Date: 20070426
Docket: T-762-06
Citation: 2007 FC 352
BETWEEN:
BAYER HEALTHCARE AG and
BAYER INC.
Plaintiffs
and
SANDOZ
CANADA INCORPORATED
Defendant
PUBLIC REASONS FOR JUDGMENT
(Confidential Reasons for
Judgment issued April 2, 2007)
MACTAVISH J.:
[1]
Bayer
HealthCare AG and Bayer Inc. (referred to collectively in this decision as
“Bayer”) sought an interim or interlocutory injunction restraining Sandoz
Canada Incorporated from manufacturing, constructing, importing, exporting,
selling, offering for sale or using Sandoz’ ciprofloxacin intravenous
formulation, or any other intravenous formulation of ciprofloxacin, on the
basis that these activities would allegedly infringe Canadian Patent No.
1,282,006 (the “’006 patent”).
[2]
Bayer
asked that Sandoz be enjoined from dealing in ciprofloxacin intravenous
formulations until the earlier of the hearing and disposition of an application
for judicial review in a related proceeding, the expiry of the ’006 patent, or
the trial of this matter.
[3]
Sandoz
had previously undertaken not to launch its intravenous ciprofloxacin product
until March 6, 2007, that is, the date on which Bayer’s motion for an
injunction was heard. Sandoz subsequently agreed to extend that undertaking to
Friday, March 9, 2007.
[4]
As
Sandoz had received a Notice of Compliance for its ciprofloxacin product, as of
March 9, it would have been in a position to enter the marketplace with its
intravenous ciprofloxacin product, unless enjoined by the Court. Given the
urgency of the matter, I dealt with this matter by way of an order on March 9,
2007, whereby I dismissed Bayer’s motion, with reasons to follow.
[5]
These
are my reasons for that decision.
Background
[6]
Bayer
originally developed a drug containing ciprofloxacin for use in injection or
infusion solutions. Ciprofloxacin is a fluoroquinolone antibiotic. This
invention was the subject of Canadian Patent No. 1,228,547 (the “’547
patent”). This patent expired on February 17, 2004.
[7]
There
were problems with this formulation. Some patients developed phlebitis at
their injection sites, and others developed kidney crystalluria, as a result of
the solution precipitating out in the kidneys.
[8]
Bayer
then developed a new drug that avoided these side effects by adding lactic acid
to the formulation in specified ratios. This invention is the subject of the
’006 patent.
[9]
The
’006 patent is owned by Bayer HealthCare AG. It covers infusion solutions of
ciprofloxacin. Ciprofloxacin products are sold by Bayer Inc. in Canada under the
brand name Cipro® I.V., under licence from Bayer HealthCare AG.
[10]
Amongst
other things, the ’006 patent claims:
1. An infusion solution of
1-cyclopropyl-6-fluoro-1,4-dihydro-4-oxo-7-(1-piperazinyl)-quinoline-3-carboxylic
acid (=ciprofloxacin) which contains 0.015 to 0.5g of the active compound per
100ml of aqueous solution and an amount of a physiologically tolerated acid
which suffices to dissolve the active compound and to stabilize the solution,
and, where appropriate, one or more formulating auxiliaries.
[11]
The
’006 patent also claims other variations of an infusion solution, as well as
uses of the infusion solutions. In this regard, Claim 26 claims a concentrate
which can be converted into an infusion solution of claims 1, 2 and 3. Claims
36 and 37 relate to the use of an infusion solution for therapeutic treatment
in humans and in dosage units having removable contents of 40-600 mL.
[12]
The
’006 patent will expire on March 26, 2008.
[13]
In
1992, Bayer began selling its ciprofloxacin intravenous formulation in a
concentrated form, which was stored in vials. In 1999, Bayer began phasing out
its ciprofloxacin vials, and began selling reconstituted ciprofloxacin in ready
to administer “mini-bags”.
[14]
Given
that Bayer’s ciprofloxacin products are intended for parenteral administration,
the market for these products is essentially limited to hospitals.
[15]
The
’006 patent has been the subject of previous litigation. In September of 2004,
a Notice of Compliance was issued to Sabex, a predecessor of Sandoz, for a
10mg/mL ciprofloxacin solution. Bayer then commenced an action for patent
infringement against Sabex, as well as an application for judicial review requesting
that the Minister of Health quash Sabex’s NOC. Sabex’s Notice of Compliance
was then rescinded by the Minister.
[16]
In
another case involving the same drug and patent, the Minister of Health
required Novopharm Limited to address the ’006 patent in relation to its
submission for a 2 mg/mL ciprofloxacin intravenous formulation. This
ultimately cumulated in an application for prohibition being brought in this
Court. In Bayer AG v. Novopharm Limited (2006), 48 C.P.R. (4th) 46,
2006 FC 379, Justice Phelan granted a prohibition order against the issuance of
an NOC to Novopharm.
[17]
Subsequent
to Justice Phelan’s decision being handed down, a prohibition order was granted
by this Court, on the consent of the parties, against Pharmaceutical Partners
of Canada with respect to its 10 mg/mL ciprofloxacin intravenous formulation
until the expiry of the ’006 patent.
[18]
On
April 18, 2006, Sandoz received a Notice of Compliance for its ciprofloxacin
formulation. Bayer contends that this is the identical formulation to Sabex’s
ciprofloxacin intravenous formulation.
[19]
On
May 4, 2006, Bayer commenced this action in the Federal Court alleging, amongst
other things, that Sandoz had infringed the ’006 patent.
[20]
Bayer
also commenced an application for judicial review in which it seeks to quash
the decision of the Minister to issue a Notice of Compliance to Sandoz for its
ciprofloxacin formulation. A hearing in that matter is scheduled for April 12,
2007.
[21]
On
May 26, 2006, Bayer brought its motion for an injunction. It appears that the
parties have been in discussions, and that Sandoz had undertaken to stay off of
the market for the past year. Although Bayer’s motion was not brought on for
hearing until March of 2007, there is no issue between the parties as to any
delay in bringing this matter on for hearing.
[22]
As
Sandoz had not yet actually entered the market with its ciprofloxacin product
at the time that the motion was heard, the motion was brought quia timet:
that is, it is based on the harm that Bayer anticipated that it would suffer if
Sandoz was not enjoined from proceeding by the Court.
Issue
[23]
In
determining whether Bayer is entitled to an interlocutory injunction, the test
is that established by the Supreme Court of Canada in RJR-MacDonald Inc. v.
Canada (Attorney General) [1994] 1 S.C.R. 311. That is, Bayer must
establish that:
1. There is a serious
issue to be tried;
2. It will suffer
irreparable harm if the injunction is not granted; and
3. The balance of
convenience favours the granting of an injunction.
[24]
Given
that the test is conjunctive, Bayer had to satisfy all three elements of the
test before it would be entitled to relief.
Preliminary Issue
[25]
Sandoz
objects to Bayer filing and relying upon two affidavits filed by Bayer in
reply, namely those of Lida Steduto and Graham Downie. Being satisfied that
the affidavits contain proper reply evidence, and in the absence of any
demonstrated prejudice to Sandoz, I am prepared to consider the contents of
those affidavits in my deliberations.
Serious Issue
[26]
In
RJR-MacDonald, the Supreme Court of Canada observed that the threshold
for establishing the existence of a serious issue:
[I]s a low one ... Once
satisfied that the application is neither vexatious nor frivolous, the motions
judge should proceed to consider the second and third tests, even if of the
opinion that the plaintiff is unlikely to succeed at trial. A prolonged
examination of the merits is generally neither necessary nor desirable. (at pp.
337-338)
[27]
In
this case, Sandoz concedes that there is a serious issue to be tried, and that
Bayer has satisfied the first element of the RJR-MacDonald test.
However, Sandoz says that the granting of an injunction would have the effect
of finally disposing of the action, and that, as a result, it is necessary to
take a “hard look” at the merits of Bayer’s claim, in weighing where the
balance of convenience lies. However, given my conclusion on the issue of
irreparable harm, it is unnecessary to consider the balance of convenience.
Irreparable Harm
[28]
The
vast majority of the hearing was taken up with a consideration of the issue of
irreparable harm, and indeed, the result turned on this question. Before
addressing the parties’ submissions in this regard, it is helpful to start by
considering what the Courts have said on the question of irreparable harm.
[29]
In
Aventis Pharma S.A. v. Novopharm Ltd. (2005), C.P.R. (4th) 210, 2005 FC
815; aff'd 2005 FCA 390, 44 C.P.R. (4th) 326, Justice Russell provided a useful
overview of the law relating to irreparable harm, observing that:
[59] As Mr. Justice Kelen
pointed out in Pfizer Ireland Pharmaceuticals, at para. 25, it is well
established in the jurisprudence that an interlocutory or interim injunction
should only be granted in cases where there is clear evidence of irreparable
harm. The Plaintiffs must adduce "clear and not speculative" evidence
that irreparable harm will follow the entry of Novopharm's Novo-enoxaparin into
the market.
[60] It is also well
understood that irreparable harm refers to the nature of the harm suffered
rather than its magnitude. As the Supreme Court of Canada pointed out in RJR-MacDonald,
it is "harm which either cannot be quantified in monetary terms or which
cannot be cured, usually because one party cannot collect damages from the
other." (p. 341)
[61] Furthermore,
difficulty in precisely calculating damages does not constitute irreparable
harm, provided there is some reasonably accurate way of measuring those
damages. See Merck & Co. v. Nu-Pharm Inc (2000), 4 C.P.R. (4th) 464
at 476 para. 32 (F.C.T.D.).
Irreparable Harm and
Quia Timet Injunctions
[30]
While
acknowledging that, in the ordinary case, a party seeking an injunction will be
required to adduce clear and convincing evidence that it will suffer
irreparable harm if the injunction is not granted, Bayer submits that the
evidentiary burden on a moving party is lower where the injunction is sought on
a quia timet basis.
[31]
In
this regard, Bayer says that it need only demonstrate that reasonable
inferences can be drawn from the evidence that irreparable harm to Bayer will
result if Sandoz is not prevented from entering the marketplace with its
ciprofloxacin intravenous formulation.
[32]
In
support of this proposition, Bayer relies on the following extract from the
decision of Justice Rothstein, then of this Court, in Ciba-Geigy Canada Ltd.
v. Novopharm Ltd. (1994) 86 F.T.R. 161, 56 C.P.R. (3d) 289, where he
observed that:
[118] I acknowledge that I
shall draw inferences from the evidence and therefore, the observation of
Heald J.A. in Centre Ice, [cited below], that proof of irreparable harm
cannot be inferred, must be addressed. I interpret Heald J.A. in Centre Ice,
(supra), to be saying that there must be an evidentiary basis … [of]
irreparable harm not compensable in damages…
[119] I do not understand
him to be saying that a motions judge may not make inferences that reasonably
flow from the evidence. Indeed, the drawing of inferences is virtually always
necessary [in civil actions] … In the context in which he says that inferences
are not acceptable, I think Heald J.A. was saying that evidence on one element
… could not by inference, prove what was required in respect of another related
but distinct element … Proof of each element requires its own evidentiary
basis. But once some evidence of an element is present, inferences that
logically and reasonably flow from that evidence may be drawn.
[120] It will be remembered
that these applications are brought quia timet. There is no actual
evidence of harm because the defendants are not yet in the market-place. The
evidence relating to loss resulting in irreparable harm must, of necessity, be
inferred. I do not think that Heald J.A. was precluding the drawing of such
inferences or other inferences that logically follow from the evidence.
[Bayer’s emphasis]
[33]
In
considering this statement, however, it is helpful to also have regard to the
paragraph of the decision that preceded the extract relied upon by Bayer. That
is, Justice Rothstein commenced his comments by observing that:
[117] In order to
establish irreparable harm the plaintiff's evidence must be clear and not
speculative (see Imperial Chemical Industries PLC v. Apotex Inc.,
(supra), at page 351). Further, proof of irreparable harm cannot be inferred
(see Centre Ice Ltd. v. National Hockey League (1994), 53 C.P.R. (3d) 34
(F.C.A.) at page 54).
[34]
As
I read the jurisprudence relied upon by Bayer, including the decisions in Boston
Pizza International Inc. v. Boston Market Corp. (2003), 231 F.T.R. 161, 26
C.P.R. (4th) 78, 2003 FCT 382, and 826129 Ontario Inc. (c.o.b. CD Plus) v.
Sony Kabushiki Kaisha (c.o.b. Sony Corp.) (1995), 105 F.T.R. 99, 65 C.P.R.
(3d) 171, an applicant seeking a quia timet injunction may establish
that it will suffer irreparable harm through inferences that can reasonably be
drawn from the evidence before the Court, but that at the end of the day, the
applicant’s evidence of irreparable harm must nevertheless be clear and not
speculative.
[35]
That
is, paraphrasing another decision of Justice Rothstein, this time in Sports
Authority, Inc. v. Vineberg (1995), 95 F.T.R. 96, 61 C.P.R. (3d) 155 at ¶ 4,
mere assertions of harm through loss of personnel or sales are insufficient to
prove irreparable harm. In a motion for a quia timet injunction, there
is no evidence of actual harm because the allegedly infringing party is not yet
in the marketplace. Therefore, logical inferences must be drawn from the evidence.
However, to demonstrate irreparable harm, an applicant must lead clear evidence
showing how such harm will occur and why it will be irreparable. In the absence
of such evidence, there is nothing on which an inference of irreparable harm
can reasonably and logically be based.
[36]
With
this understanding of the applicable standard of proof required in matters such
as this, I will now consider Bayer’s submissions on this issue of irreparable
harm.
Bayer’s Assertions of
Irreparable Harm
[37]
Bayer
says that unless Sandoz is enjoined from dealing in its ciprofloxacin
intravenous formulations, Bayer will suffer significant, irreparable harm in
three different but inter-related ways.
[38]
Firstly,
by “springboarding” into the market now, a year before the expiry of the ’006
patent, Sandoz will deprive Bayer of an unrecoverable market share, and
non-compensable revenue for the period between the expiry of the ’006 patent in
March of 2008, and the trial of this matter.
[39]
That
is, the advantage gained by Sandoz as a result of its premature entry into the
market will continue to result in losses to Bayer in the months immediately
following the expiry of the ’006 patent, which damages, Bayer says, are not
recoverable in law.
[40]
Secondly,
Bayer risks losing [*], which would ultimately result in its loss of [*],
causing irreparable harm to the company.
[41]
In
this regard, Bayer says that the revenues which it would otherwise receive from
the sale of its Cipro® I.V. mini-bags between now and March of 2008
(when generic competition should properly begin) would enable it to retain its
[*].
[42]
Bayer’s
[*] two intravenous antibiotic drugs – namely Cipro® I.V. and Avelox®
I.V.
[43]
Avelox®
I.V. is another anti-infective which was introduced by Bayer within the last
three years. While there is significant overlap between the market for Cipro®
I.V. and that for Avelox® I.V., ciprofloxacin is evidently more
effective in the treatment of infections caused by gram negative bacteria,
whereas Avelox® I.V. is more effective in the treatment of gram
positive bacteria.
[44]
Avelox®
I.V. currently has approximately [*] in sales, in contrast with the [*] in
sales of ciprofloxacin currently enjoyed by Bayer. Both products are sold to
hospitals by Bayer [*].
[45]
Bayer’s
plan is to [*].
[46]
Bayer’s
overall plan is thus to [*] to the point where new sales will replace the
significant loss of revenues that will be suffered by the company after the
expiry of the ’006 patent. The continued [*] is allegedly critical to Bayer’s
plans.
[47]
According
to Bayer, being able to [*] during the upcoming transition year depends
entirely on it retaining market exclusivity for Cipro® I.V.
[48]
Bayer
says that it is at a particularly vulnerable point because [*]. Moreover,
Bayer will immediately begin to lose significant market share and revenue for
its Cipro® I.V. once Sandoz launches its intravenous ciprofloxacin
product. This will inevitably result in the loss of its [*].
[49]
The
loss of its [*] will cause Bayer’s sales of [*] to suffer, and will further
result in Bayer being unable to [*]. The failure of these initiatives will
result in incalculable harm to Bayer’s [*], and damage to its reputation in
that area of its business.
[50]
Finally,
Bayer says that denying the injunction would result in irreparable loss of the
time-limited monopoly right granted to Bayer in exchange for Bayer having
disclosed its invention.
Analysis
[51]
I
will deal first with Bayer’s “Springboarding” argument. “Springboarding”
refers to a competitor establishing a generic brand in the market in advance of
the expiry of the innovator’s patent. Early entry into the marketplace allows
the competitor to ‘ramp up’ and achieve a share of market penetration prior to
the expiration of the patent in issue.
[52]
In
this regard, it will be recalled that Bayer asserts that it will suffer
irreparable harm in this matter because the advantage gained by Sandoz as a
result of its premature entry into the market will continue to result in losses
to Bayer in the months immediately following the expiry of the ’006 patent.
According to Bayer, these damages are not recoverable in law, and thus amount
to irreparable harm.
[53]
In
support of this proposition, Bayer relies on two decisions of the Federal Court
of Appeal, namely Janssen-Ortho Inc. v. Novopharm Ltd., 2006 FCA 406 and
Apotex Inc. v. Merck & Co. (2006), 53 C.P.R. (4th) 79, 2006 FCA 198.
[54]
A
review of these decisions reveals that they do not stand for the proposition
advanced by Bayer. Both decisions relate to motions brought by unsuccessful
defendants in patent infringement actions who were seeking stays of adverse
trial judgments pending the defendants’ appeals of those decisions. The issue
before the Federal Court of Appeal in those cases was whether the damages that defendants
might suffer as a result of a trial judgment would amount to irreparable harm,
in the event that the trial judgments were subsequently reversed on appeal.
[55]
As
Justice Evans noted in the Merck decision, this was a concern, as the
defendants would not have a right of action against the plaintiffs for any damages
that the defendant might suffer as a consequence of the trial judgment, and
thus would not have been able to recover damages for any losses that they may
have sustained. In both cases, this concern was addressed by an undertaking in
damages given by the plaintiffs pending the appeal.
[56]
This
is not the situation here. Bayer has a right of action against Sandoz for the
alleged infringement of the ’006 patent, and it is asserting that right through
this action. Damages in patent cases are intended to put a successful
plaintiff in the position that it would have been in, but for the
infringement. It is, in my view, entirely speculative for Bayer to say at this
point that it will not be able to recover damages for any losses that it may
suffer in the post-expiry period, as a matter of law, and indeed there is
authority for the proposition that such damages are indeed recoverable: see Gerber
Garment Technology Inc. v. Lectra Systems Ltd. et al., [1995] R.P.C. 383,
aff’d [1997] R.P.C. 443.
[57]
Indeed,
in refusing to grant an interlocutory injunction in Bristol-Myers Squibb Co.
et al. v. Apotex Inc., (2001) 15 C.P.R. (4th) 190, 2001 FCT 1086 at ¶ 22,
Justice MacKay specifically rejected the very argument advanced by Bayer in
this case, noting that “damages will be calculated in reasonable fashion,
providing a normal remedy for infringement, if the trial finds that to have
occurred, whether those are caused before or after expiry of the plaintiffs’
patent.” [My emphasis.]
[58]
I
am also not persuaded that Bayer’s damages in the post-expiry period are not
quantifiable. While these losses may be difficult to quantify, it is
well-established that the mere fact that it may be difficult to quantify a
party’s losses does not mean that they amount to irreparable harm, as long as
there is some reasonably accurate way of calculating those damages: see Merck
& Co. v. Nu-Pharm Inc. (2000), 4 C.P.R. (4th) 464, at ¶ 32.
[59]
Moreover,
Bayer’s submission is not supported by the evidence. Bayer’s evidence on the
question of damages was adduced, in part, through Tom Brogan, an economist with
expertise in the pharmaceutical industry. In cross-examination, Mr. Brogan
acknowledged that while it may be difficult to project Bayer’s losses on a
forward-looking basis, these losses could be quantified on an after-the-fact
basis.
[60]
That
Bayer’s losses in the post-expiry period can indeed be quantified was also
confirmed by the evidence of Suzanne Loomer, Sandoz’ expert. Ms. Loomer is a
Chartered Accountant and Chartered Business Valuator, who confirms that any
losses that Bayer may sustain as a result of Sandoz entering the marketplace
with its ciprofloxacin product are quantifiable, for both the pre- and
post-expiry periods.
[61]
I
am also not persuaded that any permanent loss of market share on the part of
Bayer that may result from Sandoz’ early entry into the market will amount to
irreparable harm, as is alleged by Bayer. In support of this contention, Bayer
relies on cases such as this Court’s decision in Proctor & Gamble Inc.
v. Colgate Palmolive Canada Inc. (1995), 61 C.P.R. (3d) 160, at page 177.
[62]
The
Proctor & Gamble case related to fabric softener sheets. In that
case, the Court determined that in the event that the defendant was permitted
to enter the market in advance of the expiry of the plaintiff’s patent, the
defendant would be a much stronger competitor of the plaintiff in the
post-patent expiry period, resulting in a permanent loss of market share. In
the Court’s view, based upon the evidence before it in that case, this amounted
to irreparable harm.
[63]
In
my view, the fact that the Proctor & Gamble case was not a
pharmaceutical case is significant, given the unique dynamic of the
pharmaceutical industry. That is, it is predictable that as soon as a patent
expires, the innovator of the drug in question will lose a substantial portion
of its market share to generic competitors, without any realistic expectation
that the innovator company will be able to recover that market share in the
future. As such, I am of the view that cases such as Proctor & Gamble
are of limited assistance.
[64]
The
real issue will be Bayer’s loss of market share between now and the expiry of
the ’006 patent in March of 2008, and in the months immediately following the
expiry of the patent. As noted above, I am satisfied that these damages are
both quantifiable and recoverable, and thus do not amount to irreparable harm.
[65]
The
next issue, then, is whether Bayer has established that it will face
irreparable harm by losing [*] as a result of competition from Sandoz, leading
in turn to the loss of Bayer’s [*].
[66]
Relying
upon the evidence of Mr. Brogan, Bayer asserts that as soon as Sandoz enters
the market, sales of Bayer’s ciprofloxacin mini-bags will immediately begin to
drop sharply. Noting that the hospital market for pharmaceuticals is extremely
price-sensitive, Bayer points to the fact that the price for a single dose of
ciprofloxacin prepared from one of Sandoz’ ciprofloxacin vials is expected to
be approximately [*] less than the cost of a dose from one of Bayer’s ciprofloxacin
mini-bags as the cause of its projected loss of sales.
[67]
Moreover,
Sandoz is clearly ready to enter the market. In this regard, the company has
admitted having already manufactured [*] vials of its intravenous ciprofloxacin
formulation, which is evidently an amount sufficient to satisfy the entire
Canadian market for intravenous ciprofloxacin products for a period of more
than [*].
[68]
Bayer
currently enjoys approximately [*] in annual sales of its ciprofloxacin
mini-bags. Bayer estimates that it will lose [*] of these sales within [*], if
Sandoz is allowed to enter the market.
[69]
Without
these sales, Bayer says that [*]. Without [*], Bayer will be unable to [*], or
to grow its [*] business to the point that it can compensate for the loss of
its Cipro® I.V. business. The cumulative effect of this will be to
prevent Bayer from making an orderly transition to a post-patent expiry
reality, with the resultant loss of its [*].
[70]
I
do not accept Bayer’s submissions in this regard, as there are a number of
problems with Bayer’s evidence on these points. Insofar as Bayer’s [*] are
concerned, it appears that notwithstanding the value that Bayer allegedly
places on [*], Bayer itself has recently [*].
[71]
Moreover,
despite Bayer’s assertion that these [*] are [*] other Bayer products if sales
of Cipro® I.V. declined, Bayer has recently [*].
[72]
It
should also be observed that the [*] discussed in the preceding paragraphs were
made for reasons that had nothing to do with Sandoz’ pending entry into the
intravenous antibiotic marketplace.
[73]
There
are also significant frailties in Bayer’s evidence with respect to the extent
to which Bayer will lose sales, if Sandoz is allowed to enter the marketplace.
[74]
As
was explained by Bayer’s witness, Jean-Yves Julien, a consultant pharmacist
with Partagec Inc., a purchasing organization buying drugs on behalf of
hospitals in the Quebec City region, the hospital pharmaceutical market
differs from the retail market in some significant respects.
[75]
In
many areas of the country, there are buying groups that purchase pharmaceutical
products on behalf of a number of member hospitals. These purchases are made
pursuant to contracts between the group and the pharmaceutical company.
[76]
Mr.
Julien acknowledged that a number of these contracts have “partner protection”
provisions that protect vendors for periods of up to 12 months. These
provisions mean that vendors do not have to renegotiate their prices when
cheaper products come on to the market during the life of the contract.
[77]
In
such cases, the buying group in question would be obliged to continue to
purchase their intravenous antibiotic products from the vendor at the original
contract price.
[78]
Thus
it is by no means clear that hospitals would be able to purchase Sandoz’
ciprofloxacin product right away, even if the hospitals wanted to do so.
Indeed, some hospitals may not be able to switch suppliers at all during the
remaining term of the ’006 patent.
[79]
Moreover,
while price is clearly a very important factor for the purchasers of intraveneous
antibiotics, there are practical reasons why hospitals may be reluctant to
switch over to Sandoz’ product, notwithstanding the significant price advantage
associated with Sandoz’ ciprofloxacin vials.
[80]
Unlike
Bayer’s Cipro® I.V. mini-bags, which are ready to use, medication
from Sandoz ciprofloxacin vials has to be diluted prior to being administered
to patients. This requires additional staff time, and creates the potential
for human error. In addition, unlike Bayer’s Cipro® I.V. mini-bags,
which can be stored at room temperature for years, mini-bags prepared in
hospitals with Sandoz’ ciprofloxacin product must be refrigerated, and must be
administered within 14 days of preparation.
[81]
Given
that generic ciprofloxacin mini-bags will be available in Canada as of March
2008, there is a real question as to the extent to which hospitals will want to
switch to Sandoz ciprofloxacin vials between now and next March, assuming that
their purchasing contracts would allow them to do so.
[82]
Moreover,
in cases where both Bayer and Sandoz’ ciprofloxacin products were on hospital
formularies, there is evidence that Bayer’s product would be favoured over that
of Sandoz. In this regard, I refer to the evidence of Linda Dresser, a
hospital pharmacist and Bayer’s own witness, who conceded that in such
circumstances, hospital pharmacists would be more likely to use the Bayer
mini-bag for the day-to-day filling of prescriptions.
[83]
As
a consequence, Bayer has not persuaded me that its lost sales will be anywhere
near the [*] order of magnitude estimated by the company. This in turn leads
me to doubt that Bayer will lose its [*], and with [*], its [*].
[84]
I
am also not persuaded that Sandoz’ entry into the intraveneous ciprofloxacin
market will result in Bayer being unable to continue to sponsor programs such
as the [*] and [*] programs that Bayer says are essential to the development of
long-term relationships with key customers. We do not have clear information
on the cost of these programs, but we do know that Bayer evidently funds the
programs out of its Cipro® I.V. sales.
[85]
Bayer
does not say that it could not keep sponsoring these types of programs, if it
really felt that it was essential that it do so. According to Graham Downie,
Bayer’s Market Manager for Anti-infective-Hospitals, the costs of this type of
promotional program has to “be contained within justifiable limits”. That may
be so from a purely business perspective, but if the programs are as essential
as Bayer says they are, surely between now and trial they could be funded out
of Bayer’s substantial annual profits.
[86]
Given
that I am not persuaded that Bayer will lose its [*], I am similarly not persuaded
that Bayer’s [*] opportunities will be jeopardized if Sandoz is allowed to
enter the market.
[87]
Finally,
with respect to Bayer’s claim that denying the injunction would result in the
irreparable loss of the time-limited monopoly right it was granted in exchange
for having disclosed its invention, I adopt my earlier comments, and find that
this loss is one that can be readily compensated for through an award of
damages.
Balance of Convenience
[88]
Having
concluded that Bayer has failed to satisfy the irreparable harm branch of the
test, it is unnecessary for me to consider where the balance of convenience
lies in this case.
Sandoz Undertaking
[89]
Sandoz
has undertaken to keep an accounting of all its sales of vials of its
ciprofloxacin intravenous product between now and trial. I am of the view that
such an undertaking is appropriate, and the order issued in this matter included
the requirement that Sandoz do so.
Costs
[90]
In
Cutter Ltd. v. Baxter Travelnol Laboratories Ltd. (1980), 47 C.P.R. (2d)
53, Chief Justice Thurlow observed that in cases such as this, costs are often
awarded “in the cause”. While this is by no means a hard and fast rule, I am
of the view that such a disposition is appropriate in this case.
Bayer’s Request for an
Early Trial Date
[91]
Although
not requested in Bayer’s Notice of Motion, at the hearing of the motion for the
injunction counsel for Bayer asked that an early trial date be fixed for this
case.
[92]
It
appears that this request was a bit of an afterthought, and that the parties
clearly had not given any real consideration as to how long the trial will
take, or how much time would realistically be required to prepare for the
trial.
[93]
This
Court will fix early trial dates in appropriate cases. Without opining on
whether such an order would be appropriate in this case, it is open to Bayer to
seek to have this matter continue as a specially managed proceeding, and to
bring a formal request for an expedited trial before the case-management judge
or Prothonotary assigned to deal with this case. Such a request would have to
be accompanied by a proposed schedule for the completion of the necessary
pre-trial steps, as well as proper estimate of the time required for the trial
itself.
That said, it should be noted that my
analysis of the issues is not premised on the assumption that there would be an
early trial in this matter.
“Anne
Mactavish”
Ottawa,
Ontario
April
26, 2007
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