Date: 20080521
Docket: T-161-07
Citation: 2008 FC
628
Ottawa, Ontario, May 21, 2008
PRESENT: The Honourable Mr. Justice O'Keefe
BETWEEN:
SANOFI-AVENTIS CANADA INC. and
SCHERING CORPORATION
Plaintiffs
And
APOTEX INC.
Defendant
AND
BETWEEN:
APOTEX INC.
Plaintiff by Counterclaim
And
SANOFI-AVENTIS CANADA INC.,
SCHERING CORPORATION,
SANOFI-AVENTIS DEUTSCHLAND GmbH and
RATIOPHARM INC.
Defendants by Counterclaim
REASONS FOR ORDER AND ORDER
O’KEEFE J.
[1]
This is a
motion by Apotex Inc. (Apotex) appealing the October 18, 2007 order of
Prothonotary Aronovitch. The Prothonotary’s order dismissed Apotex’s motion to
strike out subparagraphs 1(a), (b), (c) and the words “or, in the alternative
as the plaintiffs’ may elect, an accounting of profits” from subparagraph 1(d)
of the statement of claim as they apply to Sanofi-Aventis Canada Inc. (Sanofi
Canada).
[2]
In this
appeal, Apotex seeks an order setting aside paragraphs 1 and 2 of the
Prothonotary’s October 18, 2007 order which stated:
1. The motion is dismissed.
2. Costs of this motion fixed in
the amount of $5,000 are payable by Apotex to Sanofi Canada, in any event of the cause.
[3]
The
plaintiff Sanofi Canada is a manufacturer, vendor and
distributor of pharmaceutical products.
[4]
The
plaintiff Schering Corporation (Schering) is the owner of Canadian Letters
Patent No. 1,341,206 (the ‘206 patent) which is the subject matter of the
statement of claim.
[5]
The
defendant Apotex is a manufacturer, vendor and distributor of pharmaceutical
products.
[6]
Subparagraphs
1(a), (b), (c) and (d) of the statement of claim read as follows:
1. The Plaintiffs claim:
(a) a declaration
that, as between the parties, claims 1, 2, 3, 6 and 12 of Canadian Letters
Patent No. 1,341,206 (“206”) have been infringed by Apotex Inc. (“Apotex”);
(b) an interim,
interlocutory and permanent injunction restraining Apotex, its officers,
directors, servants, agents and employees and all those acting by, through or
with Apotex’s direction and control, from infringing the ‘206 patent;
(c) an Order directing
that Apotex forthwith, under oath, deliver up to the Plaintiffs, or destroy,
all things or material in the possession or control of Apotex, which in any way
offend against any Order which may be made pursuant to the Plaintiffs’ claims
herein;
(d) damages or, in the
alternative, as the Plaintiffs may elect, an accounting of profits in respect
of the infringing activities of Apotex;
[7]
Issue
Did the Prothonotary make a reviewable error?
Analysis and Decision
[8]
The
Federal Court of Appeal in Merck & Co. v. Apotex Inc. (2003), 30 C.P.R. (4th) 40 at
paragraphs 17 to 19 stated:
17 This
Court, in Canada v. Aqua-Gem
Investment Ltd., [1993] 2 F.C. 425
(F.C.A.), set out the standard of review to be applied to discretionary orders
of prothonotaries in the following terms:
[...]
Following in particular Lord Wright in Evans v. Bartlam, [1937]
A.C. 473 (H.L.) at page 484, and Lacourcière J.A. in Stoicevski v. Casement
(1983), 43 O.R. (2d) 436 (Div. Ct.), discretionary orders of prothonotaries
ought not to be disturbed on appeal to a judge unless:
(a)
they are clearly wrong, in the sense that the exercise of discretion by the
prothonotary was based upon a wrong principle or upon a misapprehension of the
facts, or
(b)
they raise questions vital to the final issue of the case.
Where
such discretionary orders are clearly wrong in that the prothonotary has fallen
into error of law (a concept in which I include a discretion based upon a wrong
principle or upon a misapprehension of the facts), or where they raise
questions vital to the final issue of the case, a judge ought to exercise his
own discretion de novo.
18
MacGuigan
J.A. went on, at pp. 464-465, to explain that whether a question was vital to
the final issue of the case was to be determined without regard to the actual
answer given by the prothonotary:
[...] It seems to me that a decision
which can thus be either interlocutory or final depending on how it is decided,
even if interlocutory because of the result, must nevertheless be considered vital
to the final resolution of the case. Another way of putting the matter would be
to say that for the test as to relevance to the final issue of the case, the
issue to be decided should be looked to before the question is answered by the
prothonotary, whereas that as to whether it is interlocutory or final (which is
purely a pro forma matter) should be put after the prothonotary's decision. Any
other approach, is seems to me, would reduce the more substantial question of
"vital to the issue of the case" to the merely procedural issue of
interlocutory or final, and preserve all interlocutory rulings from attack
(except in relation to errors of law).
This
is why, I suspect, he uses the words "they (being the orders) raise
questions vital to the final issue of the case", rather than "they
(being the orders) are vital to the final issue of the case". The emphasis
is put on the subject of the orders, not on their effect. In a case such as the
present one, the question to be asked is whether the proposed amendments are
vital in themselves, whether they be allowed or not. If they are vital, the
judge must exercise his or her discretion de novo.
19 To avoid the confusion which we have
seen from time to time arising from the wording used by MacGuigan J.A., I think
it is appropriate to slightly reformulate the test for the standard of review.
I will use the occasion to reverse the sequence of the propositions as
originally set out, for the practical reason that a judge should logically
determine first whether the questions are vital to the final issue: it is only
when they are not that the judge effectively needs to engage in the process of
determining whether the orders are clearly wrong. The test would now read:
Discretionary
orders of prothonotaries ought not be disturbed on appeal to a judge unless:
a)
the questions raised in the motion are vital to the final issue of the case, or
b)
the orders are clearly wrong, in the sense that the exercise of discretion by
the prothonotary was based upon a wrong principle or upon a misapprehension of
the facts.
[9]
I am of the view that
the main issue raised in this case is vital to the final issue of the case as
the relief sought is to strike out part of the statement of claim. I must
therefore exercise my discretion de novo.
[10]
The Prothonotary
stated in the endorsement to her order at page 3:
To
succeed in this motion Apotex must establish that it is “plain and obvious”
that there is no cause of action to support any of the above relief and that
those claims cannot succeed.
Given
the apparent conflict between Justice Hughes’ finding and that of other Courts,
including this Court, I am unable to find that it is plain and obvious that
Sanofi Canada’s claims for injunctive relief and an election of profits have no
chance of success. In include in this category an order for delivery-up which
is ordinarily ancillary to the grant of an injunction (Janssen-Ortho Inc. v.
Novopharm Limited (2006), 57 C.P.R. (4th) 6 at para. 131(F.C.)).
That
leaves Sanofi Canada’s claim for a declaration (paragraph
1(a) of the statement of claim). I do not read Justice Hughes’ reasons to
encompass all relief other than damages or to preclude a licensee from seeking
a declaration of infringement. It is a remedy available under the Federal
Courts Act and is not limited to patentees.
Apotex
maintains that I am bound by the findings of Justice Hughes and must strike the
impugned remedies. In light of conflicting authority of this Court, Apotex has
failed to explain why I am not equally bound by the judgment of Justice
Mahoney. Apotex’s argument does not avail for the very reason that Apotex
cannot meet its burden in this motion, namely, that there is conflicting
jurisprudence on point.
[11]
I am of the opinion
that Prothonotary Aronovitch was correct in her conclusion. Sanofi Canada’s claims contained in paragraphs 1(a), (b) and (c) are
claims that can be made by it as a licensee, in its statement of claim.
[12]
The Federal Court of
Appeal reasonably held in Apotex Inc. v. Sanofi-Aventis Canada Inc.
and Schering Corporation and Apotex Inc. v. Sanofi-Aventis Canada
Inc., Schering Corporation, Sanofi-Aventis Deutschland GmbH and
Ratiopharm Inc., 2008 FCA 175:
[9] The
motions judge observed that the Improper Conduct Pleadings portion of the
statement of defence, if successful, would deprive Sanofi Canada of its claim for equitable relief in the form of an
injunction and/or an accounting of profits from the alleged infringement. He
then went on to conclude, notwithstanding that none of the parties raised the
issue, that Sanofi Canada was not entitled to claim any equitable relief in
respect of the alleged infringement because it was a mere licensee of the ‘206
Patent.
[10] The
motions judge then proceeded to review the jurisprudence with respect to
improper conduct defences in intellectual property proceedings. After reviewing
the decisions in RBM Equipment Ltd. v. Philips Electronics Industries
Ltd. (1973),
9 C.P.R. (2d) 46 (F.C.A.); Eli Lilly & Co. et al. v. Marzone
Chemicals Ltd. et al. (1976),
29 C.P.R. (2d) 255 (F.C.A.); Procter & Gamble Co. v. Kimberly-Clark
of Canada Ltd. (1990), 29 C.P.R. (3d) 545 (F.C.A.); Visx Inc. v. Nidek
Co. (1994), 58 C.P.R. (3d) 51 (F.C.T.D.); and Volkswagen Canada Inc.
v. Access International Automotive Ltd. (C.A.), [2001] 3 F.C.
311, the motions judge stated, at paragraph 35, as follows:
[35] I conclude from
these decisions that a pleading in a defence which raises, as a defence,
unlawful conduct such as that in contravention of the Competition Act
must relate to the acquisition of title to the patent or other intellectual
property right, or to a claim for equitable relief or both.
[11]
Applying his conclusion to the circumstances
that were before him, the motions judge noted that Schering, not Sanofi Canada, holds title to the '206 Patent and reiterated his earlier
conclusion that Sanofi Canada, as a mere licensee of the '206 Patent, was not
entitled to claim equitable relief in the Infringement Action. It followed, in
his view, that because the Improper Conduct Pleadings were raised as a defence
to a claim that Sanofi Canada was not entitled to make, that portion of the
statement of defence had to be struck out as against Sanofi Canada.
[12]
It is apparent that the underpinning of the
decision of the motions judge to strike out the Improper Conduct Pleadings
portion of the statement of defence is his determination that the status of
Sanofi Canada as a licensee, rather than a patentee,
disqualified it from claiming equitable relief in the Infringement Action. In
my view, this determination, which the parties agree was made without the
benefit of arguments from them, is unsupportable.
[13]
In the Infringement Action, Sanofi Canada is seeking equitable relief in the form of injunctions
restraining the alleged infringement by Apotex and an accounting for profits in
respect of the allegedly infringing activities. Both of these forms of
equitable relief have been granted to licensees. (See Fiberglass Canada Ltd.
et al. v. Spun Rock Wools Ltd. et al. (1947), 6 C.P.R. 57 (P.C.); Domco
Industries Ltd. v. Armstrong Cork Canada Ltd. et al. (1980), 47
C.P.R. (2d) 1 at 9-10 (F.C.T.D.), aff’d on other grounds (1980), 54 C.P.R. (2d)
155 (F.C.A.), aff’d (1982), 66 C.P.R. (2d) 46 (S.C.C.); Windsurfing
International Inc. et al. v. Trilantic Corporation (Now BIC Sports Inc.)
(1985), 8 C.P.R. (3d) 241 at 244 and 268-269 (F.C.A); Monsanto Canada Inc.
v. Schmeiser (2001), 12 C.P.R. (4th) 204 at paras. 129-140 (F.C.T.D.),
aff’d (2002), 21 C.P.R. (4th) 1 (F.C.A.), allowed in part (2004), 31 C.P.R.
(4th) 161 (S.C.C.); Wellcome Foundation Ltd. v. Apotex Inc.
(1998), 82 C.P.R. (3d) 466 at paras. 468-471 (F.C.T.D.), aff’d (2001), 11
C.P.R. (4th) 218 (F.C.A.); Lubrizol Corp v. Imperial Oil Ltd.
(1992), 45 C.P.R. (3d) 449 at 452-453 and 479 (F.C.A.); and Beloit Canada
Ltd. v. Valmet-Dominion Inc. (1997), 73 C.P.R. (3d) 321 at 326 and
369-370 (F.C.A.).)
This
decision clearly supports the decision of Prothonotary Aronovitch.
[13]
Apotex is also
appealing the award of costs made against it by Prothonotary Aronovitch in the
amount of $5,000. Prothonotary Aronovitch stated at pages 3 and 4 of her
endorsement:
Some
additional comments are warranted regarding the timing and necessity for this
motion. The parties did not make a formal request to adjourn the motion. Sanofi
Canada urged the Court to dismiss the motion
and only in the alternative to adjourn the motion sine die, to be
continued, if necessary, following the decision of the Court of Appeal.
Apotex’s counsel argued that the motion was not premature but rather timely
given that the “lopsided” pleadings, as they now stand, would result in
prejudice to Apotex during discovery which was about to get underway. I did not
find Apotex’s submissions as to the nature or extent of the prejudice either precise
or persuasive.
I
take the view that unless there are compelling reasons to do so, a party ought
not to bring a motion to strike in reliance of a decision that is under appeal,
especially where there is a likelihood of a proximate disposition. In the same
manner that it is problematic to bring two applications in different Courts
where there is significant overlap between the issues for determination.
Schering
appeared to this motion and essentially adopted the position of Sanofi Canada. I disagree with Apotex that Schering had no standing to do
so. Schering is a patentee and a party to this action with rights under the Federal
Courts Rules (the “Rules”) to be served with any motion brought by
any other party to the action, and the right thereafter to appear to any such
motion subject only to having complied with the Rules. That said, in the
circumstances, Schering will not be entitled to costs.
Further
on costs, Sanofi Canada has been successful and has had to
respond to a motion which, in my view, was unnecessary at this time. I have,
therefore, accepted Sanofi Canada’s submissions on costs and will so
order.
THIS
COURT ORDERS that:
1. This
motion is dismissed.
2. Costs
of this motion fixed in the amount of $5,000.00 are payable by Apotex to Sanofi
Canada, in any event of the cause.
3. No
costs are payable to Schering.
[14]
The issue of costs is
not vital to the final issue of the case. I must determine whether the
Prothonotary’s order with respect to costs, was “clearly wrong, in the sense
that the exercise of discretion by the prothonotary was based upon a wrong
principle or upon a misapprehension of the facts.”
[15]
On a review of
Prothonotary Aronovitch’s endorsement, I cannot conclude that she was clearly
wrong, in the sense that the exercise of her discretion was based upon a wrong
principle or upon a misapprehension of the facts. She gave her reasons for the
award of costs.
[16]
Apotex’s motion
(appeal) is therefore dismissed with costs to Sanofi-Aventis Canada Inc. and
Sanofi-Aventis Deutschland GmbH. There shall be one set of costs.
ORDER
[17]
IT IS
ORDERED that Apotex’s
motion (appeal) is therefore dismissed with costs to Sanofi-Aventis Canada Inc.
and Sanofi-Aventis Deutschland GmbH. There shall be one set of costs.
“John
A. O’Keefe”
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