Merck & Co. Inc. v. Brantford Chemicals Inc., 2004 FC 1400

Date: 20041013

Docket: T-1780-03

Citation: 2004 FC 1400

OTTAWA, ONTARIO, OCTOBER 13, 2004

Present:           THE HONOURABLE MR. JUSTICE MARTINEAU                               

BETWEEN:

                                                        MERCK & CO., INC. and

                                               MERCK FROSST CANADA & CO.

                                                                                                                                             Plaintiffs

                                                                         - and -

                                                BRANTFORD CHEMICALS INC.

                                                                                                                                           Defendant

                                            REASONS FOR ORDER AND ORDER

[1]                This is a motion, dated September 22, 2004, on behalf of the Plaintiffs, Merck & Co., Inc. and Merck Frosst Canada & Co. (Merck), for:

1.          An order setting aside the order of Prothonotary Milczynski dated September 15, 2004;

2.          An order that:

(a)        any question as to extent of the infringement of any right, any question as to the damages flowing from the infringement of any right, or any question as to the profits arising from the infringement of any right or entitlement to elect profits (collectively, the deferred issues), shall be the subject of a separate determination to be conducted after the trial of the remaining issues in this action, by direction of the trial judge, if it then appears that the deferred issues need to be decided;

(b)        there shall be no oral or documentary discovery on the deferred issues until after the conclusion of the trial on the remaining issues; such discovery will occur after the said trial, by direction of the trial judge, if it then appears that the deferred issues need to be decided;

(c)         if it is ordered by the trial judge that the deferred issues need to be decided and the trial judge directs that Merck has the right to elect between damages or profits, Merck shall have the right to all documentary and oral examination in respect of the matters at issue in the separate determination prior to having to make any election as to whether it will be seeking damages or an accounting of profits; and

(d)        any deferred issues to be decided will be the subject of a further trial or a reference under Rules 107 or 153 of the Federal Court Rules,1998, S.O.R./98-106 (the Rules), if it then appears that such issues need to be decided;

3.          Costs of the within motion, on such a scale as this Court deems appropriate; and

4.          Such further and other relief as to this Court deems just.

[2]                A discretionary order of a Prothonotary, such as a decision regarding whether to bifurcate a proceeding, will not be disturbed on appeal unless it is clearly wrong, in that it was based upon a wrong legal principle or upon a palpable and overriding misapprehension of the facts. Absent such an error, this Court should not interfere with the exercise of a Prothonotary's discretion, even where the presiding judge would have decided the matter differently had he or she heard the matter in the first instance (Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 at 463 (F.C.A.); VISX Inc. v. Nidek Co. (1996), 72 C.P.R. (3d) 19 at 22, 23 (F.C.A.).

[3]                Overall, I find that there is no reason in this case to intervene or to hear the matter de novo. More specifically, I find that the Prothonotary did not base her decision on irrelevant considerations. Moreover, she did not fail to properly consider Merck's evidence in accordance with the legal test applicable to motions under Rule 107. The other grounds of appeal raised by Merck are also unsubstantiated.

[4]                The onus on a motion for a bifurcation order is always on the applicant (Apotex Inc. v. Bristol-Myers Squibb Co., 2003 FCA 263 at para. 10 (F.C.A.), (2003), 26 C.P.R. (4^th) 120 (F.C.A.)). The order may be made where the Court is satisfied, on a balance of probabilities, that, in light of the evidence and all the circumstances of the case (including the nature of the claims, the conduct of the litigation, the issues and the remedies sought), severance is more likely than not to result in the just, expeditious and least expensive determination of the proceeding on its merits (Illva Saronno S.p.A. v. Privilegiata Fabrica Maraschino "Excelsior", [1999] 1 F.C. 146 at para. 14 (F.C.T.D.); (1998), 84 C.P.R. (3d) 1; Illva Saronno S.p.A. v. Privilegiata Fabrica Maraschino (2000), 183 F.T.R. 25 at para. 8 (F.C.T.D.), [2000] F.C.J. No. 170 (F.C.T.D.) (QL)).

[5]                At page 2 of her order, Prothonotary Milczynski sets out a number of "practical and economic considerations" for determining whether or not to order separate trials on the issues of liability and damages. Those include:

-            the complexity of issues to be tried;

-            whether the issues of liability are clearly separate from the issues of remedy;

-            whether the factual structure upon which the action is based is so extraordinary or exceptional that there is good reason to depart from normal practice requiring the single trial of all issues in dispute;

-            whether the trial judge will be better able to deal with the issues of the injuries of the plaintiff and the plaintiff's losses, by reason of having first assessed the credibility of the plaintiff during the trial of the issue of damages;

-            whether a better appreciation of the nature and extent of injuries and consequential damage to the plaintiff may be more easily reached by trying the issues together;

-            whether the issues of liability and damages are so inextricably interwoven if bound together that they ought not to be severed;

-            whether, if the issues of liability and damages are severed, there are facilities in place which will permit these two separate issues to be tried expeditiously before one court or before two separate courts, as the case may be;

-            whether there is a clear advantage to all parties to have liability tried first;

-            whether there will be a substantial saving of costs;

-            whether it is certain that the splitting of the case will save time, or will lead to unnecessary delay;

-            whether, or to what degree in the event severance is ordered, the trial of the issue of liability may facilitate or lead to settlement of the issue of damages; and

-            whether it is likely that the trial on liability will put an end to the action.

[6]                Many of these factors are inspired or directly imported from Bourne v. Saunby [1993], O.J. No. 2606 (Ont. Sup. Ct.). The same appears to have been recently considered, but not necessarily applied (at least as an integral part), by Rutherford J. in Roche Palo Alto LLC et al. v. Apotex Inc., [2004] O.J. No. 3522. Rutherford J. noted in this regard that "[w]hile that list is helpful in that it sets out a number of very good lines of inquiry and although counsel touched on several of these factors in their arguments, the motion materials filed on both sides rely essentially on the opinion of counsel with expertise in patent litigation expressed in lengthy affidavits". In said case, Rutherford J., after summarizing the respective views of counsel, succinctly concluded that "after considering the materials filed and the submission of counsel, I am not persuaded that the circumstances are exceptional or such as to justify a departure from the normal procedures for trial of an action and I am not of the view that the issues for trial should be split off and the procedure bifurcated."

[7]                The jurisprudence emanating from other jurisdictions on bifurcation, although helpful, should nevertheless be approached with caution. Moreover, no list of factors is in itself exhaustive and there is always room to add other relevant factors. Such factors do not necessarily have the same importance. Any imported factors, although generally relevant, must always be adapted to the nature of the proceeding and take into account the particular and unique set of circumstances of each individual case. While the formulation derived from Bourne provides a useful set of general guidelines, it is not binding on the Court. It must be remembered that it was developed in a different context. While certainly useful, for example, in an action for damages following the injuries suffered by an individual as the result of the wrong done by another individual, I am not certain that all these factors apply or have the same usefulness in the context of a patent infringement action involving pharmaceutical companies who are competing in an already highly regulated environment.

[8]                In Illva Saronno, supra, Evan J. (as he then was) invoked the language of Rule 3 for assistance in interpreting the scope of Rule 107. As subsequently noted by Stone J.A., "the word "determined" in both rules appears to indicate that Rule 107 was designed to assist the Court to achie[ve] the just, expeditious and least expensive determination of the proceeding on the merit rather than to assist the parties to reach an out-of-court settlement of their dispute" (Realsearch Inc. v. Valone Kone Brunette Ltd., [2004] F.C.J. No. 23, at para. 16 (F.C.A.) (QL)). Accordingly, it would have been wrong for Prothonotary Milczynski to grant or to refuse to make a bifurcation order on the basis that "the trial of the issue of liability [will or will not likely] facilitate or lead to settlement of the issue of damages" which is one of the factors listed in Bourne (although it may not be framed in the exact words used Prothonotary Milczynski in her decision). However, it is clear that the latter (while perhaps considered) was not an overriding consideration for refusing to make a bifurcation order.

[9]                Neither can I agree, as suggested in Bourne, that it must be "certain that the splitting of the case will save time, or will lead to unnecessary delay". As stated by Evans J. in Illva Saronno, supra, the applicant has the onus of convincing the Court that bifurcation will inter alia result in the saving of time and money, on a balance of probabilities standard, and not on the standard of beyond a reasonable doubt. However, a close reading of the reasons given by Prothonotary Milczynski confirms that she properly understood that the issue had to be decided on a balance of probabilities standard and not on a higher one.

[10]            In the same vein, I have strong reservations with the import of a test asking an applicant to demonstrate, even on a balance of probabilities standard, that "the factual structure upon which the action is based is so extraordinary or exceptional that there is good reason to depart from the normal practice requiring a single trial of all issues in dispute". This seems to have been an overriding consideration in the refusal of Rutherford J. to order bifurcation in Roche Palo Alto LLC., supra. The requirement that the factual structure upon which the action is based be "extraordinary" or "exceptional" is alien to the intent or wording used in Rules 3 and 107. Those rules are drafted in broad terms. They confer to the Court a large flexibility in order to meet, in a variety of situations, the particular challenges posed in terms of the administration of justice. As stated by Stone J.A. in Realsearch Inc., supra, at para. 17 "[t]he intent of Rule 3 is not only to secure the most expeditious and least expensive determination but also, and as importantly, the "just" determination of the proceedings on its merit." Therefore, whether the opposing party would suffer some injustice under the bifurcation order is also a key factor to consider. The injustice must be real. It must go beyond a disadvantage that would be mostly of a procedural nature (Apotex Inc. v. Merck & Co., [2004] F.C.J. No. 1372 (F.C.T.D.) (QL) at para. 13 and 14). An example of a possible injustice is where there is a likelihood "that important evidence might be lost due to the death or fading memory of a witness" (Realsearch Inc., supra, at para. 18). Moreover, while there may be nothing "exceptional" or "extraordinary" in the nature of the proceeding itself, the complexity of certain patent infringement actions will certainly be a relevant factor to consider where the elements of just, most expeditious and least expensive determination of the proceeding on its merits are considered by the Court. That being said, if all three factors indicated at Rule 3 are met, it will be appropriate for the Court to make a bifurcation order.

[11]            In the case at bar, I am satisfied that in the result, Prothonotary Milczynski applied the proper legal test to the matter before her and addressed herself to the question of whether or not bifurcation would, on a balance of probabilities, lead to the just, most expeditious and least expensive determination of the proceeding on its merits. It is also apparent that Prothonotary Milczynski's conclusion is based on the evidence and was one that she could reasonably have made in this case. In this regard, Prothonotary Milczynski refers in her reasons, to the affidavits of Mr. Gerard Devlin and Mr. Harry Radomski who respectively act as in-house counsel (U.S.) for Merck and outside counsel for the defendant, Brantford Chemicals Inc. (Brantford). While there is no particular analysis of each individual factor listed in her decision, Prothonotary Milczynski has indicated key elements of the reasoning leading to her conclusion that bifurcation would not lead to the just, most expeditious and least expensive determination of the proceeding on its merits. She notes in this regard that "[t]he record contains scant if any evidence of whether and more importantly, how the order sought will result in a saving of time and expense". In the case at bar, a close reading of the reasons found in the impugned order makes it apparent that sufficient attention was also given to the "just" determination of the proceeding on its merits. She further adds that "[i]n this case, and on the evidence provided, I am not satisfied that an order severing the issues of liability and damages will lead to economy. Rather, I find that such an order may in fact open a new area for interlocutory disputes regarding whether or not a matter is the proper subject for the first or second hearing, and consequently give rise to disputes regarding the adequacy of production and the appropriate scope of discovery." Also, she found that "it is likely that bifurcation will lead to a duplication of evidence." In the result, she did not find that "the issues relating to infringement, while complex, are such that would warrant a departure from the general rule that all issues be tried together." While I may have reached a different conclusion, deference should be given to these factual findings which are clearly based on the evidence Prothonotary Milczynski had before her.

[12]            In the case at bar, Merck has also submitted that Prothonotary Milczynski erred in law in affording any weight to the affidavit of Brantford's counsel. The use of affidavits made by interested counsel who act at the same time on behalf of a party in an infringement proceeding and describing, in their opinion, why a bifurcation order would or would not serve the interests of justice and expedition, raises a number of questions. As they closely resemble expert testimony, under which conditions are such affidavits admissible? As they are mostly argumentative in nature and suggest a legal determination that only the Court is allowed to make, what weight then should be given to the opinions given by counsel? When such opinions are premised on counsel's own experience in various other proceedings, such evidence, where admitted, also introduces in the proceeding the possibility of parallel disputes concerning the existence or interpretation of peripheral facts coming from other proceedings and which are not necessarily relevant to the merits of the proceeding itself. This appeal is an example.

[13]            However, in view of the position that the parties have taken before Prothonotary Milczynski, I do not need to decide these possibly contentious issues. I note that in the case at bar, both parties filed and relied on such affidavits which are now part of their motion materials and have been legally introduced as evidence. Accordingly, Prothonotary Milczynski was certainly entitled to refer to the affidavits of Mr. Devlin and Mr. Radomski. That being said, as with any type of evidence, the weight to be given to the evidence presented by counsel, with respect, is a matter better left to the appreciation of the Prothonotary. The fact, that in other instances, I assigned little weight or found Mr. Radomski's evidence inconclusive (an Order, rendered on September 20^th, 2002, docket T-1306-01, where the parties were Bristol-Myers Squibb Company, Bristol-Myers Squibb Canada Inc., and The University of Kentucky Research Foundation and Apotex Inc. which was confirmed on appeal in Apotex Inc. v. Bristol-Myers Squibb Co., [2003] F.C.J. No. 950 (C.A.) (QL); Apotex Inc. v. Merck & Co., [2004] F.C.J. No. 1372 (F.C.T.D.) (QL)) does not, by itself, constitute a general ground of appeal authorizing the Court to overturn, on appeal, an otherwise valid order based on legally admitted evidence before the Prothonotary. Each case has to be decided on its own merits. This depends on the particular facts of the case. Hence, with respect to bifurcation the end result achieved in another case has a limited precedential value. Here, Prothonotary Milczynski was entitled to prefer the evidence of Mr. Radomski to that of Mr. Devlin and I see no palpable and overriding misapprehension of the facts in her analysis of the evidence. Self-serving affidavits by counsel may also incidentally affect the credibility of their authors. This is a matter for the Court to determine. Again, this former aspect was already before Prothonotary Milczynski as well as my most recent decision on bifurcation. Therefore, it is not necessary for the purpose of this appeal that I determine whether or not Mr. Radomski's new affidavit (who presents certain additions) differs significantly from his previous affidavits. That being said, I am satisfied here that Prothonotary Milczynski did not fetter the exercise of her judicial discretion. It is apparent that Prothonotary Milczynski's conclusion is based on her own appreciation of the totality of the evidence before her and on her own interpretation of the particular circumstances of this case.

[14]            For these reasons, this appeal must fail. Costs should be allowed in favour of Brantford.

                                                                       ORDER

THIS COURT ORDERS that this appeal be dismissed with costs in favour of Brantford.

                   "Luc Martineau"                    

                                                                                                                                                   Judge                                

                                                             FEDERAL COURT

                            NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                          T-1780-03

STYLE OF CAUSE:                          MERCK & CO., INC. ET AL. v. BRANTFORD CHEMICALS INC.

PLACE OF HEARING:                    OTTAWA, ONTARIO

DATE OF HEARING:                      OCTOBER 5, 2004

REASONS FOR ORDER

AND ORDER:                                  THE HONOURABLE MR. JUSTICE MARTINEAU

DATED:                                             OCTOBER 13, 2004

APPEARANCES:

PETER WILCOX                                                                     FOR THE PLAINTIFFS

DAVID LEDERMAN                                                               FOR THE DEFENDANT

SOLICITORS OF RECORD:

OGILVY RENAULT                                                                FOR THE PLAINTIFFS

TORONTO, ONTARIO

GOODMANS LLP                                                                  FOR THE DEFENDANT

TORONTO, ONTARIO