Date: 20101110
Docket: T-2169-01
Citation: 2010 FC 1133
Vancouver, British Columbia, November 10,
2010
PRESENT: Roger R. Lafrenière, Esquire
Prothonotary
BETWEEN:
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BAYER AG, and BAYER INC.
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Applicants
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and
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APOTEX INC. and
THE MINISTER OF HEALTH
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Respondents
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REASONS FOR ORDER AND
ORDER
[1]
This
is a motion brought on behalf of the Applicants, Bayer AG and Bayer Inc., for an
order that costs of their application brought pursuant to the Patented
Medicines (Notice of Compliance) Regulations (PMNOC Regulations), and
discontinued following the withdrawal of the underlying Notice of Allegation
(NOA), be paid by Apotex Inc. (Apotex).
Facts
[2]
The
pertinent facts giving rise to this motion to fix costs of the proceeding can
be summarized as follows. On October 24, 2001, Apotex served the Applicants
with a NOA in which Apotex alleged that its ciprofloxacin hydrochloride tablets
in various dosage strengths did not infringe the Applicants’ Canadian Patent
1,218,067 (‘067 Patent), and that the ‘067 Patent was invalid. The NOA was the
8th challenge by Apotex relating to ‘067 Patent, and the third
attack based on validity.
[3]
The
Applicants instituted the present proceeding (commonly referred to as Cipro 8)
pursuant to the PMNOC Regulations on December 10, 2001, within
three weeks of commencing another proceeding against Apotex in T-2052-01 (Cipro
7). In support of the Cipro 8 proceeding, the Applicants served and filed
affidavit evidence of nine affiants. Apotex filed six responding affidavits.
[4]
Over
the next few months, there were a number of interlocutory skirmishes between
the parties, including a motion by Apotex in May 2002 to dismiss the Cipro
8 proceeding for delay. The motion was dismissed on July 26, 2002, without
prejudice to Apotex’s right to later assert that the Applicants had failed to
reasonably cooperate in expediting the hearing of the application.
[5]
On
February 20, 2003, the application was scheduled for hearing commencing on
September 8, 2003. Apotex offered to agree to a stay of the proceeding pending
the determination of the Cipro 7 proceeding, however, the offer was rejected by
the Applicants. Apotex acknowledges that it did not offer to waive any claim
for compensation
for loss it may have suffered during the stay period.
[6]
Following
cross-examinations and service of the Applicants’ Record, Apotex advised
that it was withdrawing its NOA by letter dated August 19, 2003.
[7]
On
September 2, 2003, the Applicants discontinued the proceeding. The Notice of
Discontinuance specified that the proceeding was being dismissed “aside from
the issue of costs, which shall be decided by way of motion regarding
entitlement and directions to an assessment officer on consent of the
Applicants and the Respondent, Apotex Inc.” It should be noted that the terms
of discontinuance, while agreed to by the parties, were never raised with the
case management judge.
[8]
On
June 14, 2010, nearly seven years after the proceeding was discontinued, the
Applicants brought the present motion seeking costs of the proceeding. No
explanation, nor any justification, has been provided by the Applicants for
their delay in bringing this motion. Although the Federal Courts Rules do
not prescribe any deadline for seeking costs when a proceeding is discontinued,
the assumption, as well as expectation, is that the request will be made in a
timely manner. Prompt attention to the issue of costs is required in order that
the matter is sufficiently fresh in the mind of the parties and the Court.
[9]
Apotex
submits that the Applicants should be estopped from claiming their costs
because of the excessive delay. Estoppel by conduct may arise when a party has
made a statement or has led the other party to believe in a certain fact. In
addition, estoppel by acquiescence could arise when one person gives a legal
warning to another based on some clearly asserted facts, and the other does not
respond within a reasonable period of time. However, on the facts before me, I
am not satisfied that the Applicants should be prevented from advancing their
claim.
[10]
First
of all, there is no indication that the Applicants made any representation
regarding the timing of a motion for costs, or that any warning was ever given
to the Applicants to bring the motion within a specific time. Secondly, Apotex
does not appear to have been prejudiced by the delay or to have altered its
position to its disadvantage as a result. In fact, the Applicants were deprived
of the benefit of any cost award, as well as any claim for interest, for the
entire period of delay. Thirdly, it was always open to Apotex to seek
directions itself from the case management judge and obtain finality regarding
costs. Rather, Apotex simply appears to have condoned the delay.
[11]
Turning
to the issue of entitlement, a party against whom an application has been
discontinued is usually entitled to its costs forthwith: see Rule 402. The
general rule does not apply, however, where a respondent withdraws the NOA that
formed the basis for an application under the PMNOC Regulations. On the
record before me, it is clear that the present proceeding was rendered moot as
a result of the withdrawal of the NOA by Apotex. The Applicants are therefore prima
facie entitled to their costs.
[12]
The
Applicants seek solicitor and client costs, as well as its disbursements, as a
lump sum award of $994,708.31. They claim that Apotex’s attempt to
re-litigate the issue of validity of the ‘067 Patent was an abuse of
process of the regulatory scheme established by the PMNOC Regulations.
There is some merit to the Applicants’ position in light of the decision of the
Federal Court of Appeal in Pharmascience Inc. v. Abbott Laboratories
(2007), 59 C.P.R. (4th) 131. At paragraph 46, Mr. Justice Sexton
concluded that, unless a material fact could not be uncovered by reasonable
diligence, multiple NOAs alleging invalidity are not permissible because the
factual basis does not change depending on the circumstances of the generic.
[13]
That
said, solicitor and client costs should not be granted based on a decision
issued almost four years after this proceeding was discontinued. Apotex’s
conduct should be assessed at the time of discontinuance, and not filtered
through the prism of subsequent events. In any event, solicitor and client
costs are to be awarded only in exceptional circumstances, which have not been
established on this motion. Finally, the Court should be encouraging parties to
discontinue or abandon unmeritorious proceedings, and not penalizing them by
imposing a substantial award of costs for acting responsibly: Fournier
Pharma Inc. v. Canada (Health), 2007 FC 433 (CanLII).
[14]
Cases
under the PMNOC Regulations are usually complex, often involve the
retainer and instruction of experts, and require a large amount of work to be
accomplished in a relatively short period of time. This case is no exception.
As a result, I find that, although a case for solicitor and client costs has
not been made out, increased costs are warranted.
[15]
The
Order disposing of this motion reflects a lump sum amount of costs and
disbursements agreed to by the parties at the hearing of the motion, calculated
roughly based on the middle of Column IV of Tariff B.
ORDER
THIS COURT
ORDERS that
the Respondent Apotex Inc. shall pay costs to the Applicants, as follows:
(a)
Fees,
disbursements and costs of this assessment in the lump sum of $175,000.00; and
THIS
ORDER BEARS INTEREST
at the rate of 2.0 per cent per year commencing 30 days from the date of
this Order.
“Roger R. Lafrenière”
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