Date: 20091124
Docket: T-1563-09
Citation:
2009 FC 1209
Toronto, Ontario, November 24, 2009
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
ASTRAZENECA CANADA INC.,
IPR PHARMACEUTICALS, INC.,
ASTRAZENECA UK LIMITED and
SHIONOGI SEIYAKU KABUSHIKI KAISHA
Plaintiffs
and
NOVOPHARM LIMITED
Defendant
REASONS FOR ORDER AND ORDER
[1]
The
Defendant, Novopharm, has brought a motion to strike out the Statement of Claim
and dismiss this action. For the reasons that follow, I am allowing the motion
with costs to Novopharm.
[2]
This
action is brought by the Plaintiffs AstraZeneca et. al. by a Statement of Claim
filed September 18, 2009, in which it is alleged that the Plaintiffs comprise
the owner of Canadian Patent 2,072,945 (the '945 Patent) and those having
rights under that patent. It is alleged, as summarized in paragraph 35 of the
Statement of Claim, that the Defendant Novopharm has and will continue to
infringe certain claims of the '945 Patent. Relief by way of a declaration of
infringement, an injunction, delivery up, damages or profits, costs, interest
and other relief is claimed.
[3]
The
portion of the Statement of Claim dealing with the allegations of infringement
is set out at paragraphs 24 to 35 of the Statement of Claim as follows:
24.
Novopharm
has made or had made for it and imported or had imported for it, rosuvastatin,
rosuvastatin calcium and pharmaceutical compositions containing rosuvastatin
calcium together with a pharmaceutically acceptable carrier. The pharmaceutical
compositions are useful as HMG-CoA reductase inhibitors and for treating
hypercholesterolemia, hyperlipoproteinemia and atherosclerosis.
25.
Novopharm
filed an Abbreviated New Drug Submission (“ANDS”) on August 29, 2008 with
Health Canada for a Notice of Compliance (“NOC”) for rosuvastatin calcium
tablets and had compared its tablets to AstraZeneca Canada’s CRESTOR tablets.
26.
NOVO-ROSUVASTATIN
is Novopharm’s brand name for its rosuvastatin calcium tablets.
27.
Novopharm
has made or had made for it and imported or had imported for it, rosuvastatin,
rosuvastatin calcium and NOVO‑ROSUVASTATIN for commercial use.
28.
NOVO-ROSUVASTATIN
will be sold by Novopharm and used as an HMG-CoA reductase inhibitor and for
treating hypercholesterolemia, hyperlipoproteinemia and atherosclerosis.
29.
In
September 2008, Novopharm served AstraZeneca Canada with a Notice of Allegation
(“NOA”) pursuant to section 5(1) of the Patented Medicines (Notice of
Compliance) Regulations (“Regulations”) regarding the active pharmaceutical
substance rosuvastatin calcium and the '945 patent.
30.
On
October 23, 2008, in response to the Novopharm NOA, AstraZeneca Canada
commenced an application under the Regulations seeking an order prohibiting the
Minister of Health from issuing an NOC to Novopharm until the expiry of the
'945 patent (Court File No. T-1636-08).
31.
Novopharm
requested a December 2009 or earliest subsequent hearing date in order to
advance the issuance of an NOC for and its sale of NOVO-ROSUVASTATIN tablets. A
hearing on the merits is anticipated in March 2010 and a decision is expected
shortly thereafter.
32.
Novopharm
will market and sell its NOVO‑ROSUVASTATIN tablets in Canada immediately upon the issuance
of an NOC.
33.
Novopharm
has a policy of seeking to be an early entrant in the generic market in Canada
for patented pharmaceutical products, including CRESTOR.
34.
The
aforementioned activities of Novopharm have been and will be without the
consents of any of the Plaintiffs.
35.
By
reason of the above activities, Novopharm has and will continue to infringe
claims 1-3, 5-6, 9, and 15-16 of the '945 patent.
[4]
Novopharm
requested particulars of these pleadings. AstraZeneca refused. No defence has
been filed. Instead Novopharm has moved to strike.
[5]
The
Defendant Novopharm moves to strike the Statement of Claim on various grounds:
1.
It
is an abuse of process;
2.
It
is a fishing expedition;
3.
It
fails to plead material facts;
4.
It
fails to satisfy the criteria for pleading a quia timet action:
·
deliberate
expressed intention to engage in activity the result of which would raise a
strong possibility of infringement;
·
the
activity must be imminent;
·
the
resulting damage must be very substantial; and
·
the
facts pleaded must be cogent, precise and material.
[6]
The
Plaintiffs AstraZeneca argue that the pleadings are sufficient. Further, they
argue, there is a new climate emerging wherein a more pragmatic and efficient
approach is to be taken by the Court and litigants in situations such as these
where there are parallel NOC proceedings underway at the same time as an action
for infringement of the same patent is taken.
[7]
I
fully agree with counsel for AstraZeneca that the NOC procedure requires
revision. In many ways such proceedings have become too complex, they lack the
features of an ordinary action such as discovery, live witnesses and the result
fails to become binding as res judicata. Several efforts have been made
to suggest changes for improvement. These efforts should be ongoing with the
encouragement of the Court. That encouragement, however, cannot extend to reversing
established jurisprudence or making rulings that are, in effect, legislative
changes.
[8]
The
allegations made in the Statement of Claim as to infringement essentially are:
·
Novopharm
has made or had made for it or imported a medicine “for commercial use”;
·
Novopharm,
has filed an Abbreviated New Drug Submission (ANDS) with Health Canada and seeks a
Notice of Compliance (NOC) which will permit it to sell the medicine in Canada.
·
AstraZeneca
has commenced proceedings in this Court to prohibit Novopharm from receiving an
NOC, which will be heard in March 2010; and
·
If
Novopharm succeeds in the NOC proceedings it will market the medicine in Canada thus
infringing the patent.
[9]
AstraZeneca
argues that this action should be heard within two years and invites Novopharm
to consent to an interlocutory injunction subject to the usual undertakings
from AstraZeneca. Novopharm replies that it should not be twice vexed in
dealing with both this action and the NOC proceeding, nor should it be bullied
into accepting an injunction even subject to undertaking.
STRIKING OUT PLEADINGS
A. Failing to Plead a Cause of
Action
[10]
Rule
221(1)(a) of this Court permits a Statement of Claim to be struck out where it
fails to disclose a reasonable cause of action. In this regard, no evidence
outside the pleading may be considered and, usually, that which is pleaded is
to be accepted as true and provable in evidence at the appropriate time.
However, pleadings that are based on assumptions and speculation and those that
are incapable of proof cannot be taken as true.
[11]
In this
regard, the Supreme Court of Canada, Wilson J. for the Court, wrote at
paragraphs 30 and 31 of Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959:
While this Court has had a
somewhat limited opportunity to consider how the rules regarding the striking
out of a statement of claim are to be applied, it has nonetheless consistently
upheld the "plain and obvious" test. Justice Estey, speaking for the
Court in Attorney General of Canada v. Inuit Tapirisat of Canada, [1980] 2 S.C.R.
735, stated at p. 740:
As I have said, all the facts pleaded in the
statement of claim must be deemed to have been proven. On a motion such as this
a court should, of course, dismiss the action or strike out any claim made by
the plaintiff only in plain and obvious cases and where the court is satisfied
that "the case is beyond doubt": Ross v. Scottish Union and National
Insurance Co.
I had occasion to affirm this
proposition in Operation Dismantle Inc. v. The Queen, [1985] 1 S.C.R. 441. At
pages 486-87 I provided the following summary of the law in this area (with
which the rest of the Court concurred):
The law then would appear to be clear. The facts
pleaded are to be taken as proved. When so taken, the question is do they
disclose a reasonable cause of action, i.e. a cause of action "with some
chance of success" (Drummond-Jackson v. British Medical Association,
[1970] 1 All E.R. 1094) or, as Le Dain J. put it in Dowson v. Government of
Canada (1981), 37 N.R. 127 (F.C.A.), at p. 138, is it "plain and obvious
that the action cannot succeed?"
And at p. 477 I observed:
It would seem then that as a general principle
the Courts will be hesitant to strike out a statement of claim as disclosing no
reasonable cause of action. The fact that reaching a conclusion on this
preliminary issue requires lengthy argument will not be determinative of the
matter nor will the novelty of the cause of action militate against the
plaintiffs. [Emphasis added.]
[12]
However,
in Operation Dismantle v. The Queen, [1985] 1 S.C.R. 441, Dickson J. for
the majority, wrote at page 455 of the reported decision:
(c) The Rule that Facts in a
Statement of Claim Must be Taken as Proven
We
are not, in my opinion, required by the principle enunciated in Inuit
Tapirisat, supra, to take as true the appellants' allegations concerning the
possible consequences of the testing of the cruise missile. The rule that the
material facts in a statement of claim must be taken as true for the purpose of
determining whether it discloses a reasonable cause of action does not require
that allegations based on assumptions and speculations be taken as true. The
very nature of such an allegation is that it cannot be proven to be true by the
adduction of evidence. It would, therefore, be improper to accept that such an
allegation is true. No violence is done to the rule where allegations,
incapable of proof, are not taken as proven.
[13]
There
is no doubt that a competent solicitor can draft a Statement of Claim that has
the appearance of setting out a cause of action. For instance, in a patent
infringement action, there is no great difficulty in crafting a pleading such
as the one at issue that says, in effect, the Plaintiffs own and have rights in
respect of a patent directed to a medicine, the Defendants possess such a
medicine that they want to make use of and sell commercially if and when the
NOC hurdles have been overcome.
[14]
The
flaw in such a pleading is first that it assumes that the NOC hurdles will be
overcome, a surprising assumption coming from parties who, in the NOC
proceedings, are attempting to prevent that very thing. The second is that the
Defendant, if it overcomes the NOC hurdles, will immediately enter the Canadian
marketplace with an infringing product. This is an assumption as to the state
of mind and intentions of the Defendant.
[15]
The
Plaintiffs provide, in effect, two answers to such criticisms of their
pleadings. First, they say that any question as to what the Defendant has done
or intends to do can be explored on discovery whereupon a satisfactory case can
thereafter be made out. Second, they say that the pleading is a quia timet
pleading and a Plaintiff is entitled to anticipate what a Defendant will do and
commence an action accordingly. Both these arguments can be addressed by
considering whether the action, as pleaded, is an abuse of process.
B. Abuse of Process – Fishing
Expedition
[16]
Rule
221(1)(f) of this Court permits a Statement of Claim or other pleading to be struck
out if it is an abuse of process.
[17]
There
are many decisions of this Court that state that an action cannot be brought on
speculation in the hope that sufficient facts may be gleaned on discovery that
will support the allegations made in the pleadings. Often this is referred to
as a fishing expedition. I cite only one of them, which is exemplary of the
others. Rothstein J (as he then was a Judge of this Court) wrote in Merck
& Co. Inc. v. Apotex Inc. (1997), 72 C.P.R. (3d) 515 at page 516:
According to the submissions of counsel for the Plaintiffs,
paragraphs 18, 19 and 20 of the Plaintiffs' pleading refer to the threat by
Apotex of infringement approximately one year from now. The basis is that the
Plaintiffs have written to Apotex asking if it will infringe in the future.
Apotex has not responded. This is the basis of the threat which the Plaintiffs
plead. The Plaintiffs have provided some further particulars by way of a letter
but the letter adds nothing to what is already known.
I think these paragraphs must be struck out for two reasons.
First, the pleadings are only intended to enable the plaintiffs to get to
discovery to bootstrap their claim; while discovery is for the purpose of
obtaining admissions from the other party and ascertaining the position of the
other party, it is not a fishing expedition simpliciter, which is what it would
be used for here. Second, the threat, even if it could be substantiated, is
approximately one year away according to Plaintiffs' counsel. At best, these
paragraphs are premature. Paragraphs 18, 19 and 20 are struck out.
[18]
The
pleadings in the Statement of Claim in the present action that the Defendant
has acquired the medicine “for commercial use” and intends to sell it lacks any
material facts to support the plea. Bald allegations such as these must be
supported by material facts. It is not an answer to say that, given discovery,
these facts can be ascertained. That is an abuse.
QUIA TIMIT
[19]
An
action taken on the basis of anticipation has been called a quia timit
(because one fears) action. A thorough review of the jurisprudence in respect
of such an action was undertaken by Gibson J. of this Court in Connaught
Laboratories Ltd. v. SmithKline Beecham Pharma Ltd. (1998), 86 C.P.R. (3d)
36. Counsel for the parties in the present matter do not disagree with the
summary of law which he presented at paragraph 20 of his Reasons:
From the foregoing authorities, I derive the following criteria
for allegations that must be evident on the face of a statement of claim
initiating a quia timet proceedings alleging patent infringement: the statement
of claim must allege a deliberate expressed intention to engage in activity the
result of which would raise a strong possibility of infringement; the activity
to be engaged in must be alleged to be imminent and the resulting damage to the
plaintiff must be alleged to be very substantial if not irreparable; and,
finally, the facts pleaded must be cogent, precise and material. It is not
sufficient that they be indefinite or speak only of intention or amount to mere
speculation.
[20]
It is
important to note the factual circumstances in Connaught. The Defendant had received, about two
years previously, a Notice of Compliance to sell a drug in Canada and that
related companies had been selling outside Canada for some period of time. Nonetheless,
Gibson J. held that it was insufficient to speak only of intention or to plead
something that amounted to mere speculation.
[21]
In Pfizer
Research and Development Co. N.V./S.A. v. Lily ICOS LLC, (2003) 27 C.P.R.
(4th) 86, Heneghan J of this Court was presented with a situation where a drug
company was seeking an NOC to sell a drug in Canada that was allegedly the
subject of a patent owned by the Plaintiff. It was alleged by the Plaintiff that
the company would act immediately upon receipt of the necessary regulatory
approval to import, make, distribute, promote and sell an allegedly infringing
drug. The Defendant drug company moved to strike the action on the basis that
it was speculative and premature. Heneghan J. agreed. She struck the action and
wrote at paragraphs 24 and 25 of her Reasons:
In my opinion, the Plaintiffs have failed to plead sufficient
facts in their Amended Statement of Claim to satisfy the necessary criteria for
launching a quia timet action. The Defendants have brought an action relative
to the validity of the Patent, court file number T-341-02. In that Statement of
Claim, their intentions are expressly set out, as seeking regulatory approval
for tadalafil in order to offer it for sale in Canada as an oral therapeutic agent
for the treatment of male erectile dysfunction. However, the Plaintiffs have
not satisfied me that action by the Defendants upon this deliberate, expressed
intention is imminent.
I make no finding as to whether this deliberate, expressed
intention of the Defendants raises a strong possibility of infringement. The
Plaintiffs have not demonstrated the temporal aspect of the criteria for
commencing a quia timet action. Neither party has control over when, or if, the
government will issue regulatory approval for its product. In my opinion, the
Plaintiffs have not pleaded facts to support its allegation that the
Defendants' allegedly infringing activities are imminent. This motion for an
order striking out the Amended Statement of Claim in its entirety is granted as
the Plaintiffs have failed to properly plead a quia timet action; it is plain
and obvious that the pleading discloses no reasonable cause of action.
[22]
More
recently, Prothonotary Aalto of this Court in GlaxoSmithKline Biologicals
S.A. v. Novartis Vaccines and Diagnostics, Inc., 2007 FC 833 was faced with
an action brought by GlaxoSmithKline (GSK) to impeach a Novartis patent. GSK
alleged in the Statement of Claim that it wished to sell in Canada a vaccine
containing the same elements as described in the patent. Novartis defended the
action and counterclaimed on the basis that GSK intended to sell its vaccine
and will infringe. That defence and counterclaim was struck out as being
speculative. Prothonotary Aalto wrote at paragraphs 14 to 16 of his Reasons:
As noted by Justice Reed in Faulding (Canada) Inc.
v. Pharmacia
S.p.A. (1998), 82 C.P.R. (3d) 435 at p. 439:
Claims for infringement that are
premised on indefinite acts in the future are in the realm of speculation. As
such they are premature and should be struck out. [citations omitted] Similarly,
pleas founded on the "intention of a party to do certain acts are improper
and will be struck [citations omitted]
Novartis
argues that the pleadings are sufficient to support a quia timet case of patent infringement and that the pleading complies
with the test for a quia timet
proceeding for patent infringement. They argue that there is no basis for GSK
bringing this action now to declare the 507 Patent invalid as it expires in
less than three years. They argue that the only possible conclusion is that GSK
plans to sell the GSK Adjuvant imminently and well before the 507 Patent
expires. This is an entirely speculative argument. There are no material facts
pleaded of how imminent such activity of GSK is nor any other material fact
other than mere possibility of infringing acts. None of the authorities cited
by the Novartis assist their cause. Material facts may come to the attention of
Novartis which may support a quia timet action for patent infringement. There are none presently
pleaded.
Further,
the Counterclaim and paragraph 7 should not be used as a weapon to permit
Novartis to get to discovery and "bootstrap their claim" and use the
discovery process improperly as a fishing expedition (see Justice Rothstein's
comments in Merck & Co. v. Apotex Inc. (1997), 72 C.P.R. (3d) 515 at p. 516).
[23]
There
is no material difference between the pleadings in the three cases referred to
above and the pleadings in the present Statement of Claim. There has been a bit
of “wordsmithing” done to the present Statement of Claim, however, put into a
realistic perspective, all that is said is that if Novopharm prevails in
the NOC proceeding after trial or appeal it will most probably get an
NOC and then most likely commence to sell the patented drug in Canada. This
pleading is not materially different from those that were struck out before by
this Court.
[24]
Therefore,
the Statement of Claim will be struck out and the action dismissed but without
prejudice to the Plaintiffs to file a new action should new, non-speculative,
circumstances arise.
[25]
I
invited counsel to make submissions as to costs and their quantum. Both agreed
that the prevailing party should get costs. Novopharm’s counsel suggested
$10,000.00. AstraZeneca’s counsel suggested $4,000.00 to $5,000.00. Costs will
be awarded to the prevailing party, Novopharm, fixed at the sum of $5,000.00,
inclusive of all fees, disbursements and GST.
ORDER
For the Reasons given:
THIS COURT ORDERS that:
1.
The
Statement of Claim filed September 18,2009 herein is struck out;
2.
This
action is dismissed without prejudice to the Plaintiffs to file a new action
when new, non-speculative circumstances arise; and
3.
The
Defendant is entitled to recover costs from the Plaintiffs fixed in the sum of
$5,000.00, inclusive of all fees, disbursements and GST.
“Roger
T. Hughes”
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