Date: 20000202
Docket: T-294-96
Citation: 2001 FCT 11
BETWEEN:
APOTEX INC.
Plaintiff
(Defendant by
Counterclaim)
- and -
MERCK & CO. INC. and
MERCK FROSST CANADA INC.
Defendants
(Plaintiffs by
Counterclaim)
REASONS FOR ORDER
McKEOWN, J.
[1] This is a hearing of two motions for summary judgment regarding Court File No. T-294-96, an action brought by Apotex Inc. for a declaration that its use of the subject enalapril maleate did not infringe the Defendants' Canadian Letters Patent No. 1,275,349 ( the "349 Patent"). The first motion for summary judgment was brought by the Defendants, Merck and Merck Frosst Canada. The Plaintiff, Apotex Inc., then brought a cross-motion for summary judgment.
[2] In July 1987, notices of compliance were issued by the Commissioner of Patents to Merck Frosst in respect of the subject patent. A non-party in this matter, Delmar, was granted a compulsory licence on April 24, 1992 under the Merck patent to manufacture, use and sell enalapril maleate, with royalties payable to Merck.
[3] In accordance with its licence, Delmar sold 772kg of enalapril maleate to an unidentified third party on February 3, 1993.
[4] On February 14, 1993, the Patent Act Amendment Act, 1992 ("PAAA") came into force. Section 12(1) of the PAAA extinguished the Delmar compulsory licence.
[5] In May and October of 1994, Apotex purchased two lots of enalapril maleate, totalling 772.9kg, from the unnamed third party. As noted, the subject enalapril maleate had been sold to this third party by Delmar prior to the extinguishment of Delmar's compulsory licence. Apotex then proceeded to make use of the subject enalapril maleate.
[6] There have been previous actions between these two parties involving the pharmaceutical drug enalapril maleate. In March and April of 1994, the parties went to trial before Justice MacKay (Court File No. T-2408-91). That case involved a 44.9kg quantity of enalapril maleate which was sold by Delmar to a third party in January of 1993 and acquired by Apotex from that third party in March of 1993. The judgment by MacKay J. was rendered on December 14, 1994. The matter was appealed and ruled on by the Federal Court of Appeal on April 19, 1995 (Court File No. A-724-94). On December 7, 1995, Application for Leave to Appeal to the SCC was refused (File No. 24751).
[7] The present action was commenced by Apotex on February 5, 1996, wherein Apotex sought declarations that its use of the subject enalapril maleate did not infringe Merck's `349 Patent. By amended counterclaim filed on May 27, 1999, Merck sought a declaration that this use did indeed infringe its patent.
[8] As previously stated, this is a hearing of two motions for summary judgment pursuant to Rule 216 of the Federal Court Rules, the first brought by the Defendants (Merck and Merck Frosst Canada) and the second brought by the Plaintiff (Apotex Inc.).
Analysis:
[9] Before addressing the motions for summary judgment, I will deal briefly with the issue of the admissibility of the document at tab 20 of the Defendants' Motion Record, referred to as the Delmar Compulsory Licence. At the hearing of the motion, the Plaintiff's Counsel argued that the tab 20 document was not properly before the Court. It is my view that the tab 20 document was properly before the Court at that time, however, I granted an adjournment to provide an opportunity for each party to further address the issue of admissibility in writing. I am satisfied that due process has been followed, as ample opportunity to comment on the document and its admissibility has been provided to both parties. Therefore, I find that the document in question is properly before me.
[10] I now proceed to deal with the motions for summary judgment. Rule 216 of the Federal Court Rules states that a motion for summary judgment is to be granted where there is no genuine issue for trial. In determining the issue, the Court must consider the contextual framework of the case before it. As per the decision of Tremblay-Lamer J. in Granville Shipping Co. v. Pegasus Lines Ltd. S.A., [1996] 2 F.C. 853 (T.D.), summary judgment should only be granted when the case is so doubtful that it does not deserve consideration by a trial judge.
[11] The Defendants argued that the Plaintiff's statement of claim and argument raised no genuine issue for trial because the matter was res judicata, given the decisions of MacKay J. at trial, and MacGuigan J.A. on appeal, in the matter of Merck v. Apotex (1994), 59 C.P.R. (3d) 133 (F.C.T.D.); (1995), 60 C.P.R. (3d) 356 (F.C.A.). In the alternative, the Defendants argued that should the Court find that the matter was not res judicata, then the Plaintiff's use of the subject enalapril maleate infringed the `349 Patent due to the operation of sections 39.11 and 39.14 of the former Patent Act, R.S.C. 1985, C.p-4 (the "Patent Act").
[12] The Plaintiff argued that summary judgment be granted in its favour in light of the Supreme Court of Canada's decision in Novopharm Ltd. v. Eli Lilly (1998), 80 C.P.R. (3d) 321, which was heard with Apotex Inc. v. Merck Frosst, [1998] 2 S.C.R. 193.
[13] In my view, the matter is disposed by the operation of the doctrine of res judicata or issue estoppel, which applies to every point in issue which the parties, exercising reasonable diligence, might have brought forward at the time. This doctrine operates to reinforce the principal of finality in the litigation process. In [1951] S.C.R. 346">Maynard v. Maynard, [1951] S.C.R. 346 (S.C.C.), Cartwright J. cited the case of Hoystead v. Commissioner of Taxation, [1926] A.C. 155 at 165:
| Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the Court of the legal result either of the construction of the documents or the weight of certain circumstances. |
| If this were permitted litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted, and there is abundant authority reiterating that principle. |
[14] Cartwright J. then went on to state:
| In my opinion the law is correctly stated in Halsbury's Laws of England (2nd Edition) Volume 13 at page 410, where it is said that the principle of estoppel applies, "whether the point involved in the earlier decision, and as to which the parties are estopped is one of fact, or one of law, or one of mixed law and fact." |
[15] In Rocois Construction v. Quebec Ready Mix Inc., [1990] 2 S.C.R. 440, the Supreme Court stated that res judicata implies identity of parties, identity of object, and identity of cause. At 451-2 of this decision, Gonthier J. cited Mignault's commentary on the object of an action. In Le droit civil canadien, vol. 6, 1902, at 105, Mignault states the following:
| [TRANSLATION] It is of course the immediate legal benefit which is being sought in bringing it, namely the right the party is seeking to assert . . . |
| . . . but it is important to complete the rule by saying that it is not necessary for the two actions to have exactly the same conclusion: res judicata will exist when the object of the second action is implicitly included in the object of the first. |
[16] In finding issue estoppel with respect to the validity of the defence in the within action in T-294-96 dated November 5, 1999, Lemieux J. stated at paragraph 46 with respect to the licence issue:
| In my opinion, it is plain and obvious that Merck's motion to strike meets the conditions for issue estoppel. First, the question of the validity of the Merck patent, for the purposes of the present action, has been decided in the 1991 action. As was found by both MacKay J. on the motion for reconsideration and Muldoon J. in action T-2869-96, Apotex cannot now re-litigate piecemeal the issue of the invalidity of Merck's patent on different grounds. Moreover, the issue of the invalidity of Merck's patent was fundamental to the decision reached in the 1991 action and the declaration and remedies awarded, namely, that the Merck patent had been infringed by Apotex in relation to specific lots of bulk enalapril maleate and 44.9 kilograms of enalapril maleate which was purchased by Apotex from Delmar in March 1993 after the compulsory licence held by Delmar was extinguished by statute. In addition, an injunction issued restraining Apotex from infringing claims in the Merck patent and, in particular, from manufacturing, using, offering for sale and selling, in Canada or elsewhere, APO-ENALAPRIL tablets or other dosage of forms containing enalapril maleate related to specific lots and the 44.9 kilograms purchased from Delmar. |
[17] Further, Lemieux J. held that there was no relationship of licensee/licensor between Merck and Apotex in relation to the bulk enalapril maleate in question since by that time the licence was extinguished. At paragraph 49 he wrote:
| There are two reasons why, in my view, Merck's application to strike should succeed despite Apotex's licence estoppel plea. First, assuming that Apotex is entitled to claim the exception to licensee estoppel, in my view, that exception (the ability of the licensee to attack the validity of the licensor's patent) would not operate in this case because that very issue has been decided in a previous proceeding. The very essence of issue estoppel is to prevent a person in a different proceeding with a different cause of action from re-litigating a decided question. Apotex cannot come in the back door through the licensee estoppel exception. Second, as I see it, there is no licensor/licensee relationship between Merck and Apotex in relation to the bulk enalapril maleate in question. There was one between Merck and Delmar but that relationship was extinguished by statute. |
[18] As the Defendant argued, the case before me involved identical parties and issues and almost identical facts to that of Merck v. Apotex Inc., supra, which was heard by MacKay J. and later by the Federal Court of Appeal. Both cases involve enalapril maleate acquired by Delmar under a compulsory licence issued on April 24, 1992. As in the present case, the Merck case involved bulk enalapril maleate acquired by Delmar and sold to a foreign third party in January and February of 1993. Additionally, both cases require a determination as to what effect the statutory extinguishment of the Delmar licence on February 14, 1993 had on the rights of subsequent purchasers of enalapril maleate that had been sold by Delmar while still under licence. MacKay J. and the Court of Appeal found that the Merck Patent is infringed by Apotex in relation to enalapril maleate purchased by Apotex from an undisclosed foreign customer of Delmar after the compulsory licence held by Delmar was extinguished by statute.
[19] Much of the argument made by the Plaintiff surrounded the interpretation of subsections 12(1) and 12(2) of the PAAA, which state respectively:
| Every licence granted under section 39 of the former Act on or after December 20, 1991 shall cease to have effect on the expiration of the day preceding the commencement day, and all rights or privileges acquired or accrued under that licence or under the former Act in relation to that licence shall thereupon be extinguished. |
| For greater certainty, no action for infringement of a patent lies under the Patent Act in respect of any act that is done before the commencement day under a licence referred to in subsection (1) in accordance with the terms of that licence and sections 39 to 39.17 of the former Act. |
[20] Counsel for the Plaintiff made some strong argument regarding the interpretation of these subsections. His argument centred around the fact that often the term "for greater certainty" will imply that the drafter intended to reiterate what should already be obvious from the first statement in the particular clause in question. In this case, it implies that what is already known is that the extinguishment of compulsory licence rights does not apply to acts done prior to the day the extinguishment goes into effect. If this construction is true, then the decision of the Court of Appeal in the Merck case would be brought into doubt.
[21] The Plaintiff's Counsel also argued that the Delmar Compulsory Licence was unrestricted and that use rights should exist in rem after February 14, 1993, given that the license notes that the rights that it accords could be "terminated", as opposed to "extinguished", by legislation.
[22] Counsel for Merck also made able arguments regarding the interpretation of "extinguishment" as used in subsection 12(1) of the PAAA. He indicated that extinguishment differs from a mere termination of a licence, in that it generally renders the provisions or licences affected void ab initio. That is, it makes it as if the licence in this case had never existed in the first place. This view would accord with the decision of the Court of Appeal in the Merck case, in that it supports the finding that all rights were extinguished on the date section 12(1) came into effect, including the rights of purchasers as regards any thing previously subject to a compulsory licence under the former Patent Act.
[23] While counsel for the Plaintiff made able arguments, I note that we are not here to re-try a case that has already come before this Court. As such, I must first determine whether or not the case before me is estopped by virtue of the operation of the doctrine of res judicata.
[24] I note that the only difference between Merck v. Apotex, supra and the case before me, is that the subject enalapril maleate was acquired in March of 1993 in the previous case, while the enalapril maleate involved in the present case was acquired by Apotex in May and October of 1994. As determined by Joyal J. in Reasons for Order dated February 14, 1997, Apotex acquired the additional enalapril maleate after the trial but prior to the delivery of the Reasons for Judgment dated December 14, 1994 and failed to disclose this in the T-2408-91 action. The additional enalapril maleate in issue in this proceeding was disclosed for the first time in the affidavit of documents of Apotex filed in this proceeding. Nothing turns on this factual difference between the two cases, as in both cases the subject enalapril maleate was acquired after the Delmar compulsory licence was extinguished by statute on February 14, 1993.
[25] The Plaintiff argued that the decision of the Supreme Court of Canada in Novopharm, supra changed the law to the degree that res judicata should not bar its case being made at this time in regard to the subject enalapril maleate. Essentially, the Plaintiff attempted to argue that the Novopharm decision illustrated that purchaser's rights exist in rem and that because the subject enalapril maleate had been sold to the foreign third party from which Apotex purchased it prior to the extinguishment of the Delmar compulsory licence, such extinguishment therefore had no effect on Apotex' rights to use the subject enalapril maleate. However, given that the Novopharm decision involved different facts: namely the question of the termination of a licence by a patentee rather than the extinguishment of a compulsory licence by statute, this case is distinguished from the present one.
[26] The Plaintiff also argued that the Court has discretion regarding its application of the doctrine of res judicata. This argument is based on Laskin J.A.'s obiter comments in Minott v. O'Shanter Development Company Ltd. (1999), 168 D.L.R. (4th) 270 (O.C.A.). Laskin J.A. stated at 288-9 that:
| Issue estoppel should be applied flexibly where an unyielding application of it would be unfair to a party who is precluded from relitigating an issue. |
| That the courts have always exercised this discretion is apparent from the authorities. For example, courts have refused to apply issue estoppel in "special circumstances", which include a change in the law or the availability of further relevant material. If the decision of a court on a point of law in an earlier proceeding is shown to be wrong by a later judicial decision, issue estoppel will not prevent relitigating that issue in subsequent proceedings. |
[27] It is important to note that the Minott decision involved issue estoppel arguments raised to prevent the Court from examining the findings of an administrative tribunal, namely the Board of Referees under the Employment Insurance Act, S.C. 1996, c. 23. Given the procedural fairness context involved in that case, I am reluctant to put too broad an interpretation on Laskin J.'s words. I also note that I am not convinced by the Plaintiff's argument that there are special circumstances inherent to this case which warrant the Court's exercise of its discretion to circumvent the normal workings of the doctrine of res judicata.
[28] As a result of the judgments of the Trial Division and Court of Appeal in T-2408-91 and A-724-94, respectively, there is no genuine issue to be tried in respect of the claim for declaratory relief by Apotex in its Statement of Claim herein and Apotex has no defence to the claim by the Plaintiffs by Counterclaim, Merck and Merck Frosst, for infringement of the Merck Patent.
[29] In light of the previous discussion, I do not have to deal with the Defendants' alternative argument concerning sections 39.11 and 39.14 of the former Patent Act.
[30] As such, I order summary judgment in favour of the Defendants, Merck & Co. Inc. and Merck Frosst Canada Inc. By agreement of the parties the question of remedy will be dealt with at a subsequent hearing. The cross-motion for summary judgment brought by Apotex Inc. is dismissed. The action by Apotex is dismissed. Costs on both motions to the Defendants.
"W. P. McKeown"
JUDGE
Ottawa, Ontario
February 2, 2001
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-294-96
STYLE OF CAUSE: APOTEX INC. v. MERCK & CO. INC. and MERCK FROSST CANADA INC.
PLACE OF HEARING: OTTAWA, ONTARIO
DATE OF HEARING: OCTOBER 30, 2000
REASONS FOR ORDER OF McKEOWN
DATED: FEBRUARY 2, 2001
APPEARANCES:
MR. H. B. RADOMSKI and FOR PLAINTIFF
MS. D. BASSAN
MR. G. A. MACKLIN and FOR DEFENDANTS
MS. H. D'IORIO
SOLICITORS OF RECORD:
| GOODMAN PHILLIPS & VINEBERG FOR PLAINTIFF |
TORONTO, ONTARIO
GOWLING LAFLEUR HENDERSON LLP FOR DEFENDANTS
OTTAWA, ONTARIO
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