Ltd. (Teva Israel), Teva
Pharmaceutical USA, Inc. (Teva USA) and Dipharma (collectively, the
Defendants).
[2]
The
089 Patent is directed to a piperidine derivative referred to as fexofenadine and its use as an
anti-allergenic pharmaceutical compound. AMR claims that the Defendants
infringe the 089 Patent. Dipharma admits, in its Statement of Defence, that it
has manufactured fexofenadine HCI in Italy. Further, it admits
that it has sold this product to Teva Israel, and that some of the product was
shipped to Novopharm in Canada. Dipharma also admits that it uses
substantially the same process set out in its European Application EP 1 616 861
for manufacturing its fexofenadine HCI. The main contention of Dipharma is that
its product is sold in Italy and not in Canada. Thus,
Dipharma argues, there can be no cause of action against it for infringement of
the 089 Patent.
II. Issues
[3]
The
main issue in this motion is whether Dipharma is entitled to summary judgment
removing it as a party to the action. This issue can be broken down into 2
sub-components:
1.
Should
the motion for summary judgment be granted?
a)
Is
there a genuine issue for trial with respect to AMR’s allegation that Dipharma
sold fexofenadine in Canada?
b)
If
there is a genuine issue, is there sufficient evidence to determine the issue
on summary judgment?
[4]
A
secondary issue relates to the admissibility of some of the expert evidence put
forth by AMR.
III. Statutory
Framework
[5]
Rules
213 through 216 of the Federal Courts Rules, pertain to summary
judgment. The provisions relevant to this matter are reproduced here.
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Rule
213. (2) a defendant may, after serving and filing a defence and at any time
before the time and place for trial are fixed, bring a motion for summary
judgment dismissing all or part of the claim set out in the statement of
claim.
Rule
216. (1) Where on a motion for summary judgment the Court is satisfied that
there is no genuine issue for trial with respect to a claim or defence, the
Court shall grant summary judgment accordingly.
(2)
Where on a motion for summary judgment the Court is satisfied that the only
genuine issue is
…
(b)
a question of law, the Court may determine the question and grant summary
judgment accordingly.
(3)
Where on a motion for summary judgment the Court decides that there is a
genuine issue with respect to a claim or defence, the Court may nevertheless
grant summary judgment in favour of any party, either on an issue or
generally, if the Court is able on the whole of the evidence to find the
facts necessary to decide the questions of fact and law.
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Règle
213. (2) Le
défendeur peut, après avoir signifié et déposé sa défense et avant que
l’heure, la date et le lieu de l’instruction soient fixés, présenter une
requête pour obtenir un jugement sommaire rejetant tout ou partie de la
réclamation contenue dans la déclaration.
Règle
216. (1) Lorsque, par suite d’une requête en
jugement sommaire, la Cour est convaincue qu’il n’existe pas de véritable
question litigieuse quant à une déclaration ou à une défense, elle rend un
jugement sommaire en conséquence.
(2) Lorsque, par suite d’une
requête en jugement sommaire, la Cour est convaincue que la seule véritable
question litigieuse est :
. .
.
b) un point de droit, elle peut
statuer sur celui-ci et rendre un jugement sommaire en conséquence.
(3) Lorsque, par suite d’une requête en jugement sommaire, la
Cour conclut qu’il existe une véritable question litigieuse à l’égard d’une
déclaration ou d’une défense, elle peut néanmoins rendre un jugement sommaire
en faveur d’une partie, soit sur une question particulière, soit de façon
générale, si elle parvient à partir de l’ensemble de la preuve à dégager les
faits nécessaires pour trancher les questions de fait et de droit.
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IV. Principles of
Summary Judgment
[6]
The
guiding principles for the granting of a summary judgment were outlined by
Justice Tremblay-Lamer in Granville Shipping Co. v. Pegasus Lines Ltd. S.A.,
[1996] 2 F.C. 853. These principles (which were endorsed by the Court of
Appeal in ITV Technologies Inc. v. WIC Television
Ltd., 2001 FCA 11,
199 F.T.R. 319 (F.C.A.), leave to appeal dismissed, [2001] S.C.C.A. No. 156 (Q.L.), can be
summarized as follows:
a)
The
purpose of the provision is to allow the Court to summarily dispense with cases
which ought not proceed to trial because there is no genuine issue to be tried;
b)
It
is not whether a party cannot possibly succeed at trial; it is whether the case
is so doubtful that is does not deserve consideration by the trier of fact at a
future trial;
c)
Each
case should be interpreted in reference to its own contextual framework;
d)
The
Court may determine questions of fact and law on the motion for summary
judgment if this can be done on the material before the Court; and
e)
On
the whole of the evidence, summary judgment cannot be granted if the necessary
facts cannot be found or if it would be unjust to do so.
[7]
The
issue of summary judgment was recently discussed by the Court of Appeal in Suntec
Environmental Inc. v. Trojan Technologies Inc., 2004 FCA 140, (2004) 320
N.R. 322 (F.C.A.). In sum, the Court in Suntec, at para. 15, 16,
concluded that the test is not whether the plaintiff cannot succeed at trial;
rather, it is whether the court reaches the conclusion that the case is so
doubtful that it does not deserve consideration by the trier of fact at a
future trial. Claims clearly without foundation should not take up the time and
incur the costs of a trial.
[8]
The
responding party has the evidential burden of showing that there is a genuine
issue for trial, but the moving party bears the legal onus of establishing the
facts necessary to obtain summary judgment. Both parties must put their best
foot forward to enable the motions judge to determine whether there is an issue
that should go to trial (F. Von Langsdorff Licensing Ltd. v. S.F. Concrete
Technology, Inc. (1999), 165 F.T.R. 74, 1 C.P.R. (4th) 88 (T.D.)).
V. Facts
[9]
With
these principles in mind, I turn to the facts before me in this case.
[10]
The
following “facts”, relevant to this motion, are contained in AMR’s Statement of
Claim (see, in particular paragraphs 28, 29, 32-36 and 41):
·
Dipharma
manufactures fexofenadine in Italy, for use in an allegedly infringing
product;
·
Such
fexofenadine is covered by claims 1 and 3 of the 089 Patent;
·
In
the process of manufacturing fexofenadine, Dipharma uses an intermediate
product covered by claims 2, 4 and 5 of the 089 Patent;
·
For
a period of time, allegedly infringing product, manufactured by Dipharma was
supplied to Teva Israel and by Teva Israel to Teva U.S.A. for sale
in the United
States;
·
Since
about 2006, Novopharm has been manufacturing allegedly infringing product
using, at least in part, fexofenadine manufactured in Italy by Dipharma; and
·
The
fexofenadine used by Novopharm is sold by Dipharma to Novopharm in Canada.
[11]
Dipharma
does not deny that it makes fexofenadine in its Italian facilities. Nor does it
dispute that it sells or has sold this product to other of the named Defendants
in this action – specifically, to Teva Israel and
Novopharm. The basis of Dipharma’s motion is that there is no genuine issue for
trial since Dipharma has not sold fexofenadine made by it in Canada. Thus, the
issue before me in this motion for summary judgment is whether, on the facts before
me, I can conclude that there is not and has never been any sale of possibly
infringing product in Canada.
[12]
As
discussed in the materials and arguments before me, sales of the potentially
infringing product fall into three different phases. Firstly, Dipharma sold and
delivered fexofenadine in Italy to Teva Israel pursuant to a supply
agreement signed April 25, 2005 in Italy by Dipharma and signed
in Israel by Teva. In
the second phase, Dipharma delivered fexofenadine to Novopharm (located in
Canada) on direction of Teva Israel given on January 17, 2006 and pursuant to
purchase orders provided to it by Teva Israel. In the
final phase, beginning about May 2006, Dipharma sold and delivered fexofenadine
to Novopharm pursuant to purchase orders provided directly to it by Novopharm.
VI. Analysis
[13]
In
oral submissions, AMR focused on the final stage – the direct sales to
Novopharm. AMR correctly points out that Dipharma’s motion must fail if, with
respect to any one of the three different sales arrangements, the Court is
satisfied that there is a genuine issue for trial.
[14]
The
parties are in agreement that the test set out in Domco Industries Ltd. v.
Mannington Mills Inc. et. al. (1990), 29 C.P.R. (3d) 481 (F.C.A.) at 496
should be applied. In that case, Chief Justice Iaccobucci (as he then was)
stated:
By way of summary, where delivery or
possession of the goods takes place outside of Canada, and where it is not
proved that a contract for sale of infringing goods has taken place in Canada, no vending occurs in Canada for purposes of section 46 of
the Patent Act.
[15]
Stated
in the converse, if the delivery or possession of the goods takes place in
Canada, or if the contract for sale took place in Canada, a sale for
purposes of s. 42 of the Patent Act, R.S.C. 1985, c. P-4 may have taken place. Thus, each of
the questions of where title passes and where the contract was made is a
genuine issue for trial. However, the motion may still be granted if I am able
“on the whole of the evidence to find the facts necessary to decide the
questions of fact and law” (Rule 216(3)).
[16]
According
to Dipharma, the record clearly shows that neither delivery of the goods nor
the sales contract took place in Canada. AMR’s position is that
there are significant evidentiary gaps to resolve this issue on summary
judgment. In AMR’s view, an assessment of what evidence was made available
indicates that title likely passed in Canada and that the contract
of sale was effected here.
[17]
The
key question in this motion is whether I have sufficient evidence to determine
where possession (or title) to the product passed. If possession did not pass
in Canada, it may be
that Dipharma is correct and I must then go on to consider where the contract
of sale was made. If, however, Dipharma does not persuade me that I have
sufficient evidence to conclude that Novopharm took possession of and title to
the product outside Canada, there remains a genuine issue for trial,
regardless of where the contract of sale was made.
[18]
I
turn then to review the facts that are before me with respect to the transfer
of title from Dipharma to Novopharm.
[19]
In
this motion, Dipharma has put forward the affidavit of Mr. Marc-Olivier Geinoz,
Chief Executive Officer of Dipharma. Mr. Geinoz described in detail his
understanding of the contractual arrangements between Dipharma and Novopharm.
In support of Dipharma’s contention that it did not sell the allegedly
infringing product in Canada, Mr. Geinoz pointed to the following:
·
In
April 2006, Dipharma was notified of documentation problems with shipments to
Novopharm by Dipharma that were based on Teva Israel-Dipharma purchase orders.
Since Novopharm issued its purchase orders to Teva Israel, all
shipping documentation required by Novopharm should come from Teva Israel;
·
In
May 2006, Dipharma sold and delivered fexofenadine in Italy to Novopharm
pursuant to purchase orders provided directly to it by Novopharm. The contract
for sale of the product was made upon acceptance by Dipharma in Italy. The
purchase orders specifically indicated that title was to pass when transferred
to a transportation facility, which occurred in Italy;
·
The
sales were governed by the Dipharma – Teva agreement of April 25, 2005;
·
Pursuant
to such purchase orders, Dipharma manufactured fexofenadine HCl in Italy and shipped
the product to Novopharm in Canada; and
·
The
invoices specified the delivery terms as “CIP Toronto”. Pursuant to the CIP –
“Carriage and Insurance Paid to” – delivery terms (as set out in the
International Chamber of Commerce, INCOTERMS 2000 (Paris: ICC Publishing S.A.,
1999) [INCOTERMS 2000]), Mr. Geinoz states, use of “CIP Toronto” means that
“title to the goods transfers to the buyer upon delivery by the seller of the
goods to the first carrier” and, thus, in Exel, in Italy.
[20]
AMR
has pointed to numerous gaps and inconsistencies in Dipharma’s evidence.
Although Dipharma has attributed some of the inconsistencies to error or AMR’s
misconstruction of its evidence, the fact remains that we have no evidence that
all of the parties to the transaction—namely Dipharma, Teva Israel and
Novopharm—intended for title to the fexofenadine to pass outside Canada. I agree
with AMR that such evidence is important for the purpose of ascertaining
whether the goods were sold in Canada. The only evidence available is the
affidavit of Mr. Geinoz regarding his understanding of the intended
meaning and intention of the CIP delivery term, which has only been
consistently found on the purchase orders written by Dipharma.
[21]
Mr.
Geinoz’s response on this point is that inclusion of the CIP terms was routine
and that he had felt that it was unnecessary to discuss the CIP terms with
either Teva or Novopharm. The fact that Novopharm did not complain about use of
this term is put forth as evidence that they shared Dipharma’s intention. By
doing so, Dipharma is requiring the Court to draw an inference about Novopharm
and Teva’s intentions based merely on their silence.
[22]
The
jurisprudence on Rule 216 is clear that a motions judge should refrain from
issuing summary judgment where the relevant evidence is unavailable on the
record and involves a serious question of fact which turns on the drawing of
inferences. (See MacNeil Estate v. Canada (Department of
Indian & Northern Affairs), 2004 FCA 50, [2004] 3 F.C.R. 3, Apotex Inc.
v. Merck & Co., 2002 FCA 210, [2003] 1 F.C. 242 (Fed. C.A.)). In my
view, the question of title transfer is a serious question of fact upon which
the main issue of infringement turns. A trial judge deciding the
main issue of infringement would benefit
from having more evidence on Teva and Novopharm’s intentions going into the
contractual relationship with Dipharma. This could include:
·
Evidence
from the parties present at the meeting in Israel on April 18,
2005. That meeting resulted in an oral agreement which formed the basis for the
April 25, 2005 agreement. Since the April 25 agreement seems to be lacking key
contractual terms such as payment, transfer of title, product testing and
returns, evidence from the April 18 meeting may help the trial judge to
understand the parties’ intentions;
·
Evidence
from Teva Israel that Dipharma issued some purchase orders specifying Novopharm
as the “buyer” only as a service to Teva because they were having problems with
customs clearance; and
·
Evidence
from the individuals who drafted the allegedly erroneous purchase orders in
which CIP terms were not used
[23]
In
addition, I have difficulties with Mr. Geinoz’s observations on the meaning of
CIP. While Mr. Geinoz has experience in the application of the various
INCOTERMS, he is not a lawyer or an expert in their interpretation. In this
motion, AMR disputes Mr. Geinoz’s interpretation of “CIP”. Having reviewed the
INCOTERMS 2000 as submitted with the motion materials, I can see no explicit
reference in the document to the fact that title passes upon use of CIP
delivery terms. It appears to me that further expert evidence is needed to
provide the trial judge with a better understanding of the term “CIP”.
[24]
In
response to this motion, AMR presented affidavits of Professor Aaron Ari
Afilalo, a professor of international business law and contracts at Rutgers Law School, and
Professor Jacob Ziegel, Professor of Law Emeritus at the University
of Toronto. Counsel to
AMR asked each of the eminent professors to provide his opinion on the
conclusions reached by Mr. Geinoz. In my view, the conclusions, if any, reached
by the professors are not important. It is not necessary for me to conclude
that a sale was completed in Canada. Rather, my task is to assess the
evidentiary record to determine whether I can conclude that no sale was made in
Canada. The
affidavits of the two professors outline a number of issues that, in their
opinions, require further evidence before this key question is answered. For
example, Prof. Afilalo (reasonably, in my view) states that “INCOTERMS
constitute only one part of the contract of sale”. Prof. Ziegel states that
expert evidence is required to establish what Israeli law is with respect to
the time of transfer of title in the goods”. In other words, the professors
question the very assumptions upon which Dipharma’s motion is brought and, in
the case of Prof. Afilalo, reach contrary conclusions on the nature of the
contractual arrangements between Dipharma and Novopharm.
[25]
Dipharma
objects to the admission of the affidavit evidence of Prof. Afilalo and Prof.
Ziegel and asked that I disregard the affidavits. I do not accept Dipharma’s
argument on this point. The submission by AMR of affidavits by two legal
experts was a logical response to the affidavit of Mr. Geinoz in which he
provided his opinions on contract and international commercial law matters. In
accepting the affidavits of the professors, I wish to make it clear that I am
not relying on them for the proof of international commercial law, Canadian law
or the interpretation of INCOTERMS 2000. However, I find the affidavits
acceptable and helpful for the limited purpose of identifying the
incompleteness of the record before me on this motion. In effect, they do
nothing more than confirm my view that there are serious gaps in the evidence
that preclude the granting of summary judgment.
[26]
Dipharma
urges me to follow the jurisprudence of Domco, where both the Federal
Court Trial Division, (1988), 24 F.T.R. 234 and the Court of Appeal (Domco,
above) concluded that no “vending” had taken place in Canada. In that
case, the question before the courts was whether the activities of the
defendant, who offered for sale and sold in Canada coverings made in the United
States,
could constitute an infringement of a Canadian patent. There, as before me, the
product fell within the scope of the Canadian patent. The courts concluded that
there could be no infringement. The facts in Domco differ in one
important detail from those before me. In Domco, there was no dispute
between the parties as to the title to the products; the parties were agreed
that the property in and possession of the goods passed in the United
States
from Mannington to its customers. Here, we have no such agreement. Thus, in my
view, the question of where Novopharm took possession of the potentially
infringing product must be determined. Based on the record before me, I have
insufficient evidence before me to determine the answer to the question. Thus, Domco
is not directly applicable to the facts before me.
[27]
As
noted earlier in these reasons, the question of where title transfers is a
serious issue. Having determined that I cannot, on the record before me,
conclude one way or the other as to the transfer of title, I must dismiss the
motion.
VII. Conclusion
[28]
In
conclusion and on the facts before me, Dipharma does not meet the test for
summary judgment. The motion by Dipharma dismissing the action as against
Dipharma S.p.A. and Dipharma Francis S.r.l. will be dismissed.
[29]
Very
shortly before the hearing of this summary judgment motion, AMR filed a motion
to amend its Statement of Claim and asked that its motion be heard at the same
time as Dipharma’s motion. The subject matter of the proposed amendments
related to Dipharma. Since the AMR motion to amend its pleadings is dependant
on my conclusion on the summary judgment motion, I advised parties that I would
not hear that motion and that it could be heard, if necessary, after my
decision in this motion and by the case management prothonotary.
ORDER
THIS COURT ORDERS that
1. The motion for summary judgment
is dismissed, with costs to AMR.
“Judith
A. Snider”
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