Date: 20050118
Docket: T-213-04
Citation: 2005 FC 57
BETWEEN:
ZAMBON GROUP S.P.A.
Plaintiff
and
TEVA PHARMACEUTICAL INDUSTRIES LTD.
Defendant
AND BETWEEN:
TEVA PHARMACEUTICAL INDUSTRIES LTD.
Plaintiff by Counterclaim
and
ZAMBON GROUP S.P.A., ZAMBON CORPORATION,
APOTEX INC. and TORPHARM INC.
Defendants by Counterclaim
REASONS FOR ORDER
PHELAN J.
OVERVIEW
[1] Zambon S.P.A. (Zambon Group) and Zambon Corporation (Zambon Corp.) (collectively the Zambon Companies) are seeking to strike all or portions of a counterclaim filed by Teva Pharmaceutical Industries Ltd. (Teva) which counterclaim would have the effect of bringing Zambon Corp. into patent infringement litigation commenced by Zambon Group against Teva. The Zambon Companies, in the alternative, want particulars of some of the allegations in the counterclaim.
[2] Prothonotary Milczynski dismissed the Zambon Companies motion to strike and/or for particulars. Her conclusion was:
I am not satisfied that the Counterclaim ought to be struck either in whole or in part. It is neither plain and obvious nor beyond doubt that Teva's reliance simply on the fact of a sale by the Zambon companies is doomed to fail. I agree with the submissions of counsel for Teva that the Counterclaim sets out sufficient facts to establish a cause of action and that there is no basis to strike out any part of the Counterclaim. Having established an arguable case on the pleadings, the merits of that case is best left to the trial judge.
With respect to the request for particulars, the Zambon Defendants by Counterclaim have not established that the pleadings are deficient in that regard such that they are unable to plead a defence in response. Many of the particulars sought by the Zambon Defendants by Counterclaim relate to questions that would more properly form part of the examination for discovery on the evidentiary basis at trial.
[3] The Zambon Companies now appeal the Prothonotary's decision on both matters - the motion to strike and the demand for particulars. The particulars of the order sought are:
An Order, pursuant to Rule 51 of the Federal Court Rules, reversing the Order of the Prothonotary and granting the relief requested by the Zambon Companies as set out in the Notice of Motion dated October 21, 2004, and specifically the following:
(a) An Order, pursuant to Rules 174, 181 and 221, striking out and dismissing the Counterclaim against Zambon Corporation;
(b) In the alternative to paragraph (a) above, an Order, pursuant to Rules 174, 181 and 221, striking out the allegations against Zambon Corporation in paragraphs 32, 43 and 47 of the Counterclaim;
(c) In the alternative to paragraph (a) above, and in addition to paragraph (b) above, an Order, pursuant to Rules 174, 181 and 221, striking out the last sentence of each of paragraphs 32 and 43 of the Counterclaim, and striking out the entirety of paragraphs 44, 45 and 46 of the Counterclaim; and
(d) An Order, pursuant to Rules 174 and 181, requiring the Defendant, Plaintiff by Counterclaim, Teva Pharmaceutical Industries Ltd. (hereinafter referred to as "Teva") to provide within two weeks of the date of the Order the particulars of the allegations in paragraphs 32 and 43 to 46 of the Counterclaim, as more specifically set out in Schedule "A" of the Notice of Motion dated October 21, 2004, and also attached to this Notice of Motion, and failing which the paragraphs of the Counterclaim for which particulars are not provided shall be struck out;
For costs of this Motion and before the Prothonotary; and
For such further and other relief as this Honourable Court may deem just.
BACKGROUND
[4] Zambon Group, an Italian company, commenced an action against Teva, an Israeli company, in which it sought a declaration that Teva's patent and each of the claims of the patent are null and void. The patent is entitled: "Stable Gabapentix Containing More Than 20 ppm of Chlorine Ion", referred to here as "the Product".
[5] Zambon Group alleges that it makes gabapentin in bulk in Italy and sells it to a purchaser, namely, Apotex Inc. in Canada who then uses it to make pharmaceuticals for sale in Canada.
[6] Teva issued a Statement of Defence and Counterclaim, in which it named as Defendants by Counterclaim not only the Zambon Companies but also Apotex Inc. and Torpharm Inc. (an entity related to Apotex Inc.). Teva alleges that the Zambon Companies and Apotex/Thorpham infringed its patent.
[7] In respect of the general infringement of its patent, Teva alleges that each of the Zambon Companies offered for sale and sold gabapentin to Apotex/Torpharm and that each of the Zambon Companies caused Apotex /Torpharm to import Zambon's bulk gabapentin into Canada. (Counterclaim paragraph 32).
[8] Teva repeats these allegations in respect of the Zambon's specific infringement and adds that through the sale of the Product, the Zambon Companies knowingly induce infringement against nine claims in the patent except claim 4.
[9] More specifically, Teva alleges that Apotex/Torpharm's infringement of the patent claims would not have taken place except for the knowing influence of the Zambon Companies who knowingly sold bulk gabapentin to be manufactured, sold and offered for sale in Canada in breach of the patent claims. Teva also adds that all the Defendants by Counterclaim acted in concert to import the product so that infringement through manufacture, offer for sale and sale could occur.
[10] The Zambon Companies say that a "sale" is not sufficient to constitute inducement and that to offer for sale is not, in and of itself, sufficient to support a claim for inducement. They also object to the use of the words "have caused" and "acted in concert" as there is no such cause of action as causing infringement or acting in concert to infringe a patent.
ANALYSIS
Standard of Review
[11] The parties appear to agree as to the standard of review; the issue is the application of that standard.
[12] The standard of review with respect to a Prothonotary's decision is that such discretionary decisions ought not to be disturbed unless the issue is vital to the case (see Merck & Co. v. Apotex Inc. (2003), 30 CPR(4th) 40 (FCA).
[13] An order to strike a statement of claim, or parts of it which go to the cause of action or to the liability of a party, is vital to the case. Therefore the judge hearing an appeal from a prothonotary's decision is to engage in a de novo review of the issues.
[14] An order dealing with whether particulars should be ordered is not vital to the case. As such it should be reviewed on the basis of whether the Prothonotary's decision is clearly wrong, in the sense of whether the decision was based either on a wrong principle or on a misapprehension of the facts.
MOTION TO STRIKE
[15] The Zambon Companies have combined two grounds for their motion to strike certain parts of the Counterclaim. The first is that there are insufficient particulars pleaded; the second is that the causes of action do not arise in Canadian law. As to the sufficiency of particulars, that issue is dealt with, in these Reasons, separately from the causes of action.
[16] The Zambon Companies seek to strike allegations that they
a) offered for sale and sold the Product to Apotex/Torpharm (paragraphs 32 and 43);
b) caused Apotex/Torpharm to import the Product (paragraph 43);
c) knowingly induced Apotex/Torpharm to infringe the patent (paragraph 44);
d) knowingly influenced infringement of the patent by Apotex/Torpharm (paragraph 45);
e) acted in concert with Apotex/Torpharm to import the Product (paragraph 46).
[17] The common feature of these allegations is that they are alleged indirect infringement of the patent.
[18] With respect to the allegation of the offer for sale and sale, Teva alleges more than a mere sale of the Product. The allegation includes offer for sale, knowledge that the Product will be used in violation of the patent claims, knowing influence and acting in concert. I concur with Prothonotary Milczynski's conclusion that even if Teva's reliance is simply on the fact of a sale, such reliance cannot be doomed to fail. In addition, Teva relies on more than a bare sale to support its claim.
[19] With respect to "caused to import", the allegation is a statement of fact not the plea of a separate cause of action.
[20] In respect of the plea of knowing inducement and/or knowing influence, the Federal Court of Appeal in Valmet Oy v. Beloit Canada Ltd. (1986) 20 CPR(3d) 1 (FCA) has held that inducement depends on a party doing something to lead another to infringe the patent.
[21] As I read Teva's pleading that "something" is the knowing sale, the offer for sale (the terms of which are not specified), the importation said to be caused by the Zambon Companies and the influence over Apotex/Torppharm. The plea is essentially that "but for" the Zambon Companies, the infringement would not have occurred. When taken in context, there is not basis to strike. (See Warner Lambert Co. v. Wilkinson Sword Canada Inc. [1988] FCJ No. 70 (FCTD) at page 4).
[22] With respect to the plea of "acting in concert", the necessary facts are pleaded. The facts are that the two companies acting together offered the product for sale and that both had knowledge of the intended use.
[23] These facts are pleaded as facts to support the cause of action of inducement to infringe a patent. There is no case law that holds that these facts, especially in the context of the other facts pleaded, cannot support a claim for inducement. (See Proctor & Gamble Co. v. Bristol-Myers Canada Ltd. (1978) 39 CPR(2d) 145 (FCT) and Hafford v. Seed Hawk Eng. (2004) 31 CPR (4th) 434 at 560-1).
[24] Given the high burden of establishing that "it is plain and obvious that the impugned paragraphs fail to disclose a reasonable cause of action or defence", the Zambon Companies have not met that onus.
Particulars
[25] The standard of review to be met is whether there is an error in principle or a misunderstanding of facts by the Prothonotary's decision before this Court will interfere with the exercise of discretion.
[26] It is clear that Prothonotary Milczynski understood the facts. She also turned her mind to the relevant issues of whether the Zambon Companies could plead and whether the particulars sought could be obtained by some other process, particularly other pre-trial process.
[27] There is no reason to disturb the exercise of her discretion.
(s) "Michael L. Phelan"
Judge
FEDERAL COURT OF CANADA
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-213-04
STYLE OF CAUSE: Zambon Group S.P.A. v. Teva Pharmaceutical Industries Ltd.
Teva Pharmaceutical Industries Ltd. v. Zambon Group S.P.A., Zambon Corporation, Apotex Inc. and Torpharm Inc.
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: December 6, 2004
REASONS FOR ORDER: Phelan J.
DATED: January 18, 2005
APPEARANCES:
Mr. Dan Hitchcock FOR THE PLAINTIFF
Ms. Ruth Promislow FOR THE DEFENDANT
SOLICITORS OF RECORD:
Riches, McKenzie & Herbert LLP
Toronto, Ontario FOR THE PLAINTIFF
Bennett Jones LLP
Toronto, Ontario FOR THE DEFENDANT
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