Date: 20040211
Docket: T-1100-97
Citation: 2004 FC 206
BETWEEN:
ELI LILLY AND COMPANY and
ELI LILLY CANADA INC.
Plaintiffs
- and -
APOTEX INC.
Defendant
AND BETWEEN:
APOTEX INC.
Defendant
(Plaintiff by Counterclaim)
-and-
ELI LILLY AND COMPANY
and ELI LILLY CANADA INC.
Plaintiffs
(Defendants by Counterclaim)
-and-
NOVOPHARM LTD.
Defendants by Counterclaim
REASONS FOR ORDER
ARONOVITCH, P.
[1] The plaintiffs raise the question of the meaning to be given to "grave consequences" in the context of this patent infringement action commenced by Lilly in respect of the medicine nizatidine.
[2] Lilly has brought a motion to amend its statement of claim seeking various relief on account of "grave consequences", on the basis that this Court has indicated on numerous occasions that there would be such consequences to a generic drug manufacturer who sends a misleading Notice of Allegation (NOA) to an innovator in order to obtain approval to market a generic drug.
[3] The allegations of facts that nourish the claim for grave consequences are not disputed by the defendant, who concedes that the conduct complained of, if proven, may entitle Lilly to exemplary damages or solicitor and client costs - not however to the relief claimed by Lilly in consequence of those act.
[4] In summary, the allegations of fact, which, as I have said, are not disputed are as follows. Nizatidine was the subject of two NOAs and two proceedings, one for prohibition, one for certiorari under the Patented Medicines (Notice of Compliance) Regulations (the PMNOC Regulations). Lilly alleges that in the case of the first NOA, Apotex represented that it would rely upon Novopharm's compulsory license to acquire only licensed nizatidine, thereby not infringing the plaintiffs' patent, and that contrary to its undertaking Apotex did not in fact sell licensed nizatidine.
[5] In respect of the second NOA, it is alleged that a version of the process that was being used by Apotex was different from the process originally claimed. Lilly eventually moved for certiorari, seeking to quash Apotex' Notice of Compliance ("NOC") issued in respect of its second application to the Minister. In the adjudication of the application, Mr. Justice Teitelbaum found the information supplied as to process by Apotex, "to say the least misleading". (Eli Lilly and Co. v. Apotex Inc. 87 C.P.R (3d) 83).
[6] There is another proceeding that is germane. Following the above proceedings, Apotex instituted an ongoing action, pursuant to section 8 of the PMNOC Regulations, in Court File T-320-01, claiming damages arising as a result of losses suffered by Apotex during the period it was left off the market due to Lilly's prohibition application under section 6(1) of the Regulations. I shall refer to this action as Apotex' section 8 claim.
[7] On the basis of the allegations that Apotex' two NOAs are inaccurate and misleading, Lilly claims the following additional relief in this action in respect of "grave consequences"; a stay of Apotex' section 8 action, and such other unspecified relief as the Court may grant for "grave consequences" and patent infringement.
[8] More precisely, the disputed paragraphs of the draft statement of claim consist of the emphasized sections of paragraph 32, as well as paragraphs 37(7) and (10) of the amended claim as follows:
32. Consequently, the Plaintiffs are entitled to relief including, without limitation, punitive damages, for example, in an amount that is triple of whatever damages are awarded for infringement, or such other amount as the Court deems just; an order declaring that Apotex is precluded from seeking relief or, in the alternative, permanently staying any claims for relief pursuant to Section 8 of the Patented Medicines (Notice of Compliance) Regulations in respect of nizatidine; and such other relief as the Court may deem appropriate by way of grave consequences or patent infringement. (Emphasis added)
33. The Plaintiffs therefore claim:
(7) an order declaring that Apotex is precluded from seeking relief for any delay in the issuance of its Notice of Compliance pursuant to Section 8 of the Patented Medicines (Notice of Compliance) Regulations in respect of nizatidine or, in the alternative, permanently staying any such proceedings;
(10) such further and other relief in respect of patent infringement and grave consequences as the Plaintiffs may claim and this Honourable Court may award, as is proper under the circumstances.
GRAVE CONSEQUENCES
[9] The term "grave consequences" first entered into the language of patent infringement proceedings before the Federal Court in the decision of Mr. Justice Stone in Hoffmann-La Roche v. Canada (Minister of National Health and Welfare) (1996) 70 C.P.R. (3d) 206 at 213, where he found that if the detailed statement provided in the generic's NOA was subsequently shown to be inaccurate, the consequences for the generic "could well be very grave indeed."
[10] This language reappeared in the above-noted decision of Mr. Justice Teitelbaum in Eli Lilly, wherein he dismissed the plaintiffs' application for an order of certiorari to quash the NOC issued to Apotex in respect of nizatidine.
[11] Notably, the plaintiffs in that proceeding sought to quash the Minister's decision and revoke Apotex' NOC on the very basis that is now asserted in the statement of claim. In dismissing the application, Mr. Justice Teitelbaum concluded that patent infringement proceedings, and not certiorari proceedings, is the proper forum to determine inaccuracies or inadequacies in the disclosure provided in an NOA, and that if the NOA were found to be inaccurate in the infringement proceeding, the defendant "could be subject to grave consequences such as, in addition to ordinary damages, punitive damages and solicitor-client costs."
[12] The term "grave consequences" was also referenced by the Federal Court of Appeal in dismissing the appeal of Mr. Justice Teitelbaum's decision, where Mr. Justice Evans stated:
If, at the end of the infringement proceeding, Apotex is found, both to have infringed Lilly's patent, and to have misconducted itself prior to the issue of the NOC, it would be open to the Judge to award punitive damages or solicitor-client costs, as the Motions Judge suggested. Such remedies would certainly constitute "grave consequences" of the kind contemplated by Stone J.A. in Hoffmann-La Roche, supra.
Eli Lilly and Co. v. Apotex Inc. 9 C.P.R. (4th) 439 at 442.
[13] The plaintiffs accept that the nature of grave consequences is, as yet, unclear. It may be a cause of action ancillary, or incidental to a patent infringement, thus the plaintiffs' characterization of the action as being for patent infringement and grave consequences. In the alternative, says Lilly, "grave consequences" may constitute an additional set of equitable or legal remedies for patent infringement. Lilly maintains that the nature of "grave consequences" is unsettled at law, and since it is being raised for the first time in the present patent infringement proceeding, the plaintiffs' motion to amend their statement of claim in respect of grave consequences should not be refused merely because the claim is novel.
[14] Notwithstanding the able argument of counsel, I find nothing in the jurisprudence to suggest that the warning of grave consequences to a generic manufacturer is anything other than a foreboding of potential liability for additional or aggravated penalties that are known at law, and presently available on account of patent infringement.
[15] To begin, "grave consequences" cannot be said to be an independent cause of action. In Domco Industries Ltd. v. Mannington Mills Inc. and Congoleum Corp. (1990), 29 C.P.R. (3d) 481 at 496 (F.C.A.), Iacobucci, C.J. (as he then was), adopted the concept of "cause of action" stated by Lord Justice Diplock in Letang v. Cooper, [1964] All E.R. 929 (C.A.) at 934:
"A cause of action is simply a factual situation the existence of which entitles one person to obtain from the Court a remedy against another person."
[16] In Merck & Co. v. Nu-Pharm Inc. _1999_ F.C.J. No. 1857 at paragraphs 15-16, I cited the foregoing passage, and noted that in addition to the factual component, there is a legal one pertaining to a judicial remedy. In that case, I agreed with the defendant's contention that there is no cause of action for breach of injunction since, as a matter of law, breach of injunction does not give rise to
any remedy in a civil action. In citing the decision of the Federal Court of Appeal in Lubrizol Corp.
v. Imperial Oil Ltd. (1996), 67 C.P.R. (3d) 1, I found that while there was no remedy in damages for breach of injunction in a case of patent infringement, disregard for an injunction might support an award of exemplary damages.
[17] Similarly, as a matter of law, allegations of a misleading or inaccurate NOA, of themselves are not facts that justify or give rise to a defined remedy in an action that can be prosecuted in respect of that cause of action alone. For the same reason "grave consequences"can also not be grafted onto a patent infringement as incidental to it. As to the jurisprudence cited by counsel, it does not so much as hint that the plaintiffs' allegations in that regard may found an action separate from infringement.
[18] Indeed, in the certiorari proceeding, at first instance as on appeal, the Court refused to grant Lilly the remedy sought in respect of the allegedly misleading NOA, and indicated instead that Lilly was to seek remedies for patent infringement in a patent infringement proceeding.
[19] As to whether grave consequences may simply be a remedy, the notion is consonant with the reasons of Justices Evans and Teitelbaum, who make the point that remedies such as punitive damages and elevated costs, in fact, constitute grave consequences. While it is agreed that the list of remedies cited by the Court as grave consequences is not exhaustive, there is no indication in any of the judgments that grave consequences may amount to separate, new or unspecified forms of relief. There is also no suggestion in the Court's premonition of grave consequences, that a plaintiff's claims for a misleading NOA cannot be adequately addressed by the existing forms of relief available in a patent infringement action.
[20] This leads me to find beyond doubt, that allegations that may attract "grave consequences" will not found a novel, or indeed, any cause of action at law, and that "grave consequences are no more than forms of relief currently available for patent infringement.
DECLARATORY RELIEF AND STAY OF SECTION 8 ACTION
[21] The form of relief sought to be added to the claim by Lilly and, most strenuously opposed by Apotex is the declaration that Apotex be precluded from seeking relief for any delay in the issuance of its NOC, in the section 8 action or, in the alternative, permanently staying any such proceedings.
[22] Lilly concedes that the declaration will go as the stay goes. I will accordingly focus the discussion on the availability of a stay.
[23] Given my findings above, I take it that the issue for my consideration is whether a stay of another proceeding, may be granted as a remedy in an action for patent infringement or, in the parlance of a motion to strike, whether it is plain and obvious that the relief claimed by Lilly is not available in an action for patent infringement that includes allegations of misleading NOAs.
[24] Lilly opens its argument by stating that it would be perverse to allow a claim for damages pursuant to section 8, if it were established either that the NOAs were inaccurate, or that Apotex had infringed the plaintiff's patent. It argues that no compensation should be available to an infringer who can go to market with the patented medicine and claim for delays incoming to market, in direct violation of the innovator's patent rights, when the delay would have been justified to prevent patent infringement.
[25] While the plaintiffs are unable to direct the Court to any authority directly on point they presented the following argument. As a Court of Law, Equity and Admiralty, the Federal Court has jurisdiction to formulate remedies as appropriate at law and equity, where it has jurisdiction over the subject matter before it, such as patent infringement and matters ancillary to patent infringement. (Teledyne Industries Inc. v. Lido Industrial Products Ltd. (1982) 68 C.P.R. (2d) 204).
[26] Section 50 of the Federal Courts Act provides explicit jurisdiction in the Court to stay proceedings. Similarly, says Lilly, with respect to stays generally, a Court may stay a proceeding, even a proceeding before another Court, where to do so serves the interests of justice. (Wood v. Connolly Brothers, Ltd., 1911 1 Ch. 731 (Eng. C.A.); and Kelman v. MacInnis, _1993_ O.J. No. 505 (O.C.J., Gen.Div.)). All the more so, according to the plaintiffs, where the Federal Court would be staying its own action, thus eliminating the issue of jurisdiction.
[27] The above-noted cases in my view turn on their particular facts, and will not support the broad and general assertion made by the plaintiffs. Certainly they are to be distinguished from the case at bar.
[28] In Wood, supra, the Chancery Division held that it had jurisdiction to restrain proceedings in the County Palatine of Lancaster, and ordered that the defendant should be restrained from proceeding with or taking any further action in the Palatine Court. On appeal, Cozens-Hardy, M.R. held that the Chancery Division had the jurisdiction to restrain the defendant from proceeding with a duplicative and vexatious proceeding in the Palatine Court by issuing an injunction in personam against the defendant, and declined to decide the question whether the Chancery Court could issue an injunction against the proceedings in the Palatine Court because it was an inferior court.
[29] In their concurring decisions, each of Fletcher Moulton L.J. and Buckley L.J. take pains in Woods to distinguish the injunction in personam against the defendant from any order staying a proceeding in another Court. In particular, Buckley L.J. stated at 748 that:
In my view the plaintiff resorted to the Palatine Court for a purpose which was not legitimate and his proceedings were vexatious and oppressive. On that ground this Court is fully entitled, not to interfere with the other Court, but to prevent the party from further prosecuting his action in the other Court.
[30] In Kelman, supra, the Ontario Court of Justice - General Division granted a stay of an action in the Small Claims Court pursuant to sections 107(a) and (c) of the Courts of Justice Actwhere the actions were not identical, but where there were several significant common factual and legal issues and the balance of prejudice supported the stay. The case is not analogous to our own, as a stay of a Court of coordinate jurisdiction is at issue here. More importantly, in Kelman, the Court had explicit statutory authority to grant the stay by virtue of section 107(1)(e)(I) of the Courts of Justice Act.
[31] It cannot be argued that section 50 of the Federal Courts Act is such statutory authority. The extraordinary power to stay a proceeding in another Court requires express language to that effect. Absent such express authority, a stay of proceedings is clearly an order by which the Court stays or suspends its own proceeding not that of another Court. ( Always Travel Inc. v. Air Canada [2003] F.C.J. No. 133; Canadian Pacific Railway Co. v. Sheena M. (The) [2000] 4 F.C. 159).
[32] Mr. Justice Hugessen's observation in Always, supra, that superior courts do no not order each other about or make orders interfering with each others' process is apt in the circumstances. It matters not that the two proceedings at issue in this case are in the same jurisdiction, as the judges seized of hearing the two actions, in my view, constitute two separate and distinct Courts, each with the power and jurisdiction to control its own proceeding.
[33] Section 50 of the Federal Courts Act cannot be taken as a statutory basis for the Federal Court sitting in a patent infringement case to order the stay of a separate section 8 action, potentially at the trial stage, as presided over by another judge of the Federal Court, even though such proceeding may involve the same parties, and some similar evidence. There is no case that I am aware of, and none is suggested by Lilly, where a stay of a Federal Court action has been brought or granted in this Court in a proceeding other than the one sought to be stayed.
[34] Given my conclusion that the relief sought by the plaintiffs is not available. I will not belabour the point that Lilly has, in any case, failed to show that this is an appropriate case for a stay, by failing to provide evidence that the proceedings are duplicative, or that the determination of the issues in one proceeding would be determinative of the issues in the other.
[35] Finally, the plaintiffs acknowledge that they are not precluded from defending the section 8 action on the basis of the allegations of a misleading NOA. Nor are they prevented from seeking a stay of the section 8 action in the context of that proceeding. That, in my view, is the proper and indicated course of action, assuming of course that the applicants can establish the necessary elements for a stay.
CONCLUSION
[36] For the above reasons I conclude that "grave consequences" is merely a descriptive phrase rather than a term of art that carries a specified meaning. The expression does not denote an independent cause of action, nor any form of legal or equitable relief other that is available for patent infringement and is accordingly improperly pleaded on its own account.
"Roza Aronovitch"
Prothonotary
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1100-97
STYLE OF CAUSE:
ELI LILLY AND COMPANY and
ELI LILLY CANADA INC.
-and-
APOTEX INC.
-and-
ELI LILLY AND COMPANY and
ELI LILLY CANADA INC.
-and-
NOVOPHARM LTD.
PLACE OF HEARING: OTTAWA, ONTARIO
DATE OF HEARING: OCTOBER 23, 2003
NOVEMBER 7, 2003
REASONS FOR ORDER OF MADAM PROTHONOTARY ARONOVITCH
DATED: FEBRUARY 11, 2004
APPEARANCES:
MR. JAY ZAKIAB FOR PLAINTIFFS
MS. BEVERLEY MOORE
MR. DAVID M. SCRIMGER FOR DEFENDANT
"APOTEX INC."
SOLICITORS OF RECORD:
GOWLING LAFLEUR HENDERSON LLP FOR PLAINTIFFS
OTTAWA, ONTARIO
GOODMANS LLP FOR DEFENDANT
TORONTO, ONTARIO
The relevant provisions of the Courts of Justice Act provide that:
(1) Where two or more proceedings are pending in two or more different courts, and the proceedings,
(a) have a question of law or fact in common;
(b) claim relief arising out of the same transaction or occurrence or series of transactions or occurrences; or
(c) for any other reason ought to be the subject of an order under this section,
an order may, on motion, be made,
(d) transferring any of the proceedings to another court and requiring the proceedings to be consolidated, or to be heard at the same time, or one immediately after the other; or
(e) requiring any of the proceedings to be,
(I) stayed until after the determination of any other of them, or
(ii) asserted by way of counterclaim in any other of them.
(4) The motion shall be made to a judge of the Superior Court of Justice.
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