Docket:
T-1407-09
Citation:
2012 FC 414
BETWEEN:
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APOTEX INC.
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Plaintiff/
Defendant by
Counterclaim
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and
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H. LUNDBECK A/S
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Defendant/
Plaintiff by
Counterclaim
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REASONS FOR ORDER
TABIB P.
[1]
As
case management judge, I am seized of a motion by Lundbeck A/S (“Lundbeck”) for
leave to amend its Statement of Defence and Counterclaim, and of a motion by
Apotex Inc. (“Apotex”) for an order that the issue of quantification of damages
or profits be severed and heard after the determination of the other issues in
this action. As the motions involve consideration of some of the same factors
and as the outcome of one could affect the outcome of the other, both motions
were heard at the same time in early February 2012. The trial of this matter is
scheduled to begin on November 5, 2012. Time being of the essence, the formal
order disposing of these motions was issued on February 27, 2012, with reasons
to follow. These are the reasons for order.
History and
Chronology of the proceedings
[2]
In
April 2007, Apotex served on Lundbeck a Notice of Allegation pursuant to the Patented
Medicines (Notice of Compliance) Regulations (SOR/93-133) (“the PM(NOC)
Regulations”), alleging that Lundbeck’s patent no. 1,339,452 in respect of
the (+) enantiomer of citalopram (also known as escitalopram) was invalid and
that Apotex should therefore be permitted to obtain a Notice of Compliance to
sell escitalopram in Canada prior to the expiration of the said patent. As it
was entitled to do under the PM(NOC)Regulations, Lundbeck commenced an
application in this Court seeking a declaration that Apotex’s allegations of
invalidity were not justified and an order prohibiting the Minister of Health
from issuing an NOC to Apotex until the expiration of the patent. Lundbeck was
successful in its application, and a prohibition order issued on February 12,
2009.
[3]
Applications
under the PM(NOC) Regulations are summary proceedings, which are
not finally determinative of the issues of validity or infringement raised therein.
Apotex was therefore at liberty to formally launch an action to impeach the
‘452 patent, notwithstanding the Court’s decision of February 2009. It did so
by launching the present proceedings on August 21, 2009. In addition to the
allegations of invalidity previously raised in the NOC proceedings, Apotex’s
action includes a request for a declaration that the escitalopram product it
intends to sell in Canada will, in any event, not infringe certain claims of
the patent.
[4]
Lundbeck
defended the action and added a counterclaim seeking a declaration that Apotex
had and would infringe the ‘452 patent, an injunction, and other remedies.
[5]
By
motion dated April 9, 2010, Apotex moved to strike Lundbeck’s counterclaim,
arguing that the counterclaim failed to plead material facts to support a
finding that it had in the past or was currently committing any act of
infringement; insofar as the counterclaim could be construed as a quia timet
recourse, Apotex argued that it failed to meet the jurisprudential criteria for
a valid recourse.
[6]
At
the hearing of the motion, Lundbeck conceded that it had, at that time,
knowledge of no material facts that might show that Apotex had actually begun
manufacturing, importing or selling escitalopram. On that basis, and subject to
Lundbeck’s right to seek to amend should such facts come to light, I granted
Apotex’s motion in part and struck that part of the counterclaim seeking a
declaration of past infringement and related relief. I did, however, hold that
Lundbeck’s counterclaim, seeking a declaration that Apotex’s proposed
escitalopram product would infringe the patent and a quia timet
injunction were fair and appropriate, given that the issue of whether or not
the proposed product was infringing had been put into play by Apotex itself in
seeking a declaration of non-infringement.
[7]
In
September 2010, both parties being desirous of an early trial, the trial date
of November 5, 2012 was set, and a schedule established for all steps
leading up to it. At that time, the past infringement allegations of Lundbeck
having been struck, no issues of damages, profits or quantification were at
play and a bifurcation order was not needed.
[8]
As
a result of both parties’ inability at different times to comply with the
schedule, the schedule was twice amended, each time compressing the time
allotted to pre-trial steps. Although meeting the trial date has become more
and more difficult as a result, the parties appear committed to the trial
dates; I do not believe either is intentionally attempting to delay the trial.
[9]
In
October 2011, as a result of facts it learned in the course of the litigation,
Lundbeck filed a motion for leave to amend its statement of defence and
counterclaim, notably to reinstate its
allegations of past and present
infringement by Apotex. These amendments arose primarily out of Apotex’s
importation of escitalopram API manufactured by Hetero Labs, which it then
transformed into tablets in Canada and exported and sold to other countries. On
or about October 27, 2011, Apotex consented to that part of the amendment,
without condition, and more importantly, without seeking a bifurcation order as
a pre-condition to its consent.
[10]
The
parties proceeded to discoveries in November 2011 on the basis of these
proposed amended pleadings. It is only shortly thereafter that Apotex asked
Lundbeck to consent to the bifurcation and that Lundbeck asked Apotex to
consent to the addition of Apotex Pharmachem Inc. as an additional defendant to
its infringement counterclaim. In the face of each one’s refusal of the other’s
request, these motions came before me for determination.
The motions and
the parties’ positions
[11]
As
mentioned, Apotex had already consented to Lundbeck amending its counterclaim
to reinstate its claim of infringement against it. The proposed new amendment
would add Apotex Pharmachem Inc. (“Pharmachem”), an affiliate of Apotex, as an
additional third party defendant to that claim. Pharmachem is identified as the
entity who will be manufacturing in Canada the active pharmaceutical ingredient
in Apotex’s proposed escitalopram product, and who allegedly has already
manufactured some API batches for Apotex.
[12]
Apotex
does not take the position that Lundbeck’s proposed infringement claim against
Pharmachem is unmeritorious. Indeed, it has formally offered to consent to the
amendments on condition that the quantification of damages or profits, if any,
be bifurcated, that the addition not cause the trial to be adjourned and that
Lundbeck accept the first round of discovery of Apotex on infringement issues as
its first round of discovery of Pharmachem (counsel for Apotex confirmed at the
hearing that Pharmachem had also agreed to be bound by that round of
discovery). Apotex’s formal position on the motion to amend is that it should
be refused, and alternatively, that the amendment should only be allowed if
those conditions are imposed.
[13]
In
support of that position, Apotex argues that Lundbeck waited too long to seek
to add Pharmachem as a defendant: Lundbeck first raised that possibility on
January 16, 2012, even though it knew a year earlier that Pharmachem was the
proposed supplier of Apotex’s API and that it was aware by November 3, 2011
that Pharmachem had manufactured some API for Apotex. Apotex then argues that
Pharmachem is not a “necessary” party for the complete determination of the
issues between itself and Lundbeck, and that adding a new party to the
litigation at this time (and without imposing the aforementioned conditions)
would result in the loss of the trial dates or an unreasonably compressed schedule,
causing it prejudices which cannot be compensed (compensated) in costs.
[14]
Lundbeck
for its part submits that it did not become aware that Pharmachem, other than
being the proposed supplier, had actually begun manufacturing until November
2011, that not adding Pharmachem to the existing action would result in a
multiplicity of actions and potentially contradictory judgments, that the trial
dates can be met despite the addition of Pharmachem, and that even if they
cannot, Apotex is the author of its own misfortune as it delayed production of
the documents that would have shown Pharmachem’s actual manufacture and
misleadingly asserted that it had not sold or used commercial quantities of
escitalopram, even though the recently produced documents show the opposite.
[15]
Towards
the end of the hearing, Lundbeck further undertook, if it was allowed to add
Pharmachem as an additional defendant without bifurcation of the quantification
issues, to abandon its claim for damages against Apotex and Pharmachem,
restricting its monetary claims to an accounting of their profits and punitive
or exemplary damages (to the extent these remedies are available to it in the
circumstances).
[16]
Apotex’s
motion for bifurcation seeks an order that the discovery and trial of the
quantification aspects of any claim for damages or accounting of profits
(whether against Apotex pursuant to the re-instated claim of infringement or
against Pharmachem under the proposed new claim) be severed from the main trial
and be determined after the Court’s determination of whether the patent is
valid and has been infringed. Apotex’s arguments are essentially the same as
those advanced on the motion to amend. Lundbeck opposes the bifurcation,
arguing that it has the right, as a litigant, to having all the issues raised
in its pleadings heard and determined in a single trial and that Apotex has
failed to demonstrate, as is its burden, that bifurcation is necessary to
achieve the just, most expeditious and least expensive determination of the
issues herein.
Motion to amend
[17]
It
appears that the allegedly infringing product of Pharmachem is one of the very
products which form the basis of Lundbeck’s infringement action against Apotex,
newly added on consent. In the circumstances, it is beyond dispute that the
interest of justice, in ensuring the efficient use of judicial resources and
avoiding a multiplicity of proceedings and the risk of contradictory judgments,
dictates that Lundbeck’s amendment be permitted.
[18]
Lundbeck’s
alleged delay in proposing the amendment would not detract from that
conclusion, unless, in the circumstances, the delay is prejudicial to the
interests of justice or to Apotex, and the prejudice cannot be adequately
mitigated, compensated or eliminated by conditions (such as those argued by
Apotex) or an award of costs.
[19]
As
will be discussed below, I am satisfied that allowing the amendments is neither
contrary to the interest of justice nor of a nature to cause prejudice to
Apotex or Pharmachem in the circumstances and on the conditions imposed. Thus,
it would not be necessary to consider whether Lundbeck unreasonably delayed in
proposing the amendment.
[20]
Still,
as the amendment will undoubtedly add additional demands on Apotex’s and
Pharmachem’s counsel’s time in the preparation for trial, in an already
demanding schedule, it is appropriate that the issue of delay be addressed.
[21]
First,
it should be stressed that the delay at issue is not Lundbeck’s delay in
reasserting its infringement claim against Apotex, but in asserting it against
Pharmachem.
[22]
It
is true that Apotex disclosed as early as December 22, 2010, through its
affidavit of documents, that Pharmachem was intended to be its future supplier
of escitalopram API and may have, to that end, already produced escitalopram.
However, it was held in Eli Lilly Canada Inc. v Nu-Pharm Inc., 2011 FC
255 that the preparation and filing of an ANDS (including production of product
for that purpose) are insufficient to properly ground an action for
infringement. Apotex itself, in the covering letter to its affidavit of
documents, clearly stated that “no batches for commercial use” had been
obtained from Pharmachem. It is only in early November 2011, on the eve of
Lundbeck’s discovery of Apotex, that Apotex produced Pharmachem’s batch
production records, from which Lundbeck could have noticed that Pharmachem had
in fact begun production and on what scale. Yet, in the face of Apotex’s
assertion that it had not obtained any product for commercial use, I doubt
Lundbeck was bound to immediately scrutinize those records for signs of
commercial quantities.
[23]
On
December 16, 2011, however, in answer to an undertaking, Apotex produced for
the first time amended records of raw material receipts showing receipt of two
lots of 6.58 and 1.76 kg of escitalopram from Pharmachem, only 0.32 kg of which
is listed as having been used for reserve samples, and a purchase order
indicating that Apotex had ordered from Pharmachem in June 2010 a total 117 kg
of escitalopram – arguably commercial quantities given that Apotex’s own
records show a total use of only 48.919 kilos of escitalopram over five years
for R & D and regulatory usage. It is only at that point that Lundbeck
could reasonably be said to have had the knowledge of Pharmachem’s potentially
infringing conduct that would mandate prompt notice of an intention to amend.
It can hardly be suggested that, taking into account the Christmas recess, the
delay between December 16, 2011 and January 16, 2012 is unreasonable. Nor has
it been suggested that Apotex or Pharmachem could have used that time to any
great effect had Lundbeck notified them of an intention to add Pharmachem as a
defendant as of December 16, 2011. I therefore conclude that there was no undue
delay in Lundbeck moving to amend.
[24]
Given
that the proposed claim against Pharmachem has prima facie merit, that
it is intimately connected to the existing infringement claim made against
Apotex, that there would be clear duplication and a real risk of contradictory
judgments if it were to proceed separately, and that Lundbeck has not delayed
in seeking to add Pharmachem as a defendant, the interest of justice clearly
lies in permitting the amendment, unless doing so would cause prejudice to
Apotex that cannot be compensated in costs.
[25]
The
prejudice that was advanced by Apotex here is the potential loss of the
November trial dates, and then, only if the quantification of the damages or
profits was not bifurcated. Apotex did not suggest that adding Pharmachem at
this point with a bifurcation order in place would jeopardize the trial dates
or cause it prejudice. Indeed, counsel for Apotex represented to the Court at
the hearing that it had been instructed by Pharmachem to defend it, that
Pharmachem’s defence would be substantially the same as Apotex’s and that it
would agree to be bound by the discoveries already conducted. As to the nature
of the prejudice flowing from the loss of the November trial dates in the event
the quantification issues were not bifurcated, Apotex’s argument was that it
would delay the determination of its impeachment and declaratory action. More
specifically, Apotex has not alleged or led evidence to show that such a delay
would cause irreparable, or even significant financial losses, or that it would
make the evidence necessary to make its case more difficult or impossible to
marshal. The delay, if any, would simply have the effect of delaying Apotex’s
ability to come to market in Canada with its proposed escitalopram product –
assuming it is successful in its impeachment or declaratory action.
[26]
The
loss of trial dates and an unreasonable delay in bringing a matter to trial
can, in certain cases, be assimilated to prejudice that cannot be compensated
in costs (Montana Band v Canada 2002 FCT 583, Apotex Inc. v Shire
Canada Inc. 2011 FC 1159). However, whether, in any given case, a delay in
reaching trial is “unreasonable” is a determination which must be made taking
into account all relevant circumstances.
[27]
As
mentioned before, and will be more fully discussed below, I am in any event not
satisfied that in the circumstances and on the conditions imposed by this
order, the existing trial dates must necessarily be lost as a result of the
amendment, even without bifurcation. Even if I am wrong, I find any such delay
would not, in the circumstances, be unreasonable and would not outweigh the
interests of justice in allowing the amendment or justify denying it in the
circumstances.
[28]
It
must be remembered here that Apotex has already invoked the PM(NOC)
Regulations and benefited from a summary and timely determination of
whether the same allegations of invalidity which it is pursuing here were
justified. Nothing prevented Apotex from choosing, instead of the summary
PM(NOC) route, to proceed with a full-fledged impeachment action back in
2007. Its wish to see this action determined within little more than three
years from its institution, having failed in the earlier PM(NOC)
proceeding, is not improper or abusive; however, it cannot trump Lundbeck’s
rights or the Court’s ability to judiciously allocate its resources.
[29]
Finally,
the procedural choices which Apotex made in this matter must be taken into
consideration. A party, especially one as sophisticated as Apotex, must be
taken to accept the possible consequences of the procedural choices it makes,
and cannot be heard to complain that these consequences are prejudicial to it.
In particular, parties who ask for the Court’s early and intensive case
management services to secure an early trial date are expected to make
procedural choices that would expedite, rather than risk delaying, the litigation.
[30]
Apotex
brought its motion to strike Lundbeck’s infringement counterclaim in the spring
of 2010, at a time where it had already imported, transformed into tablets and
sold abroad significant quantities of escitalopram. Those facts would clearly
have been sufficient to reasonably sustain a counterclaim for infringement, had
Lundbeck known and pleaded them at the time. By the time Apotex’s motion was
heard in July 2010, Apotex had purchased and received from Pharmachem
escitalopram in quantities that could reasonably be argued to be commercial. It
was Apotex’s strict procedural right to insist that Lundbeck discover these
facts by itself before being allowed to counterclaim for infringement and
Apotex cannot be faulted for standing on this right. However, it was equally
within its purview to choose not to challenge Lundbeck’s counterclaim and allow
Lundbeck to obtain knowledge of the relevant facts through early discovery
rather than through happenstance or incidental disclosure. Apotex knew – and it
was clearly stated in the reasons disposing of its motion to strike – that if
and when Lundbeck became aware of facts that could establish current
infringement, such as the purchases and sales mentioned above, it would be
entitled to seek to amend. In choosing to bring and pursue its motion to
strike, Apotex must be taken to have known and taken the chance that if
Lundbeck discovered those facts at a time which would make it difficult or
impossible to meet the trial dates, the possibility would exist that the trial
be postponed.
[31]
Apotex
may have made other procedural choices that tended to delay the time where
Lundbeck would be in a position to revive its counterclaim or add Pharmachem as
a defendant. Lundbeck argues that Apotex purposefully delayed transmitting to
it documents that would show the extent of Apotex’s sales abroad and the fact
that Pharmachem had manufactured and sold escitalopram to Apotex. Lundbeck
further argues that Apotex’s pleadings, in which it specifically denies having
ever sold escitalopram, were improper. Although these arguments are of concern
to me, I decline to further discuss them or determine whether Apotex’s actions
were inappropriate or intentional. I merely reiterate that Lundbeck had a right
to seek to amend when the facts became known to it, and that it did not unduly
delay in bringing this motion to amend; I also note that, had Apotex
transmitted to Lundbeck the documents which are now before me at the time it
served its affidavit of documents in December 2010, the need for and the
consequences of this amendment could have been dealt with nearly 22 months
before trial, rather than eight months as matters now stand.
[32]
I
find that Lundbeck’s proposed amendments do serve the interest of justice, and
that there is no reason why they should not be permitted at this stage.
[33]
The
conclusion that an amendment ought to be permitted in the interest of justice
does not mean that it should be permitted without any conditions or terms. With
a trial eight months away, an amendment adding a party and a claim of
infringement, even if it does not result in the adjournment of the trial, is
bound to add to both parties’ existing procedural burdens. The Court must
consider all circumstances and determine whether the trial dates can be met and
at what price. It must consider whether conditions or measures can be imposed
to minimize the chances of an adjournment and ensure that the parties can
realistically and reasonably be ready to proceed to trial as scheduled.
[34]
Apotex
has requested, as a condition to the amendment being permitted, that no further
first round of discovery on the issues of infringement be required; that
Lundbeck be prevented from raising the amendment or anything flowing therefrom
as a basis for moving, extending or otherwise affecting the currently scheduled
trial; and that a bifurcation of the proceedings be ordered.
[35]
As
for the first condition, I note that Apotex had tendered for discovery as its
representative an employee of Pharmachem itself and that by agreement of the
parties, Lundbeck’s discovery included the infringement issues. Further,
Pharmachem having now instructed Apotex’s counsel to consent to being bound by
the first round of examination for discovery, it necessarily follows that
Lundbeck should not be permitted to duplicate the discovery already conducted,
without it being necessary to make this a formal condition of this order.
[36]
As
for the second condition, I find it in part unnecessary and in part excessive
in the circumstances. The record before me indicates that Apotex is satisfied
that the issues of infringement raised against it, save for the quantification
issues, would not require an amendment to the trial dates. In particular,
Apotex has not suggested that the allegations it might make in defence to
Lundbeck’s claim to an entitlement of profits would require protracted
discovery. Apotex’s counsel on behalf of Pharmachem also represented that
Pharmachem would not raise substantial new defenses and would agree to be bound
by Apotex’s discovery of Lundbeck. I have therefore concluded that the
amendment should not cause the trial to be moved, extended or otherwise
affected. There is no need for Lundbeck to be specifically prevented from
raising arguments which the Court has already considered and determined.
Further, Apotex would wish the Court’s determination or the prohibition on
Lundbeck to include not merely the amendment but “anything flowing therefrom”.
Such a condition would be unreasonable and excessive, since it would prevent
Lundbeck from raising and the Court from considering unforeseen or unannounced
grounds of defence raised by Pharmachem, or any unforeseen difficulty or delay
in discovery, even if caused by Pharmachem itself.
[37]
As
for the last condition, I will deal with it in the context of dealing with
Apotex’s motion for bifurcation.
Motion for
bifurcation
[38]
It
is trite law that it is a basic right of a litigant to have all the issues in
dispute in a litigation resolved at one trial, and that on a motion for a
bifurcation order, the moving party always bears the burden of demonstrating
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, most
expeditious and least expensive determination of the proceeding on its merits (Apotex
Inc. v Bristol-Myers Squibb Co. 2003 FCA 263). It is also true, as pointed
out by Apotex, that bifurcation tends to be the rule rather than the exception
in intellectual property matters. In my view, this is so not merely because
actions in intellectual property tend to be complex, because the scientific and
financial issues are often discrete and because parties are generally loathe to
share sensitive commercial or financial information with potential competitors
until their liability to do so has been established, but mostly because of the
nature of the remedies available and sought in infringement actions. A
successful plaintiff in an infringement action is entitled to the damages it
has suffered as a result of the infringement, but may also be entitled to opt
instead for an accounting of the profits realized by the defendant. Because the
right to elect an accounting of profits is discretionary, parties would not, in
an un-bifurcated action, know whether the option is available to the plaintiff
until the final judgment has been rendered. As such, without bifurcation, both
parties will necessarily conduct and be subject to discoveries, and trial time
will be necessarily be spent in leading evidence as to both parties’ revenues
and expenses, even though only one side’s losses or profits can ever form the
basis of an actual award. It is that inherent inefficiency that, in my view,
most often justifies a bifurcation order.
[39]
Here,
in order to ensure that all the issues in its infringement action can be heard
and determined in a single trial and without delay, Lundbeck has made the bold
decision to forego its entitlement to damages in the event Apotex and
Pharmachem are found to infringe its patent, and claim only their profits,
taking the risk that Apotex and Pharmachem could successfully oppose its
entitlement to that type of remedy. That decision, although it came late in the
hearing of the motions, has had a dramatic and determinative effect on the
outcome of Apotex’s motion.
[40]
Indeed,
had Lundbeck not made this belated concession, I would have had to conclude, on
the evidence before me, that the task of completing discoveries, preparing
expert reports and leading trial evidence on both parties’ losses or profits
could not realistically be accomplished in the time remaining before and
allocated for trial. The almost inevitable loss of the trial date, together
with the inherent waste of time and effort, for the parties and for the Court,
in conducting discoveries and adducing evidence at trial of both parties’
financial affairs where only one could form the basis of the final award, if
any, would clearly have justified a bifurcation order.
[41]
For
the reasons discussed below, I am satisfied that an inquiry into Apotex and
Pharmachem’s profits can reasonably be made in the existing timeframe and trial
time, without causing prejudice to Apotex or to Pharmachem. In addition,
Lundbeck’s abandonment of its right to claim damages results in a greater
certainty of savings of time and effort for the parties and for the Court.
Without it, the prospect of Lundbeck being successful in its infringement
action, including the right to elect an accounting of profits, and thereafter
having discovery of Apotex and Pharmachem’s profits, electing for its damages,
subjecting itself to discovery of same by Apotex and Pharmachem, and then
proceeding to a second trial on quantification, remain real possibilities.
[42]
A
party’s willingness to so drastically narrow the issues in dispute, potentially
at the risk of compromising its substantial rights, in order to achieve the
just, most expeditious and least expensive determination of the dispute before
the Court is a factor that should weigh heavily in the Court’s exercise of its
discretion. I have done so here. And even if I had not come to the conclusion,
as set out below, that the parties could reasonably be ready for and proceed to
trial on the issue of Apotex’s and Pharmachem’s profits within the existing
timetable without bifurcation, I would still have dismissed Apotex’s motion for
bifurcation, on the basis that the benefits of Lundbeck’s concession, both in
terms of the allocation of judicial resources and of savings of costs and
expenses to both parties, outweigh the prejudice that might be caused to the
Court and to Apotex from delaying the trial by six months or even a year.
[43]
I
have carefully reviewed the evidence adduced by the parties on this motion,
including the expert affidavit Dr. Pierre-Yves Crémieux for Lundbeck and that
of Mr. Howard Neil Rosen for Apotex and the transcript of both experts’
cross-examinations on affidavit. I note that the testimony of both experts took
into account the complexity and time required to have discovery, assess and
produce expert reports as to both Lundbeck’s damages and Apotex’s and
Pharmachem’s profits. Lundbeck having offered to abandon its claim for damages,
only the quantification of Apotex and Pharmachem’s profits would remain at
issue.
[44]
Apotex’s
cross-examination of Dr. Crémieux addressed mostly, if not solely, the
correctness of his opinion as regards the complexity and difficulties of
assessing Lundbeck’s damages, and did little to challenge his conclusion
insofar as it concerns the assessment of Apotex and Pharmachem’s profits. I
also note that in cross-examination, Mr. Rosen specifically acknowledged that
if Lundbeck were to abandon its claim for damages, it would substantially
reduce the work required to be done on quantification issues, and even halve
it.
[45]
There
is little dispute between the experts that the exercise of quantifying Apotex
and Pharmachem’s profits primarily involves calculating the revenues of Apotex
and Pharmachem (which, even taking into account the application of currency
exchange, is still a relatively simple exercise, involving, as it does, less
than 20 invoices), and then deducting therefrom the cost of the sales. It is
noteworthy that Mr. Rosen, who has acted for Apotex in numerous proceedings
involving quantification issues, could not be very precise as to the time and
effort required of Apotex or Pharmachem to identify, produce and disclose to
him the documents necessary to support the costing data which Apotex admittedly
tracks within its accounting system.
[46]
It
was Apotex’s burden to satisfy the Court that bifurcation was necessary to
avoid losing the trial dates. Apotex chose to concentrate its evidence on the
complexities and effort involved in quantifying Lundbeck’s potential damages,
even though it has privileged access to information that would have established
the time and difficulties involved in quantifying it and its affiliate’s own
profits. Considering the above, I am satisfied that it would be reasonably
possible for the parties to complete their discovery on the issue of Apotex and
Pharmachem’s profits, and prepare the required expert reports in time for
trial.
[47]
I
have, in that determination, taken into consideration the fact that the extent
of the infringement is fairly limited, that the amounts at stake, while not
insignificant, are comparatively small, and that the timeframe in which the
alleged infringement took place is both short and recent. I have also
considered the fact that all of the information and documents relevant to the
quantification of Apotex and Pharmachem’s profits are within their full power
and control, and how the parties’ respective rights and obligations on
discovery would enable Apotex and Pharmachem to avoid unnecessary delay and
ensure a timely trial.
[48]
The
rules relating to documentary discovery require of a party that it discloses to
its opponent only those documents that would assist its opponent’s case and
those upon which it intends to rely at trial. It has no obligation to disclose
documents that can only assist it, if it accepts that it won’t be able to use them
at trial. Similarly, proportionality in oral discoveries demands that the
Court, in determining whether certain questions be ordered answered, consider
whether the information sought is necessary for the requesting party to make
its case, or whether the questions were asked solely to ensure that it not be
taken by surprise at trial. If the latter, it is my practice to decline
ordering that an answer be provided, it being understood that the party being
examined will then be precluded by Rule 248 from relying on the information at
trial.
[49]
The
most important information Lundbeck needs to establish its rights are the
volume of sales made by Apotex and Pharmachem and the invoices reflecting those
sales, as establishing the gross revenues. Its discovery, to that extent, is
nearly complete. Once Lundbeck has in its possession and can adduce at trial
evidence of Apotex and Pharmachem’s revenues, the main part of Apotex and
Pharmachem’s burden as defendants would be to establish the costs of those
sales, as they go directly to reducing their apparent profits. In that, Apotex
and Pharmachem have the advantage that all the costing information is within
their possession and control. To the extent Apotex and Pharmachem wish to
assert certain costs as reducing their profits and rely on documents to
establish same, they can and must promptly disclose to Lundbeck all relevant
documentation. To the extent full and complete production is made, there would
be little scope for Lundbeck to have protracted discovery, or to complain now
that it has insufficient time to analyze the data and produce an adequate
expert report. Apotex and Pharmachem may also choose, in order to simplify and
expedite discovery, to forego producing the entirety of the supporting
documents for certain costs. Again, unless Lundbeck can show that the
undisclosed documents would likely contradict the information or documents
which Apotex and Pharmachem have chosen to produce (and therefore assist
Lundbeck), it would have little scope to delay or extend discoveries to demand
further production; the risk that certain items of costs would not be accepted
for lack of sufficient evidence would fall on Apotex and Pharmachem and would
not negatively affect Lundbeck’s case. In that sense, Apotex and Lundbeck can
exercise a great degree of control over the scope and extent of discovery, and
they can make such procedural choices as may be appropriate to ensure that the
trial dates can be met.
[50]
I
have, for all these reasons, not been satisfied that a bifurcation order is necessary
to achieve the just, most expeditious and least expensive determination of the
issues herein on their merits, or that same should be imposed as a condition to
allowing Lundbeck to amend its counterclaim to assert a claim of infringement
against Pharmachem, given Lundbeck’s undertaking to abandon its claim for
damages for infringement if the trial herein is allowed to proceed, without
bifurcation, on all issues.
Costs
[51]
The
costs of an amendment, including that of a motion for leave to amend, should in
principle be borne by the amending party. In this case, however, Apotex did not
merely ask that the amendment be permitted on terms. It actively opposed it, on
the argument that Lundbeck had unreasonably delayed in moving to amend. I found
that argument to be without merit. Moreover, I found that Apotex’s own
procedural choices had caused the delay of which it complained. To the extent
Apotex sought, in the alternative, that terms (other than bifurcation) be
imposed for the amendment, I found those terms to be unnecessary, excessive or
dependant upon an undertaking which Pharmachem had yet to make. As for
bifurcation, it was not procedurally appropriate for Apotex to seek it as a
condition to the amendment and Apotex should have confined that request to its
motion for bifurcation. The amendment sought only to add Pharmachem as a
defendant. Apotex had already agreed, without condition, to the infringement
action being reinstated against it. Whether or not Pharmachem was added as a
defendant was quite irrelevant to Apotex’s desire for a bifurcation, and
indeed, bifurcation of the quantification issues arising out of the claim
against Apotex was not an appropriate consideration or condition to determining
whether Pharmachem should be added as a defendant. I find that Apotex had no
reasonable grounds to oppose Lundeck’s proposed amendments, and that it should
not have opposed the motion. Lundbeck having been successful on its motion, it
should have its costs.
[52]
Lundbeck
was also the successful party on Apotex’s motion for bifurcation and, in the
application of the general rule, it should also recover its costs. However, but
for Lundbeck’s belated undertaking to forego its claim for damages for
infringement, Apotex’s motion would have been granted. Lundbeck should not, in
the circumstances, recover its costs. I have considered whether Apotex should
instead be awarded the costs of the bifurcation motion. However, considering
that the late reinstatement of the infringement claim would have been one of
the main justifications for bifurcation, and that that delay was caused by the
manner in which Apotex chose to conduct this litigation, Apotex too should be
denied its costs.
“Mireille
Tabib”
Ottawa, Ontario
April 11,
2012
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