Date: 20091217
Docket: T-1161-07
Citation: 2009
FC 1285
Ottawa, Ontario, December 17, 2009
PRESENT: The Honourable Madam Justice Snider
BETWEEN:
SANOFI-AVENTIS CANADA INC.,
SCHERING CORPORATION and
SANOFI-AVENTIS DEUTSCHLAND GmbH
Plaintiffs
and
NOVOPHARM LIMITED
Defendant
AND
BETWEEN:
NOVOPHARM LIMITED
Plaintiff by Counterclaim
and
SANOFI-AVENTIS CANADA INC.,
SCHERING CORPORATION and
SANOFI-AVENTIS DEUTSCHLAND GmbH
Defendants by Counterclaim
Docket: T-1201-08
BETWEEN:
SANOFI-AVENTIS CANADA INC.,
SCHERING CORPORATION and
SANOFI-AVENTIS DEUTSCHLAND GmbH
Plaintiffs
- and -
LABORATOIRE RIVA INC. and
PHARMASCIENCE INC.
Defendants
AND
BETWEEN:
LABORATOIRE RIVA INC. and
PHARMASCIENCE INC.
Plaintiffs by Counterclaim
- and -
SANOFI-AVENTIS CANADA INC.,
SCHERING CORPORATION and
SANOFI-AVENTIS DEUTSCHLAND GmbH
Defendants by Counterclaim
Docket: T-1357-09
BETWEEN:
APOTEX INC.
Plaintiff
and-
SCHERING CORPORATION,
SANOFI-AVENTIS, SANOFI-AVENTIS
DEUTSCHLAND GmBH and
SANOFI-AVENTIS CANADA INC.
Defendants
REASONS FOR ORDER AND ORDER
[1]
Sanofi-Aventis
(Sanofi France), Sanofi-Aventis Canada Inc. (Sanofi Canada) and Sanofi-Aventis Deutschland GmbH (Sanofi
Germany) (collectively Sanofi) have brought a motion to have three actions
heard together with a common record. In each of the three actions, one or more
of the Sanofi family of companies is named as Defendant. Each proceeding will
require a calculation of damages under s. 8 of the Patented Medicines (Notice of Compliance)
Regulations,
SOR/93-133 (NOC Regulations).
A further common element is Canadian Patent No. 1,341,206 (the '206 Patent), a claim to the drug ramipril.
[2]
For the reasons that
follow, I have concluded that the motion for a joint hearing or a formal
consolidation ought to be dismissed. I am, however, prepared to order that the
three actions, while formally separate, be managed by the same case management
prothonotary and heard consecutively by a single judge.
I. The
Actions
[3]
In brief, the three
actions in issue are as follows:
1.
T-1161-07: This file
began as an action against Novopharm Limited (Novopharm) for infringement of the
'206
Patent. Novopharm
counterclaimed for, inter alia, damages pursuant to s. 8 of the NOC
Regulations. By agreement, this part of the counterclaim was stayed
pending the outcome of the main action. Court File No. T‑1161-07 was
heard together with Court File No. T-161-07, where Apotex Inc. (Apotex) was
named as Defendant. By decision dated June 29, 2009, Sanofi’s actions against
both Apotex and Novopharm were dismissed (Sanofi-Aventis Canada Inc. v. Apotex Inc., 2009 FC 676, 77 C.P.R. (4th)
99 (Sanofi-ramipril)).
This decision is currently under appeal.
2.
T-1201-08: Sanofi
also commenced an action against Laboratoire Riva Inc. (Riva) for infringement
of the same '206 Patent. Riva counterclaimed for, inter
alia, damages pursuant to s. 8 of the NOC Regulations. The parties
have not proceeded further with this action – presumably, because of the
T-1161-07 action.
3.
T-1357-09: Following the
release of the decision in T-161-07 (which had been heard at the same time as
T-1161-07), Apotex commenced this action claiming, inter alia, damages
pursuant to s. 8 of the NOC Regulations.
[4]
Apotex supports this
application and encourages the Court to order a formal consolidation of the
three actions. The other plaintiffs – Novopharm and Riva – are strongly opposed
to any form of consolidation. Schering Corporation, who is also named as a Defendant
in the three actions, made limited representations on the motion.
II. Statutory Framework
[5]
Sanofi’s
motion for consolidation or joint hearing is based on Rule 105(a) of the Federal
Courts Rules, SOR/98-106. Under Rule 105(a), Court may, in respect of two
or more proceedings, order that they be consolidated, heard together or heard
immediately after the other.
[6]
At this point in time,
there has been (subject to the outstanding appeal in Sanofi-ramipril)
resolution of the question of the validity of the '206 Patent. Each of the plaintiffs has
undergone the complex application procedure of the NOC Regulations. We
are now at the stage in the litigation where the assessment of damages under s.
8 is to be determined.
[7]
The three
actions for damages are based on s. 8 of the NOC Regulations. Under s.
8(1)(b), if the innovator’s NOC application to Court is withdrawn,
discontinued, or dismissed by the Court, “the first person is liable to the
second person for any loss suffered during the period”. Thus, the Court will be
called upon to determine, for each action, the loss suffered by each of
Novopharm, Riva and Apotex. At this point, the question of who is the proper
“first person” has been the subject of further motions heard by the case
management prothonotary; this question need not be resolved for purposes of
this motion.
III. Analysis
A. Jurisprudence
and Legal Principles
[8]
A consolidation order
under Rule 105 of the Federal Courts Rules is based on a number of
policy objectives: “the avoidance of a multiplicity of proceedings and the
promotion of expeditious and inexpensive determination of those proceedings” (Global
Restaurant Operations of Ireland Ltd. v. Boston Pizza Royalties Limited
Partnership, 2005 FC 317, 38 C.P.R. (4th) 551 (Boston Pizza), at
para. 11; John E. Canning Ltd. v. Tripap Inc. (1999), 167 F.T.R. 93, 88
A.C.W.S. (3d) 543 at para. 27 (F.C.T.D.) (Canning)). For a patent trial,
this eliminates the duplication of pre-trial preparations, including document
production, examination of witnesses, and the length of the trial itself (Apotex
Inc. v. Wellcome Foundation Ltd. (1993), 69 F.T.R. 178, 51 C.P.R. (3d) 480,
at para. 7 (F.C.T.D.) (Apotex-Wellcome)). According to Justice
Lemieux in Canning, these objectives further “the general interest of
justice, its proper administration and the true interests of the parties”
(above, at para. 26).
[9]
A number of relevant
factors have been identified in the jurisprudence that may be taken into
account in deciding whether the Court should exercise its discretion under Rule
105 (see Boston Pizza, above, at para. 11; Canning, above, at
para. 27; Knappett Construction Ltd. v. Canada (Minister of Labour)
(1999), 87 A.C.W.S. (3d) 30; [1999] F.C.J. No. 308 at para. 18 (F.C.T.D.) (Knappett);
Sivamoorthy v. Canada (MCI), 2003 FCT 307, 121 A.C.W.S. (3d) 1125 (Sivamoorthy);
Montana Band v. Canada (1999), 182 F.T.R. 161, 93 A.C.W.S. (3d) 44 (F.C.T.D.)
(Montana Band)). These factors include such matters as: commonality of
parties, issues, facts and remedies; and, prejudice.
[10]
Under the notion of
common facts and legal issues, Prothonotary Hargrave in Fibreco Pulp Inc. v.
Star Shipping A/S (1998), 145 F.T.R. 125, 78 A.C.W.S. (3d) 437 (F.C.T.D.) (Fibreco),
held that the rule for consolidation “does not require the separate causes of
action to have completely common questions of fact or law, but only some
commonality” (at para. 42).
[11]
With respect to
prejudice, if the Court finds that one of the parties would suffer injustice or
prejudice, this finding works against consolidation (Boston Pizza,
above, at para. 11). Justice Rothstein (as he was then) held that the burden is
on the party seeking consolidation to prove that the responding parties would
not suffer appreciable prejudice or injustice (see Eli Lilly and Co. v.
Novopharm Ltd. (1994), 55 C.P.R. (3d) 429, 48 A.C.W.S. (3d) 31 at para. 6
(F.C.T.D.) (Eli Lilly)). In Apotex-Wellcome, Justice Mackay
agreed with the jurisprudence that the onus also rests on the moving party
(often the defendant) to prove that continuing the actions separately would be
an abuse of process or would prejudice the moving party (above, at para. 15;
see Mon-Oil
Ltd. v. Canada,
(1989) 27 F.T.R. 50, 26 C.P.R. (3d) 379 (F.C.T.D.) (Mon-Oil); Fruit of the Loom Inc. v. Chateau
Lingerie Mfg. Co. Ltd. (1984), 79 C.P.R. (2d) 274). The moving party must
prove a prejudice rather than a mere inconvenience (Apotex-Wellcome,
above, at para. 15).
[12]
Inconsistency in
findings of fact does not necessarily constitute prejudice. The question of
consolidation was before the Court in Mon-Oil, above, where the
defendant had brought a motion to consolidate three separate actions with
different plaintiffs but the same defendant. In dismissing the motion, Justice
Cullen stated as follows:
Certainly,
for the defendant, it would be more convenient, and administratively easier to
consolidate/join the actions or require that they be heard consecutively in a
pre-determined order. However, that is clearly not the test, and is a long way
from meeting the heavy onus. Inconsistent findings of fact may well occur but
vigilant counsel and a vigilant court can minimize that possibility, and in any
event is not a sufficient ground to warrant consolidation.
These
three actions are moving forward at their own pace as determined by counsel for
the plaintiffs and counsel for the defendant. To consolidate the three actions
would seriously hinder one plaintiff where action is practically ready for
trial, whereas another is barely off the starting block. This delay could very
well result in a significant loss to certainly one plaintiff if its worst fears
are realized.
[13]
In oral argument,
Apotex argued that the Court of Appeal in Apotex Inc. v. Janssen
Pharmaceutica Inc. et. al. (1997), 72 C.P.R. (3d) 179 at 181 (F.C.A.) (Apotex-Janssen)
altered the test for consolidation as stated in Mon-Oil. Justice Décary
stated:
We
wish to add that the Court's time and resources would be better used if counsel
arranged for joint hearing of applications, actions or appeals dealing with
some common question of law or fact instead of each insisting in having his or
her own separate day in court. Counsels' failure to do so impedes the
development of a coherent case law and obliges the Court of Appeal to apply,
sometimes reluctantly, the principle of stare decisis.
[14]
I do not agree that Apotex-Janssen
has the effect asserted by Apotex. The comments of the Court of Appeal do not
effectively relieve the moving party of its burden to establish prejudice on
its part, and no prejudice to an opposing party. All one can take from this
decision is that, wherever possible, parties should strive to have similar
matters heard together. However, the Court of Appeal did not direct that
consolidation should take place when a party could be prejudiced. These passing
comments do not change the principles of Mon-Oil.
[15]
A final consideration
is Rule 3 of the Federal Courts Rules. As taught by this Rule, the Rules
– including Rule 105 – are to be “interpreted and applied so as to secure the
just, most expeditious and least expensive determination of every proceeding on
its merits”. In the context of a motion to consolidate or hear together, an
important question to keep in mind is this: Would consolidation provide the
most efficient resolution of the matters in issue?
[16]
In sum, for this
particular motion, the following questions are significant:
1.
Are there common
parties?
2.
Are there common
legal and factual issues?
3.
Will any of the
parties suffer prejudice or injustice from the consolidation?
4.
Will consolidation
provide the most efficient resolution of the matters in issue?
[17]
Based on these
principles, I now turn to the facts of the case.
B. Application
of Law to Facts
(1) Common Parties
[18]
The three
actions all involve different plaintiffs, Novopharm, Riva and Apotex. This fact
argues against consolidation, although not strongly so.
[19]
For the most
part, the defendants are common to the three actions. Novopharm argues that, if
consolidation were to occur, it would have to litigate against defendants
unrelated to its s. 8 claim. Apotex has made s. 8 claims against Sanofi
(France) when Novopharm has not done so. This difference in defendants is minor
and could likely be managed in a joint or consolidated trial.
(2) Common Legal and Factual Issues
[20]
There is no
question that each of Novopharm, Riva and Apotex is seeking compensation with
respect to s. 8 of NOC Regulations. Moreover, each claim is in respect
of the same patented drug – the '206 Patent to ramipril. That, of course, does not necessarily
assist Sanofi and Apotex in this motion (to formally consolidate or hear
together) unless the factual and legal underpinnings are so intertwined that
one action ought not to proceed without the others.
[21]
Sanofi and
Apotex each argue that the overall generic market for ramipril will be the
focus of all of the claims. Accordingly, they assert that consolidation (or at
least joint hearings) will ensure that there is a common evidentiary record
and, thus, consistent decisions.
[22]
On the other
hand, there will be major factual differences. The s. 8 claims deal
specifically with the individualized damages that arise with respect to each
generic pharmaceutical “second person”. Each of Apotex, Riva and Novopharm will
bear the burden of proving its losses for the applicable length of time, and
will bring its own financial situation to the table for consideration by the
Court.
[23]
The Court
will be required to evaluate each claim separately. While consolidation does
not call for completely common factual or legal situations (Fibreco,
above), in my view, the records will be significantly different in each action.
There may be common evidence,
related to the operation of the market for ramipril, to all three actions.
Actions of a generic who is not party to one action may impact on the
assessment of damages in that action. In my view, these are evidentiary matters
that can be dealt with in the context of each the action without joining or
consolidating it with the other two.
[24]
On balance, I
view this factor as not supporting consolidation.
(3) Prejudice
[25]
Of all of the
factors, the issue of potential prejudice is the most significant. It must be
remembered that there is a two-pronged onus on the moving party (Sanofi) to
prove that: (a) it will suffer prejudice under the status quo of
separate hearings; and, (b) the responding parties will not suffer prejudice if
consolidation occurs (see Boston Pizza, above; Eli Lilly, above; Apotex-Wellcome,
above).
[26]
In Sanofi’s
submissions:
At the heart of these proceedings is how this Court should
assess damages under s. 8 of the Regulations in circumstances of
multiple generic entry. A fundamental issue will be identifying the appropriate
‘but for’ universe. Is each generic entitled to have its damages assessed
independent of the activities of any other generic? Alternatively, is the Court
required to make a finding on a single ‘but for’ universe and allocate damages accordingly?
[27]
Sanofi
alleges that if proceedings are heard separately, there is a potential for
contradictory or inconsistent findings with respect to the “but for” market
share determinations. Apotex supports Sanofi in this position and goes even
further in arguing that Apotex will be prejudiced if it is not allowed complete
access to the discovery of all witnesses.
[28]
Neither
Sanofi nor Apotex have persuaded me that they would be prejudiced by the
continuation of separate trials. I first observe that Sanofi’s view of the
necessity of a “but for” market share determination is strongly challenged by
Novopharm. At this stage, Sanofi and Apotex hold a view of how damages can be
proven that is not accepted by the party whose burden it is to prove its
damages. If Novopharm is correct, there will be no need for all generics to
prove individual shares of some hypothetical “but for” market and no prejudice
to Sanofi by not joining the actions. Even if Sanofi and Apotex are correct,
the individual trial of Novopharm can still proceed with Sanofi tendering
whatever evidence on the “but for” market that it feels is necessary to refute
the claims of Novopharm. Apotex, in its action, can litigate its claim on
whatever basis it wishes and, once again, Sanofi can defend. In any one of the
three actions, Sanofi may obtain evidence from other generics through
subpoenas. Apotex may do the same in its action.
[29]
In my view,
the prejudice to Novopharm and Riva, should the consolidation occur, would
outweigh the problems of not consolidating.
[30]
I would also find
that Sanofi has not discharged its burden to prove that Riva, in particular,
will not suffer prejudice from the consolidation. Riva, during oral
submissions, argued that consolidation would not help to expedite its s. 8
claim, and would come at a heavy cost for Riva, a smaller generic
pharmaceutical company. I agree. Neither Sanofi nor Apotex has addressed the
prejudice that would befall Riva. As was taught by jurisprudence in Mon-Oil,
Boston Pizza and Eli Lilly, the onus is on Sanofi, the moving
party, to prove that it would suffer prejudice without a consolidation or a
joint hearing, and that other parties would not suffer injustice or prejudice.
Sanofi has not come close to meeting this burden.
(4) Efficiency
[31]
I do not doubt that
consolidation or some other common procedure can provide for overall
efficiencies in an action. The validity and infringement issues in Sanofi-ramipril
are a fine example. However, I do not believe that this is one of those cases.
Rather than efficiency, I am concerned that the result of consolidation or a
joint hearing, in this case, would result in a situation close to procedural
paralysis.
[32]
Sanofi and
Apotex both argue that it would be against principles of expediency and
conservation of court resources to have different judges deal with the common
background of these three s. 8 claims. I do not disagree. However, the added
complexity of a joint or consolidated trial would tend to neutralize any
theoretical advantage of such a proceeding.
[33]
With at least four
parties, whose interests are not always aligned, one can be certain that there
will be difficulty in managing each and every procedural step. At the pre-trial
stage, there will be a multiplicity of motions, all of which will require the
submissions of four sets of counsel. Since actions for damages necessarily deals
with financial information, the likely disputes on maintenance of confidentiality
will be hard fought. A trial management conference, even on the simplest of
matters, will require coordination of all parties rather than two. The issues
related to discovery will require resolution by all parties and – almost
certainly – require many trips to the case management prothonotary or judge. At
a consolidated or joint trial, up to four sets of witnesses and experts will be
heard. Issues of admissibility and confidentiality will be complex. Finally,
there is the possibility of another generic company commencing a s. 8 claim
with respect to ramipril.
[34]
A common
concern of Sanofi and Apotex is the possibility of inconsistent findings in the
three cases. This potential problem could be effectively managed by having the
cases heard separately, but consecutively by one judge. Furthermore, I can see
considerable advantage to having all three cases managed by the same case
management prothonotary or judge. While dismissing the motion, as advanced by
Sanofi or Apotex, I am prepared to exercise my discretion to order that both of
these steps be taken.
C. Common
Discovery Transcripts
[35]
Sanofi asks the Court
to order that all transcripts from examinations for discovery in all three
actions be made available to each of the parties in the actions. Apotex goes
even further in its request that there be common discoveries in the actions,
even if the files are not consolidated. I see no advantages to so ordering.
IV. Conclusion
[36]
In conclusion, I am
not prepared to allow the motion that seeks full consolidation (as requested by
Apotex) or hearing together (as requested by Sanofi). However, I can see
substantial merit in having the three proceedings heard one after the other, by
the same judge. Further, common case management of all three would be an
essential element to the overall efficiency of the trials. In this way, the
benefits of full consolidation could be achieved without the risks described
above.
[37]
One problem,
identified by Novopharm, remains. Novopharm submits that it would be ready to
proceed to trial and seeks a trial date of September 2010. Novopharm also
argues that it would be prejudiced by a delay while the other two actions get
up to speed. It is true that the Novopharm action is procedurally ahead of the
other two. It is questionable whether the other two plaintiffs (Riva and
Apotex) would be ready to proceed to trial as of September 2010. However, this
potential problem disappears because the Court is likely unable to accommodate
a three-week trial any sooner than early 2011. Thus, the parties to the other
two actions would have sufficient time to prepare for their trials, which would
follow the Novopharm trial.
ORDER
THIS COURT ORDERS that:
1.
Pursuant to Rule
105(a) of the Federal Courts Rules, Court files T-1161-07, T‑1201‑08
and T-1357-09 are to be assigned to a single judge to be heard consecutively;
and
2.
The motion of Sanofi
is otherwise dismissed, with costs fixed in the amount of $2,000.00 to each of
Novopharm and Riva.
“Judith
A. Snider”
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