Date: 20030613
Docket: A-552-02
Citation: 2003 FCA 263
CORAM: RICHARD C.J.
NOËL J.A.
PELLETIER J.A.
BETWEEN:
APOTEX INC.
Appellant
and
BRISTOL-MYERS SQUIBB COMPANY
BRISTOL-MYERS SQUIBB COMPANY INC. and
THE UNIVERSITY OF KENTUCKY RESEARCH FOUNDATION
Respondents
Heard at Ottawa, Ontario, on June 4, 2003.
Judgment delivered at Ottawa, Ontario, on June 13, 2003.
REASONS FOR JUDGMENT BY: PELLETIER J.A.
CONCURRED IN BY: RICHARD C.J.
NOËL J.A.
Date: 20030613
Docket: A-552-02
Citation: 2003 FCA 263
CORAM: RICHARD C.J.
NOËL J.A.
PELLETIER J.A.
BETWEEN:
APOTEX INC.
Appellant
and
BRISTOL-MYERS SQUIBB COMPANY
BRISTOL-MYERS SQUIBB COMPANY INC. and
THE UNIVERSITY OF KENTUCKY RESEARCH FOUNDATION
Respondents
REASONS FOR JUDGMENT
PELLETIER J.A.
[1] This is an appeal of an order severing the trial of issues of liability from issues of the quantum of recovery in an action in which the plaintiff alleges infringement of its patent with respect to a pharmaceutical product. The appellant, defendant in the action, alleges that the motions judge acted on a wrong principle in holding that, in pharmaceutical matters, bifurcation orders are the usual practice, and that it is the departure from that practice which must be justified. It is also urged upon us that the motions judge erred in his appreciation of the evidence when he found that the order he made would result in a reduction of the complexity, length and cost of the trial of this matter.
[2] The Statement of Claim in this matter was issued on July 18, 2001. The Statement of Defence and Counterclaim was filed on September 4, 2001, and the Defence to Counterclaim was filed on October 18, 2001. The respondents have delivered three affidavits of documents while the appellants have yet to deliver theirs. No examinations for discoveries have taken place. The reason for the motion for severance was to determine the scope not only of the trial, but of the production of documents and oral examinations which will precede it.
[3] The judge's order recites that, in cases such as the present, bifurcation orders are commonly entered into by the parties, and that the appellants had failed to convince him that the usual practice should not be followed. The judge held that he was satisfied that there would be no overlap of witnesses as between issues of liability and issues of compensation, and that there would be a reduction in the complexity of the trial as well as a reduction in its cost. Declaring himself to have been satisfied that it would result in the just, most expeditious and least expensive determination of the issues, the judge made the following order:
1. The motion be granted with costs;
2. All issues of facts pertaining to:
a) any questions as to the extent of any infringement of the plaintiff's rights;
b) any questions as to the damages arising from any said infringement; and
c) any questions relating to the profits arising from any such infringement;
be determined after trial as the subject of a hearing, if it then appears that such issues are required to be decided.
3. The plaintiffs be entitled to an examination for discovery and production of documents from the defendants prior to making their election between profits and damages; and
4. Any examination for discovery and production of documents in respect of the plaintiff's damages only occur after plaintiff's make their election and only if plaintiffs elect to recover their damages.
[4] This order is now challenged on a number of grounds which can be summarized as follows:
1. The judge erred is proceeding on the basis that it was for the appellant to convince him why an order should not be made when it was for the respondents to persuade him that an order should be made.
2. The judge erred in assuming that the respondent could elect the equitable remedy of an accounting as of right.
3. The judge erred in fact in finding that such an order would reduce length, cost and complexity of the trial, and in not taking into account the appellants to the opposite effect.
4. The judge erred in failing to provide for the appellant's right to oral and documentary discovery of the respondents on the issue of remedy.
[5] As this is an appeal from a discretionary order of a judge, this Court will not intervene unless it is shown that the judge misapprehended the facts or committed an error in principle in deciding the matter as he or she did. Eli Lilly Canada Inc. v. Canada (Minister of Health) 2001 FCA 108, [2001] F.C.J. No. 613.
[6] The order in issue here was made pursuant to Rule 107 of the Federal Court Rules 1998, reproduced below:
| 107. (1) The Court may, at any time, order the trial of an issue or that issues in a proceeding be determined separately.
(2) In an order under subsection (1), the Court may give directions regarding the procedures to be followed, including those applicable to examinations for discovery and the discovery of documents.
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107. (1) La Cour peut, à tout moment, ordonner l'instruction d'une question soulevée ou ordonner que les questions en litige dans une instance soient jugées séparément.
(2) La Cour peut assortir l'ordonnance visée au paragraphe (1) de directives concernant les procédures à suivre, notamment pour la tenue d'un interrogatoire préalable et la communication de documents.
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[7] It is true that an applicant seeking an order under rule 107 must satisfy the court that the conditions for the making of such an order have been satisfied. See Illva Saronno v. Privilegiata Fabbricata Maraschino "Excelsior" (1998), 84 C.P.R. (3d) 1 (F.C.T.D.) at paragraph 14. Beyond that, there is also the principle that "it is a basic right of a litigant to have all issues in dispute resolved in one trial". Elcano Acceptance Ltd. v. Richmond, Richmond, Stambler, Mills (1986), 55 O.R. (2nd) 56 (C.A.) at p. 59. Consequently, I agree with the appellant that a party seeking an order severing the trial of some issues from the trial of others must justify the departure from the usual practice.
[8] Counsel for the appellant suggested that no conclusion could be drawn from the evidence that a number of bifurcation orders had been made on consent, on the ground that each case stood on its own facts. However, such cases may also have certain things in common. William L. Hayhurst Q.C., a distinguished member of the intellectual property bar had this to say about the practice in patent litigation:
Because the trial of an action for patent infringement may be lengthy and complex (largely because of the technology involved rather than because of any special difficulty about the applicable law), the parties have commonly agreed to an order deferring an inquiry into damages or an accounting until the court has decided whether the patentee has established its right to any remedy. This may eliminate some needless pre-trial discovery and avoid premature disclosure of confidential financial information. If discovery after trial is required, anything that may have been held not to infringe may be ignored, at least if no appeal is pending.
Hayhurst, W.L. "Remedies" in Henderson, G. Patent Law in Canada, Carswell, Toronto 1994 at p. 289.
[9] When an experienced specialist bar like the intellectual property bar commonly consents to the making of a bifurcation order, it is open to a judge to infer that, in general, such an order may well advance the just and expeditious resolution of claims. But this is only one factor to be considered, and it is not conclusive of the issue.
[10] The onus in applications for a bifurcation order is always on the applicant. On the facts of this case, I am satisfied that the judge addressed his mind to the proper factors when, after reciting the criteria which he considered had been satisfied, he declared that he was satisfied that the severance of the proceedings would "more likely than not result in the just, most expeditious and least expensive determination of the proceedings on the merits". I do not take his reference to justifying a departure from past practice as imposing upon the appellant a burden which it would not otherwise have had. Once there was evidence before the judge upon which he could conclude that an order could properly be granted, the appellant was in the position where its failure to lead evidence exposed it to the risk of an adverse result. This has been referred to as the tactical burden:
It is not strictly accurate to speak of the burden shifting to the defendant when what is meant is that evidence adduced by the plaintiff may result in an inference being drawn adverse to the defendant. Whether an inference is or is not drawn is a matter of weighing evidence. The defendant runs the risk of an adverse inference in the absence of evidence to the contrary. This is sometimes referred to as imposing on the defendant a provisional or tactical burden.
Snell v. Farrell, [1990] 2 S.C.R. 311 at p. 319-320 per Sopinka J.
[11] As a result, given that there was evidence before the judge capable of supporting the making of an order, the appellant was exposed to the risk of an adverse result unless it took steps to counter that evidence. In other words, it had the tactical burden. While it is not correct to say that the appellant had the burden of justifying a departure from past practice, the appellant did have the tactical burden of countering the effect of the evidence before the judge. To that extent, the judge did not impose on the appellant a burden which it would not otherwise have had.
[12] The appellant questions the judge's conclusion that a bifurcation order reduces the length and complexity of trials, relying upon its experience in three other matters. Such proof is ambiguous at best. It is as probative of the appellant's manner of conducting litigation as it is of the merits or demerits of any particular step in litigation. It would not be an error to assign little weight to this evidence, as the judge evidently did.
[13] The appellant raises the fact that it has put into issue the question of the respondent's entitlement to the equitable remedy of an accounting, suggesting that a separate proceeding will be required to resolve that issue, after the trial on liability but before the issues of quantum can be addressed. However, when the respondent demanded particulars of its purported disentitlement to an accounting of profits, the appellant filed a Reply to Demand for Particulars in which it simply stood upon its position that the respondent must demonstrate its entitlement.
[14] The fact that equitable remedies are discretionary means that the respondent cannot elect an accounting of profits as of right. That said, a discretionary remedy is not an arbitrary remedy. In the absence of proof of a bar to equitable relief, a claimant can expect to be granted the remedy it seeks in accordance with the principles governing its availability. Nor does the issue of a bar to equitable relief require the claimant to disprove every ground which could possibly disentitle it to that relief. It is not open to a party to argue that its opponent has not sufficiently disproven a given bar. All this to say that there is no reason why the issue of the respondent's right to elect an accounting of profits cannot be dealt with in the liability portion of the trial. The appellant having denied that it relies upon particular facts to say that the respondent is not entitled to an accounting, the trial judge can deal with the question of entitlement on the basis of the respondent's own evidence.
[15] This leads to the final ground of appeal which is that the judge erred in failing to provide for the appellant's right of oral and documentary discovery prior to the respondent's choice of remedy. I am in agreement with the following passage from Apotex Inc. v. Merck & Co. Inc., 2002 FCT 626, [2002] F.C.J. No. 840 cited in paragraph 59 of the Respondent's Memorandum:
[para52] In my view, the procedure proposed by Merck is proper, and it ought not be required to submit to discovery unless it elects damages. In deciding this issue, regard again ought to be had for Rule 3 and considerations of time and efficiency. Unless Merck elects damages, any information relevant to the remedy of accounting of profits would be wholly within Apotex's knowledge and possession. I fail to see how Merck could have information relevant to this issue, and thus it would cause unnecessary expense and delay were they to be discovered.
[16] In the end result, I am in agreement with the motions judge's conclusions and can see no reason to interfere with his order. I would, however, clarify the order to this extent. The judge has put over the issue of determining "any questions as to the extent of any infringement of the plaintiff's rights". I take this to mean that the questions of when and where and for how long infringement occurred will be dealt with in the liability portion of the trial. The only questions remaining for the second portion of the trial as to the extent of the infringement, if any, are questions relating to the quantification of the infringement proven in the liability portion of the trial. There is to be no retrial of the issues of when, where and how long infringement occurred, if indeed it did, in the remedies portion of the trial under the guise of quantifying the plaintiff's remedy.
[17] The appeal will be dismissed with costs.
"J.D. Denis Pelletier"
J.A.
"I agree
J. Richard, C.J."
"I agree
Marc Noël J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-552-02
STYLE OF CAUSE: APOTEX INC. v. BRISTOL-MYERS SQUIBB COMPANY, BRISTOL-MYERS SQUIBB CANADA INC. and THE UNIVERSITY OF KENTUCKY RESEARCH FOUNDATION
PLACE OF HEARING: OTTAWA
DATE OF HEARING: JUNE 4, 2003
REASONS FOR JUDGMENT: PELLETIER J.A.
CONCURRED IN BY: RICHARD C.J.
NOËL J.A.
DATED: JUNE 13, 2003
APPEARANCES:
Mr. Nando De Luca FOR THE APPELLANT
(416) 979-2211
Mr. Alexander Mackin FOR THE RESPONDENT
Ms Jennifer Wilkie
(613) 786-0106
SOLICITORS OF RECORD:
Goodmans LLP FOR THE APPELLANT
Toronto, Ontario
Gowling Lafleur Henderson LLP FOR THE RESPONDENT
Ottawa, Ontario
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