Date: 20100922
Docket: A-451-09
Citation: 2010 FCA 240
CORAM: SEXTON
J.A.
EVANS
J.A.
SHARLOW
J.A.
BETWEEN:
ELI LILLY AND COMPANY and
ELI LILLY CANADA INC.
Appellants
and
APOTEX INC.
Respondent
REASONS FOR JUDGMENT OF THE
COURT
(Delivered from the Bench at Ottawa, Ontario, on September 22, 2010)
EVANS J.A.
A. INTRODUCTION
[1]
Eli Lilly
and Eli Lilly Canada Inc. (Lilly) have appealed a decision of the Federal Court
(2009 FC 991) in which Justice Gauthier (Judge) held that Lilly had failed to
prove that Apotex Inc. had infringed any of eight process patents owned by
Lilly when Apotex imported into Canada, after June 3, 1998, approximately 7,500
kg of the compound cefaclor for use in its antibiotic medicines.
[2]
The Judge
held that Lilly had not proved that Apotex’ Indian supplier, Lupin Laboratories
Inc. (Lupin), had produced the bulk cefaclor from an intermediate compound
(7-ACCA) made by a process covered by any of the Lilly patents. The compound
cefaclor itself is no longer protected by a patent.
[3]
She also held
that Apotex had infringed Lilly patents by importing bulk cefaclor before June
3, 1998, which had been produced outside Canada from an intermediate compound that
Apotex’ suppliers had made by a patented process. Apotex has cross-appealed
this aspect of the Judge’s decision.
B. LILLY’S APPEAL
[4]
The issue
in Lilly’s appeal is essentially factual: did Lupin change from using a
patented to a non-patented process when it made the intermediate compound needed
to supply Apotex with the bulk cefaclor imported after June 3, 1998?
[5]
Whether a
party has discharged its burden of proof is a question of fact. Appellate
courts only interfere with a trial judge’s finding of fact when the appellant
can point to a palpable and overriding error in the judge’s findings, or when
the judge was wrong in law in, for example, admitting or excluding evidence
that was material to the result.
[6]
We are not
persuaded that the Judge in this case, who rendered careful and comprehensive
reasons for her decision after a six months’ trial, committed any error that warrants
our intervention.
[7]
In arguing
that the Judge erred in concluding that Lilly had not discharged its burden of
proving infringement on a balance of probabilities Lilly did not identify any
obvious and significant error in the Judge’s analysis of the evidence. Particularly
in light of the Judge’s credibility findings, there was an ample evidential basis
for her conclusion.
[8]
Lilly effectively
invited us to reweigh the evidence and to draw our own inferences from it,
particularly the fact that the Drug Master File (DMF) filed with Health Canada, as well as regulatory filings
with the United
States’ Food and
Drug Administration, showed that Lupin was using an infringing process in the
manufacture of the intermediate. This is an invitation that an appellate court
should not accept. To do otherwise would usurp the role of the trial judge and
unnecessarily burden public and private resources alike.
[9]
Nor are we
persuaded that the Judge committed legal errors in admitting certain oral and
documentary evidence. Evidential rulings often require the trial judge to weigh
competing factors. They thus involve an exercise of discretion to which an
appellate court should afford considerable deference and not simply substitute
its opinion for that of the trial judge who was immersed in the matter.
[10]
Lilly says
that the Judge erred in law in admitting the oral evidence of Mr Satpute, Lupin’s
Vice President, Active Pharmaceutical Ingredient Manufacturing, and, at the
relevant time, the senior manager of Lupin’s factory in India where 7-ACCA was manufactured. Lilly
argues that Mr Satpute’s evidence respecting the process used to produce the
intermediate was inadmissible hearsay because it was based on information given
to him by Lupin scientists. The Judge did not address this issue in her
reasons.
[11]
We do not
agree that the Judge erred by not excluding Mr Satpute’s testimony as hearsay. It
was based largely on his direct knowledge of the manufacturing process used to
produce the 7-ACCA to fill Apotex’ large order for bulk cefaclor. That he may
have relied on others’ notes to refresh his memory or for some of the technical
detail of the process used does not warrant characterizing his evidence as
hearsay. In any event, hearsay evidence is not automatically barred. The Judge
found (at para. 252) that Mr Satpute’s evidence was “very credible”, an
impression that she said was confirmed when she read and reread the transcript
of his testimony.
[12]
Lilly also
says that the Judge erred in law by not excluding Mr Satpute’s testimony under
rule 248 of the Federal Courts Rules. On discovery, an officer of Apotex
had stated that he had no knowledge of the process actually used by Lupin, when
in fact, unknown to Lilly, Lupin had written a letter, dated July 4, 2000, to
Mr Ivor Hughes as Apotex’ lawyer advising him that it was willing to cooperate
in the litigation.
[13]
We do not
agree with Lilly’s submission. It is apparent from the paragraphs in the
Judge’s reasons dealing with the admissibility of the disputed evidence (paras.
235-56) that she was alive to Lilly’s underlying concern, namely that Apotex’
litigation tactics had resulted in “ambushing” Lilly and thus deprived it of an
opportunity to effectively probe the evidence on which Apotex based its
defence.
[14]
However, the
Judge decided to admit the disputed evidence after having both considered the
lengthy submissions of the parties on these issues, and offered to suspend the
trial to enable Lilly to try to obtain more information or reopen discovery
after it became aware that Apotex intended to call witnesses from India, an
offer that Lilly declined. Of Mr Satpute’s evidence in particular, she said (at
para. 256) that, “in this case”, it would not be in the best interests of
justice to “totally put aside” his testimony, and that she would exercise her
residual discretion to admit it.
[15]
In so
concluding, the Judge, in our view, made no error of principle warranting the intervention
of this Court.
[16]
In
reaching this decision, we should not be taken to condone Apotex’ unexplained
failure to provide timely responses to questions, to correct erroneous
responses, and to produce documents in a timely fashion. In the circumstances
of the present case, the Judge properly exercised her discretion when she
accepted the late tendered evidence. It should, however, never be considered
good practice for a party to fail to comply with the rules of discovery, and parties
cannot expect that such conduct will always be excused at trial.
C. APOTEX’ CROSS-APPEAL
[17]
Apotex
cross-appeals the Judge’s finding that it infringed Lilly’s patents when, prior
to June 3, 1998, it imported bulk cefaclor from overseas suppliers who had
produced it from an intermediate compound made by processes covered by Lilly
patents. Apotex says that, by finding that the importation of cefaclor breached
Lilly’s rights under the Patent Act, the Judge extended the scope of
protection beyond the use of the claimed invention (here, the processes for
making the intermediate product), and gave an extraterritorial reach to the Act
that Parliament should not be taken to have intended.
[18]
After thoroughly
canvassing the relevant jurisprudence, the Judge rejected Apotex’ argument,
holding that it has been settled law in Canada for over a hundred years that a
process patent can be infringed by the importation, and use and sale in Canada,
of a product manufactured abroad by another person using the patented process. She
pointed out that the Supreme Court of Canada had recently endorsed the rule,
known as the “Saccharin doctrine” (Saccharin Corporation Ltd. v.
Anglo-Continental Chemical Works, [1901] 1 Ch. 414 (Eng. Ch. D.): see Monsanto Canada Inc. v.
Schmeiser, 2004 SCC 34, [2004] 1 S.C.R. 902 especially at para. 44.
[19]
The Judge
also rejected Apotex’ alternative argument that, if relevant at all, the Saccharin
doctrine should not apply if “material changes” are made to the article
produced by the patented process prior to the importation of the ultimate
product. She applied (at paras. 326-329) the present law, which requires only
that the patented process played an “important part” in the manufacture of the
imported product, and concluded that it did.
[20]
We see no
legal error in the Judge’s analysis of the state of the law in Canada on either of these issues.
D. CONCLUSIONS
[21]
For these
reasons, Lilly’s appeal and Apotex’ cross-appeal will be dismissed, both with
costs.
“John
M. Evans”
Email this Content