77] This is a case of regulatory interpretation, and nothing more. The Court must always be careful not to overstep its boundaries. Public policy must be left to the legislature and government, especially when dealing with competing interests where the government has consulted stakeholders and asked Parliament to legislate.

II. Preliminary Issues

[78] Biolyse has raised a number of preliminary issues which need to be addressed before embarking on the core of this appeal.

A. Judicial Review Is the Appropriate Remedy

[79] Biolyse submits that the very remedy used by BMS should not be available to it under s. 18.1 of the Federal Courts Act, R.S.C. 1985, c. F-7. It claims that the Patent Act and the NOC Regulations contain a complete code of patent remedies. Since there was a preferable alternative remedy in the Patent Act, the courts below should have denied BMS’s application for judicial review. I cannot agree.

[80] Judicial review is explicitly provided for in s. 18.1 of the Federal Courts Act (see Appendix). It has always been available in cases where the Minister was alleged to have failed to comply with the NOC Regulations: Merck & Co. v. Canada (Attorney General) (1999), 1999 9090 (FC), 176 F.T.R. 21 (“Merck 1999”), aff’d (2000), 2000 15094 (FCA), 5 C.P.R. (4th) 138 (F.C.A.), leave to appeal denied, [2000] 1 S.C.R. xvii; Nu-Pharm Inc. v. Canada (Attorney General) (1998), 1998 7436 (FCA), 80 C.P.R. (3d) 74 (F.C.A.). BMS’s interest, insofar as its patents are concerned, is directly affected by Biolyse’s submissions and falls within the purview of s. 18.1. The special statutory regime created by the NOC Regulations does not provide for the quashing of a NOC. Nonetheless, the NOC Regulations, under s. 6, do govern the prohibition proceedings. Moreover, although it may have been determined that courts will not normally grant relief on an application for judicial review under s. 18.1 when the applicant could have sought an order of prohibition pursuant to a right of action under s. 6 of the NOC Regulations (see Syntex (U.S.A.) L.L.C. v. Canada (Minister of Health) (2002), 20 C.P.R. (4th) 29, 2002 FCA 289), this is not an absolute rule. As noted by the Federal Court of Appeal ([2003] 4 F.C. 505, 2003 FCA 180, at para. 41), when an applicant had no opportunity to proceed under s. 6, the court’s exercise of its judicial review jurisdiction under s. 18.1 is not constrained by the special regime created by the NOC Regulations. In the case at bar, it is Biolyse’s own action in circumventing the procedure in the NOC Regulations that deprived BMS of possible relief under the NOC Regulations.

[81] I agree with Blanchard J. of the Federal Court, Trial Division when he expresses the following view:

While a patent infringement action is open to the applicant, the Regulations set out a scheme that is designed to give notice to those whose patent rights may be infringed. A party’s right to instigate a patent infringement action should have no bearing on its right to seek to quash a NOC improperly issued, and judicial review of a ministerial decision not to require service of a NOA where a party is of the view that the Minister erred in rendering such decision.

((2002), 224 F.T.R. 236, 2002 FCT 1205, at para. 33)

[82] The alternative option of BMS, i.e., to institute an action in infringement against Biolyse, would not have given rise to the remedy sought. BMS argues that the Minister erred in law when he decided to issue a NOC without requiring that Biolyse comply with s. 5(1.1) of the NOC Regulations and that the Court should therefore quash the NOC. But the validity of a NOC is not a subject to be adjudicated in an infringement action. The legislative scheme grants to the Minister the power to decide on the appropriateness of issuing a NOC with regard to safety issues. BMS was not trying to prove infringement of its patent and claim damages. An action in infringement would have served no useful purpose in the case at bar. Hence, there was no alternative procedure to be followed in order to quash the Minister’s decision. The “adequate alternative remedy principle” finds no application in the instant case (see Canadian Pacific Ltd. v. Matsqui Indian Band, 1995 145 (SCC), [1995] 1 S.C.R. 3, at paras. 32-42).

[83] In sum, an application for judicial review was the sole procedural means available to BMS in order to quash the Minister’s decision.

B. Correctness Is the Proper Standard of Review

[84] Having determined that an application for judicial review was the proper course of action, it is now necessary to determine the appropriate level of deference which must be shown to the Minister. Both the Federal Court, Trial Division and the Federal Court of Appeal agreed that the adequate standard of review was correctness. Biolyse argues that it is the standard at the other end of the spectrum that should have been applied: patent unreasonableness. I disagree. No deference should be shown for the Minister’s decision in the present case.

[85] As established by this Court in Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 982, a pragmatic and functional analysis must be conducted in order to determine the applicable standard of review. The central determination of this approach turns on legislative intent (Pushpanathan, at para. 26). The enquiry entails consideration of the following factors: (1) the absence or presence of a privative clause; (2) the purpose of the Act as a whole and of the applicable provision in particular; (3) the expertise of the tribunal; and (4) the nature of the problem. I now propose to examine these factors.

[86] First, the Minister’s decision is not protected by a privative clause in the NOC Regulations. The latter are silent as to the intended standard of review.

[87] Second, as will be detailed below, the legislative function and purpose of the NOC Regulations are to protect patent rights, more specifically to prevent patent infringement. This purpose can be contrasted with that of the Food and Drug Regulations, C.R.C. 1978, c. 870, which is to protect public health by assuring the safety and efficacy of drugs. As the Court stated in Pushpanathan, at para. 36, “[w]here the purposes of the statute and of the decision-maker are conceived not primarily in terms of establishing rights as between parties, or as entitlements, but rather as a delicate balancing between different constituencies, then the appropriateness of court supervision diminishes.” Thus, while determinations made pursuant to the Food and Drug Regulations are polycentric, given that the Minister’s decisions are made in contemplation of public health, and therefore amount to an implementation of social and economic policy in a broad sense, the decision of the Minister to grant a NOC under the NOC Regulations is one that is judicially based and grapples in essence with the interests of the new drug applicant and the interests of an existing patent holder (see Pfizer Canada Inc. v. Minister of National Health and Welfare (1986), 1986 7719 (FCA), 12 C.P.R. (3d) 438 (F.C.A.), at p. 440). Consequently, in the case at bar, the Minister was primarily establishing rights between parties as opposed to undertaking a delicate balancing exercise (see Reference re: Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, s. 7 (1999), 3 C.P.R. (4th) 77 (F.C.A.), at para. 4).

[88] Third, Biolyse argues that the Minister’s expertise in drug approval should tip the balance in favour of deference. True: the primary area of expertise of the Minister relates to safety and efficacy, basically the evaluation of scientific evidence. However, such expertise is not engaged when simply interpreting the NOC Regulations, divorced from their relationship to the science (see Eli Lilly Canada Inc. v. Canada (Minister of Health), [2003] 3 F.C. 140, 2003 FCA 24, at para. 5.

[89] Fourth, there is no doubt that the central issue in this case is the interpretation and application of s. 5(1.1) of the NOC Regulations. Hence, the issue before the Court presents a question of mixed law and fact with precedential value. The Minister would arguably have no greater expertise with regard to this issue than the Court (see Merck 1999, at para. 68).

[90] I agree with Blanchard J. that the appropriate standard of review applicable to the issue of whether s. 5 of the NOC Regulations is engaged on the facts of this application is correctness. The Federal Court, Trial Division and the Federal Court of Appeal have usually concluded that a low level of deference should be adopted when reviewing decisions by the Minister to grant a NOC under the NOC Regulations (Merck 1999, at para. 68). I would adopt the following comments from Hugessen J. in Novopharm Ltd. v. Canada (Minister of National Health and Welfare), 1998 9043 (FC), [1998] 3 F.C. 50 (T.D.), at paras. 16 and 19, with regard to this:

The Minister is not a specialized tribunal; he is not a tribunal at all. He has no independent decision‑making power, no discretion and no policy‑making role under the Regulations; his functions are purely ministerial. He is charged with the duty of applying and administering the Regulations and he must do so properly. The standard of review is that of correctness.

The Minister’s duty is to keep the register and to administer the Regulations. It is not a duty which sits lightly with a Minister whose primary function is the protection of public health and safety since these Regulations have nothing to do with that subject and everything to do with the regulation of the conflicting relationships between brand name and generic drug manufacturers. The duty is, however, cast upon him by the Regulations and he must carry it out fairly and even-handedly.

[91] As will be demonstrated in the analysis below, I am of the view that no significant error of fact or principle was made by the lower courts in concluding that the Minister committed a reviewable error. Biolyse presented a number of new arguments to our Court; none are accepted here.

[92] Absent an error of principle, a misapprehension of the facts, or an otherwise unreasonable determination, this Court should not interfere with the application judge’s exercise of discretion conclusion. I would confirm his decision.

C. Motion by BMS to Admit Reply Evidence Is Allowed

[93] At the hearing, BMS renewed a motion which it had made to the Court in August 2004. BMS applied for an order admitting new evidence, the affidavit of Noëlle-Dominique Willems, and allowing it to file a reply factum to respond to the new evidence, i.e., the affidavit of James Keon and the factum of the intervener Canadian Generic Pharmaceutical Association. Given that the underlying position of Biolyse, as will be discussed later, is centred on the policy considerations and the impact of the regulatory regime, argument which is developed in great detail by the intervener Canadian Generic Pharmaceutical Association, this Court should be provided with the opposing party’s view. I would allow the motion and admit the reply evidence and factum of BMS.

III. Statutory Interpretation

[94] Courts are confronted on a daily basis with the task of interpreting enactments of Parliament and the Governor in Council. Effectively, statutes and regulations are the instruments which embody the voice of parliamentarians and members of legislative assemblies and provide guidance to Canadians in making decisions. In Sullivan and Driedger on the Construction of Statutes (4th ed. 2002), at p. 2, Professor Sullivan eloquently explains this important dimension:

In the case of legislation, the law-maker wants to communicate the law that it intended to enact because that law, as set out in the successive provisions of a statute or regulation, is the means chosen by the law-maker to achieve a set of desired goals. Law-abiding readers (including those who administer or enforce the legislation and those who resolve disputes) try to identify the intended goals of the legislation and the means devised to achieve those goals, so that they can act accordingly.

A. General Principles

[95] In his book Construction of Statutes (2nd ed. 1983), at p. 87, E. A. Driedger sets out this often-cited principle:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

[96] It is now well settled in law that this modern approach is the preferred method of statutory interpretation (see Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27, at para. 21; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42, at para. 26; H.L. v. Canada (Attorney General), [2005] 1 S.C.R. 401, 2005 SCC 25, at paras. 186-87; Marche v. Halifax Insurance Co., [2005] 1 S.C.R. 47, 2005 SCC 6, at para. 54; Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.C.R. 45, 2002 SCC 76, at para. 154). However, this framework need not be applied in a formulaic manner. The factors need not be canvassed separately in every case, given that they are very closely related and interdependent: Chieu v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 84, 2002 SCC 3, at para. 28.

[97] Biolyse argues that the proper method of interpretation when one is interpreting a regulation, and not an act, is to adopt a two-stage analysis where one first applies the Driedger approach to the regulation in isolation, and then applies the result of the first analysis in the context of the wording and policy objects of the act itself, taking into account other relevant acts and legal policies. BMS submits that there is no need to make a distinction between statutes and regulations. There is only one method of interpretation which applies to all instruments. I agree. Regulations are subject to the same rules of interpretation as statutes themselves (see, e.g., Francis v. Baker, 1999 659 (SCC), [1999] 3 S.C.R. 250; P.-A. Côté, The Interpretation of Legislation in Canada (3rd ed. 2000), at pp. 24-25; Driedger, at p. 247).

[98] The interpretation of a regulation merely requires consideration of the purpose and context of the enabling statute, and more specifically the section which confers the powers to enact regulations, as an additional element to be factored into the modern approach to interpretation. In fact, the modern approach already embodies the important role that context must inevitably play when a court construes the written words of a statute. It is undoubted that words take their colour from their surroundings: Bell ExpressVu, at para. 27. Furthermore, this Court acknowledged, on more than one occasion, that one is required to consider the “entire context” of a provision before one can determine if it is reasonably capable of multiple interpretations (meaning) and be labelled ambiguous: Bell ExpressVu, at para. 29.

[99] Thus, the specific regulation has to be read in the context of both the regulations, as an ensemble, and the enabling act as a whole: Sullivan, at p. 282.

[100] Even though a regulation is not subject to the usual process of study and debate by members of the House of Commons and the Senate, followed by various amendments, it is often submitted to various industry consultations and amendments before proclamation. As a result, the regulations reflect important policy choices made to ensure order and stability in regulated industries.

[101] The federal Interpretation Act, R.S.C. 1985, c. I-21, prescribes that the same rules of interpretation apply both to statutes and regulations (ss. 3(1) and 2(1)). Moreover, s. 12 provides that every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.

[102] Thus, statutory interpretation is the art of finding the legislative spirit embodied in enactments. In order to master this art, courts need to follow the statutory framework recognized and applied over the years. In this regard, the courts’ role will greatly differ when dealing with a legislative rather than a constitutional context. This shift in scenery is of the utmost importance in preserving the integrity and stability of the law, as confirmed in Bell ExpressVu, at para. 62:

Statutory enactments embody legislative will. They supplement, modify or supersede the common law. More pointedly, when a statute comes into play during judicial proceedings, the courts (absent any challenge on constitutional grounds) are charged with interpreting and applying it in accordance with the sovereign intent of the legislator.

The above principle was applied repeatedly by the courts: United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City), [2004] 1 S.C.R. 485, 2004 SCC 19, at para. 16; Spar Aerospace Ltd. v. American Mobile Satellite Corp., [2002] 4 S.C.R. 205, 2002 SCC 78, at para. 44; Harvard College, at para. 178; Marche, at para. 57; R. v. McDonald (2002), 2002 NSCA 135, 209 N.S.R. (2d) 283 (C.A.), at para. 24.

[103] The courts must be careful not to confuse policy considerations leading to the adoption of an act or regulations, which are examined in order to discover legislative intent, and the appropriateness of policy choices which are a matter that must be left to legislators. Contextual interpretation does not justify departures from ordinary rules of statutory interpretation; in particular, reading in words cannot be justified in the absence of a demonstrable ambiguity.

B. Application of the Modern Approach

[104] Simply put, this Court must determine whether Biolyse’s submission for a NOC falls within the purview of s. 5(1.1) of the NOC Regulations. The difficulty in this case lies in the application of the contextual approach to the interpretation of the impugned regulation. Nonetheless, I will start my analysis with the usual first step of looking at the grammatical and ordinary sense of the section before proceeding to consider the broader and external context of s. 5(1.1). This latter inquiry will entail an examination of the legislative history and object of the NOC Regulations as a whole, the Patent Act and the Food and Drug Regulations.

(1) Grammatical and Ordinary Meaning

[105] This first step in the interpretation exercise requires the Court to examine the ordinary meaning of the words used. What is the reader’s first impression, the understanding that spontaneously emerges when the provisions are simply read through? (Sullivan, at p. 21; Canadian Pacific Air Lines Ltd. v. Canadian Air Line Pilots Assn., 1993 31 (SCC), [1993] 3 S.C.R. 724, at p. 735)

[106] When one reads s. 5(1.1), what is understood? For ease of reference, I reproduce ss. 5(1.1) and 5(1), the latter being necessary to interpret the former:

5. (1.1) Subject to subsection (1.2), where subsection (1) does not apply and where a person files or has filed a submission for a notice of compliance in respect of a drug that contains a medicine found in another drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent included on the register in respect of the other drug containing the medicine, where the drug has the same route of administration and a comparable strength and dosage form,

(a) state that the person accepts that the notice of compliance will not issue until the patent expires; or

(b) allege that

(i) the statement made by the first person pursuant to paragraph 4(2)(c) is false,

(ii) the patent has expired,

(iii) the patent is not valid, or

(iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed.

5. (1) Where a person files or has filed a submission for a notice of compliance in respect of a drug and compares that drug with, or makes reference to, another drug for the purpose of demonstrating bioequivalence on the basis of pharmaceutical and, where applicable, bioavailability characteristics and that other drug has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the register in respect of the other drug,

(a) state that the person accepts that the notice of compliance will not issue until the patent expires; or

(b) allege that

(i) the statement made by the first person pursuant to paragraph 4(2)(c) is false,

(ii) the patent has expired,

(iii) the patent is not valid, or

(iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed.

[107] In a nutshell, s. 5(1.1) will be triggered when the second or subsequent entry manufacturer’s drug contains the same medicine, employs the same route of administration and has a comparable strength and dosage form as the drug listed on the patent register. I want to underline here the importance of the list, to which I shall return later.

[108] The Food and Drug Regulations make a distinction between three types of submissions: (1) a new drug submission (“NDS”); (2) an abbreviated new drug submission (“ANDS”); and (3) a supplement to NDS or ANDS. The Minister’s filing requirements are different for innovative new drug product developers and generic manufacturers who sell drugs patented by others, after patent protection has expired. The former requires a NDS and the latter needs only an ANDS. Biolyse argues that s. 5(1.1) was introduced to require that a NOA be served solely by generic manufacturers filing an ANDS. BMS submits that Biolyse’s interpretation would render s. 5(1.1) redundant with s. 5(1), and therefore meaningless. Further, BMS submits that s. 5(1.1), and more specifically the NOA procedure, apply equally to an applicant filing a NDS or an ANDS where the drugs contain the same medicine, dosage form and route of administration.

[109] A simple dissection of the impugned section casts light on the five conditions (see F.C.A. judgment, at para. 15):

(1) Section 5(1) cannot apply to the situation;

(2) The person must have filed a submission for a NOC;

(3) The NOC filed must be in respect of a drug that contains a medicine found in another drug;

(4) The first entry drug has to have been marketed in Canada pursuant to a NOC issued to a first person and in respect of which a patent list has been submitted; and

(5) The new drug has to have the same route of administration and a comparable strength and dosage form as the first entry drug.

[110] I will now briefly examine each of these components in light of their plain and ordinary meaning. First, s. 5(1) cannot apply. Blanchard J. explains, at para. 40:

In my view, the language in s-s. 5(1) is clear. Without a second drug used for comparative purposes to assess the safety and efficacy of the new product, s-s. 5(1) has no application. Further, a second person would be unable to comply with the requirements under the subsection to provide the specified information, “with respect to each patent on the register in respect of the other drug”, since no “other drug” is identified in this instance.

The application judge, on the evidence, concluded that Biolyse did not compare its drug or make reference to another drug for the purpose of demonstrating bioequivalence (at para. 40):

On the evidence, the Biolyse submission contains clinical studies on sick patients; specifically those with advanced breast cancer unresponsive to usual treatment and those with locally advanced non-small-cell lung cancer. The safety and efficacy of the Biolyse product assessment was based on those studies and on what was known to scientists in the public realm about paclitaxel.

[111] Second, it has been established that, for the purposes of the NOC Regulations, “a submission for a notice of compliance” means a NDS, an ANDS, as well as a supplement to either of these submissions. This interpretation was first adopted by McGillis J. in Apotex Inc. v. Canada (Minister of Health) (1999), 1999 7834 (FC), 87 C.P.R. (3d) 271 (F.C.T.D.), at para. 36, where she stated:

In considering the expression “a submission for a notice of compliance” in sections 4 and 5 of the Patented Medicines (Notice of Compliance) Regulations, the mechanisms which trigger the issuance of a notice of compliance are, by virtue of the definition of “notice of compliance” in section 2, those specified in section C.08.004 of the Food and Drug Regulations, namely a new drug submission, an abbreviated new drug submission and a supplement to a new drug submission or to an abbreviated new drug submission. In the circumstances, the expression “submission for a notice of compliance”, as used in sections 4 and 5 of the Patented Medicines (Notice of Compliance) Regulations means a new drug submission, an abbreviated new drug submission and a supplement to a new drug submission or to an abbreviated new drug submission. [Emphasis added.]

(See also Merck 1999, at para. 59.)

[112] At para. 58, Binnie J. finds support in a number of cases from the Federal Court for the proposition that the word “submission” does not include any submission, more specifically that it does not include a supplementary NDS (Bristol-Myers Squibb Canada Inc. v. Canada (Attorney General) (2001), 2001 22128 (FC), 10 C.P.R. (4th) 318 (F.C.T.D.), aff’d (2002), 16 C.P.R. (4th) 425, 2002 FCA 32; Toba Pharma Inc. v. Canada (Attorney General) (2002), 21 C.P.R. (4th) 232, 2002 FCT 927; Ferring Inc. v. Canada (Attorney General) (2003), 26 C.P.R. (4th) 155, 2003 FCA 274; AstraZeneca Canada Inc. v. Canada (Minister of Health) (2004), 36 C.P.R. (4th) 58, 2004 FC 736). In my opinion, this line of cases cannot find application here. First of all, these decisions deal with the attempt by patentees to circumvent the time requirements in s. 4 of the NOC Regulations by making various administrative modifications (i.e., changing the brand (trade) name or the company’s (manufacturer) name) in a supplementary NDS in order to add patents on the patent register. None of these cases deals with the issue of whether “submission” includes NDS and ANDS. In fact, in AstraZeneca, at para. 21, the Federal Court refers and accepts McGillis J.’s comment in Apotex Inc. v. Canada (Minister of Health).

[113] In the recent decision of the Federal Court in GlaxoSmithKline Inc. v. Canada (Attorney General) (2004), 38 C.P.R. (4th) 27, 2004 FC 1302, at paras. 64-71, Lemieux J. recognizes that a “submission” encompasses a NDS and an ANDS, but distinguishes the administrative NDS since its purpose is not to enable the Minister to assess the safety and effectiveness of the new drug. An administrative or supplementary NDS cannot possibly be liken to a NDS or an ANDS. The former submission has no substantive content compared to the latter submissions.

[114] I consequently take issue with Binnie J.’s contention that the intervener Pfizer Canada Inc. supports Biolyse in its claim that the word “submission” does not include any submission (para. 42). Pfizer’s claim was exclusively related to the administrative NDS, i.e., a NDS which contains no scientific or technical data, but is completely administrative, not falling within the ambit of s. 5(1.1). In fact, Pfizer did not take position on whether an ANDS or a NDS was included in the word “submission”, the issue at hand. Finally, it is interesting to note that Pfizer has since the hearing been able to convince the Minister of its position and is no longer preoccupied with the result of this appeal (letter from Pfizer to the Court, dated November 24, 2004).

[115] Third, the NOC must have been filed in respect of a drug that contains a medicine found in another drug that has been marketed in Canada. Biolyse argues that the definition of medicine must be tied to the patent list because s. 4(2)(b) of the NOC Regulations limits what may be on a patent list to any Canadian patent that is owned by that person and contains a claim for the medicine itself. I cannot agree. Section 4(2)(b) is not as restrictive as asserted by Biolyse. It is in fact very comprehensive and allows a patent list to be submitted for any Canadian patent that is owned by that person and contains a claim for the medicine itself or a claim for the use of the medicine. In addition, as was recognized by Biolyse, a “claim for the medicine itself” was given in s. 2 of the NOC Regulations by the Governor in Council a very broad ambit. The same can be said for a “claim for the use of the medicine”. These definitions cannot be ignored:

“claim for the medicine itself” includes a claim in the patent for the medicine itself when prepared or produced by the methods or processes of manufacture particularly described and claimed or by their obvious chemical equivalents; (revendication pour le médicament en soi)

“claim for the use of the medicine” means a claim for the use of the medicine for the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or the symptoms thereof; (revendication pour l’utilisation du médicament)

[116] Moreover, “medicine” is defined in s. 2 as “a substance intended or capable of being used for the diagnosis, treatment, mitigation or prevention of a disease, disorder or abnormal physical state, or the symptoms thereof”.

[117] Biolyse’s interpretation would require the Court to read in the term “patented” in s. 5(1.1), something that would go entirely against a plain reading of the section which clearly refers to “medicine”, a defined term. It has been recognized that in interpreting a statute or regulation words should not be added or deleted, and the readers should not try to fill in any gaps that they think they see: Driedger, at p. 94. Here, the definition of “medicine” is very wide and cannot be said to encompass solely patented medicines.

[118] BMS has three patents listed on the patent register in respect of its drug Taxol, more specifically in connection with paclitaxel. Two of the three patents are in relation to the use of paclitaxel solution: (1) patent number 2,086,874, a new method of administering paclitaxel which uses less paclitaxel and shorter infusion time; and (2) patent number 2,132,936, to increase shelf life of paclitaxel using a new solvent (castor oil, ethanol, and aluminum oxide). The third patent is a formulation patent that claims the active ingredient with particular excipients: patent number 2,189,916, composition for treatment of Kaposi’s sarcoma. While one could posit that the patents held by BMS are narrow, it would be inappropriate to venture on uncertain grounds to examine these patents in detail or question their validity, given the absence of a full factual record in the case at bar. It is also totally unnecessary in this case. These patents exist and there has been no challenge regarding their validity. The indirect attack resulting from reading in words as proposed by Binnie J. in paras. 52-53 or reading down the provision as proposed in his paras. 57-61 is, in my opinion, not consistent with the rules of statutory interpretation and constitutes a diversion from the real contentious issue. Only one question needs to be answered: has Biolyse filed a submission in respect of a drug that contains a medicine found in another drug? The answer is clear, yes. As found by Blanchard J. and reiterated by Evans J.A., the medicine paclitaxel is found in Paclitaxel for injection and in Taxol. This is a finding of fact not contested by Biolyse, which explains why it is trying to qualify the word “medicine” through tortuous constructions.

[119] Fourth, the first entry drug has to have been marketed in Canada pursuant to a NOC issued to a first person and in respect of which a patent list has been submitted. As mentioned above, Taxol has been marketed in Canada pursuant to a NOC issued to BMS and the latter owns three patents in connection with the drug.

[120] Fifth, there is no contention that Biolyse’s drug for injection has the same route of administration and a comparable strength and dosage form as BMS’s drug. Blanchard J. found that the evidence established that Biolyse’s Paclitaxel for injection had the same route of administration as Taxol, intravenous injection, and was of identical strength and dosage form as Taxol, 6mg/ml (para. 51).

[121] Consequently, as determined by the two lower courts, if s. 5(1.1) is to be interpreted by giving its language the ordinary and grammatical meaning, Biolyse had to make an allegation in its submission pursuant to s. 5(1.1)(b) and, until Biolyse complied, the Minister was prohibited by s. 7(1)(b) from issuing a NOC in respect of Paclitaxel for injection.

[122] Therefore, a simple reading of s. 5(1.1) does not reveal any ambiguity or incoherence.

[123] Nonetheless, as asserted by this Court in Chieu, at para. 34, the grammatical and ordinary sense of a section is not determinative. This Court has long rejected a literal approach to statutory interpretation (see Sullivan, at pp. 20-21). Thus, this first step must be followed by a consideration of the entire context.

(2) Entire Context

[124] Since, in this case, the provision under scrutiny is part of a bigger scheme, the context that will colour the words is more expansive: Bell ExpressVu, at para. 27. Context is an indefinite and adaptable concept. Different fact situations will warrant different appreciations of context, all with the goal of discovering the clear intention of the legislature (or Parliament) and the true purpose of the statute or regulation.

[125] The entire context in this appeal can be analysed in two stages. First, I will explore the broader context, i.e., the legislative scheme in which is found the litigious section. Second, I will probe into the external context which consists of the extrinsic evidence relating to the historical setting in which s. 5(1.1) was enacted and currently operates (see Sullivan, at pp. 260-62; Marche, at para. 66).

[126] Contrary to Binnie J., I contend that, when read in its entire context, s. 5(1.1) applies to Biolyse.

(a) Broader Context: Legislative Scheme

[127] The broader context in which is found the impugned section contains three pieces of legislation which require this Court’s attention: (1) the Food and Drug Regulations; (2) the Patent Act; and (3) the NOC Regulations. I will canvass these instruments with, for obvious reasons, a particular attention to the last two.

[128] When analysing the legislative scheme, the Court tries to discover how the provisions or parts of different acts and regulations work together to give effect to a plausible and coherent plan: see Sullivan, p. 284. As the product of a rational government, the NOC Regulations are seen as part of a system, every component contributing to the whole (see Côté, at p. 308; Marche, at para. 72). One cannot criticize the larger scheme in place in the guise of “contextual analysis” to subsequently apply the contextual values one favours. The examination of the broader context should be executed objectively in order to avoid a distorted application of the intention of the legislator (or Governor in Council).

(i) Food and Drug Regulations

[129] The Food and Drug Regulations are intrinsically linked to the NOC Regulations given the usage in the latter of the instrument called the “notice of compliance” first introduced as a notice issued by the Minister under s. C.08.004 of the Food and Drug Regulations.

[130] On the one hand, for new product developers, s. C.08.002(2) of the Food and Drug Regulations sets out the requirements for an approval by way of a NDS. The innovative developer must show safety and effectiveness in humans by the submission of evidence of clinical testing. On the other hand, for generic manufacturers, s. C.08.002.1 of the Food and Drug Regulations sets out the requirements for an approval by means of the shorter ANDS. The generic manufacturer must only show that its product is bioequivalent or is the pharmaceutical equivalent to a Canadian reference product for which safety and efficacy have already been demonstrated and that the route of administration and the conditions of use of the new drug is the same as that of the Canadian reference product.

[131] Further, s. C.08.003(1) provides that a supplement to a NDS or a supplement to an ANDS needs to be filed with the Minister where there have been changes to a new drug (for which a notice of compliance has been issued) in respect of specified matters such as the description, the brand name, the name of the manufacturer, the specifications of ingredients, the methods of manufacture, the labels used, the representations made, the recommended route of administration, the dosage and similar matters.

[132] The Food and Drug Regulations differ greatly from the NOC Regulations, and more specifically s. 5(1.1). I will address these differences later.

(ii) Patent Act

[133] The granting of a patent in Canada can be compared to a contract between the Government of Canada, the general public, and the patentee. S. B. Garland and J. E. Want, in their article “The Canadian Patent System: An Appropriate Balance Between the Rights of the Public and the Patentee” (1999), 16 C.I.P.R. 43, discuss the policy values underlying the Canadian patent system:

It is well understood that in Canada the grant of a patent is akin to a contract or bargain between the patentee on the one hand and the government of Canada (representing the interests of the general public) on the other. The patentee receives the grant of an exclusive right to use the patented invention in Canada for a specific period of time in return for fully disclosing the invention to the public by way of the patent specification. [p. 43]

H. G. Fox, in his oft-cited text The Canadian Law and Practice Relating to Letters Patent for Inventions (4th ed. 1969), indicates at p. 163:

The grant of a patent is in the nature of a bargain between the inventor on the one hand and the Crown, representing the public, on the other hand. The consideration for the grant is double: first, there must be a new and useful invention, and secondly, the inventor must, in return for the grant of a patent, give to the public an adequate description of the invention with sufficiently complete and accurate details as will enable a workman, skilled in the art to which the invention relates, to construct or use that invention when the period of the monopoly has expired. The function of the description contained in the specification is both to enable the construction and use of the devices contained therein after the expiry of the patent, and also to enable others to ascertain with some measure of exactness the boundaries of the exclusive privilege upon which they may not trespass during the existence of the grant.

[134] In Canada, the patent right and its protection against infringement are based entirely in the Patent Act. Sections 54 and 55 of the Patent Act permit a person to bring an action for infringement of a patent against another person. This action for what has been described as a statutory tort (see Gerber Garment Technology Inc. v. Lectra Systems Ltd., [1997] R.P.C. 443 (Eng. C.A.), at p. 452) is not without its exceptions. Under s. 55.2(1), reproduced in the Appendix, the legislator has created an exception, known as the “early working” exception, by which companies can make use of patents in conducting studies, such as clinical trials to obtain approval for their product from an appropriate government authority as required by a regulatory scheme such as the Food and Drug Regulations. Thus, it permits utilization of the rights under a patent for the benefit of permitting an earlier launch of second entry products after expiry of any relevant patent. When first introduced, s. 55.2 contained a second exception (s. 55.2(2)) which permitted a person to stockpile patented products during the final six months of the term of the patent, provided that such articles were intended for sale after the expiry of the patent. This “stockpiling” provision was repealed in 2001 following a decision by the World Trade Organization in which it concluded that this exception violated the terms of the Agreement on Trade-Related Aspects of Intellectual Property Rights, 1869 U.N.T.S. 299 (see WTO, Report of the Panel, “Canada — Patent Protection of Pharmaceutical Products”, WTO Doc. WT/DS114/R, March 17, 2000). Section 55.2 sets forth an equilibrium between the protection of patentees’ rights and the exemption from infringement for manufacturers that have to make use of patents in conducting studies, such as clinical trials.

[135] Nevertheless, in a clear attempt to contain and circumscribe the above exception, Parliament authorized the Governor in Council in s. 55.2(4) to make regulations which it considers necessary for preventing the infringement of a patent by any person who makes, constructs, uses or sells a patented invention in accordance with subs. (1). E. Hore, in his article “The Notice of Compliance Regulations Under the Patent Act: The First Two Years” (1995), 12 C.I.P.R. 207, at p. 208, described the rationale for this section in the following manner:

The wording in s. 55.2(4) is somewhat obscure: a person, by doing an act expressly stated not to be patent infringement obviously cannot, by doing it, be infringing a patent. The thinking of the governor in council, it appears, must therefore have been that persons taking advantage of the two exceptions would, unless the NOC Regulations were enacted as a necessary safeguard, step beyond the exceptions, thus becoming infringers.

[136] The power bestowed on the Governor in Council is very broad, as evidenced by the language of the section (see Appendix). Section 55.2(4) provides a mechanism by which the Governor in Council can continue to further the objective of the Patent Act: the prevention of patent infringements. As I will discuss in more detail below, the section at the heart of this dispute, s. 5(1.1) of the NOC Regulations, is a valid exercise of this power.

[137] In addition, the Patent Act, pursuant to s. 55.2(5), provides for the supremacy of s. 55.2 over other statutes. This provision is used by BMS in its rebuttal.

[138] Biolyse claims that there is a conflict between two “circles of context”. Biolyse emphasizes that this Court, when balancing the concepts of competition and monopoly, should remember that competition is the norm and monopoly the exception. BMS retorts that Parliament, in s. 55.2(5) of the Patent Act, confirmed that the NOC Regulations enacted pursuant to the section must prevail over any other Act of Parliament. The Governor in Council knew what market forces were at play when it adopted its regulations.

(iii) Patented Medicines (Notice of Compliance) Regulations

[139] Pursuant to the statutory power described above (s. 55.2(4)), the Governor in Council adopted the NOC Regulations. At the risk of repeating myself, these Regulations permit a patentee’s competitor to do, without being liable for patent infringement, whatever is necessary to prepare an application to the competent government authority for the approval of a patented article: R. H. Barrigar, Canadian Patent Act annotated (2nd ed. (loose-leaf)), at p. PA-232.1.

[140] It is now well established that the objective of the NOC Regulations is to provide further protection to owners of patents regarding medicines: Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1998), 1998 8936 (FC), 84 C.P.R. (3d) 492 (F.C.T.D.), at para. 2, aff’d (2000), 2000 15616 (FCA), 8 C.P.R. (4th) 48 (F.C.A.); Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1994), 1994 19508 (FCA), 55 C.P.R. (3d) 302 (F.C.A.) (“Merck 1994”), at p. 314; Eli Lilly Canada Inc. v. Canada (Minister of Health), at para. 6; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), 1998 792 (SCC), [1998] 2 S.C.R. 193 (“Merck 1998”), at para. 30; Hore, at p. 208.

[141] Consequently, in 1993, with the abolition of compulsory licenses for patented medicines and the enactment of the NOC Regulations, the Governor in Council provided the patentee with additional methods of protecting private commercial patent rights:

With the abolition of compulsory licenses for patented medicines, it remains open to medical patentees to sue any infringing user of its patents, and to seek interlocutory injunctions pending the trial of such actions. In addition to this means for patentees to protect their patents, the Governor in Council in 1993 adopted the Regulations which provide patentees with a more direct and easier method of blocking possible infringement: by seeking an order of prohibition against the Minister preventing him from allowing another alleged user of the patented medicine to market the allegedly infringing product. Thus the Minister’s authority to refuse a notice of compliance, originally designed to protect the personal health of Canadians, has been harnessed to protect the financial health of drug patentees. Whatever the public policy merits of this, it must be seen as an extraordinary means of providing interim protection to patentees by which a competitor can be blocked from marketing for 30 months by the simple expedient of the patentee filing an application in the Trial Division for prohibition. [Emphasis added.]

(Merck Frosst Canada Inc. v. Apotex Inc., 1997 4806 (FCA), [1997] 2 F.C. 561 (C.A.), at para. 7)

[142] I will now examine each of the sections that form an important part of the general scheme of the NOC Regulations (see Hughes and Woodley on Patents (loose-leaf ed.), at pp. 381-18 and 381-19; Hore, at pp. 209-11).

[143] A preliminary remark is however warranted. While it was open to the Governor in Council, when these NOC Regulations were adopted, to use the same language as in the Food and Drug Regulations, that was not done. Broader language was used. The NOC Regulations do not refer to a NDS, or an ANDS, or a supplement, but simply to a “submission”. Furthermore, two new concepts were introduced by the NOC Regulations, “first person” and “second person”. As we will see, this puts into question Biolyse’s contention that s. 5(1.1) only applies to an ANDS and not a NDS.

[144] Section 4 allows an originating manufacturing company, i.e., a first person, who files a submission for, or has been issued, a NOC to submit to the Minister a patent list. Pursuant to ss. 4(4) and 4(6), a first person may also add a patent to an existing patent list.

[145] Section 5, the contentious provision in this case, applies to what has been labelled “the second person”. An amendment to the patent list by the first person, after the second person files a submission for a NOC, but before the NOC is issued, will affect the submissions of the second person (s. 5(2)). When a second person makes an allegation pursuant to s. 5(1)(b) or s. 5(1.1)(b), for example, claiming that the patent is not valid, this person has the obligation, under s. 5(3), to serve a NOA. This notice fulfills a crucial role. It advises and alerts first entry manufacturers (innovators) of possible infringement of their patents. Subsequently, pursuant to s. 7(1)(b), the Minister cannot issue a NOC to a second person before the second person complies with s. 5.

[146] Following the receipt of a NOA, the first person has the right to apply to a court for an order prohibiting the Minister from issuing a NOC (s. 6(1)). This last step has been addressed by this Court in the past and consumes a great part of Binnie J.’s reasons in this case. While the 24-month stay has been qualified in the past by this Court as “draconian”, though valid (Merck 1998, at para. 33), it is not at issue in the present situation and should play no role in the disposition of this appeal. In fact, in the case at bar, by convincing the Minister to issue a NOC, Biolyse has effectively bypassed the NOA procedure and the statutory prohibition enacted in the NOC Regulations. Notwithstanding that, the 24-month stay is a subsequent step of the regulatory scheme which is not before this Court, but more importantly is not in any way relevant to the construction of s. 5(1.1).

(iv) Relationship Between Patent Protection and Health Considerations

[147] The relationship between the patent-related review and the health/public safety review required to be made for a drug sought to be marketed in Canada was described by the Federal Court of Appeal in Reference re: Patented Medicines (Notice of Compliance) Regulations, at para. 4, as follows:

The Patented Medicines (Notice of Compliance) Regulations recently adopted pursuant to the Patent Act, R.S.C. 1985, c. P‑4, ought not to be interpreted rigidly, without regard to their true intent and scope. The judicial process they introduced a few years ago following the abolition of the compulsory licensing system, with a view to bringing some protection to patent holders whose proprietary rights might be inadvertently but too easily affected, is separate and distinct from the long‑standing administrative process imposed by the Food and Drug Regulations, C.R.C. 1978, c. 870, adopted pursuant to the Food and Drugs Act, whose purpose is to satisfy the requirements of safety and efficacy. Of course, both processes can only be triggered by a drug manufacturer who contemplates marketing a new product. But nothing requires that they be both set in motion at the same time. The judicial process has nothing to do with the administrative one and vice versa. These are parallel processes. Matching them is achieved only through their results: the Minister cannot issue a NOC without regard to the findings established by the two processes.

[148] Therefore, the complete scheme imposes two parallel processes linked by the “NOC”: (1) an administrative procedure designed to ensure safety and efficacy; and (2) a judicial procedure designed to protect the interests of patent holders. The matching of these processes is achieved only through their application and the two results obtained (see Hughes and Woodley on Patents, at p. 381-17; Merck 1999, at para. 54).

[149] Hugessen J.A. in Merck 1994, at p. 304, commented on the interaction between the NOC Regulations and the Food and Drug Regulations:

In large measure, the difficulty is due to the fact that those regulations, whose clear intention is to facilitate the protection of privative commercial patent rights, have been grafted onto a regulatory scheme, the Food and Drug Regulations, C.R.C. 1978, c. 870, as amended, whose sole purpose is the protection of public health and safety. The union is not a happy one.

(v) Concluding Remarks Regarding the Context

[150] At the end of this first contextual analysis, it is important to reiterate the objective sought, which is “to interpret statutory provisions to harmonize the components of legislation inasmuch as is possible, in order to minimize internal inconsistency”: Willick v. Willick, 1994 28 (SCC), [1994] 3 S.C.R. 670, at p. 689. The above instruments are not just three independent pieces of legislation; they each form part of this bigger purposively put-together system. This aspect is critical to the interpretation exercise and deserves particular attention:

The fundamental presumption underlying scheme analysis is that modern legislation (unlike much early legislation) is not just a series of rules. It typically includes a mix of interpretation provisions, application provisions, office- and institution-establishing provisions, power conferring provisions, dispute resolution provisions and transitional provisions as well as traditional prohibitions and entitlements, all of which are meant to operate together in a particular institutional setting. Much modern regulatory legislation is lengthy and complex, and the schemes can be difficult to master. However, once mastered such schemes often point quite clearly to the interpretation that gives effect to the legislature’s intention.

(Sullivan, at p. 285)

[151] In light of the above, I am of the view that the attempt by Biolyse to restrict the circumstances under which a NOA must be sent cannot possibly be in accordance with the purpose of s. 55.2 and the NOC Regulations, which is to protect the rights of patent holders.

[152] I cannot envision why s. 5(1.1) would not be a proper exercise of the purpose and power conferred to the Governor in Council under s. 55.2(4): s. 5(1.1) strives to stop a second entry manufacturer from circumventing the NOC Regulations by forcing it to address the question of infringement pursuant to the scheme of the NOC Regulations.

[153] The ordinary meaning of s. 5(1.1) is consistent not only with the purpose of the NOC Regulations but also with the purpose of s. 55.2 of the Patent Act. It fits properly in the scheme contemplated by the government.

(b) External Context: Legislative History

[154] Legislation and regulation are a response to circumstances in the real world and necessarily operate within an evolving set of institutions and relationships: Sullivan, at pp. 260-61. Tracing the evolution of legislation from its inception, through successive amendments to its current form, may reveal a gradual trend or evolution in legislative policy or it may reveal that the original purpose of legislation has remained constant in spite of the amendments: Sullivan, at pp. 218 and 471-72. “Prior enactments may throw some light on the intention of Parliament in repealing, amending, replacing or adding to a statute”: R. v. Ulybel Enterprises Ltd., [2001] 2 S.C.R. 867, 2001 SCC 56, at para. 33; Marche, at para. 99.

[155] Before embarking on the examination of the history of s. 5 of the NOC Regulations, I would like to briefly comment on the use of a specific extrinsic aid relied on by the parties to determine the intention of the Governor in Council: the Regulatory Impact Analysis Statement (“RIAS”). Biolyse expressed some uncertainty about whether this Court should consider or give weight to such extrinsic aids. I am of the view that these doubts are unsubstantiated.

[156] It has long been established that the usage of admissible extrinsic sources regarding a provision’s legislative history and its context of enactment could be examined. I held in Francis v. Baker, at para. 35, that “[p]roper statutory interpretation principles therefore require that all evidence of legislative intent be considered, provided that it is relevant and reliable.” Consequently, in order to confirm the purpose of the impugned regulation, the intended application of an amendment to the regulation or the meaning of the legislative language, it is useful to examine the RIAS, prepared as part of the regulatory process (see Sullivan, at pp. 499-500). McGillis J. in Merck 1999, at para. 51, indicated:

. . . a Regulatory Impact Analysis Statement, which accompanies but does not form part of the regulations, reveals the intention of the government and contains “. . . information as to the purpose and effect of the proposed regulation”.

[157] The use of the RIAS to determine both the purpose and the intended application of a regulation has been frequent in this Court and others, and this across a wide range of interpretive settings: see, e.g., RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311, at pp. 352-53; Friesen v. Canada, 1995 62 (SCC), [1995] 3 S.C.R. 103, at paras. 63-64; Merck 1999, at para. 51; AstraZeneca, at para. 23; Bayer Inc. v. Canada (Attorney General) (1999), 1999 8099 (FCA), 87 C.P.R. (3d) 293 (F.C.A.), at para. 10.

[158] Binnie J. refers in his analysis (at para. 47) to the WTO Report in order to decipher the object of the NOC Regulations. More specifically, he refers to Canada’s submissions to the WTO in the context of the complaint made by the European Communities. In my respectful view, no weight should be accorded to such evidence given that it was presented in the context of international litigation occurring long after the NOC Regulations and pertinent legislation were enacted. It says nothing of legislative context.

[159] In the present case, the history of the impugned provision can be divided in two time periods: the period prior to the 1999 amendment, and the period following the 1999 amendment. The evolution of s. 5(1.1) demonstrates how the government was active in its efforts to transform and broaden the provision.

(i) Pre-1999

[160] As discussed earlier, in 1993, following the abolition of the compulsory licensing system of drug patents, the government first enacted the NOC Regulations in order to protect the rights of patentees by preventing generic manufacturers from marketing their drugs until the expiry of all relevant patents (see Merck 1999, at para. 51; M. Smith, Patent Protection for Pharmaceutical Products in Canada — Chronology of Significant Events (March 30, 2000)). The RIAS accompanying the NOC Regulations explained the reasons for this new regulatory scheme:

Under the status quo patentees have the right to pursue patent infringement actions in the courts to obtain interlocutory relief and to be compensated in damages if an injunction is not granted and it turns out that there was infringement. As a general rule, judicial remedies are sufficient to address patent infringement. However, with the enactment of Bill C-91 the government has created an exception to patent infringement allowing generic competitors to undertake any activities necessary to work up a submission to obtain regulatory approval of a product. This removes a patent right that may have otherwise been available to patentees to prevent generic competitors from obtaining such regulatory approval of their products.

These Regulations are needed to ensure this new exception to patent infringement is not abused by generic drug applicants seeking to sell their product in Canada during the term of their competitor’s patent while nonetheless allowing generic competitors to undertake the regulatory approval work necessary to ensure they are in a position to market their products immediately after the expiry of any relevant patents.

These Regulations together with subsection 55.2(1) will allow patentees to enjoy full patent protection while ensuring off-patented competitors will be able to enter the marketplace immediately upon the expiry of all patents pertaining to a medicine. [Emphasis added.]

(SOR/93-133, Canada Gazette, Part II, vol. 127, No. 6, at pp. 1387-88)

[161] As has been consistently and properly affirmed by the courts, the only purpose of the NOC Regulations is to prevent patent infringement by protecting the research and development initiatives of innovator companies (see Merck 1999, at para. 53; Nu‑Pharm, at para. 6; Eli Lilly & Co. v. Novopharm Ltd., 1998 791 (SCC), [1998] 2 S.C.R. 129, at para. 9). As reflected in the Patent Act, the government chose to accord primacy to the protection of patent rights, but still permitted generic manufacturers to access the regulatory approval system.

[162] When first promulgated in 1993, there was no s. 5(1.1) in the NOC Regulations. Section 5(1) read:

5. (1) Where a person files or, before the coming into force of these Regulations, has filed a submission for a notice of compliance in respect of a drug and wishes to compare that drug with, or make reference to, a drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the patent list . . . .

At that time, there was no requirement that there be bioequivalence for a NOA to be sent, simply some comparison or reference to the first entry product.

[163] In 1998, seeking to reduce unnecessary litigation, to streamline the process and to reinforce the balance between providing a mechanism for the effective enforcement of patent rights and ensuring that generic products enter the market as soon as possible, the Governor in Council amended the NOC Regulations. The stay preventing the Minister from issuing a NOC while patent issues are resolved was reduced to 24 months from the previous 30 months (s. 7(1)). Moreover, a clearer indication was given to the courts concerning the circumstances in which damages could be awarded to a second person to compensate for the loss suffered by reason of delayed market entry of its drug, and the factors that may be taken into account in calculating such damages (s. 8). However, s. 5(1), except for minor changes, remained the same:

5. (1) Where a person files or has filed a submission for a notice of compliance in respect of a drug and wishes to compare that drug with, or make reference to, another drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the register in respect of the other drug . . . .

(ii) Post-1999

[164] In 1999, concerns were expressed surrounding attempts by second and subsequent entry manufacturers to creatively structure their new drug submissions to avoid the impact of the NOC Regulations. A proposed amendment was published in the Canada Gazette, Part I, July 31, 1999, at p. 2265. The proposed version reads as follows:

5. (1) If a person files or has filed a submission for a notice of compliance in respect of a drug that contains a medicine found in another drug that is or has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent included on the register in respect of the other drug containing the medicine, where that drug