2022 FC, 2022 FC 1460

Date: October 25, 2022 Docket: T-1004-22 T-1006-22 Citation: 2022 FC 1460 Toronto, Ontario, October 25, 2022 PRESENT: Case Management Judge Trent Horne BETWEEN: GILEAD SCIENCES, INC. AND GILEAD SCIENCES CANADA, INC. Plaintiffs and APOTEX INC. Defendant ORDER AND REASONS I. Overview [ 1 ] In this PM(NOC) proceeding, the plaintiffs move for production of samples. The motion will be granted in part. II.

Background [ 2 ] These closely-related proceedings have been brought pursuant to the Patented Medicines (Notice of Compliance) Regulations SOR/93-133 (“ " Regulations ” " ). [ 3 ] In T-1004-22, the plaintiffs (“ " Gilead” " ) request, among other things, a declaration that certain claims of Canadian patent 2,845,553 (the “553 Patent”) will be infringed by or as a result of Apotex Inc. (“ " Apotex” " ) making, constructing, using, importing, offering for sale, selling, or exporting a product containing the medicinal ingredient tenofovir alafenamide hemifumarate in accordance with abbreviated new drug submission number 260351. [ 4 ] In T-1006-22, Gilead seeks a similar declaration in respect of Apotex’s abbreviated new drug submission number 257211. [ 5 ] Apotex has defended both actions, and denies the allegations of infringement. [ 6 ] I issued a scheduling order in both proceedings on August 12, 2022.

The order set a deadline of September 1, 2022 for Gilead to request samples from Apotex, and September 26, 2022 as the date for any motion for the production of samples. Samples were requested by Gilead, but the parties were unable to reach an agreement on this issue. III.

The Delaware Action [ 7 ] Earlier litigation in the United States in respect of the same product and similar patents played a prominent role in Apotex’s argument. [ 8 ] Gilead Sciences, Inc " (“Gilead Sciences” " ) and Apotex (among other defendants) were involved in Hatch-Waxman litigation in the United States District Court for the District of Delaware (Court file no CA No 20-189) that also involved Apotex’s APO-TENOFOVIR ALAFENAMIDE, APO-EMTRICITABINE-TENOFOVIR ALAFENAMIDE, and APO-EMTRICITABINE-RILPIVIRINE-TENOFOVIR tablet products containing tenofovir alafenamide hemifumarate (the " “Delaware Action” " ).

The Delaware Action involved United States patents 8,754,065 and 9,296,769 (the " “065 and 769 Patents” " ). [ 9 ] A stipulated protective order issued in the Delaware Action on July 30, 2020. Among other terms, this order (paragraph 4b) states that " “Designated Material” " shall be used solely for purposes of conducting this Litigation, and that Designated Material shall not be used or referenced in any pending or future litigation other than this Litigation. [ 10 ] Apotex’s evidence on the motion is an affidavit sworn by Peter Eustace, in-house patent counsel for Apotex.

Mr Eustace was not cross-examined. [ 11 ] Mr Eustace states that the Delaware Action was commenced in February 2020, and that the initial claims of the patents asserted against Apotex were identified only as " “at least claim 1 of each patent” " . [ 12 ] Gilead Sciences requested, and Apotex voluntarily provided, samples of Apotex’s finished dosage forms in the Delaware Action.

Mr Eustace states that it was his understanding that these samples were requested by Gilead Sciences so that it could conduct testing to determine if Apotex infringed claims of the 065 or 769 Patents, particularly claims 2 to 5 of the 065 Patent and claim 6 of the 769 Patent.

These claims make reference to differential scanning calorimetry ( " “DSC” " ) and X-ray powder diffraction ( " “XRPD” " ) values. [ 13 ] Mr Eustace goes on to say that, after providing Gilead Sciences with the finished dosage form samples, Gilead Sciences advised that it would be pursuing the following claims: 1, 6-19, 23, and 26 of the 065 Patent, and claims 1-5, 7-12, 15, and 17 of the 769 Patent. None of these claims include DSC or XRPD values.

[ 14 ] Gilead Sciences subsequently made a further request for samples of the tenofovir alafenamide hemifumarate active pharmaceutical ingredient ( " “API” " ) in the Delaware Action. Samples were voluntarily provided by Apotex in February 2021.

Mr Eustace understands that these API samples were requested by Gilead Sciences so that it could conduct testing to determine if the tenofovir alafenamide hemifumarate used by Apotex infringed claims of 065 or 769 Patents, and more particularly, claims 2 to 5 of the 065 Patent and claim 6 of the 769 Patent, which are the claims of the patents that make reference to DSC and XRPD values. [ 15 ] To the extent Gilead Sciences undertook testing on the finished dosage form or API samples produced in the Delaware Action, those results have not been provided to Apotex. [ 16 ] On May 26, 2021, the Delaware Court issued a memorandum order, or a " “Markman Order” " , construing the disputed claim terms in the 065 and 769 Patents. [ 17 ] After the Markman Order, Gilead Sciences and Apotex entered into a stipulation and order of infringement.

Mr Eustace states that since claims 2-5 of the 065 Patent, and claim 6 of the 769 Patent (which make reference to DSC and XRPD values) were not asserted against Apotex by Gilead Sciences, Apotex stipulated to infringement of claims 1, 6-19, 23, and 26 of the 065 Patent, and claims 1-5, 7- 12, 15, and 17 of the 769 Patent on the basis of the Delaware Court’s construction of these claims following the Markman hearing. [ 18 ] The US litigation was terminated by a consent judgment and order dated September 8, 2022. IV. The Federal Court Actions [ 19 ] These actions were commenced on May 17, 2022.

Both actions allege infringement of, among others, claims 6-9 of the 553 Patent, which read as follows: 6. Tenofovir alafenamide hemifumarate, wherein an X-ray powder diffraction (XRPD) pattern comprises 2theta values of 6.9 ± 0.2° and 8.6 ± 0.2°. 7. The hemifumarate of claim 6, wherein the XRPD pattern comprises 2theta values of 6.9 ± 0.2° , 8.6 ± 0.2° , 11.0 ± 0.2° , 15.9 ± 0.2°, and 20.2 ± 0.2°. 8. The hemifumarate of claim 1 that has a differential scanning calorimetry (DSC) onset endotherm of 131 ± 2 °C. 9.

The hemifumarate of claim 8 that has a DSC onset endotherm of 131 ± 1 °C. [ 20 ] In its statements of defence, Apotex denies infringement of these claims. V.

Rule 249 [ 21 ] The parties agree that a request for samples is properly brought as a motion pursuant to Rule 249 of the Federal Courts Rules , SOR/98-106 , and that the leading authority is Apotex Inc v Eli Lilly Canada Inc , 2013 FCA 45 (“ Eli Lilly ”) . [ 22 ] Rule 249 states that samples may be ordered where it is " “necessary or expedient for the purpose of obtaining information or evidence in full.” " [ 23 ] In Eli Lilly (para 8 ), the Court of Appeal interpreted " “necessary” " to mean that there is " “a reasonable possibility that the proposed test will reveal something useful for the trier of fact (that is something which will assist the trier of fact in determining an issue in the proceeding).” " The Court of Appeal further determined (para 10) that the use of the words " “necessary or expedient” " was intended to give a broad discretion to the Court. [ 24 ] In determining a motion for production of samples, the Court must balance any number of factors relevant to the three main interests at play: those of the party requesting the inspection or samples; those of the party in possession of the property concerned; and those of the trier of fact.

It is because of this need to balance all the relevant factors that a party must move to get an order under Rule 249 , contrary to other discovery Rules ( Eli Lilly at para 10 ). [ 25 ] To obtain an order for the production of samples, the moving party is not required to lead evidence that that the proposed tests are the only means to establish their case, or at least that the facts present an exceptional case where such testing is a solution of last resort ( Eli Lilly at para 11 ). [ 26 ] Each case turns on its own facts. Here, Apotex makes a number of arguments as to why production should be refused. A.

Gilead already has the samples it requests [ 27 ] Apotex asserts that Gilead is already in the possession of the very material that it seeks, and therefore the motion is entirely without merit. I disagree. While product and API samples were provided to Gilead Sciences in the Delaware Action, and the lot numbers of those samples are the same as the lot numbers provided to Health Canada as part of Apotex’s Canadian filing, the disclosure in Delaware was under the terms of a protective order. That order explicitly prohibits use of or reference to " “Designated Material” " in any pending or future litigation.

Absent some form of agreement, or variance of the protective order, Gilead Sciences would be in breach of the protective order if it conducted tests and relied on the results in the Canadian proceedings. Gilead Sciences may have samples of Apotex product and API in its possession, but is prohibited from using or relying those samples in these actions.

[ 28 ] Mr Eustace’s affidavit also attaches portions of Apotex’s abbreviated new drug submission ( " “ANDS” " ) that include XRPD and DSC values. I do not accept that this precludes Gilead from undertaking an independent analysis in this respect. Gilead has asserted claims that include XRPD and DSC values. Apotex has denied infringement. Information previously provided to Health Canada by Apotex is not determinative of this issue. [ 29 ] Gilead’s notice of motion expressly requests unexpired samples of the finished product, API and excipients.

Mr Eustace’s affidavit states that the tablets provided to Gilead Sciences in the Delaware Action are all considered to be expired because they were manufactured more than two years ago. Even if Gilead was not restrained by the terms of the protective order, it is not apparent the samples provided to Gilead Sciences in the Delaware Action are suitable for testing in these proceedings. Exhibit PE-10 to Mr Eustace’s affidavit does, however, show that Apotex has three batches of unexpired tablets. B.

Any testing conducted in the Delaware Action was not disclosed [ 30 ] In the correspondence between counsel preceding the motion, Apotex asked for the results obtained from the testing of the previously provided samples, as well as a description of the testing that is planned for the further samples that have been requested. [ 31 ] Gilead refused to disclose the results of any earlier testing, and advised that the kinds of testing that may be relevant relate to analytical testing to determine the identity and characteristics of the Apotex products and drug substances at issue in these actions. [ 32 ] At the risk of generalizing Apotex’s position, it argues that: patent claims including XRPD and DSC values were potentially in issue in the Delaware Action; product and API samples were provided to Gilead Sciences for testing; and, after receipt of the samples, Gilead Sciences did not assert patent claims directed to XRPD and DSC values.

Since it can be inferred that Gilead Sciences was not satisfied that it had a good basis for asserting infringement of claims including XRPD and DSC values in Delaware, it owes Apotex and the Court an explanation as to what it expects will be different in the Federal Court proceedings, and how it can be necessary or expedient to compel production of samples in these circumstances. Apotex argues that an adverse inference must be drawn. [ 33 ] It is unknown whether Gilead Sciences actually performed tests on the Apotex samples in the Delaware Action, but an assumption that it did would not be unreasonable.

But even if I assume that testing was undertaken in the Delaware Action, that proceeding has been concluded by a consent judgment. [ 34 ] In the United States, communications with third parties and other materials prepared in anticipation of litigation (such as testing) are covered by the " “attorney work product” " doctrine ( Blank v Canada (Minister of Justice) , 2006 SCC 39 at para 30 ( " “ Blank ” " ) ).

In Canada, litigation privilege attaches to documents created for the dominant purpose of litigation ( Blank at paras 59-60 ). [ 35 ] I cannot agree that, in the circumstances of this motion, Gilead has a positive obligation, or should be compelled, to waive privilege over any previously conducted tests to receive samples from Apotex for the purposes of these actions. I cannot agree that it was reasonable for Apotex to request such material. [ 36 ] As for what kind of tests will be undertaken, there is an unadmitted allegation of infringement of patent claims that include XRPD and DSC values.

The nature of at least some of the testing that could be undertaken is apparent on the face of the pleadings and the 553 Patent. Gilead is not required to undertake to carry out such tests, or to file evidence of an express intention to carry out tests, as that would invite an unwarranted and unnecessary intrusion into a solicitor’s brief and litigation privilege ( Bayer Inc v Pharmascience Inc , T- 270-20, unreported decision of associate judge Tabib dated July 27, 2020 at page 8 (“ Bayer ”)).

I therefore cannot agree that Gilead should be required to particularize the testing it intends to conduct in these circumstances beyond what is apparent on the face of the pleadings and the 553 Patent. [ 37 ] Apotex’s argument in respect of an adverse inference has initial appeal. If Gilead Sciences had access to Apotex samples in the Delaware action, and did not pursue infringement of claims that include XRPD and DSC values, it begs the question why production of samples would be necessary or expedient in these proceedings.

This requires consideration of what kind of evidence could or should have been filed by Gilead, and Apotex’s third argument. C. Gilead has not submitted sufficient evidence [ 38 ] As the moving party, Gilead bears the burden of demonstrating that samples should be produced. Gilead’s evidence is an affidavit sworn by a law clerk employed by its Canadian counsel. The affidavit attaches a series of documents, including the 553 Patent, portions of Apotex’s ANDS, correspondence between counsel relating to the request for samples, and documents from the Delaware Action.

Apotex says that this is insufficient, and that Gilead’s motion is premised on nothing more than the bald assertions of counsel that samples are relevant to its allegations of infringement. [ 39 ] In argument, I asked Apotex who should have presented an affidavit on behalf of Gilead, and what the affidavit should have said.

Apotex submitted that, with respect to what transpired in the Delaware Action, in-house counsel for Gilead Sciences could have furnished an affidavit, just as Apotex did on this motion, explaining why the testing that was carried out was relevant and beneficial, and why it established facts relevant to the claims of infringement.

As for XRPD or DSC values, it was submitted that a brief expert affidavit would be appropriate. [ 40 ] As set out above, I do not accept that Gilead Sciences should be required to waive attorney work product or litigation privilege over any testing that was conducted in the Delaware Action. [ 41 ] As for whether expert evidence is required, in Eli Lilly , expert evidence was before the Court ( Apotex Inc v Eli Lilly Canada Inc , 2012 FC 880 at para 14 ). I do not, however, read Eli Lilly or other jurisprudence to generally or presumptively require expert evidence on a Rule 249 motion.

[ 42 ] The decision under appeal in Eli Lilly was Justice Rennie’s decision in 2012 FC 880 . The matter before him was an appeal of an unreported decision of prothonotary Aronovitch dated April 16, 2012 in T-656-09. Among other things, she found that the weight of authority favours a more permissive approach to Rule 249 (page 4). [ 43 ] On the first level appeal to the Federal Court, Apotex’s central submission was that prothonotary Aronovitch erred by favouring a more permissive approach under Rule 249 , rather than requiring that the samples order be a last resort ( 2012 FC 880 at para 35 ) .

Justice Rennie rejected this argument, and upheld prothonotary Aronivitch’s decision. [ 44 ] While the Court of Appeal did not specifically address the “more permissive approach”, Apotex’s submission on further appeal that the Court should set out a strict test ( i.e. “only means”, “exceptional case”, “last resort”) was again rejected ( Eli Lilly at paragraph 11 ). In my view, there is no reason to deviate from a permissive approach to Rule 249 in this context. [ 45 ] Proceedings under the Regulations run on a compressed

schedule because of the 24-month statutory stay. In light of a permissive approach to Rule 249, and the nature of proceedings under the Regulations , it should not be generally expected that motions for production of samples will include expert evidence, or invite competing expert evidence in reply. This is particularly the case when the Court’s Timetable Checklist for proceedings under the Patented Medicines (Notice of Compliance) Regulations generally expects motion for production of generic samples at an early stage, even before an oral discovery plan is finalized.

I cannot accept that a motion for samples, particularly when there are live issues of infringement of claims including DSC and XRPD values, should routinely invite competing expert evidence at an early stage. [ 46 ] Further, and as set out in Bayer , the Court is alert to issues of litigation privilege. Apotex’s submission that in-house counsel and/or independent experts should provide evidence on this motion invites an intrusion into that privilege.

Apotex’s adverse inference argument raises a good question, but when the answer can only be based on privileged information, Gilead should not be compelled to respond. While Apotex’s adverse inference argument was well made, I am not persuaded that Gilead should be expected to waive privilege and reveal details of what it did (or did not do) with the samples in the Delaware Action, or provide further particulars of what it intends to do with the samples in these proceedings. [ 47 ] A permissive approach to Rule 249 does not mean that there is no burden on the moving party.

On the facts of this case, I am satisfied that Gilead’s evidence establishes a sufficient nexus between testing of tablets and API that may be conducted and the unadmitted allegations in the pleadings, particularly the asserted claims of the 553 Patent that include XRPD and DSC values. I also note that the disclosure of the 553 Patent describes experimental settings for XRPD (page 15) and experimental conditions for the DSC analysis (page 16). VI.

Consideration of the Three Interests [ 48 ] As set out in Eli Lilly at para 10 , the Court must consider the three main interests at play: those of the party requesting the inspection or samples (Gilead), those of the party in possession of the property concerned (Apotex) and those of the trier of fact (the Court). [ 49 ] For Gilead, access to product samples and API will enable it to conduct private tests to determine if inter partes testing will be conducted, and meet its burden on its allegations of infringement, particularly in respect of the asserted claims of the 553 Patent that refer to XRPD and DSC values.

In light of the deadline for service of notices for inter partes testing set out in the scheduling order ( December 30, 2022, or 12 weeks after samples are provided, whichever is later) the timing of the motion is appropriate. [ 50 ] I do not reach the same conclusion with respect to Gilead’s request for production of 10 grams of each excipient. Only claim 10 of the 553 Patent refers to a pharmaceutically acceptable excipient. It is not at all apparent what kind of testing would need to be undertaken on the excipients to establish infringement of this claim.

Gilead conceded in argument that the request for samples may be a bit of a reach based on the record, but requested that any dismissal of the motion in this respect be without prejudice to Gilead filing a subsequent motion for the same relief. I have difficulty with this approach. Gilead’s submissions emphasized the compressed nature of actions brought pursuant to the Regulations , and the expectation that motions for production of samples will be brought early in the proceedings.

Parties are expected to put their best foot forward when asking for the Court’s intervention; multiple motions for the same relief, to say the least, are strongly discouraged. I have no indication in the materials before me as to what kind of testing would or could be conducted on the excipients, or why production of the excipients is necessary or expedient if Gilead otherwise receives samples of the finished tablets and API. There is no indication that excipient samples were requested or produced in the Delaware Action.

I will therefore not grant leave to bring a further motion for production of excipients. [ 51 ] I am not persuaded that Apotex will be prejudiced by production of product samples and API (Apotex stated in argument that it was not asserting that the provision of samples will occasion prejudice), and give little weight to its submissions that the request is intrusive. No inspection of premises is requested. The number of tablets manufactured by Apotex for each batch is between 50,154 and 130,555. 28.1kg of API was manufactured.

There is no evidence that the amount of samples requested by Gilead would leave Apotex unable to conduct its own private testing, meet its regulatory obligations with Health Canada, or otherwise cause hardship. Handing over physical property to a competitor is inherently intrusive, but no more intrusive than the disclosure of other confidential documents and information that will be produced to Gilead during the discovery process. Apotex argues that providing samples will cause disruption, but I have no evidence that the collection and delivery of samples will be difficult or onerous.

This point was not addressed in Mr Eustace’s affidavit at all. It is not clear why voluntary production of samples in the Delaware Action was not deemed disruptive, but doing the same for these actions would be. [ 52 ] For the Court, production of product samples and API may assist in its adjudication of the infringement claims on their merits, i.e. reveal something useful which will assist the trier of fact in determining an issue in the proceeding. [ 53 ] Having regard to all of the above, Apotex will be ordered to produce unexpired product samples and API, but not excipients.

The product samples will be limited to certain Apotex drug product batch numbers; the evidence on the motion is that these are the only

batches that are not considered to be expired. Similarly, the API will be limited to the single batch that is not considered to be expired. [A draft of this order and reasons was provided to the parties so that they could make submissions on any redactions that may be necessary to protect confidential information. The parties did not request any redactions, but jointly requested that the order be modified.

Specifically, Apotex advised that it was not able to comply with the order because the required amount of tablets from each batch is not available to be produced, and that no tablets are available from a certain batch number. The order has been so amended.] [ 54 ] Gilead also requests production of the material safety data sheets for the product samples and API. These documents may provide information on proper handling, transportation and storage, and will be ordered produced. VII.

Costs [ 55 ] The Court has full discretionary power over the amount and allocation of costs (subrule 400(1)). [ 56 ] Gilead submits that Apotex acted unreasonably in its refusal to produce samples, and did not indicate before motion materials were exchanged that the samples produced in the Delaware Action are now considered to be expired. Gilead requests costs at the high end of Column V of the Tariff, payable forthwith and in any event of the cause, if it is successful.

Apotex submits that there is no basis to award elevated costs, that its position was reasonable, and that costs should be in the cause at the ordinary scale. [ 57 ] While there was some intuitive appeal to Apotex’s adverse inference argument, it was not supported by any jurisprudence, and a closer examination showed that Gilead could not fully respond to the question without disclosing privileged information. [ 58 ] I will award costs to Gilead, fixed at $2,720.00. This is based on the high end of Column IV of the Tariff, with two hours of argument.

Gilead requests costs for second counsel, however given the volume of materials and length of argument, I will decline to order a second counsel fee. Costs will be payable in any event of the cause. ORDER in T-1004-22 and T-1006-22 THIS COURT ORDERS that : 1 . Within 14 days of the date of this order, the defendant shall produce to the plaintiffs: i . 50 tablets from drug product batch number FD327-68; ii . 50 tablets from drug product batch number FD327-69; iii . 25 grams of tenofovir alafenamide hemifurate, DS manufacturer lot number FO0031020, Apotex lot number TE1099; and iv .

Any material safety data sheets relating to the above. 2 . The plaintiffs’ motion is otherwise dismissed. 3 . Costs of the motion are payable by the defendant to the plaintiffs, fixed at $2,720.00, payable in any event of the cause. blank “Trent Horne” blank Case Management Judge FEDERAL COURT SOLICITORS OF RECORD DOCKET: T-1004-22, t-1006-22 STYLE OF CAUSE: GILEAD SCIENCES, INC. AND GILEAD SCIENCES CANADA, INC. v APOTEX INC. PLACE OF HEARING: HELD VIA VIDEOCONFERENCE DATE OF HEARING: September 26, 2022 ORDER and REASONS: CASE MANAGEMENT JUDGE TRENT HORNE

DATED: October 25, 2022 APPEARANCES : Sana Halwani Alexis Vaughan For The Plaintiffs Sandon Shogilev For The Defendant SOLICITORS OF RECORD : Lenczner Slaght LLP Barristers and Solicitors Toronto, Ontario For The Plaintiffs Goodmans LLP Barristers and Solicitors Toronto, Ontario For The Defendant