Date: 20040507
Docket: T-2391-00
Citation: 2004 FC 673
BETWEEN:
TORPHARM INC.
Appellant
- and -
COMMISSIONER OF PATENTS
and
ATTORNEY GENERAL OF CANADA
Respondents
REASONS FOR JUDGMENT
MacKAY, Deputy Judge
[1] This is an appeal pursuant to section 71 of the Patent Act, R.S.C. 1985, c. P-4 (the "Act") from a decision of the Commissioner of Patents (the "Commissioner") dated September 28, 2000, refusing the application of Torpharm Inc. (the "appellant"), for relief based on alleged abuse of exclusive rights under a patent, pursuant to section 65 of the Act.
[2] In its application, made December 2, 1999, the appellant sought a compulsory licence which would enable it to acquire a bulk chemical, lisinopril, then subject to a patent owned by Merck & Co. Inc. ("Merck"), for the purpose of manufacturing tablets in Canada for export. The Commissioner was not satisfied that the appellant had made a case for relief as required by s-s. 68(2) of the Act and rejected the application without directing any response by Merck.
[3] Canadian Patent No. 1,275,350 (the "'350 patent") including claims to lisinopril was issued to Merck on October 16, 1990. It expires October 16, 2007. At the time of its issue, Merck was also the owner of U.S. Patent No. 4,374,829, the United States equivalent of the '350 patent, which was then to expire December 30, 2001. Both patents contain claims for a class of compounds including the medicine lisinopril.Without a licence, in view of the '350 patent, if the appellant were to acquire bulk lisinopril and manufacture lisinopril tablets in Canada this would infringe Merck's exclusive rights under the Canadian patent, even if that production were exclusively for export, as Torpharm proposed to do for export markets, in the United States after Merck's patent there expired and other countries where Merck had no patent,.
[4] By letter dated July 5, 1999, the appellant requested a voluntary licence from Merck limited to production of lisinopril tablets for export. In this letter, the appellant detailed the purpose of the request, and the terms proposed for a licence, including a proposed royalty rate of $1.00 per 1,000 tablets, which the appellant estimated would represent approximately 10% of the value added by production of tablets in Canada. Merck acknowledged this request and sought answers to a number of questions. Torpharm replied to these and that exchange was repeated on three subsequent occasions as Torpharm continued its correspondence seeking a licence and replying to Merck's questions. Then, by letter dated November 18, 1999, Merck advised that its existing licences in Canada under the patent were satisfying demands for lisinopril based tablets in Canada to a reasonable extent, that it did not understand how the trade or industry of Canada would be prejudiced if a further licence was not granted, and it refused to grant the appellant a licence with a royalty rate at the unreasonably low level proposed. On November 22, 1999, Torpharm responded once more, commenting on matters raised by Merck's letter, repeating its plans to supply product to the U.S. and other markets from its Canadian plant, a demand not met by Merck's licencees, and contesting the bases on which Merck argued that the royalty rate was unreasonably low.
[5] Thereafter, on December 2, 1999, the appellant brought an application before the Commissioner pursuant to section 65 of the Act. Torpharm alleged that Merck had abused its patent rights with respect to the bulk chemical lisinopril and that the appellant was entitled to relief under section 65 of the Act.
Relevant Legislation
[6] Portions of the Act relevant for this case are as follows:
| 65. (1) The Attorney General of Canada or any person interested may, at any time after the expiration of three years from the date of the grant of a patent, apply to the Commissioner alleging in the case of that patent that there has been an abuse of the exclusive rights thereunder and asking for relief under this Act.
(2) The exclusive rights under a patent shall be deemed to have been abused in any of the following circumstances:
(a) and (b) [Repealed, 1993, c. 44, s. 196]
(c) if the demand for the patented article in Canada is not being met to an adequate extent and on reasonable terms;
(d) if, by reason of the refusal of the patentee to grant a licence or licences on reasonable terms, the trade or industry of Canada or the trade of any person or class of persons trading in Canada, or the establishment of any new trade or industry in Canada, is prejudiced, and it is in the public interest that a licence or licences should be granted;
. . .
68. (1) Every application presented to the Commissioner under section 65 or 66 shall
(a) set out fully the nature of the applicant's interest, the facts on which the applicant bases his case and the relief that he seeks; and
(b) be accompanied by statutory declarations verifying the applicant's interest and the facts set out in the application.
(2) The Commissioner shall consider the matters alleged in the application and declarations referred to in subsection (1), and, if satisfied that the applicant has a bona fide interest and that a case for relief has been made, he shall direct the applicant to serve copies of the application and declarations on the patentee or his representative for service and on any other persons appearing from the records of the Patent Office to be interested in the patent, and the applicant shall advertise the application in the Canada Gazette and the Canadian Patent Office Record.
69. (1) If the patentee or any person is desirous of opposing the granting of any relief under sections 65 to 70, he shall, within such time as may be prescribed or within such extended time as the Commissioner may on application further allow, deliver to the Commissioner a counter statement verified by a statutory declaration fully setting out the grounds on which the application is to be opposed.
(2) The Commissioner shall consider the counter statement and declaration referred to in subsection (1) and may thereupon dismiss the application if satisfied that the allegations in the application have been adequately answered, unless any of the parties demands a hearing or unless the Commissioner himself appoints a hearing, and in any case the Commissioner may require the attendance before him of any of the declarants to be cross-examined or further examined on matters relevant to the issues raised in the application and counter statement, and he may, subject to due precautions against disclosure of information to rivals in trade, require the production before him of books and documents relating to the matter in issue.
(3) In any case where the Commissioner does not dismiss an application as provided in subsection (2), and
(a) if the parties interested consent, or
(b) if the proceedings require any prolonged examination of documents or any scientific or local investigation that cannot in the opinion of the Commissioner conveniently be made before him,
the Commissioner, with the approval in writing of the Minister, may order the whole proceedings or any issue of fact arising thereunder to be referred to the Federal Court, which has jurisdiction in the premises.
(4) Where the whole proceedings are referred under subsection (1), the judgment, decision or order of the Federal Court is final, and where a question or issue of fact is referred under that subsection, the Court shall report its findings to the Commissioner.
70. Any order for the grant of a licence under this Act, without prejudice to any other method of enforcement, operates as if it were embodied in a deed granting a licence executed by the patentee and all other necessary parties.
71. All orders and decisions of the Commissioner under sections 65 to 70 are subject to appeal to the Federal Court, and on any such appeal the Attorney General of Canada or such counsel as he may appoint is entitled to appear and be heard.
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65.(1) Le procureur général du Canada ou tout intéressé peut, après l'expiration de trois années à compter de la date de la concession d'un brevet, s'adresser au commissaire pour alléguer que, dans le cas de ce brevet, les droits exclusifs qui en dérivent ont donné lieu à un abus, et pour demander un recours sous l'autorité de la présente loi.
(2) Les droits exclusifs dérivant d'un brevet sont réputés avoir donné lieu à un abus lorsque l'une ou l'autre des circonstances suivantes s'est produite :
a) et b) [Abrogés, 1993, ch. 44, art. 196]
c) il n'est pas satisfait à la demande, au Canada, de l'article breveté, dans une mesure adéquate et à des conditions équitables;
d) par défaut, de la part du breveté, d'accorder une ou des licences à des conditions équitables, le commerce ou l'industrie du Canada, ou le commerce d'une personne ou d'une classe de personnes exerçant un commerce au Canada, ou l'établissement d'un nouveau commerce ou d'une nouvelle industrie au Canada subissent quelque préjudice, et il est d'intérêt public qu'une ou des licences soient accordées;
[...]
68.(1) Toute requête présentée au commissaire en vertu de l'article 65 ou 66 :
a) expose complètement la nature de l'intérêt du demandeur, les faits sur lesquels le demandeur fonde sa requête, ainsi que le recours qu'il recherche;
b) est accompagnée de déclarations solennelles attestant l'intérêt du demandeur, ainsi que les faits exposés dans la requête.
(2) Le commissaire prend en considération les faits allégués dans la requête et dans les déclarations, et, s'il est convaincu que le demandeur possède un intérêt légitime et que, de prime abord, la preuve a été établie pour obtenir un recours, il enjoint au demandeur de signifier des copies de la requête et des déclarations au breveté ou à son représentant aux fins de signification, ainsi qu'à toutes autres personnes qui, d'après les registres du Bureau des brevets, sont intéressées dans le brevet, et le demandeur annonce la requête dans la Gazette du Canada et dans la Gazette du Bureau des brevets.
69. (1) Si le breveté ou un tiers désire s'opposer à la concession d'un recours en vertu des articles 65 à 70, il remet au commissaire, dans le délai prescrit ou dans le délai prolongé que celui-ci accorde sur pétition, un contre-mémoire attesté par une déclaration solennelle et exposant complètement les motifs pour lesquels opposition sera faite à la requête.
(2) Le commissaire prend en considération le contre-mémoire et la déclaration à l'appui, et il peut dès lors rejeter la requête, s'il est convaincu qu'il a été suffisamment répondu aux allégations de la requête, à moins que l'une des parties ne demande à être entendue ou que le commissaire lui-même ne fixe une audition. En tout cas, le commissaire peut requérir la comparution devant lui de l'un des déclarants pour être contre-interrogé ou examiné de nouveau sur les matières se rapportant aux points soulevés dans la requête et dans le contre-mémoire, et il peut, à condition de prendre les précautions voulues afin d'empêcher la divulgation de renseignements à des concurrents commerciaux, exiger la production, devant lui, des livres et documents se rapportant à l'affaire en litige.
(3) Lorsque le commissaire ne rejette pas une requête, ainsi qu'il est prévu au paragraphe (2), et si, selon le cas_:
a) les parties intéressées y consentent;
b) les procédures exigent un examen prolongé de documents, ou des recherches scientifiques ou locales qui, à son avis, ne peuvent convenablement avoir lieu devant lui,
il peut, avec l'approbation par écrit du ministre, ordonner que l'ensemble des procédures ou que toute question de fait en découlant soit déférée à la Cour fédérale, laquelle a juridiction en l'espèce.
69(4) Idem
(4) Lorsque l'ensemble des procédures a ainsi été déféré, le jugement, la décision ou l'ordonnance du tribunal est définitive. Lorsqu'une question ou un point de fait a ainsi été déféré, le tribunal fait rapport de ses conclusions au commissaire.
70. Toute ordonnance rendue pour concéder une licence sous l'autorité de la présente loi a, sans préjudice de tout autre mode de contrainte, le même effet que si elle était incorporée dans un acte de concession d'une licence souscrit par le breveté et par les autres parties nécessaires.
71. Toutes les ordonnances et décisions rendues par le commissaire sous l'autorité des articles 65 à 70 sont sujettes à appel à la Cour fédérale, et en tel cas, le procureur général du Canada ou un avocat qu'il peut désigner a le droit de comparaître et d'être entendu.
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Commissioner's Decision
[7] By the decision letter of September 28, 2000, the Commissioner concluded pursuant to subsection 68(2) of the Act, that a case for relief had not been made by Torpharm and he refused to direct service of the application on the patentee. Thus, there was no requirement for Merck, as patentee, to respond to the application and there was no hearing concerning the application.
[8] With respect to subsection 68(2) the Commissioner held he was required to decide whether, in accord with the French text of the provision, the words " 'de prime abord' (at first glance)" an application is meritorius. He further noted that he had considered "whether or not a case for relief has been made out" under each of the grounds raised by the application.
[9] With reference to paragraph 65(2)(c), the Commissioner found that there was no evidence that Torpharm ever requested that Merck supply it with bulk lisinopril, it had only asked for a licence. Nor was there any evidence that Merck refused to supply the patented article to Torpharm. Further, he found that "a demand for bulk lisinopril for use in manufacturing tablets solely for export from Canada is not a demand in Canada for lisinopril in bulk chemical form." Finally, he was not satisfied that the demand for lisinopril in Canada is "not being met to an adequate extent and on reasonable terms." In his view, no case of abuse was made under paragraph 65(2)(c).
[10] As for the ground referring to paragraph 65 (2)(d), the Commissioner found that there had been no refusal by Merck to grant a licence on reasonable terms. He construed the letter of November 18, 1999, as a refusal to grant a licence on the terms proposed by Torpharm, not as a final refusal on any terms. Moreover, he found the terms proposed by the appellant were not reasonable, and there was no evidence Merck would not consider granting a licence on reasonable terms. Thus, he found no case of abuse under paragraph 65(2)(d) was made by Torpharm without considering the effect upon industry in Canada, or on the public interest, if no licence were granted.
[11] Finally, with respect to the third ground of abuse asserted by the appellant, namely, the exercise of monopoly rights for no bona fide purpose, the Commissioner refused to consider this since, in his opinion, "the classes of abuse are set out in the several paragraphs of s-s 65(2)," and since the circumstances relied upon by Torpharm were not within one of these classes no relief was granted under s. 65.
[12] In December 2000, the applicant Torpharm appealed the decision of the Commissioner, alleging reviewable error on his part, pursuant to s. 71 of the Act.
The issues
[13] The parties differ on the standard required of the Commissioner in considering this application, as set out by s-s 68(2) of the Act. The appellant submits that he erred in determining, without even calling upon the patentee to respond, that a case for relief was not made by Torpharm.
[14] Further, it is urged the Commissioner erred in concluding that abuse was not established under paragraph 65(2)(c) since there was no evidence of a request by Torpharm that Merck supply it with bulk lisinopril, and that a demand for the patented article, bulk lisinopril, for use in manufacturing tablets solely for export from Canada is not a demand in Canada for the article.
[15] The appellant also urges that the Commissioner erred, in relation to its complaint about abuse under paragraph 65(2)(d), in deciding terms proposed for the licence were not reasonable and that the final letter of Merck on November 18, 1999, was not a rejection of a request for a licence but rather merely a rejection of the request on the terms proposed by Torpharm.
[16] A final ground of appeal urged by the applicant concerned the basis of rejection of its claim of abuse of patent rights on general grounds, apart from paragraphs 65(2)(c) and 65(2)(d), which alleged Merck's reliance on its patent rights for no bona fide purpose.
[17] I deal hereafter with each of these grounds.
Consideration under s-s. 68(2)
[18] The appellant submits that the determination by the Commissioner on receipt of an application concerning abuse of a patentee's rights, as contemplated by subsection 68(2), should involve only a preliminary assessment of whether an applicant has an arguable case. The Commissioner, it is urged, misapplied the applicable standard and made errors of law in his assessment of the evidence. It is said that the standard here applied required that "a case for relief be made out", a standard not set out in the statute.
[19] The standard to be applied by the Commissioner under subsection 68(2) has not been settled by jurisprudence and the appellant argues that, in keeping with the statutory scheme of the Act, the standard is intended to be one which serves to weed out clearly frivolous applications that raise no genuine issue and could not possibly succeed. Torpharm urges that the appropriate standard is one analogous to that applicable upon a motion for an interlocutory injunction regarding the threshold issue on the merits, i.e., that it raise a serious issue, and so long as the application is not frivolous or vexatious it should be permitted to proceed to the next stage. In the appellant's view an application which raises a serious issue should not be determined without consideration of the application and any objections to it, if appropriate after a hearing.
[20] The respondent refers to the French version of the Act to identify the appropriate standard for determination under subsection 68(2). The phrase "de prime abord", the respondent argues, is analogous to "prima facie", using an English dictionary to demonstrate that "prima facie" in English usage, is equivalent to "at first glance", which happens to be the Commissioner's translation of the French words to English. Thus, it is submitted that when the English and French texts of s-s. 68(2) of the Act are considered together, the subsection requires an applicant to establish a prima facie case for relief. I am not persuaded this argument is relevant since whether a prima facie case was made by the applicant was not a matter of concern in the decision of the Commissioner. His only reference to the French text of s-s. 68(2) was that the use of the words "de prime abord, la preuve a été établie pour obtenir un recours", in his view, made clear that he was to determine whether "at first glance" an application is meritorious.
[21] Even if it were relevant, and in my view it is not, the respondent's argument is not helpful for it ignores the fact that in the statute prior to the 1985 revision, both English and French texts of the relevant provision, then s.s. 70(2), referred to the requirement that "a prima facie case has been made out" ("qu'une preuve prima facie a été établie pour obtenir un recours"), and both were changed in the 1985 revision to omit reference to the standard of a prima facie case.
[22] Subsection 68(2) provides that, upon receiving such an application, the Commissioner shall consider the matters alleged in the application and, if satisfied that the applicant has a bona fide interest and that "a case for relief has been made", or in the French text "de prime abord, la preuve a été établie pour obtenir un recours", he shall direct the applicant to serve copies of the application on the patentee and to advertise the application in the Canada Gazette and the Canadian Patent Office Record. Subsection 68(1) places the onus on an applicant to "set out fully ... the facts on which the applicant bases his case and the relief that he seeks". In other words, an applicant must provide enough evidence to allow the Commissioner to determine the facts that, absent persuasive objection, could result in the relief sought. The decision made by the Commissioner pursuant to section 68 is thus a preliminary determination that the application has some merit and it should be permitted to proceed to the next stage. In my opinion that decision is comparable to that on an application for leave to appeal or leave to proceed for judicial review in this Court, i.e., that an arguable case on the law is raised by the application. I acknowledge that this analogy was not accepted by counsel for either party when it was suggested to them at the hearing of this matter.
[23] In any event, any reference in this case to establishing a prima facie case is irrelevant for as I read the decision of the Commissioner that was not the standard applied in considering Torpharm's application. He considered whether at first glance a case for relief had been made. I am not persuaded that he erred in stating the appropriate test to be applied under s.s. 68(2). If he erred it was in applying that test in considering each of the grounds set forth in the application, for his decision was based on his assessment whether a case for relief has been made out under those grounds of alleged abuse.
Abuse alleged under paragraph 65(2(c)
[24] The appellant argues that paragraph 65 (2)(c) does not require, as the Commissioner appears to have held, that to establish there is an unmet demand, there must be evidence of a specific request made to the patentee to supply a demand and of a refusal to supply the patented article. Further, it is said that the Commissioner erred in holding that the demand asserted by the appellant, for the purpose of manufacturing tablets for export, could not constitute a demand pursuant to paragraph 65(2)(c).
[25] The appellant submits that the Act simply requires that there be a demand in the marketplace which is not being met to an adequate extent and on reasonable terms. The appellant argues that the Commissioner erred in indicating that he was not satisfied that the demand for lisinopril in Canada was not being met to an adequate extent for Torpharm says that the demand exists for bulk lisinopril in Canada for the manufacture in Canada of tablets for sale abroad, and that demand is not now being met to any extent.
[26] The respondent submits that it was open to the Commissioner to deny the application on the basis of the facts before him. More specifically, regarding the Commissioner's conclusion that it could not be said Merck is not meeting the demand in Canada for lisinopril in bulk form, the respondent submits that the Commissioner did not err in finding as he did, for a mere assertion or opinion by an applicant is not evidence of the facts required to be established under the subsection. To hold otherwise, it is said, would mean that any time a licence for a patented article is requested of, and refused by, a patentee, an abuse of patent rights could be deemed to have occurred. The last argument ignores the full requirements for a finding of abuse under the Act, requirements which can only be fully assessed after a preliminary determination that the applicant under s. 65 has raised a serious issue in the sense of an arguable case of alleged abuse.
[27] With respect for the Commissioner's decision concerning paragraph 65(2)(c), I am persuaded that he erred in law in his assessment of the evidence before him. It is true that Torpharm did not specifically request that the patentee supply bulk lisinopril to it, and that there was no specific refusal to supply the product. But no assessment was made whether the repeated request by Torpharm for a voluntary licence could constitute a request for the product in the situation here with Torpharm requiring a licence from the patentee to use the desired product in Canada. In my view, the absence of a specific request in itself is not more significant than the absence of a specific offer to supply the bulk lisinopril by the patentee to one who seeks a licence to use the patented product in Canada to serve markets abroad in countries where the patentee has no patent rights.
[28] Further, the Commissioner's decision was in error, in my opinion, in its conclusion that "a demand for bulk lisinopril for use in manufacturing tablets solely for export from Canada is, in reality, not a demand in Canada." Clearly, a demand for bulk product for use in manufacturing tablets in Canada, which requires a licence from the patentee, as in this case, is a demand in Canada for the patented bulk product. It is not a demand equivalent to that for tablets, made from that product, for foreign markets, or for the Canadian market.
[29] I agree with the appellant that the Commissioner erred in concluding there was no demand in Canada for the bulk lisinopril, by ignoring certain of the evidence before him, and by concluding that serving export markets abroad by manufacturing tablets in Canada could not constitute a demand for bulk lisinopril in Canada as the raw product for use in manufacture. With respect, both are errors of law.
[30] In my opinion, he erred in concluding there was not evidence that Merck is not meeting the demand in Canada for lisinopril in bulk chemical form. His determination that the demand for lisinopril in Canada is "nor being met to an adequate extent" ignored the demand for the chemical in bulk form of which Torpharm's plans to manufacture product for foreign markets was evidence.
[31] His assessment concerning the lack of evidence of reasonable terms concerning the supply of bulk lisinopril was an integral aspect of his determination respecting both paragraphs 65(2)(c) and (d) and I deal with this aspect in discussing the latter paragraph since the result of the Commissioner's decision on alleged abuse under that paragraph was based entirely on his finding that terms proposed by Torpharm were not reasonable.
Alleged abuse under paragraph 65(2(d)
[32] With respect to the reasonableness of the licence terms, the appellant argues that the Commissioner erred for there was no evidence to support the conclusion that the licence terms offered by Torpharm were not reasonable. The appellant urges that its application should not have been rejected without a hearing.
[33] Paragraph 65(2)(d) provides that an abuse of exclusive rights is deemed to exist if, by reason of the refusal of the patentee to grant a licence or licences on reasonable terms, the trade or industry of Canada or the trade or industry of any person or class of persons trading in Canada, or the establishment of any new trade or industry in Canada, is prejudiced, and it is in the public interest that a licence or licences should be granted. The Commissioner's decision did not consider the effects of a refusal to grant a licence upon the trade or industry of Canada or upon any person in Canada, or whether the public interest would be served by the grant of a licence.
[34] The respondent submits that it was open to the Commissioner, in the absence of any further information from the appellant regarding the reasonableness of its licence proposal made to Merck to conclude that the terms were not reasonable.
[35] In my opinion, the Commissioner's decision that the terms proposed by Torpharm were not reasonable was not based on evidence before him. The terms he considered related only to the royalty proposed which he found unreasonable because those failed to take into consideration "the value of lisinopril in either bulk form or tablet form [and] its selling price to purchasers who are at arm's length from Torpharm". Evidence of those matters omitted was not before him. Although some estimates based on the factors referred to by the Commissioner were included in Merck's refusal letter of November 18, 1999, the bases for those estimates were subsequently contested by the appellant in its reply to Merck's letter on November 22, 1999.
[36] In my opinion, the conclusion that the terms proposed by Torpharm were not reasonable is not supported on the record before the Commissioner which in summary includes a royalty proposed by Torpharm on a basis not acceptable to Merck whose own basis for rejection of the terms was not acceptable to Torpharm. While paragraph 65(2)(c) requires the Commission to be satisfied of the patentee's failure to meet a demand in Canada "to an adequate extent and on reasonable terms", the reasonableness of the terms, particularly in relation to proposed royalites, in my opinion, could not be determined in the circumstances of this case without consideration of submissions directly made to the Commissioner by the appellant and the patentee.
Abuse alleged concerning the exercise of monopoly rights for no bona fide purpose
[37] The appellant argues that although the third ground of abuse alleged is not enumerated under s-s. 65(2), that subsection does not purport to be an exhaustive listing of the grounds of abuse which can lead to relief, including possibly the grant of a compulsory licence. I agree that the subsection is a deeming provision listing particular circumstances set out therein which are to be considered to constitute abuse whether or not those circumstances would appear to fall within the general terms of s-s. 65(1). Subsection (2) is not merely a definition of the general terms of s.-s. 65(1). As Mr. Justice Beetz commented for the Supreme Court of Canada in R. v. Verrette (1978), 21 N.R. 571 at 578 a deeming provision is expansive rather than limiting of the scope of a general clause to which it refers. That construction of a deeming provision has been referred to in decisions of the Federal Court of Appeal: Canadian National Railway Co. v. Handyside et al. (1995), 170 N.R. 353, [1994] F.C.J. No. 859 (Q.L.) (per Hugessen J.A. at para. 6), and Sero v. Canada, [2004] F.C.J. No 71, (per Sharlow J.A. at para. 40).
[38] There is no basis argued for a different construction of the deeming provision, s-s. 65(2), in this case. I agree with Torpharm that the Commissioner's reliance solely on Celotex Corp. v. Donnacona Paper Company Ltd., [1939] Ex. C.R. 128, to conclude that the grounds of abuse under s. 65 are limited to those set out in s-s. 65(2), was misplaced. That case dealt with alleged abuse within the classes set out in the precursor to s-s. 65(2) as modified by then s-s. (3), since repealed, that in considering an alleged abuse, patents are to be understood so that so far as possible they are to be worked on a commercial scale in Canada without undue delay. In Celotex abuse was found where the patentee had not worked the patent on a commercial scale in Canada. The circumstances and the legislation in that case differed from those before the Commissioner here. Comments in the Celotex decision so far as they might be taken to concern the scope of s. 65 generally, apart from the classes in paragraph 65(2)(c), are obiter. In concluding that the only abuses included in the current Act are those described in the classes enumerated in s-s. 65(2), in my opinion, the Commissioner erred in stating the law.
[39] Nevertheless, in my opinion, in stating the issues raised by the appellant in its application to the Commissioner alleging abuse, Torpharm did not set out grounds other than those relating to paragraphs 65(2)(c) and 65(2)(d), except to urge that it was adversely affected by Merck's refusal to issue it a licence, without any benefit to Merck, and that in light of Torpharm's case it is in the public interest that a licence be granted to it. Otherwise, Torpharm would plan to acquire product in the United States and to forego the creation of manufacturing the tablets, with its related employment, in Canada. The Commissioner made no comment on the claimed public interest, an interest he would have been required to assess in considering whether a licence should be granted if abuse were otherwise found with paragraph 65(2)(d). Little evidence of prejudice to Torpharm, or of the public interest affected by the refusal was before the Commissioner.
[40] Thus, I am not persuaded that the Commissioner erred in finding no case was made by Torpharm in relation to alleged abuse because of circumstances falling outside those described by paragraphs 65(2)(c) and (d). A loss of opportunity to Torpharm to manufacture in Canada rather than to acquire product for manufacturing in foreign markets or a loss of possible royalty earnings by Merck if no licence were granted, may not in themselves constitute an abuse of exclusive rights of Merck.
Conclusion
[41] Since I find, as these reasons set out, that the Commissioner of Patents erred in his decision which was based on conclusions concerning the law or its application in regard to alleged abuses under paragraphs 65(2)(c) and (d) of the Patent Act, an order goes setting aside the decision dated September 28, 1999.
[42] The appeal is allowed. The impugned decision is set aside. The matter is remitted to the Commissioner for reconsideration on the basis that the application of Torpharm warrants a preliminary finding that a case for relief is made, and that the application be dealt with in accord with s-s. 68(2) and related provisions of the Act. A separate judgment, so directing, now issues. That provides that the appellant shall serve a copy of these Reasons and of the related Judgment upon Merck & Co. Inc. which was not a party before the Commissioner or to these proceedings.
"W. Andrew MacKay"
Deputy Judge
Ottawa, Ontario
May 7, 2004
FEDERAL COURT
Names of Counsel and Solicitors of Record
DOCKET: T-2391-00
STYLE OF CAUSE: Torpharm Inc. v. Commissioner of Patents and Attorney General of Canada
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: June 12, 2003
REASONS FOR JUDGMENT BY: MacKAY J.
DATED: May 7, 2004
APPEARANCES BY:
H. B. Radomski For the appellant
Valerie J. Anderson For the respondents
SOLICITORS OF RECORD:
Goodman's LLP For the appellant
Toronto, Ontario
Morris Rosenberg For the respondents
Deputy Attorney General of Canada
FEDERAL COURT
Docket: T-2391-00
BETWEEN:
TORPHARM INC.
Applicant
- and -
COMMISSIONER OF PATENTS
and
ATTORNEY GENERAL OF CANADA
Respondents
REASONS FOR ORDER AND ORDER
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