Date: 20051128
Docket: T-254-05
Citation: 2005 FC 1603
Ottawa, Ontario, November 28, 2005
PRESENT: The Honourable Justice Yves de Montigny
BETWEEN:
JANSSEN-ORTHO INC. AND
DAIICHI PHARMACEUTICAL CO., LTD.
Applicants
and
NOVOPHARM LIMITED AND
THE MINISTER OF HEALTH
Respondents
REASONS FOR ORDER
[1] The following reasons and order deal with a motion filed by the Respondents to strike an application made by the Applicants pursuant to subsection 6(5)(b) of the Patented Medicines (Notice of Compliance) Regulations ("NOC Regulations").
FACTS
[2] By letter dated December 20, 2002, Novopharm Limited ("Novopharm") served on Janssen-Ortho Inc. ("Janssen") a Notice of Allegation and Detailed Statement ("NOA") pursuant to section 5 of the NOC Regulations, in relation to 250 mg and 500 mg strengths of oral tablets of the drug levofloxacin (NOVO-LEVOFLOXACIN). The NOA alleged that Canadian Patent No. 1,304,080 (the '080 Patent) was invalid pursuant to subsection 5(1)(b)(iii) of the NOC Regulations.
[3] In response to this NOA, on February 7, 2003, Jansen and Daiichi Pharmaceuticals Co. Ltd. ("Daiichi") commenced application No. T-214-03 in the Federal Court, pursuant to the NOC Regulations. The Applicants sought an order prohibiting the Minister of Health from issuing to the Respondent Novopharm a Notice of Compliance ("NOC") in relation to 250 mg and 500 mg strengths or oral tablets of the drug levofloxacin until after the expiry of the '080 Patent.
[4] By Reasons for Order and Order dated November 19, 2004, Justice Mosley dismissed the application on the ground that the '80 Patent was invalid for obviousness (Janssen-Ortho Inc. v. Novopharm Ltd., [2004] FC 1631). The Applicants attempted to appeal the decision of Mr. Justice Mosley on various grounds, including that he had erred in applying an incorrect test for obviousness and that he had misapprehended the facts.
[5] This appeal was dismissed by the Court of Appeal as being moot, given that the Minister had issued a Notice of Compliance to Novopharm for the tablet formulation of levofloxacin prior to the hearing of the appeal. The Applicants had requested that the appeal be heard notwithstanding its mootness on various grounds, including that: a) an adversarial relationship existed between the parties due to the Applicants bringing an action against Novopharm for patent infringement; b) other NOAs would be brought by other generic drug companies to challenge the validity of the levofloxacin patent; and c) there were significant legal issues that were required to be resolved. The Court of Appeal rejected these arguments, first because a decision holding that an appeal is moot is not adjudicative of issues in an action for infringement, and also because it is preferable to wait and determine the point at issue in a genuine adversarial context. An application to extend the time for seeking leave to appeal to the Supreme Court of Canada was dismissed on May 25, 2005.
[6] In the meantime, the Applicants commenced an action on December 6, 2004 (court file no. T-2175-04), alleging infringement of the '080 Patent. Novopharm has counterclaimed for invalidity.
[7] By letter dated December 23, 2004, Novopharm served on Janssen a further NOA pursuant to section 5 of the NOC Regulations, in relation to 5 mg/mL (250 mg/50 mL, 500 mg/100 mL) strength of the drug levofloxacin in solution form for intravenous administration (NOVO-LEVOFLOXACIN). The NOA repeated the allegation that the '080 Patent was invalid. This NOA is in all material and substantive respects the same as the NOA dated December 20, 2002 in terms of allegations of invalidity of the '080 Patent. It relies explicitly on the decision reached by my brother Mosley J., while repeating several arguments (anticipation, claims broader than invention, insufficient specification and allegations of non-infringement) that it had lost before him.
[8] In response to that NOA, on February 11, 2005, Janssen and Daiichi commenced the within Application in the Federal Court pursuant to the NOC Regulations. The Applicants seek an order prohibiting the Minister of Health from granting to Novopharm a NOC in relation to NOVO-LEVOFLOXACIN injectable formulation until after the expiry of the '080 Patent.
[9] On September 20, 2005, the Respondent brought this motion to dismiss the application pursuant to subsection 6(5)(b) of the NOC Regulations, on the basis that the application is redundant, scandalous, frivolous, vexatious and an abuse of process. More particularly, the Respondent alleges that the application is an improper attempt to re-litigate the issue of invalidity of the '080 Patent.
ISSUES
[10] There is only one issue to be decided in the current proceeding, and it is whether the NOC proceeding launched by the Applicants should be dismissed by this Court, on the grounds set out in s. 6(5)(b) of the NOC Regulations.
ANALYSIS
[11] Subsection 6(5)(b) of the NOC Regulation reads as follows :
6(5) In a proceeding in respect of an application under subsection (1), the court may, on the motion of a second person, dismiss the application
(...)
b) on the ground that the application is redundant, scandalous, frivolous or vexatious or is otherwise an abuse of process.
[12] Novopharm's argument, as I understand it, is essentially that Janssen and Daiichi are attempting to re-litigate an issue which was decided by Justice Mosley, that is, that the '080 Patent is invalid for obviousness. Counsel for the Respondents relied essentially on the doctrine of abuse of process and issue estoppel as procedural mechanisms to have the NOC application dismissed.
[13] An abuse of process occurs when there has been a misuse of the court's procedure to the detriment of a party to litigation. As often reiterated in the case law, this doctrine is concerned with the finality of court rulings, fairness to the parties and the proper administration of justice. As was said in Canam Enterprises Inc. v. Coles (2000), 51 O.R.(3d) 481 (Ont. C.A.), at para. 34:
Maintaining open and ready access to the courts by all legitimate suitors is fundamental to our system of justice. However, to achieve this worthy purpose, the courts must be vigilant to ensure that our system does not become clogged with unnecessary, repetitious litigation. To allow the defendant to retry the issue of misrepresentation would be a classic example of abuse of process and a waste of time and resources of the litigants and the court. The retrying of the issues in this case would also erode the principle of finality that is crucial to the proper administration of justice. Thus, where agents as third parties must raise a defence to issues that are identical to those in a prior proceeding against their principle, the court is entitled to exercise its discretion and terminate the third party proceedings (and in this case the fourth party) as an abuse of process.
See also: Hoffman-La Roche Ltd. v. Minister of National Health and Welfare et al. (1998), 85 C.P.R.(3d) 50 (F.C.), at paras. 13-14.
[14] As much as the courts have said that the doctrine of abuse of process is a flexible tool, not in any way encumbered by the specific requirements of concepts such as issue estoppel, I believe that the discretion of the Court in a case like this one should be governed more or less by those same factors that ought to be taken into consideration when applying the doctrine of issue estoppel. After all, these two judicial doctrines have much in common and both aim at dispensing justice as efficiently and fairly as possible. The close analogy between abuse of process and issue estoppel is evident when reading in parallel the above-quoted extract from Canam Enterprises and the following quote from Justice Binnie in Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460, at pp. 473-474:
The law rightly seeks a finality to litigation. To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so. A litigant, to use the vernacular, is only entitled to one bite at the cherry. The appellant chose the ESA as her forum. She lost. An issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner. A person should only be vexed once in the same cause. Duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided.
Finality is thus a compelling consideration and judicial decisions should generally be conclusive of the issues decided unless and until reversed on appeal. However, estoppel is a doctrine of public policy that is designed to advance the interests of justice.
[15] As a result, I will focus my reasoning on the application of issue estoppel, as indeed both counsel for the Applicants and for the Respondents did at the hearing. There are basically three requirements for issue estoppel to apply: (i) that the same question has been decided; (ii) that the judicial decision which is said to create the estoppel was final; and (iii) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies. See [1975] 2 S.C.R. 248">Angle v. Minister of National Revenue, [1975] 2 S.C.R. 248, at p. 254; Danyluk v. Ainsworth Technologies Inc., supra, at p. 477; Procter & Gamble Pharmaceuticals Canada Inc. v. Canada (Minister of Health) (2003), 33 C.P.R.(4th) 193, at para. 17 (F.C.A.).
[16] There is no doubt in my mind that the three conditions for the application of issue estoppel have been met, and it was in fact conceded at the hearing by counsel for the Applicants. As previously mentioned, Mosley J. found that the '080 Patent is invalid for obviousness for the purposes of a proceeding under the NOC Regulations (Janssen-Ortho Inc. v. Novopharm Ltd., 2004 FC 1631). That decision involved the exact same parties, dealt with the same issue (i.e. the validity of the '080 Patent), and was final.
[17] The only question to be resolved by this Court, therefore, is whether I should exercise my discretion not to grant the motion because it would not be in the best interest of justice to do so. As Justice Binnie stated in Danyluk, supra, courts should refrain from applying the rules governing issue estoppel in a formal and mechanistic manner. Even if the standard requirements are met, judges should always remind themselves that "the underlying purpose is to balance the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of a particular case" (at p. 481).
[18] In the context of a previous decision made by an administrative tribunal, Justice Binnie listed seven factors to be weighed in deciding whether to exercise the discretion to grant or not to grant a motion to dismiss based on issue estoppel. Availability of an appeal and potential injustice to a litigant (which Justice Binnie saw as the most important consideration), are the most relevant factors in the present case.
[19] As regard the availability of an appeal, the Applicants Janssen and Daiichi stressed that one of the reasons invoked by Chief Justice Richard for denying leave to proceed with a moot appeal of the Mosley decision was that in the event that similar issues were to recur as a result of further NOAs, it was preferable to wait and determine those issues in a genuine adversarial context than have a moot appeal heard. Counsel for the Applicants also submitted that the decision of the Federal Court of Appeal did not amount to an effective appeal as it was based not on a review of the substantive issues but on a finding that the issue was moot.
[20] The Respondent Novopharm, on the other hand, claims that the Applicants do have an effective remedy to the extent that they have a right to commence a patent infringement action, as they did with their statement of claim filed on December 6, 2004. I must say that I find this argument convincing. It is true that the burden of proof on such an action is different and higher than in the context of a NOC application. But the result will be the same, eventually: if it is established that the '080 Patent has been infringed, Novopharm will have not only to withdraw its drug levofloxacin in oral tablets and in solution form for intravenous administration, but it will also have to pay damages to the Applicants. This is certainly the most effective and powerful procedural tool to vindicate the Applicants' rights, if ever they have been infringed. If need be, an expedited hearing of this action could be requested, ensuring that the matter is finally resolved as quickly as possible.
[21] The Applicants have also contended that there are new issues and more evidence in this second Application. They have filed three new affidavits, as well as additional reasons why the '080 Patent cannot be said to be obvious. Finally, they point to the fact that a U.S. District Court has decided, on December 23, 2004, that an equivalent patent for levofloxacin was valid and non-obvious (Ortho-McNeil Pharmaceutical Inc. et al v. Mylan Laboratories Inc. et al, Applicant's Responding Motion Record, p. 15).
[22] Once more, I find the arguments presented by the Respondents more compelling. First of all, the Applicants have not even attempted to show why these new affidavits could not have been filed before Justice Mosley. It is now trite law that a party is obliged to bring forward at one time all grounds which are relevant to the relief being sought. The doctrine of issue estoppel applies so that a party cannot raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings between the same parties. As Lord Denning said in Fidelitas Shipping Co. v. E/O Exportchleb, [1965] 2 All E.R. 4 (C.A.), at p. 9:
But within one cause of action, there may be several issues raised which are necessary for the determination of the whole case. The rule then is that, once an issue has been raised and distinctly determined between the parties, then, as a general rule, neither party can be allowed to fight that issue all over again. The same issue cannot be raised by either of them again in the same or subsequent proceedings except in special circumstances....And within one issue, there may be several points available which go to aid one party or the other in his efforts to secure a determination of the issue in his favour. The rule then is that each party must use reasonable diligence to bring forward every point which he thinks would help him. If he omits to raise any particular point, from negligence, inadvertence, or even accident (which would or might have decided the issue in his favour), he may find himself shut out from raising that point again, at any rate in any case where the self-same issue arises in the same or subsequent proceedings.
[23] There have been numerous applications of this principle. In AB Hassle v. Apotex Inc. (2005), 38 C.P.R. (4th) 216 (F.C.), Apotex was even precluded from alleging the invalidity of a patent because it could have been raised in a prior NOC proceeding. A fortiori, a party should not be allowed to bring new evidence to bolster its argument, except in the most exceptional circumstances that are not present in this instance: see, inter alia, Procter & Gamble Pharmaceuticals Canada Inc. v. Canada (Minister of Health), supra; Glaxo Group Ltd. v. Canada (Minister of Health) 2001 FCT 16 (F.C.). As for the decision from the United States District Court brought to the attention of the Court by the Applicants, it cannot be binding if only because no evidence has been presented as to whether the US patent is framed and written in the same way as the Canadian patent.
[24] Finally, the Applicants have strenuously argued that by bringing this motion over seven months after the commencement of their NOC Application, Novopharm has prejudicially affected the Applicants' rights and played a strategic game: it wished to see the Applicants' evidence prior to filing this motion, so goes their claim, in order to help it prepare its case in both this Application and in the related patent infringement action, without having to file their own evidence if they succeed in this motion.
[25] Suffice it to say that s. 6(5) does not set any particular delay for bringing a motion to dismiss a NOC Application. And I am not prepared to conclude, absent crystal clear evidence to the contrary, that Novopharm has been dishonest and has abused the process in filing their motion at this stage of the proceeding. This is an accusation of the utmost gravity, and I am not prepared to give countenance to this hypothesis just because counsel for the Respondents have opted for this particular timing in bringing their motion. Strategy should not be equated with deviousness. I note in passing that the Respondents does not seem to have made any false representations in the Court of Appeal, since they never said that they would never bring other NOAs in relation to the same patent.
[26] For all the above reasons, I am of the view that this motion to strike the application made by Janssen and Daiichi should be granted. Counsel for the Applicants and for the Respondents are invited to make submissions no later than ten days after this order is released, in writing, with respect to costs.
"Yves de Montigny"
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