Hoechst Aktiengesellschaft v. Adir, docket T-228-97

Date: 19980714

Docket: T-228-97

BETWEEN:

     HOECHST AKTIENGESELLSCHAFT

     Plaintiff

     Defendant by Counterclaim

     - and -

     ADIR and

     SCHERING CORPORATION

     Defendants

     Plaintiffs by Counterclaim

     REASONS FOR ORDER

REED, J.:

[1]      The defendant ADIR brings a motion for an order allowing it to amend its reply to Hoechst Aktiengesellschaft's ("Hoechst's") defence to ADIR's counterclaim, and to amend its defence to the claim of Schering Corporation ("Schering"). The action to which the pleadings relate seek the revision of various decisions of the Commissioner of Patents dated August 6, 1996. Those decisions were rendered pursuant to subsection 43(8) of the Patent Act, R.S.C. 1985, c. P-4, i.e., as a result of conflict proceedings.

[2]      In the conflict proceedings, the Commissioner of Patents considered a number of conflicting potential patent claims and allocated them between the parties through six written decisions. All six decisions were appealed and the appeals consolidated into the present action. Thus, the action is triangular in nature with each party asserting a right to a patent covering either the patent claims originally reviewed by the Commissioner of Patents or to substitute patent claims proposed by that party.

[3]      The proposed amendment relates to patent claims that encompass more than one compound (those composed of a common nucleus but different end chains are referred to in the materials as subclasses). The Patent Commissioner took the position that in the case of the claims before him, the party who first made one of the compounds of the group should be awarded a patent for the group claim. ADIR argues, contrary to the position being taken by both Hoechst and Schering in support of the Patent Commissioner, that the various subclasses of the group claim are patentably distinct and that the fact that one of the parties made one of the subclasses does not entitle it to a patent for the others.

[4]      ADIR seeks to amend its pleadings to allege (1) that Schering in other proceedings (e.g., proceedings in the United States) took a position inconsistent with that which it is taking before this Court with respect to ADIR's substitute claims, and (2) that the file record of those proceedings supports ADIR's position that the separate subclasses are patentably distinct and that a party who makes one or more compounds of a subclass cannot by prediction of pharmacological activities claim the compounds of a different subclass. ADIR also seeks by the amendment to add to its response to Hoechst's assertion that ADIR's substitute claims are not supportable by alleging that Hoechst itself is making similar substitute claims.

[5]      I will quote part of ADIR's Amended Notice of Motion, dated June 8, 1998:

8.      Where certain claims in conflict, such as C-21, C-26 and C-39 were covering a common nucleus such as perhydroindole with three or four end chains, ADIR in its Amended Defence and Counterclaim requested that each of these nuclei associated with one sub-class be a specific group of independent substitute claims.

9.      ADIR contends that these separate sub-classes in the substitute claims as alleged in paragraphs 116 to 119 are patentably distinct from one sub-class to another on the one hand and furthermore, contends that one applicant having made one or more compounds of one subclass such as phenyl-alkyl ending cannot by prediction of pharmacological activities claim that compounds of a different sub-class such as alkyls, cyclo-alkyls and hetero-alkyls have the same pharmacological activities.

10.      Schering contends that those sub-classes in ADIR's substitute claims are not patentably distinctive inventions in that all therapeutic activities are not sufficiently distinct to be an unobvious improvement over the invention made and disclosed in Schering application on the one hand and denied Adir's allegation that therapeutic activities were not predictable in respect of compounds differentiated only by the end chain which characterizes a sub-class from another.

11.      Schering alleges that the Commissioner correctly defined the scope of the conflicting claims (but for C26) and therefore all of the broad claims and sub-classes such as C-23, C-26 and C-39 should be awarded to the party who made the first compound within this sub-class.

12.      Plaintiff Hoechst denied the relevance of ADIR's substitute claims but itself has presented several substitute claims SC20-H-1-3, SC21-H-1-2-, SC22-H-1-3 and SC23-H-1-2SC31H 1-10 and SC31 H-1 which all consist of compounds where the end chain is a single sub-class ethyl-phenyl.

The conflict claims in suit

13.      There were at least four different patent applications co-pending before the Examiner between 1980 and 1992 at the time that the conflict was declared. These conflict claims were forty in number and claims C-17 to C-40 were in part in conflict with anyone or more of the three applicants parties to the present proceeding plus another undisclosed applicant in respect of claims C-37, C-38 which applicant did not contest the conflict.

14.      Those claims in conflict C-17 " C-40 were all independant claims of variable scope as determined by the Commissioner of Patents upon declaring the conflict and included single product claims such as C-19, C-24, C-35 etc. and broader claims of the same nucleus such as perhydroindole with a side chain selected from three or four subgroups such as alkyls, cyclo-alkyls, phenyl-alkyls and hetero-alkyls.

15.      Schering, in its pleadings in the present case, has acknowledged that the Commissioner of Patent, in defining the conflict into several independent claims, some broader claims which encompass narrower claims, did not make any error, and that therefore claims C-19 and C-35 which are included within claim C-39 can be independent one from another.

Facts discovered subsequent to the filing of 448 Affidavit

16.      Since the filing of all parties' list of documents on December 8, 1997, and, in particular, upon verifying the course of Schering corresponding U.S. Application No. 199,886 (which is one of two priorities of its Canadian one) additional material facts indicate that Schering has divided its corresponding U.S. Application into several divisional or CIP applications, wherein claims covered compounds differing either by the nucleus of the molecule or by the termination of a side chain, many of which in scope are similar or analogous to the substitute claims presented by ADIR, such as the claims in Application 117,008 which matured into patent 4,818,749.

17.      Schering's initial priority American Patent Application No. 199,886 filed on October 23, 1980, became, by way of CIP, ten different patent applications from which six American patents were granted, four patent applications being abandoned.

18.      The six American patents obtained by Schering as a result of Schering's initial priority American Patent Application No. 199,886 are American Patent No. 4,587,258 (covering compounds in the Ramipril family), American Patent No. 4,470,972 (covering compounds in the Spirapril family), American Patent No. 4,808,573 (covering compounds with a proline nucleus), American Patent No. 4,818,749 (covering compounds with a perhydroindole nucleus with phenyl end chain), American Patent No. 4,831,157 (process to prepare compounds of Ramipril), American Patent No. 5,348,944 (certain isomers of Ramipril).

19.      Defendant-Plaintiff by Counterclaim Adir has inquired with the Commissioner of Patent whether there were corresponding applications in Canada and was positively confirmed.

20.      ADIR is unaware of the status of such corresponding claim or application whether they are within the Schering application in conflict, in other confidential divisional applications or abandoned.

21.      It is in the interest of all parties to ascertain and verify that claims which could cover or encompass compounds within the claims C-17 to C-40 in suit are not remaining in other applications or undisclosed in the applications giving rise to the claims declared in conflict.

22.      While ADIR seeks to define different inventions in term of their end chain as alleged in paragraphs 116 to 119 of ADIR's Amended Defence and Counterclaim, Schering, in its U.S. Application 117,008, has even sought and obtained in U.S. Patent No. 4,818,749 21 claims, within the group compounds with a Perhydroindole nucleus with phényl-alkyl end chains.

23.      As a result, Defendant Plaintiff by Counterclaim ADIR wishes to allege such new material facts as alleged in paragraph 18A) of its Re-Amended Statement of Defence and Counterclaim.

24.      For the same reasons, Defendant Plaintiff by Counterclaim ADIR wishes to obtain the permission to file an Additional Affidavit of Documents which would list these foreign applications by Schering and Hoechst.

25.      These amendments will better define 1) the issue of admissibility of substitute claims and their patentability, 2) the nature and field of application of predictability of pharmacological properties pertaining to certain nucleus or end chains in a compound, and 3) assist in identifying relevant documentation to be produced by the parties within respective 448 list as well as the scope of discovery and correct certain ambiguity or defects in the pleadings and list of documents, 4) the scope of patents and claims sought by each party in their conclusions.

26.      No prejudice will be suffered by the Plaintiff or by the Defendant Plaintiff by Counterclaim Schering, as these amendments reflect material facts emanating from Defendant Plaintiff by Counterclaim Schering and of which they are obviously aware.

27.      On the other hand, the refusal to allow the amendments will prejudice the Defendant Plaintiff by Counterclaim ADIR and the Court insofar as it is in the interests of justice that the material facts and the questions in issue based on the most recent and relevant evidence be placed before the Court. [Errors and underlining are in original]

[6]      Schering and Hoechst object to the amendment on the ground that: (1) the positions taken in the other proceedings are irrelevant because the compounds are not the same as those that were before the Commissioner of Patents (the claims in the other proceedings relate to nuclei that are composed of two-five member rings); (2) estoppel does not exist in any event because ADIR cannot show any detrimental reliance on the positions taken by Schering in the United States proceeding; (3) file wrapper estoppel is not part of Canadian law. In addition to those arguments Hoechst adds that: (4) ADIR's amendment is inconsistent with its other pleadings; (5) ADIR mistakes Hoechst's position with respect to ADIR's substitute claims.

[7]      The starting point is decisions such as that in Francoeur v. Canada, [1992] 2 F.C. 333 (F.C.A.), Beattie v. Canada (1995), 89 F.T.R. 121 (Fed. Proth.), and Enoch Band of Stony Plain Indians v. Canada (November 18, 1993, A-294-77, A-52-92). In the Enoch Band case the Federal Court of Appeal made it very clear that the Court should only "deny amendments in plain and obvious cases" where the matter is "beyond doubt". It was held that amendments should not be denied when one is dealing with an area of the law that cannot be said to be settled with certainty.

[8]      I turn then to the arguments put forward as reasons to refuse to allow the proposed amendments. With respect to the first argument, I agree with ADIR's response that that argument is focussed on the wrong question. The question is not whether the two chemical structures are identical but whether when the end chain of the subclasses is different, the principles of pharmacological effect and predictability apply to justify an award of all the subclasses to the party that made the first one. It is the similarity of the positions taken, not the indistinguishableness of the compounds that matters.

[9]      With respect to the lack of detrimental reliance, ADIR asserts that there is more than one kind of estoppel and not all require detrimental reliance as an element. Reference is made to Halsbury's Laws of England (1992), v. 16, para 957. In the present case, I would describe ADIR's argument as that which is colloquially described by the expression: "you can't suck and blow at the same time". Part of the passage from Halsbury's reads:

On the principle that a person may not approbate and reprobate, a species of estoppel has arisen which seems to be intermediate between estoppel by record and estoppel in pais. The principle that a person may not approbate and reprobate expresses two propositions:

(1)      that the person in question, having a choice between two courses of conduct, is to be treated as having made an election from which he cannot resile, and

(2)      that he will not be regarded, in general at any rate, as having so elected unless he has taken a benefit under or arising out of the course of conduct which he has first pursued and with which his subsequent conduct is inconsistent. [footnotes omitted]

[10]      With respect to the use of material found in a file record (sometimes called file wrapper estoppel), Schering and Hoechst cite the decisions in Amfac Foods Inc. v. Irving Pulp & Paper Ltd. (1984), 2 C.I.P.R. 115 (F.C.T.D.)¹ and P.L.G. Research Ltd. et al. v. Jamoch Steel Fabricating Co. (1991), 35 C.P.R. (3d) 346 (F.C.T.D.),² aff'd (1992), 41 C.P.R. (3d) 492 (F.C.A.), at 492, for the proposition that the file records of patent applications are not admissible.

[11]      Counsel for ADIR cites the decisions in [1968] S.C.R. 307">Laboratoire Pentagone Limitée v. Parke, Davis & Company, [1968] S.C.R. 307, [1959] S.C.R. 245">Beatty Bros. Limited v. Lovell Manufacturing Company, [1959] S.C.R. 245, Foseco Trading A.G. v. Canadian Ferro Hot Metal Specialities (1991), 36 C.P.R. (3d) 35 (F.C.T.D.), Crilla Plastics Industries Ltd. v. Ninety-Eight Plastic Trim Ltd. (1985), 6 C.P.R. (3d) 137 (F.C.T.D.), Heffco Inc. v. Dreco Energy Services Ltd. (1995), 62 C.P.R. (3d) 81 (Fed. Proth.), Cochlear Corp. v. Cosem Neurostim Ltée. (1995), 64 C.P.R. (3d) 10 (F.C.T.D.), Montreal Fast Print (1975) Ltd. v. Polylok Corporation (1983), 75 C.P.R. (2d) 95 (F.C.T.D.), and Carnation Foods Co. Ltd. v. Amfac Foods Inc. et al. (1982), 63 C.P.R. (2d) 203 (F.C.A.). He draws from this jurisprudence the conclusion that file record material may in some circumstances be admissible and that the admissibility and relevance of such material is often a matter best left to the trial judge. He argues that the Laboratoire Pentagone case is particularly relevant. Also, he notes that he is not seeking to use the material found in the United States file record to interpret the scope of the patent claims, the purpose for which such material was found inadmissible in Amfac (supra). Counsel is seeking to adduce such evidence as relevant to the question of the predictability of pharmacological effect and patentable distinctiveness. These are issues of fact relating to validity.

[12]      I find counsel for ADIR's arguments persuasive. I am not convinced that in this case an interlocutory motion in relation to pleadings is the appropriate place to determine questions of the admissibility or relevance of the file record material in question. I cannot conclude that it is clearly irrelevant or inadmissible. I am not persuaded that all file record material is automatically inadmissable in all cases. What material from the file record is relevant and admissible and the purpose for which it is relevant is a matter best left for the trial judge. I do not think that that issue can usefully be decided at the pleading stage.

[13]      With respect to Hoechst's objection to the amendment on the ground that ADIR's amendment contradicts its own pleadings, counsel for ADIR notes that this is not correct; ADIR's pleading denies separate inventions arise because different isomers exist, not because of different end chains. With respect to the argument that the amendment, as addressed to Hoechst's position, misreads that position with respect to ADIR's substitute claims, as I understand counsel's response it is that all the claims Hoechst wants to have awarded to it have a phenyl ethyl chain ending and therefore evidence that relates to the predictability of pharmacological effect arising with respect to that subclass is relevant to the Hoechst's claim. I accept counsel for ADIR's reasoning. I am persuaded that Hoechst's arguments are ones that can best be dealt with at trial.

[14]      For the reasons given, the amended pleading will be allowed.

    

                                 Judge

OTTAWA, ONTARIO

July 14, 1998

__________________

     ¹      At 143-144.

     ²      At 349-350.