Date: 20080513
Docket: A-419-07
Citation: 2008 FCA 175
CORAM: LINDEN J.A.
NOËL
J.A.
RYER
J.A.
BETWEEN:
APOTEX INC.
Appellant
and
SANOFI-AVENTIS CANADA INC. and
SCHERING CORPORATION
Respondents
AND BETWEEN:
APOTEX INC.
Appellant
and
SANOFI-AVENTIS CANADA INC.,
SCHERING CORPORATION,
SANOFI-AVENTIS DEUTSCHLAND GmbH and
RATIOPHARM INC.
Respondents
REASONS FOR JUDGMENT
RYER J.A.
[1]
The matters before the Court in this
interlocutory appeal relate to an action (T-161-07) (the “Infringement Action”)
commenced by way of a statement of claim by Sanofi-Aventis Canada Inc.
("Sanofi Canada") and Schering Corporation ("Schering")
against Apotex Inc. ("Apotex"), alleging that Apotex infringed
Canadian Letters Patent No. 1,341,206 (the “'206 Patent”).
[2]
Schering is the patentee of the '206 Patent,
under which the compound known as ramipril is claimed. Sanofi Canada markets Altace, a drug containing
ramipril, under a licence with Schering.
[3]
In the Infringement Action, the plaintiffs
allege that Apotex has infringed the '206 Patent by marketing its product,
Apo-Ramipril, and claim a declaration of infringement, injunctive relief
restraining infringement and damages or, in the alternative, an accounting of
profits arising out of the infringement.
[4]
Apotex filed a statement of defence in the
Infringement Action in which it alleges the invalidity of the '206 Patent and
denies the alleged infringement. In addition, in paragraphs 7(c), 15 and 16 of
the statement of defence (the "Improper Conduct Pleadings"), Apotex
denies the entitlement of the plaintiffs to an accounting of profits on the
basis of inequitable and unlawful conduct on the part of the plaintiffs in
entering into arrangements and agreements with ratiopharm inc.
("ratiopharm") and others for the primary purpose of causing harm to
Apotex, by way of unlawful anti-competitive activity.
[5]
Apotex also filed a counterclaim in the Infringement
Action, in which it claims damages and other relief against Sanofi Canada and
Schering, as well as Sanofi-Aventis Deutschland GmbH ("Sanofi Germany") and ratiopharm who were
added to the action as defendants by counterclaim. Paragraphs 73 to 120 of the
counterclaim (the "Second Conspiracy Pleadings") describe one basis
for the counterclaim. Those paragraphs spell out the inequitable and unlawful
conduct that underpins the Improper Conduct Pleadings, including the agreement,
described by Apotex as the "Pseudo-Generic Agreement", under which
Sanofi Canada agreed to supply ramipril to ratiopharm for resale in Canada under the trade name ratio-ramipril.
[6]
It is common ground that the subject matter of
the counterclaim is also a part of an action that Apotex commenced in the
Ontario Supreme Court, in 1999 (the "Ontario Action"), against a
number of parties, including the predecessors of Sanofi Canada and ratiopharm,
but not including Schering and Sanofi Germany. The Ontario Action remains
outstanding and is apparently not proceeding quickly.
[7]
The appeal before us is from an interlocutory
order of Hughes J. (the "motions judge") of the Federal Court (2007
FC 907) dated September 12, 2007, striking out the portion of the statement of
defence containing the Improper Conduct Pleadings as against Sanofi Canada and
granting a stay of the portion of the counterclaim containing the Second
Conspiracy Pleadings as against Sanofi Canada and Sanofi Germany.
[8]
The motions judge also conducted a de novo
review of an Order of Prothonotary Morneau, dated July 20, 2007, in which a
stay (the "ratiopharm Stay") of the portion of the counterclaim
containing the Second Conspiracy Pleadings as against ratiopharm was granted.
Apotex is not appealing this decision of the motions judge.
The Motion to
Strike
[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.).)
[14]
The issue then is whether, and in what
circumstances, improper conduct on the part of a claimant of equitable relief
will be a sufficient basis upon which a court can deny the requested relief.
This issue has been considered by this Court in Volkswagen, in which
Sharlow J.A. stated:
[21] . . . An unclean hands defence can be
made out if, but only if, there is a sufficient connection between the
subject-matter of the claim and the equitable relief sought.
[25] Visx and Procter &
Gamble are two examples in which the alleged breaches of the Competition
Act by a patent holder did not cast any shadow on the patent rights
themselves. Therefore, there was no relationship between the alleged unlawful
behaviour and the equitable remedy sought by the patent holder that could
support an unclean hands defence.
[15]
In Visx, Justice Rothstein stated, at
page 53:
It is apparent that it is not any alleged
inappropriate conduct of a party that may be relevant in the consideration of
whether or not to grant equitable relief. The inappropriate conduct must relate
directly to the subject matter of the plaintiff's claim.
In the case at bar, it may be alleged that
the plaintiff should not collect royalties in the way it is alleged it does. Or
it may be that its conduct is contrary to certain provisions of the Competition
Act. However, even if the plaintiff is acting inappropriately, such actions
do not relate directly to the plaintiff's patent or whether the defendants are
infringing that patent. There is no suggestion that the patent is invalid or
otherwise cannot form the basis of a patent infringement action; nor is it
suggested that these allegations, in some way, indicate there is no patent infringement.
It has not been demonstrated that such conduct is directly related to the
plaintiff's claim.
[16]
These cases indicate that a party claiming
equitable relief will not be disentitled to that relief by virtue of
inappropriate conduct on its part unless that conduct relates directly to the
subject matter of that party's claim and the equitable relief sought. In the
instant circumstances, the party that is alleged to have engaged in improper
conduct, Sanofi Canada, is claiming equitable relief in respect of an alleged
infringement of its rights in respect of the '206 Patent by Apotex. Thus, the
issue becomes whether the alleged improper conduct on the part of Sanofi Canada
is related to its rights in respect of the '206 Patent that formed the basis of
the claim of infringement by Apotex and the equitable remedy sought by Sanofi
Canada in respect of such claim. This analysis requires a consideration of the
alleged improper conduct and in the context of a motion to strike, the facts
alleged in that regard must be taken as having been proved.
[17]
What then is the alleged improper conduct that
Sanofi Canada must be taken to have engaged in? Apotex states that the facts
that pertain to the Second Conspiracy Pleadings are contained in paragraphs 73
– 120 of the counterclaim. The substance of those paragraphs is to the effect
that by granting ratiopharm a right to market ratio-ramipril, Sanofi Canada, in
conjunction with Sanofi Germany and Schering, permitted ratiopharm to become a
new supplier of ramipril in the Canadian market that would compete with Apotex
in its proposed marketing of Apo-Ramipril, thereby causing Apotex to lose
potential sales of Apo-Ramipril.
[18]
The impugned conduct that Sanofi Canada must be
taken to have engaged in is simply its granting, in conjunction with, or with
the support of, Sanofi Germany
and Schering, to ratiopharm of rights to distribute ramipril in Canada. That conduct may or may not have been
proper. Assuming, for the purposes of the motion to strike, that such conduct
was in fact improper, I am unable to conclude that such conduct on the part of
Sanofi Canada casts a shadow over its rights in respect of the '206 Patent.
Moreover, such conduct sheds no light at all on the question of whether, by
marketing Apo-Ramipril, Apotex has infringed the '206 Patent. Accordingly, I am
of the view that there is no relationship between the alleged improper conduct
on the part of Sanofi Canada
and the equitable relief it seeks in the statement of claim, that would justify
the Improper Conduct Pleadings.
[19]
For these reasons, I am of the view that it is
"plain and obvious" that the Improper Conduct Pleadings portion of
the statement of defence discloses no reasonable defence to the claim of
infringement of the '206 Patent and therefore, that defence cannot succeed as
against Sanofi Canada.
Accordingly, I would agree with the conclusion of the motions judge that the
Improper Conduct Pleadings portion of the statement of defence should be struck
out as against Sanofi Canada.
The Motion to
Stay
[20]
While the decision of the motions judge in
relation to the ratiopharm Stay is not under appeal, it is nonetheless
appropriate to refer to the reasoning of the motions judge in that regard,
inasmuch as his reasoning in relation to that matter is informative of his reasoning
in relation to the stay motion that was brought by Sanofi Canada and Sanofi
Germany.
[21]
In accordance with subsection 50(1) of the Federal
Courts Act, R.S.C. 1985, c. F-7, the Federal Court has the discretion to
stay proceedings in any cause or matter. That provision reads as follows:
|
50.(1) The Federal Court of Appeal or the Federal Court
may, in its discretion, stay proceedings in any cause or matter
(a) on the ground that the
claim is being proceeded with in another court or jurisdiction; or
(b) where for any other reason it is in the interest of
justice that the proceedings be stayed.
|
50. (1) La Cour d'appel fédérale et la Cour
fédérale ont le pouvoir discrétionnaire de suspendre les procédures dans
toute affaire :
a) au motif que la demande est en instance devant un autre tribunal;
b) lorsque, pour quelque autre raison, l’intérêt de la justice
l’exige.
|
[22]
In exercising his discretion to grant the
ratiopharm Stay, the motions judge concluded that the Ontario Action covers the
same claim of relief as against ratiopharm as that contained in the Second
Conspiracy Pleadings portion of the counterclaim in the Infringement Action,
thus concluding, in my view, that the ground in paragraph 50(1)(a) of
the Federal Courts Act had been made out. In paragraph 23 of his
reasons, the motions judge stated:
[23] The Counterclaim as against
Ratiopharm, if allowed to continue would result, in that party being
"twice vexed" in the Federal Court and the Ontario Court, a matter
considered as an abuse of process by the Supreme Court of Canada in Toronto
(City) v. CUPE, Local 79, [2003] 3 S.C.R. 77. There is no prejudice to Apotex.
It has its longstanding Ontario action available for seeking the same
relief against Ratiopharm. The Stay of the Counterclaim against Ratiopharm does
not impact upon its Defence in the Federal Court action since Ratiopharm is not
a party to the main action.
[23]
Apotex contends that the motions judge erred by
basing his decision to grant the stay to Sanofi Canada and Sanofi Germany solely on the basis that Apotex has
commenced duplicative proceedings. In my view, paragraph 23 of the motions
judge's reasons says much more than that there is a mere duplication of
proceedings in relation to the ratiopharm Stay. First, by stating that
ratiopharm was "twice vexed", the motions judge concluded that
ratiopharm suffered prejudice or, at the very least, annoyance, by virtue of
having to contest the same matter in two forums. Secondly, the motions judge
concluded that the stay, as against ratiopharm, would cause no prejudice to
Apotex in that it would continue to be able to pursue its claim against
ratiopharm in the Ontario Action, the same claim that is made in the Second
Conspiracy Pleadings portion of the counterclaim.
[24]
While paragraphs 26 and 27 of the motions
judge's reasons do not repeat what was said in paragraph 23, he clearly held
that the counterclaim in the Infringement Action raises the same allegations
and claims the same relief as those that are contained in the Ontario Action.
In my view, the reference to the "duplicative" nature of the
counterclaim demonstrates a clear understanding on the part of the motions
judge that Sanofi Canada and Sanofi Germany would be as "vexed" by
the Second Conspiracy Pleadings portion of the counterclaim, as was ratiopharm,
in the sense of having to devote additional time and attention to the
duplicative action represented by that portion of the counterclaim.
[25]
Paragraph 23 of the motions judge's reasons also
referred to the lack of any prejudice to Apotex from the granting of the
ratiopharm Stay, in that the Ontario Action continues to provide a forum in
which the same relief claimed in the Second Conspiracy Pleadings portion of the
counterclaim is available to Apotex. This reason for the granting of the
ratiopharm Stay similarly underpins the reasoning of the motions judge in
paragraphs 26 and 27 in which he observed that it was open to Apotex to join
Sanofi Germany as a party to
the Ontario Action if necessary. Accordingly, I reject the contention that in
exercising his discretion to grant the stay as against Sanofi Canada and Sanofi Germany, the motions judge focused only on the duplicative nature of the
Second Conspiracy Pleadings portion of the counterclaim.
[26]
Apotex contends that if a stay of either of the
two proceedings is warranted, it should be the Ontario Action that is stayed.
In my view, this contention cannot be accepted. The motions judge was obviously
without jurisdiction to grant such a stay and was obliged to deal with the
issue that was before him. That is what he did, and in the exercise of his
discretion to grant the stay as against Sanofi Canada and Sanofi Germany, I am not persuaded that he made
any error that would warrant intervention by this Court.
[27]
In upholding the motions judge with respect to
his decision to grant the stays of the Second Conspiracy Pleadings portion of
the counterclaim as against Sanofi Canada and Sanofi Germany,
I would observe the obvious: that portion of the counterclaim has not been
struck out; it has only been stayed. It follows that it is open to Apotex to
move to lift the stays if the present circumstances change at some future time.
Schering
[28]
Before this Court, Schering argues that the
motions judge erred by not extending his orders striking the Improper Conduct
Pleadings portion of the statement of defence and staying the Second Conspiracy
Pleadings portion of the counterclaim to cover Schering, notwithstanding that
Schering was not a party to the stay motion that was brought before him. In so
deciding, the motions judge invited
Schering to bring its own motion given that Apotex was unwilling to consent to
the inclusion of Schering in the motion that was brought by Sanofi Canada. In my view, this was a proper exercise of discretion on
the part of the motions judge that warrants no intervention from this Court.
DISPOSITION
[29]
For the foregoing reasons, I would dismiss the
appeals with costs to Sanofi Canada but not to Schering.
"C. Michael Ryer"
"I
agree.
A.M.
Linden J.A."
"I
agree.
Marc
Noël J.A."
Email this Content