Date: 20031103
Docket: T-1721-03
OTTAWA, Ontario, this 3rd day of November, 2003
Present: THE HONOURABLE MR. JUSTICE KELEN
BETWEEN:
PFIZER IRELAND PHARMACEUTICALS
and PFIZER CANADA INC.
Plaintiffs
and
LILLY ICOS LLC and
ELI LILLY CANADA INC.
Defendants
ORDER
UPON a motion by the plaintiffs, on an urgent basis, for an interim injunction, until the parties are ready to argue the merits of an interlocutory injunction, restraining the defendants from importing into Canada, distributing and selling a pharmaceutical called CIALIS;
AND UPON reading the material filed and hearing submissions from the parties;
AND for the reasons for order issued today;
Page: 2
THIS COURT HEREBY ORDERS THAT:
1. This motion for an interim injunction is dismissed with costs in the cause; and,
2. The parties will submit within 5 days a schedule for the completion of the cross-examinations and preferred dates for the hearing of the motion for an interlocutory injunction. If there is no agreement, written submissions regarding an appropriate schedule shall be submitted within 7 days.
"Michael A. Kelen" ________________________________
JUDGE
Date: 20031103
Docket: T-1721-03
Citation: 2003 FC 1278
BETWEEN:
PFIZER IRELAND PHARMACEUTICALS
and PFIZER CANADA INC.
Plaintiffs
and
LILLY ICOS LLC and
ELI LILLY CANADA INC.
Defendants
REASONS FOR ORDER
KELEN J.:
[1] This is a motion by the plaintiffs, on an urgent basis, for an interim injunction, until the parties are ready to argue the merits of an interlocutory injunction, restraining the defendants from importing into Canada, distributing and selling a pharmaceutical called CIALIS, a new medication for the oral treatment of erectile dysfunction. The plaintiffs state that CIALIS infringes the plaintiffs' patent for VIAGRA.
FACTS
[2] The plaintiff, Pfizer Canada Inc., is the Canadian operation of the multinational pharmaceutical company, Pfizer Inc., which manufactures VIAGRA, the "first effective oral treatment" for erectile dysfunction ("ED"). VIAGRA is the subject of Canadian Patent No. 2,163,446, granted July 7, 1998 for an invention entitled "Pyrazolopyrimidinones for the treatment of impotence". The patent is for the exclusive use of pharmaceutical compositions containing a selective cGMP-specific PDEv inhibitor, for the oral treatment of ED, and expires in 2014.
[3] The other plaintiff, Pfizer Ireland Pharmaceuticals, owns the patent. Pfizer Canada is a licensee under the patent, pursuant to the Patent Act, R.S.C. 1985, c. P-4. Pfizer has sold VIAGRA in Canada since March, 1999 when regulatory approval was obtained. Sales in Canada have been approximately $182 million from launch to July, 2003. Pfizer has spent approximately $40 million advertising and promoting VIAGRA in Canada.
[4] The defendants, Lilly Icos LLC and Eli Lilly Canada Inc., have a new oral medication for the treatment of ED under the trademark CIALIS. On September 17, 2003, Lilly obtained Canadian regulatory approval to import and sell CIALIS in Canada.
[5] In 2002, the defendants commenced an action in this Court for the impeachment of Pfizer's VIAGRA patent on the ground of obviousness. Also in 2002 the plaintiffs commenced an infringement action for an injunction against the defendants to prevent the importation and sale of CIALIS, but this action was struck out as being premature before CIALIS obtained Canadian regulatory approval. As soon as CIALIS obtained regulatory approval, the plaintiffs commenced this infringement action against the defendants, and are seeking this interim injunction to prevent the import and sale of CIALIS which is anticipated any time after November 1, 2003.
[6] The defendants' evidence alleges that Health Canada has recognized, and clinical research has established, that CIALIS has different characteristics from those of VIAGRA which include:
(i) CIALIS is effective within 30 minutes after being taken and lasts up to 36 hours thereafter, whereas VIAGRA is effective for only 4 hours; and,
(ii) CIALIS may be taken without regard to food, while the effectiveness of VIAGRA may be delayed by a high-fat meal.
[7] The evidence establishes that the impending sale of CIALIS in Canada has been publicized in numerous newspaper, magazine, television and medical journal reports. At the hearing, the defendants exhibited several different television news reports from across Canada about the regulatory approval of CIALIS on September 17, 2003, the potential benefits of the drug, and its imminent launch in Canada.
[8] The defendants have been involved in clinical trials for CIALIS with patients in Canada since March 1999 in over 120 locations and involving over 100 Canadian doctors. Following regulatory approval, the defendants sent notices to 23,000 Canadian physicians, 7000 Canadian pharmacies, and the defendants' sales representatives have been calling on over 400 physicians per day since regulatory approval. Accordingly, thousands of Canadians are anticipating the sale of CIALIS in Canada.
[9] The evidence, which was not contradicted, is that CIALIS is now being sold in 48 countries around the world including the United Kingdom, Australia, the Scandinavian countries, and the European countries. CIALIS has not yet obtained approval in the United States, however
the plaintiffs have filed an infringement action against Lilly in the United States in anticipation of its approval. (A third drug for the treatment of ED called LEVITRA manufactured by Bayer Corporation received U.S. approval on August 19, 2003 and is being sold in the U.S.)
[10] Canada is the only country where the plaintiffs are seeking an interlocutory injunction to prevent the sale of CIALIS.
THE TEST FOR AN INTERIM INJUNCTION
[11] The granting of an interim injunction is a rare and exceptional remedy. An applicant must demonstrate urgency, in addition to a serious issue, irreparable harm and that the balance of convenience lies with the applicant.
[12] In Fournier Pharma Inc. v. Apotex Inc. (1999), 1 C.P.R. (4th) 344 at para. 3, Tremblay-Lamer J. reviews the prior jurisprudence of this Court and concludes:
It has been said many times by this Court, that interim injunctions are a rare and exceptional remedy. As stated in The Kun Shoulder Rest:
[...]
The granting of interim injunctions is provided for in sub-Rule 469(2) of the Rules [now Rule 374]. It marks a clear departure from the procedural requirements which are applied to standard applications for interlocutory injunction. Both the Rules and the particular nature of an application for an interim injunction require that the applicant demonstrate an urgency of such importance that there is no alternate way to proceed in order to counter the harm that might or is actually occurring.
In addition to establishing the urgency of the injunction, the applicant must also satisfy the standard three part test for an injunction.
[13] The Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General) [1994] 1 S.C.R. 311 set out the tripartite test for interlocutory injunctions as follows at page 334:
Metropolitan Stores adopted a three-stage test for courts to apply when considering an application for either a stay or an interlocutory injunction. First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.
[14] Accordingly, the tripartite test will be applied to this case, with the requirement of establishing urgency. It should be noted that an interim injunction under the Federal Court Rules, 1998 is only for a 14 day period. However, the parties do not contemplate completing the cross-examinations on the many affidavits for one or two months. Accordingly, they are seeking an interim injunction which is not contemplated by the Rules, but which the Court has the inherent jurisdiction to grant.
ANALYSIS
1. Urgency
[15] Since the Canadian launch of CIALIS is anticipated to take place soon after November 1, 2003, and since the parties do not contest the urgency, the Court accepts the requirement of urgency for the purposes of an interim injunction has been satisfied. Accordingly, I will proceed to consider the tripartite test in the context of the time period between the anticipated launch and the time when the parties will be prepared to argue the merits of an interlocutory injunction.
2. Serious Issue
[16] Notwithstanding the defendants' argument that the plaintiffs' patent is of questionable validity citing the decision of the U.K. Court of Appeal that the VIAGRA patent was invalid for obviousness, the European Patent Office decision to revoke the European patent for VIAGRA, and the U.S. Patent Office decision to reexamine the VIAGRA patent, and citing the argument that the plaintiff has not provided any evidence for this Court that CIALIS infringes the VIAGRA patent, I am satisfied that the defendants' 2002 action in this Court to impeach the plaintiffs' patent and the plaintiffs' infringement action raise a serious question to be tried, which is the low threshold required by the tripartite test for interlocutory injunctions.
3. Irreparable Harm
Plaintiffs' Position
(a) Erosion of exclusive patent rights and attached benefits
[17] The plaintiffs submit that the defendants' infringement of their patent will substantially and irreparably erode their exclusive patent rights, as well as irreparably damage their goodwill, brand equity, market share and the ability to build on these assets over the term of the patent.
[18] The plaintiffs contend that an exclusive market has many advantages besides profit. Other advantages include building company image, building strength in the market with patients and doctors, establishing strong positions in distribution and sales organizations, and establishing a strong trademark--all of which are impossible to quantify and will be adversely affected by the interruption of their exclusive market.
(b) Inappropriateness of Monetary Compensation
[19] With respect to damages, the plaintiffs submit that it is now, and will be after trial, impossible to do a proper accounting for losses because the exclusive and competitive market will develop differently. They contend that the Canadian ED market is still very underdeveloped, so there is a real potential for a large error in estimating market development and sales. Furthermore, market forecasting is complex and challenging, particularly in a market for prescription drugs where ordinary market conditions are distorted by regulations.
[20] The plaintiffs submit that there is no reliable data with which to predict the future market because there are too many unknowns. They point to the reluctance of men to admit to impotence as an impediment to producing reliable market surveys, and to the short history of market data because the treatment of ED with oral PDEv inhibitors is new, and is only for a "start-up" monopoly market. One cannot rely on information to predict the future Canadian market since there are too many unknowns.
(c) Backlash or Loss of Injunction Remedy at Trial
[21] The plaintiffs submit that an injunction at trial, after CIALIS has been on the market for two or three years, would cause a backlash against the plaintiffs. CIALIS would effectively be taken away from doctors and patients. This would cause a significant backlash against the plaintiffs in that patients would stop buying other Pfizer drugs.
[22] The plaintiffs submit that if they are only successful in obtaining an injunction at trial after CIALIS enters the market, Pfizer will be faced with the dilemma of deciding whether to take medication out of the hands of the patients using it, or to give up the right to exclusivity in the market. The European experience shows that if CIALIS is on the market for even a short time, a large portion of ED patients in Canada will begin using it. The plaintiffs will want to avoid this backlash. Accordingly, without the interim and interlocutory injunction, the plaintiffs will lose the protection of an injunction at trial to avoid the backlash.
The Defendants' Position
[23] The defendants submit that the alleged resentment and backlash would not occur in the interim period, i.e. the one or two months before the interlocutory injunction can be argued. Moreover, how is Canada different from the rest of the world? The plaintiffs are not seeking an injunction in any of the 48 countries where CIALIS is presently being sold in competition with VIAGRA. The defendants submit that the plaintiffs have adduced no clear evidence in the form of surveys and scientific studies to show that the alleged resentment or backlash will occur. The defendants' witnesses deposed that it is highly unlikely that there would be any resentment against the plaintiffs. The plaintiffs would be seen as only acting within their legal rights. In addition, the defendants argue that consumers only care about the benefits they receive from the drugs, not who manufactures the drugs. Canadian doctors and patients would not risk their health and well-being by "boycotting" the plaintiffs' products because a Canadian Court held that CIALIS could not be legally sold in Canada.
[24] The defendants also argue that if this resentment were to occur, it will already take place because thousands of Canadian doctors and Canadian patients suffering from ED are already looking forward to the sale of CIALIS in Canada.
The Court's Conclusion with Respect to Irreparable Harm
[25] It is well-established that an interlocutory injunction (or an interim injunction) can only be granted in cases where there is clear evidence of irreparable harm. The jurisprudence establishes that the applicant must adduce "clear and not speculative" evidence that irreparable harm will follow the import and sale of CIALIS in Canada. See Centre Ice Ltd. v. National Hockey League, [1994] 166 N.R. 44 (F.C.A.).
[26] The plaintiffs' allegation of resentment and backlash is not supported by clear and non-speculative evidence. Moreover, this alleged loss of goodwill must be combined with clear evidence that the loss of goodwill cannot be quantified in damages. There must be evidence of both elements of the alleged irreparable harm. In the case at bar, the plaintiffs have not adduced clear evidence of either element. As per Heald J. in Centre Ice, supra at page 47:
[...] loss of goodwill, of reputation [...] if established after a full hearing at trial may well constitute irreparable harm and lead to the issuance of a permanent injunction. However, as this Court's jurisprudence has shown, in the absence of clear evidence that irreparable harm would result at this juncture, an interlocutory injunction should not be issued.
[27] I also note that the plaintiffs have not brought to my attention one relevant Canadian case granting an interim or interlocutory injunction in a patent infringement case. On the other hand, the defendants rely upon the decision of Chief Justice Thurlow (as he then was) of the Federal Court of Appeal in Cutter Ltd. v. Baxter Travenol Laboratories of Canada, Ltd. (1980), 47 C.P.R. (2d) 53 (F.C.A.), leave to appeal refused (1980), 47 C.P.R. (2d) 53n (S.C.C.) where he held that the nature of patent rights involves monetary damages, that there is usually no reason why damages in a patent case cannot be measured or calculated in a reasonably accurate way, and that there is no reason to think that a defendant in a pharmaceutical patent case will not be able to pay such damages.
[28] Similarly, Justice Dubé in Merck Frosst Canada Inc. v. Canada (Minister of Health) (1997), 74 C.P.R. (3d) 460 at 464:
[...] the threshold of irreparable harm is very high. An injunction is an extraordinary remedy. It is discretionary. The Court ought not to grant it merely to favour one side at the expense of another in what is obviously an ongoing battle between two producers on the prescription drug market.
[29] In reviewing the confidential VIAGRA sales evidence in the Canadian market between March 1999 and August 2003, I am satisfied that future actual lost sales of VIAGRA can be accurately measured and calculated when CIALIS is launched in the Canadian market. This is especially true for the period between the launch and the time when the parties are prepared to argue the motion for the interlocutory injunction. The evidence shows a gradually increasing linear line of VIAGRA sales over the past three years. I see no reason to think that this trend will not continue.
[30] The Court also questions why the plaintiffs are only seeking an interlocutory injunction in Canada, and not in any of the other 48 countries where CIALIS is being sold in competition with VIAGRA. In my judgment, the obvious reason is the difficulty establishing irreparable harm. In Effem Foods Ltd. v. H.J. Heinz Co. of Canada Ltd. (1997), 75 C.P.R. (3d) 331 (F.C.T.D.) per Rothstein J. (as he then was) at page 333:
Sophisticated participants in the market place such as these litigants should be able to provide the Court with an indication of loss based upon historical experience and a mathematical or statistical analysis of the circumstances demonstrating that the loss is not reasonably calculable which would give the Court some degree of confidence that the kind of loss being alleged would indeed occur and cannot be calculated.
In this case, these two pharmaceutical giants can provide the Court with a reasonably accurate calculation based upon historical experience and mathematical or statistical analyses, or else proof on the same basis that the loss is not reasonably calculable. The Court must have clear, non-speculative evidence that the loss cannot be measured or calculated in dollars in order to find irreparable harm. Since this is lacking in this case, the plaintiffs have failed to satisfy the Court that they would suffer irreparable harm if the interim injunction is not granted.
4. Balance of Convenience
[31] This Court has held that the "balance of convenience" can be of paramount importance where doubt exists about the strength of one part of the test for an interlocutory injunction. However, as Justice Stone said in Turbo Resources Ltd. v. Petro Canada Inc. (1989), 24 C.P.R. (3d) 1 at 20 (F.C.A.):
If, of course, it is found that damages in the measure recoverable by a plaintiff will be an adequate remedy, it might normally be concluded that the case was not one for an interlocutory injunction.
In this case, it is my view that damages can be measured and are an adequate remedy, particularly during the interim period before the parties are ready to argue the interlocutory injunction. Accordingly, the balance of convenience is not of paramount importance in this case or the turning point.
DISPOSITION
[32] For these reasons, this motion for an interim injunction is dismissed. When the interlocutory injunction is argued, the Court will have the transcripts of the cross-examinations, thereby completing the evidence. The parties will submit a schedule for the completion of the cross-examinations and dates when they are available for the hearing of the motion for an interlocutory injunction. This schedule should be submitted within 5 days. If there is no
agreement, written submissions regarding an appropriate schedule should be submitted within 7 days. I will then issue an order fixing the schedule and the Judicial Administrator will fix a date for the motion. With respect to costs, I am satisfied that this motion for an interim injunction is a reasonable part of the litigation between the parties, and for that reason costs will be in the cause.
"Michael A. Kelen" ________________________________
JUDGE
OTTAWA, Ontario
November 3, 2003
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1721-03
STYLE OF CAUSE: PFIZER IRELAND PHARMACEUTICALS and PFIZER
CANDA INC. v. LILLY ICOS LLC and ELI LILLY CANADA INC.
PLACE OF HEARING: Toronto, ON
DATE OF HEARING: October 28, 2003
REASONS FOR Order: THE HONOURABLE MR. JUSTICE KELEN
DATED: November 3, 2003
APPEARANCES:
Mr. Robert H.C. MacFarlane
Mr. Michael E. Charles
Mr. Andrew I. McIntosh
FOR THE PLAINTIFFS
Mr. Donald M. Cameron
Mr. R. Scott MacKendrick
Ms. Jane E. Caskey
FOR THE DEFENDANTS
SOLICITORS OF RECORD:
BERESKIN & PARR
Toronto, Ontario
Tel: (416) 364-7311 FOR THE PLAINTIFFS
OGILVY RENAULT
Toronto, Ontario
Tel: (426) 340-6188 FOR THE DEFENDANTS
FEDERAL COURT
Date: 20031103
Docket: T-1721-03
BETWEEN:
PFIZER IRELAND PHARMACEUTICALS
AND PFIZER CANADA INC.
Plaintiffs
and
LILLY ICOS LLC AND
ELI LILLY CANADA INC.
Defendants
REASONS FOR ORDER
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