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Breakfast With Appeal: Quick hits (Sanis, Barbiero, Aphira and Galderma)

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Our BWA panel discusses overreach at the Patented Medicine Prices Review Board, has a rejuvenating conversation about unreasonable delays in class action lawsuits, talks mitigation obligations for leasehold damages, and offers their views on constitutional overreach in the Competition Act (originally recorded on February 26, 2025).

Yael Bienenstock (00:08): Welcome to Breakfast With Appeal, Torys’ quarterly series on the cases you want to know about. We offer our thoughts on the appellate law that’s shaping Canadian conversations. Let’s dive in.

Andrew Bernstein (00:24): We’re going to turn to four quick hits. And I'm even going to talk a little substance.

Jeremy Opolsky (00:28):Wait, Andrew, you actually know law? I thought you just wrote scripts.

Andrew Bernstein (00:32): Scripts?! What are you talking about? Are you saying that this banter isn't—what’s that word, spontaneous? [laughter] And just for that, I'm relegating your commercial tendencies case to the bottom of the pile.

Jeremy Opolsky (00:44): Fair.

Andrew Bernstein (00:44): For everyone else, I ask that you trim your 5 minutes to 4 minutes so we can get all of these cases in. I promise I'll just take a minute at the very end to talk about mine. So, Yael, you’re first. Galderma in Canada, Attorney General, Federal Court of Appeal, where you hang your hat not infrequently, go.

Yael Bienenstock (01:02): Okay, so I think if this was 2019 and we were in person, I would ask for a show of hands to see how many people in the audience have actually heard of the PMPRB. But I, I did actually kind of look—thank you, Andrew, I don't know if you're the audience—I did take a quick look over our attendance list and my guess is very few.

So, what is the PMPRB? It's the Patented Medicines Prices Review Board, and it's the board in Canada that's responsible for controlling drug prices. But not all drugs, only those that are protected by a patent. And the reason for that is kind of important and comes back—I've been described as Mrs. Federalism, so I'm going to bring federalism into this case.

The reason for the PMPRB’s jurisdiction has to do with the Constitution. Regulating prices generally is probably a matter of property and civil rights, and not something that the federal government should really be dabbling in. But the PMPRB is a bit of an exception because it was established by the federal government, and it was established by the federal government—it's established in the Patent Act under the federal government's power over patents of invention of discovery in Section 9122 of the Constitution Act, 1867.

So, the PMPRB is a federal board, and the reason it's federal has to do with patents. And that becomes very important to this decision. Its mandate is to essentially ensure that prices of drugs that are patented are not too high, because of the monopoly that a patent gives its owner.

And that link, of course, is crucial to the PMPRB’s constitutional validity. And so, in keeping with its focus on patents, and—I'll just say for one second that the constitutionality of the PMPRB is something that's been pretty controversial over the years, because every now and again, they do kind of stretch, stretch the limits of their jurisdiction. And this has caused people to question whether they are constitutional.

They, I think, the latest word on this is that, yes, the PMPRB is, you know, a valid federal board under the Patent Act and under the patent power. But in keeping with its focus on patent, the PMPRB’s jurisdiction is limited to a quote-unquote “patentee”. And the Act defines a patentee as follows. It says, “where there is an invention pertaining to a medicine, the patentee is the person entitled to the benefit of the patent”.

So, “pertaining” to a medicine, not “covering” a medicine, it's a bit of, you know, some might say loose language. And an invention pertains to a medicine, if the invention is intended or capable of being used for medicine or for the preparation or production of medicine. So, these words—pertain to, capable of it being used—they are a little bit vague, and historically it has not been unheard of for the PMPRB to use these words to stretch its jurisdiction, to try to control prices of drugs that it might not actually have jurisdiction over.

And in some cases, the PMPRB has gotten away with that, but not this time. So, this case involved two of Galderma’s drugs. They were called Differin and Differin XP. One of them is a sustained release product, it doesn't really—scientific—the thing that you need to know is these are two different drugs. 

Differin was no longer protected by a patent. It's the older drug, its patent expired. Differin XP is a sustained release product, meaning it is released more slowly in the body. And there was a patent protecting Differin XP. And the PMPRB came to Galderma and they said, we know that your patent for Differin expired in 2009, but—and it's six years later—but actually we think that your Differin XP patent can be, you know, is sufficiently linked to Differin that you should be reporting to us, and we should essentially have jurisdiction over Differin.

So Galderma JRs that decision. And this is one of these “merry go round” of judicial reviews. Galderma JRs that decision. And the federal court they win the JR, the federal court says the PRPMB’s decision is not reasonable because they didn't explain how it is that the Differin XP patent is quote-unquote “capable of being used for the drug Differin that the PMPRB is trying to exert jurisdiction over”.

Goes up to the Federal Court of Appeal, and the Federal Court of Appeal does something a little more nuanced. It, it kind of agrees, but it sends it back to the PMPRB on this narrow issue, which is, is Differin XP capable of being used for Differin because of clinical similarities? It's like hint, hint. Here's a reason: you should bolster them. And so, the PMPRB goes ahead and does that and says, yes, Differin and Differin XP are clinically similar, therefore the PMPRB has jurisdiction (I'm going to try to move quickly). 

And this goes up again. The Federal Court of Appeal says the PMPRB got it right. The clinical similarity is enough to give them jurisdiction. And the Federal Court of Appeal, in a very colourful decision written by Justice Stratas, says, “no, you do not have jurisdiction here”. And—he's got some really fun language, he says the Board is the Patented Medicine Prices Review Board. It's not the Patented and Unpatented Medicine Prices Review Board [laughter]. It's not the All Medicines Prices Review Board. They say the PMPRB cannot stretch and pull the Differin XP patent to cover Differin: it didn't actually cover Differin. This “capable of being used” language in the Act is—might, it might seem stretchy, but it's not that stretchy.

And they said in concluding otherwise, the PMPRB crashed through the constitutional, statutory and jurisprudential guardrails on its jurisdiction. So, it’s quite the smackdown. And on this clinical similarity point, you know, the previous decision from the Court of Appeal seemed like it opened a door here, but this time the Court of Appeal, I think, firmly shuts it.

They say the PMPRB cannot regulate an unpatented medicine just because it's got a link to a patented medicine that might, you know, might have the same active ingredient, or you can use it instead. So, there's a lot of controversy about the jurisdiction of the PMPRB, but I think this one, you know, I would say strengthens the guardrails on jurisdiction.

Andrew Bernstein (07:30): Thank, Yael. And David, Barbiero and Pollack. Go ahead.

David Outerbridge (07:34): So Barbiero and Pollack is a decision of the Ontario Court of Appeal from December of last year. And the significance of the case, the reason we're drawing it to your attention is twofold. Number one, it rules that a class action can be dismissed for delay, which is something that people were not necessarily aware of, although it's not surprising.

Number two is it rewrites the principles that the courts are going to—the Court is going to use in analyzing whether any case, whether it's a class action or it's an ordinary civil action, whether it should be dismissed or delayed. So, very quickly, Miss Barbiero was a patient of Doctor Pollack. Doctor Pollack injected what's called, quote-unquote, “liquid injectable silicone” into her lips and face.

I did a Google search on this. Apparently, liquid injectable silicone is beloved by people who know what they're doing in the plastic surgery field, but not beloved by all the people who suffer disfigurement because it has not been injected properly. So, Miss Barbiero brought a class action on behalf of people who had been treated by Doctor Pollack with liquid injectable silicone.

The class action was certified on consent in 2003, and in 2023, Doctor Pollack brought a motion to dismiss for delay, and to give you a sense of what had happened in the intervening 20 years, the answer is almost nothing. There were discoveries in 2004, 2005. A sample of the silicone was seized in 2005. There's a mediation in 2012, and in 2019, the plaintiff said she wanted to test a silicone that had been seized 14 years earlier.

So, 20 years later, matter hasn't been set down for trial. There have been repeated attempts by the defendant to get things moving and the plaintiff had not moved it forward. So, it comes on for a motion to dismiss for delay. The question the Court has to look at there is, was there an inordinate delay that was inexcusable? And the results in potential prejudice, unfair trial, etc., like witnesses having died or documents being destroyed or what have you.

The Court of Appeal was struck by the fact that Miss Barbiero was standing in front of them (or her counsel was standing in front of them), arguing that 20 years was not inordinate. And they said that this reflected a, quote-unquote, an “entrenched culture of indifference to delay”. They said that, you know, if somebody could stand before them and actually argue that 20 years’ delay was okay, then there's something wrong with the test for dismissal for delay… They concluded that the delay becomes inordinate after five years.

Once you're after five years, you need to be thinking about whether your case has not moved fast enough. So, in terms of its significance from the general civil law, civil litigation perspective, I would say it's, it’s a wake up bell for anybody who's got a case that's in the four-years-plus zone as a plaintiff that you, you know, you now have a greater receptiveness from the Ontario courts to dismissing for delay.

And that's something you need to be attentive to. It doesn't mean you're going to lose your case for delay, but you do have to be more alive to that risk. And the court also said there's no reason whatsoever, class actions can't be dismissed for delay, essentially on the same principles as civil actions. And therefore, you know, for those plaintiff class action lawyers who have dormant class actions for one reason or another, a reason to pay attention as well.

Andrew Bernstein (10:33): Thanks, Dave, and thanks especially for the brevity. This gives Jeremy a little time to talk about his commercial tenancies case, Canada Life and Aphria—

Jeremy Opolsky (10:42): I will also try to, Andrew, be brief here. This is a case about commercial leasing and mitigation of leasehold damages. Really the background starts centuries ago, when leases were—[laughter] I know, brief, but let’s start 400 years ago, when leases were originally purely in personam rights. So, they were just, you know, you had a fiefdom, and you had a tenant farmer and the tenant had absolutely no rights in land.

And to protect those farmers and other leaseholders, courts recognized that, actually, leases were different. They were conveyances of property rights. And remember that bundle of rights analogy of law school, the lease gave you not all of those straws in the bundle, but many of those straws in the bundle, including the ability to alienate, to exclude people from the land, etc. etc. etc. 

That led to the idea of what happens when a lease is breached, what happens when you stop paying your rent, what happens when a tenant repudiates and says, “hey, Andrew, I don't want to rent your guest house anymore”? The answer is the law had developed three mutually exclusive remedies.

The first is the landlord could just say, “Andrew, you can't repudiate the lease. I don't accept it. The lease is in place and every year you owe me $500 in rent”. Two, they could just say, “okay, Andrew, we're done. The lease is over. I'm going to relet it”. Or three, they could try to relet it on behalf of the tenant. But these were the remedies that were available forever.

In 1971, Justice Laskin for the Supreme Court of Canada affirmed these remedies and added a fourth. The landlord could say, “okay, you know what? I'm going to end the lease on notice to you, the tenant, and I'll sue you for the present value of the unexpired term”, which is really, you know, what I can't get for the future rent on a net present value basis.

But Laskin was quite clear, the Supreme Court of Canada, there is no duty to mitigate on behalf of the landlords. They can leave the lease in place and say, “you have to pay your continual rent”. In this case, the tenant entered into a merger agreement and decided it didn't want an office, its offices, in downtown Toronto.

So, it went to the landlord and said, “we don't want them anymore. We're giving them back to you,” and the landlord said, “no thank you. You owe us rent as you agreed to”. And then went to the Court, and the tenants said the law should be changed. Landlords should have to mitigate their damages. They should have to go to the market and try to rent to someone else, even if they get less rent, they should try to rent to someone else and they should charge us less than the rent we agreed to. 

Ultimately, here, the motion judge and the Court of Appeal held the law was this way for 50 years. There were four mutually exclusive remedies, and there was no obligation to mitigate. And they held that there would be a threat to the certainty and stability of the common law, contrary to stare decisis. If they just said “no, just kidding” to all these leases that had been enacted in the past 50 years, there is an obligation to mitigate that didn't exist yesterday. So, in the in the name of brevity, I will keep my other comments to myself, and we'll end it there.

Andrew Bernstein (13:42): But this is a case you were involved in, right?

Jeremy Opolsky (13:44): Yes. Yes.

Andrew Bernstein (13:45): You were on for an intervenor, and you ultimately prevailed?

Jeremy Opolsky (13:49): Yes. And then, uh, we'll see if the Supreme Court takes it up.

Andrew Bernstein (13:53): So, we're at time. I was going to discuss the Sanis Health and BC case, so I'm going to just see if I can do that in 60 seconds. But of course, if people have to get on with their day, go ahead. The Sanis Health case is about an Act in British Columbia called the Opioid Recovery Act, or the “ORA”.

And what it does is it authorizes BC, the province of BC, to bring a class action against manufacturers, marketers and distributors of opioids on behalf of other governments for various breaches of the Competition Act and common law torts. And this case wasn't about the merits of that, the merits are very much still up in the air, but the argument was that this Act itself, which allowed one government to basically sue on behalf of a bunch of other governments, was, was that constitutional overreach?

And the Supreme Court, in a not-quite-unanimous—because Justice Côté dissented decision—found that it was permissible. And I just, you know, sometimes you know from the very first paragraph that you're going to lose a case. And the first paragraph of this case says, “In an increasingly complex modern world where governments assume greater regulatory roles in multifaceted areas, overlapping jurisdictional boundaries, there's a greater need for cooperation between governments and between courts that cross those borders”.

And, you know, I'm, I’m sure that when the appellants read this, the people challenging the legislation read this, their hearts just sank because you know right away at that point when the Court talks about how complicated this all is and you need greater cooperation, that they're going to uphold the legislation. And in this case, they did uphold it as relating to the administration of justice in the province under Section 9214.

And their big point basically was, sure this binds other governments, but the other governments can opt out. And that really seems to be—that seem to carry the day for everyone except for Justice Côté. 

That's it for Breakfast With Appeal: The Michelin Guide Edition, on behalf of our Breakfast With Appeal panel, thank you very much for watching, and we'll be back in the spring with our next session. Bye everyone.

Jeremy Opolsky (16:00): Thank you everyone, safe travels.

David Outerbridge (16:00): Bye everyone.

Yael Bienenstock (16:01): Thank you.

Andrew Bernstein (16:05): That about wraps up our conversation. Before we go, I want to remind our listeners that they can find the webinar version of this edition of Breakfast With Appeal, along with previous episodes on Torys.com, and that our BWA program is eligible for one substantive hour of continuing professional development. Thanks again for joining us and take care.