Apotex Inc. v. Eli Lilly And Co., 2001 FCT 1144

Date: 20011022

Docket: T-320-01

Neutral Citation: 2001 FCT 1144

BETWEEN:

                                                                       APOTEX INC.

                                                                                                                                                          Plaintiff

                                                                            - and -

                                                       ELI LILLY AND COMPANY and

                                                             ELI LILLY CANADA INC.

                                                                                                                                               Defendants

                                                  REASONS FOR ORDER AND ORDER

BLAIS J.

[1]                 This is a motion for an order setting aside the order of the Prothonotary dated September 27, 2001 and for an order, pursuant to Rule 75 of the Federal Court Rules, granting the plaintiff Apotex leave to file an amended statement of claim.

RELEVANT FACTS

[2]                 This proceeding was commenced by statement of claim dated February 23, 2001.

[3]                 Apotex seeks, in the claim, recovery for damages or profits pursuant to section 8 of the Patented Medicines Regulations (the "Regulations"), as amended.

[4]                 By notices of motion dated March 14, 2001 each of the defendants brought motions to strike the claim on the purported ground that it disclosed no reasonable cause of action.

[5]                 By Reasons for Order and Order dated June 11, 2001, the Honourable Justice Blanchard dismissed both of the defendants' motions.

[6]                 At paragraph 18 of this decision, Blanchard J. said:

Again, the contentious issues are of a complex nature better suited for determination at trial. The defendant Lilly U.S. has not convinced me "beyond doubt" that the claim against it will fail.

[7]                 After that decision, statements of defence were filed by both defendants, both dated June 28, 2001.

[8]                 Pursuant to the statement of defence of Ely Lilly Canada, the defendant suggests at paragraph 11 that:

[para 11] ...section 8 of the Regulations is ultra vires and is of no force and effect.

[9]                 At paragraph 12, the defendant suggests:

[para 12] In the alternative, if Section 8 of the Regulations is valid Federal legislation, the Defendant denies that Section 8 of the Regulations, which is reproduced in paragraph 17 of the Statement of Claim as brought into force on March 11, 1998, is applicable.

[10]            At paragraph 15, the defendant finally suggests:

Since there was no application pending in the Trial Division on the day of the coming into force of the current Section 8 of the Regulations, namely on March 12, 1998, the previous version of section 8 of the Regulations applies to this proceeding.[...]

[11]            In light of the defendant's position regarding section 8, the plaintiff Apotex decided to file a motion dated August 27, 2001 seeking leave to file an amended statement of claim wherein section 8 of the unamended Regulations would be relied upon in the alternative.

[12]            By order dated September 27, 2001, the Prothonotary dismissed Apotex' motion concluding that, in his view, it was "plain and obvious" that section 8 in its unamended form applied only in circumstances in which the Minister had delayed the issuance of an NOC "beyond the expiration of all patents".

STANDARD OF REVIEW

[13]            The Federal Court of Appeal has established in Canada v. Aqua-Gem Investments Ltd., [1993] 2 C.F. 425 at pages 462-63, the standard of review to be applied by a motion judge to a discretionary decision of a prothonotary:

I also agree with the Chief Justice in part as to the standard of review to be applied by a motions judge to a discretionary decision of a prothonotary. Following in particular Lord Wright in Evans v. Bartlam, [1937] A.C. 473 (H.L.) at page 484, and Lacourcière J.A. in Stoicevski v. Casement (1983), 43 O.R. (2d) 436 (Div. Ct.), discretionary orders of prothonotaries ought not to be disturbed on appeal to a judge unless:

(a) they are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts, or

(b) they raise questions vital to the final issue of the case.¹⁵

[...]

15. It should be noted that Lord Wright's phrase "the final issue of the case" is quite different from "the final issue in the case." Lord Wright means "vital to the result of the case" rather than "vital to the ultimate issue on the merits of the case."

[14]            I have no hesitation in concluding that the interpretation of section 8 of the Regulations whether the whole version of this section before 1998 or the amended version after 1998, is a question vital to the final issue of this case; therefore, this Court must intervene and exercise its discretion de novo.

[15]            It is also clear from the Prothonotary's decision that it involved the determination of a question of law and the exercise of a statutory interpretation:

I conclude that it is plain and obvious that the Plaintiff cannot succeed in regard to the proposed amendment. To begin with, no material facts have been pleaded which would support a cause of action under the former section 8 of the Regulations. The Plaintiff does not allege that it has suffered harm by reason of the delay of the Minister in issuing a notice of compliance "beyond the expiration of all patents. Rather, paragraph 18 of the proposed amended pleading simply asserts that the statutory relief is available by reason of any delay in the issuance of an NOC caused by the commencement of an application for prohibition". This is a clear mis-characterization of the section.

In my view, there is no ambiguity as to when liability for damages may be imposed under former section 8 of the Regulations. I fully adopt the observations of Mahoney, J. in Bayer AG v. Canada (Minister of National Health and Welfare) (1993), 51 C.P.R. (3d) 329 at 337 in which he identifies restrictions to the availability of relief under that section:

In particular, no liability as to damages arises from the application as would be imposed by the undertaking any court would require before making an interlocutory injunction. The liability for damages created by s. 8 of the Regulations pertains only to those incurred as a result of the NOC not issuing until after the patent has expired. (emphasis added)

On the facts of this case, former section 8 may possibly serve as a shield for the Defendants, but certainly not as a sword for the Plaintiff. The proposed amendment reveals no reasonable cause of action and leave to amend must therefore be denied.

[16]            Rule 75 of the Federal Court Rules provides:

[17]            In Almecon Industries Ltd. v. Anchortek (1999), 85 C.P.R. (3d) 216 (F.C.T.D.) at page 218, I held at paragraphs 8-10:

[para 8] The Associate Senior Prothonotary Giles was wrong in ruling that the paragraphs proposed by the Amended Statement of Claim should not be allowed because of a lack of evidence to support those allegations.

[para 9] It is my opinion that the amendments should be allowed for determining the real questions in controversy provided that they do not result in an injustice to the defendants not capable of being compensated for by an award of costs and that the amendments would serve the interest of justice.

[para 10] The defendants will have all the opportunity to complete the discoveries on the proposed amendments.

[18]            The Court should remember that Blanchard J., in his decision dated June 11, 2001, concluded that:

The contentious issues are of a complex nature better suited for determination at trial.

[19]            On the other hand, the Prothonotary is of the opinion that section 8 fails to disclose a cause of action. I should also take into consideration that in its reply, the plaintiff Apotex has the right to respond to the arguments made by the defendants on whether section 8 prior to 1998 or section 8 as amended in 1998 should apply. It would be incongruous to provide arguments in reply when it could be done in the first place.

[20]            Regarding the interpretation of section 8 of the Regulations, Hugessen J. in Merck Frost Canada Inc. v. Canada (1994), 55 C.P.R. (3^rd) 302 at 316 (F.C.A.), held:

Section 8 is particularly obscure in its meaning. It appears to create a liability in the first person in the event that the Minister should comply with the 30 month prohibition in circumstances where s.7(2) specifically provides that the prohibition shall have ceased to apply. Fortunately, we are not required to interpret it on this appeal. [emphasis added]

[21]            Even though the jurisprudence provides references to section 8, in my view, it does not provide yet a clear understanding of what section 8, before or after 1998, really means.

[22]            I, therefore, conclude that it would serve the interests of justice to grant Apotex leave to file an amended statement of claim.

                                                O R D E R

THIS COURT ORDERS THAT the order of the Prothonotary dated September 27, 2001 be set aside.

Pursuant to Rule 75 of the Federal Court Rules, 1998, the plaintiff Apotex is granted leave to file an amended statement of claim in the form attached as schedule A to its notice of motion.

With costs in favour of the plaintiff.

Pierre Blais                                          

Judge

OTTAWA, ONTARIO

October 22, 2001