Date: 20100907
Docket: A-454-09
Citation: 2010 FCA 219
CORAM: NADON
J.A.
SHARLOW
J.A.
LAYDEN-STEVENSON
J.A.
BETWEEN:
ELI LILLY CANADA INC.,
ELI LILLY AND COMPANY,
ELI LILLY AND COMPANY LIMITED and
ELI LILLY SA
Appellants
and
NOVOPHARM LIMITED
Respondent
REASONS FOR ORDER BY THE COURT
[1]
The
respondent Novopharm Limited has moved for reconsideration of the judgment of
this Court dated July 21, 2010 allowing the appeal of the appellants
(collectively “Lilly”) from a judgment of the Federal Court (2009 FC 1018).
Lilly opposes the motion.
Facts
[2]
During the
period relevant to this case, Lilly manufactured and sold in Canada a drug called Zyprexa, which
contains olanzapine. Olanzapine was the subject of Canadian Patent No.
2,014,113, which was owned by Lilly. Lilly brought an action in the Federal
Court (T-1048-07) against Novopharm for damages for the infringement of the 113
patent by Novopharm’s manufacture and sale in Canada of a generic version of Zyprexa. Novopharm
asserted that the 113 patent was invalid but admitted that if the patent was
valid, it was infringed. Novopharm also asserted a counter claim for damages
under section 8 of the Patented Medicines (Notice of Compliance) Regulations,
SOR/98-166, because of the dismissal of Lilly’s application to the Federal
Court for a prohibition order under those regulations (Eli Lilly Canada Inc.
v. Novopharm Limited, 2007 FC 596).
[3]
In case
management proceedings in the Federal Court, the action was bifurcated so that
the validity of the 113 patent would be determined in one phase, and the
determination of damages (if any) would be determined in a separate phase. Novopharm’s
claim for section 8 damages was deferred to the damages phase. The bifurcation
order was not appealed.
[4]
The trial
of the first phase of the action resulted in a judgment dated October 5, 2009 favouring
Novopharm. That judgment reads as follows (2009 FC 1018):
a.
The
claims of the 113 patent in issue are invalid;
b.
Lilly’s
action for patent infringement is dismissed;
c.
Novopharm
is entitled to relief under s. 8 of the Patented Medicines (Notice of
Compliance) Regulations to be determined in a separate proceeding, and to
its costs.
[5]
On
December 19, 2009, the Federal Court judge made two orders in T-1048-07. The
first was an order giving certain directions for the assessment of the costs of
the trial of the first phase. The second order gave directions as to the
conduct of the trial of the second phase, which would determine Novopharm’s
claim for section 8 damages. The parties subsequently agreed on the quantum of
costs, $1,516,000, and on March 4, 2010, the judge made an order confirming the
assessment of costs in that amount. Lilly was ordered to pay that amount, and
did so. These orders were not appealed.
[6]
Lilly
appealed the Federal Court judgment dated October 5, 2009. Its notice of appeal
sought, among other things, an order setting aside all three paragraphs of the
Federal Court judgment, and an order for costs in this Court and in the Federal
Court.
[7]
The notice
of appeal states numerous grounds of appeal. It states, among other things, that
the judge “erred in awarding costs to Novopharm”. However, no substantive issue
was raised in the notice of appeal in relation to the award of costs to
Novopharm, or in relation to Novopharm’s claim for section 8 damages.
[8]
Lilly’s
memorandum of fact and law was filed in February of 2010. It is 150 paragraphs
long. Paragraph 40 states the issues on appeal, of which there are 8. The last
of the stated issues is, “Did the Trial Judge err in granting Novopharm’s
counterclaim for section 8 damages when he made no findings to support this
part of the Judgment?” However, that issue is not specifically addressed anywhere
in the memorandum. Nor is any mention made of Novopharm’s claim for section 8
damages except by inference in paragraph 150 of the memorandum, entitled “Order
Sought”, which reads as follows:
150. The Appellants
respectfully ask this Court to set aside the Judgment of the Federal Court and
grant judgment allowing the Appellants’ action, or in the alternative, order a
new trial, and award the Appellant its costs in this Court and the Federal
Court. Further, paragraph 3 of the Judgement [sic] should be set aside
considering that no findings were made by the Trial Judge to support this part
of the Judgement [sic].
[9]
The appeal
of the October 5, 2009 Federal Court judgment was heard in June of 2010. There
were no submissions on costs and only cursory mention of Novopharm’s claim for
section 8 damages. Novopharm pointed out that this claim was to be the subject
of a separate proceeding in the Federal Court pursuant to the bifurcation order.
[10]
This Court
concluded that the Federal Court judgment was incorrect on certain substantive
issues of patent law, and that a new trial of the first phase was required. The
reasons for judgment dated July 21, 2010 (2010 FCA 197) do not discuss any issues
relating to costs, Novopharm’s claim for section 8 damages, or paragraph 3 of
the Federal Court judgment. Costs are mentioned in the last paragraph of the
reasons for judgment only to describe the judgment to be made on the appeal.
That judgment, which is the subject of this motion for reconsideration, was
issued on July 21, 2010 and reads as follows:
The appeal is allowed
with costs and the judgment of the Federal Court is set aside. The utility and
sufficiency of disclosure grounds of alleged invalidity with respect to
Canadian Letters Patent No. 2,041,113 is remitted to the Federal Court for determination in
accordance with the Reasons for Judgment dated July 21, 2010 in this matter.
[11]
This order
on its face sets aside all three paragraphs of the Federal Court judgment,
including paragraph 3 which is repeated here for ease of reference:
Novopharm is entitled to
relief under s. 8 of the Patented Medicines (Notice of Compliance)
Regulations to be determined in a separate proceeding, and to its costs.
Novopharm’s motion for
reconsideration of the judgment
[12]
Novopharm
is concerned that it is unclear from the judgment of this Court whether, at the
retrial of the first phase of T-1048-07, or in the trial of the second phase of
T-1048-07, the Federal Court judge is precluded from awarding costs to the
successful party, or from considering Novopharm’s claim for section 8 damages. Novopharm
submits that the setting aside of paragraph 3 of the Federal Court judgment
does not accord with the reasons for judgment because there was substantially
no argument in the appeal on either of these issues and the reasons for
judgment do not discuss them. Lilly argues that the issues addressed in
paragraph 3 of the Federal Court judgment were in fact considered and there is
no basis for concluding that the judgment does not reflect the Court’s
conclusions.
[13]
Having
carefully reviewed the record, we are of the opinion that there is no basis for
reconsidering the judgment or amending it. However, we have the following
comments about how the judgment is to be interpreted and applied.
Novopharm’s claim for section
8 damages
a. The question of Novopharm’s
claim for damages under section 8 of the Patented Medicines (Notice of
Compliance) Regulations was not in issue in this appeal. This appeal raised
only issues that were determined by the Federal Court in the first phase of the
bifurcated trial, all of which related to the validity of the 113 patent. The
judgment of this Court was not intended to affect in any way Novopharm’s claim
for section 8 damages, and does not do so.
b. We note that Lilly appears to
be of the view that Novopharm cannot claim section 8 damages if the 113 patent
is ultimately found to be valid. That is an issue to be determined by the
Federal Court judge in the second phase, if it is properly raised. It was not
raised in this appeal, either directly or by necessary implication, and we have
expressed no opinion on it.
c. We do not read paragraph 3 of
the Federal Court judgment as anything more than a confirmation, for greater
certainty, that Novopharm’s claim for section 8 damages is to be dealt with in the
second phase of the bifurcated trial. For that reason, the fact that paragraph 3
was set aside with the remainder of the Federal Court judgment has no effect on
the right of Novopharm to have its claim for section 8 damages determined by
the Federal Court in the second phase of the trial. The judgment of the Court
in this appeal can not and did not deprive the Federal Court of its jurisdiction
to determine Novopharm’s claim for section 8 damages in that second phase.
Costs in the
Federal Court
d. Normally, when a trial
judgment is set aside on appeal, any award of costs included in the judgment is
also set aside, even if the reasons for judgment are silent on costs. That is
so in this case. Therefore, Novopharm’s award of costs in the Federal Court in
relation to the first trial of the first phase has been and was intended to be
set aside.
e. However, the subsequent
Federal Court orders in which the quantum of costs was determined and payment
was ordered cannot be set aside by this Court because they were not appealed. It
will be for the Federal Court judge in due course to consider what should be
done (if anything) to deal with the fact that the costs were assessed and paid
before the costs award was set aside. It will also be for the Federal Court
judge in due course to determine what costs (if any) should be awarded in relation
to any future proceedings in T-1048-07.
f. Lilly has submitted that in
allowing its appeal “with costs”, this Court awarded Lilly its costs of the
appeal as well as its costs of the first trial. That is a misinterpretation.
When this Court allows an appeal “with costs”, it allows only the costs of the
appeal. If this Court had also intended to allow Lilly its costs of the first trial,
the order would have stated “with costs in this Court and the Federal Court”,
or similar language. The order sought to be reconsidered does not award Lilly
the costs of the first trial. At present, there is no order awarding any party
the costs of the first trial. That also is a matter for consideration by the
Federal Court judge after the retrial.
Conclusion
[14]
For these
reasons, the motion for reconsideration will be dismissed. No costs will be
awarded on the motion.
“M.
Nadon”
“K. Sharlow”
“Carolyn Layden-Stevenson”
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