Federal Court of Appeal Clarifies that a “Direct Impact” is Required to Obtain Leave to Appeal Interlocutory Orders in PM(NOC) Actions

December 9, 2020
By Andrew McIntosh and Martin Brandsma

In 2017, Canada significantly amended the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”). The Regulations provide a mechanism for the holder of a Notice of Compliance (i.e., marketing authorization) for a given drug (the “first product”), and for which a patent is listed on the “patent register”, to bring an action for patent infringement against a “second person” who makes reference to the first product in support of its own application for its own Notice of Compliance.  Part of the 2017 amendments was the addition of section 6.11, which provides that an appeal of any interlocutory order made in an action under the Regulations lies directly to the Federal Court of Appeal (“FCA”)—with leave. Until now, the test for leave had never been settled or discussed by the FCA.

In Apotex Inc. v. Allergan Inc., 2020 FCA 208 (“Apotex”), the FCA “exceptionally” provided one-time, brief reasons concerning these leave motions.  In doing so, it established a two-part test for leave under section 6.11 of the Regulations, which requires applicants to demonstrate:

  1. “a fairly arguable case taking into account the standard of review”; and
  2. “that the issue raised is capable of having a direct impact on the overall success or failure of the case” (Apotex at para 7).

The “fairly arguable case” standard is the usual and default test that applicants outside the scope of the Regulations must satisfy where leave is required. In Apotex, the FCA emphasized that determination of “a fairly arguable case” must bear in mind the applicable standard of review (i.e., correctness or palpable and overriding error). The FCA stressed the difficulty applicants will encounter when seeking leave to appeal orders where the palpable and overriding standard applies (i.e., on questions of fact), stating: “Showing that something arguably fails correctness review—i.e., is arguably wrong—is one thing. Showing that something arguably fails review for palpable and overriding error—i.e., the arguable presence of one or more obvious errors which individually or collectively may affect the outcome of the matter—is quite another” (Apotex at para 10).

The FCA noted that in the context of the amendments implementing section 6.11 of the Regulations, “…only interlocutory matters of prime significance and materiality should be given leave…” (Apotex at para 14).  Thus, in addition to the normal standard for granting leave, applicants under the Regulations must also “show more” by persuading the Court that “its decision on the interlocutory appeal will have a direct impact on the overall success or failure of the case” (Apotex at paras 13-15). To describe this threshold, the FCA illustrated the example of denying leave where the case management judge has upheld a party’s refusal to answer questions and the answers to the questions will not have a direct impact on the success or failure of the case (Apotex at para 16).

Exactly how the “overall success” of a case is defined or what degree of “impact” is required remains unclear. However, the FCA has signaled that applicants seeking leave to appeal discretionary and factual matters, such as those arising from discovery, should be mindful of the considerable hurdle they need to surmount.

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