Date: 20010813
Docket: T-1822-97
Neutral citation: 2001 FCT 880
PRESENT: Roger R. Lafrenière, Esquire
Prothonotary
BETWEEN:
JOHNSON & JOHNSON INC.,
EXPANDABLE GRAFTS PARTNERSHIP and
CORDIS CORPORATION
Plaintiffs
- and -
BOSTON SCIENTIFIC LTD./BOSTON SCIENTIFIQUE LIMITÉE
Defendant
REASONS FOR ORDER AND ORDER
LAFRENIÈRE, P.
[1] The Defendant seeks leave to deliver a Fresh as Amended Statement of Defence and Counterclaim (the "Fresh Defence") to add allegations which, broadly speaking, claim that:
(a) the Plaintiffs are precluded and estopped from alleging that the NIR stent (the Defendant's product) infringes the patents in suit; and
(b) the Plaintiffs are precluded and estopped from denying that the patents in suit are invalid.
[2] The Defendant's allegations are based on "admissions made and findings of fact" in litigation in other jurisdictions relating to patents which claim priority from the same United States patent applications as the patents in suit in this action. The allegations can be found at paragraphs 11 to 15 of the proposed Fresh As Amended Statement of Defence and Counterclaim, which are reproduced below.
11. By virtue of admissions made by the plaintiffs and their privies and findings of fact in litigation in other jurisdictions relating to patents which claim priority from the same United States applications as the patents in suit in this action, the plaintiffs are precluded and estopped from alleging that the NIR Stent infringes the patents in suit. In particular, the plaintiffs are precluded and estopped from alleging that the NIR Stent:
a. comprises a tubular shaped member having a wall surface formed by a plurality of intersecting elongate members, where at least some of the elongate members intersect with one another intermediate the ends of the tubular shaped member, by virtue of:
i. the decisions of the English High Court of Justice and Court of Appeal, dated June 26, 1998 and March 20, 2000, respectively, in Boston Scientific Limited et al. v. Julio C. Palmaz and Expandable Grafts Partnership, (the "English Action") between Boston Scientific Limited and Boston Scientific International B.V., privies of the defendant herein, and Expandable Grafts Partnership, one of the plaintiffs herein, and Julio C. Palmaz, who is alleged by the plaintiffs to be an inventor and assignor of the patents in suit; and
ii. the decisions dated October 29, 1997 and June 23, 1999 of the District Court in the Hague, docket no. 97/1367, in Julio Cesar Palmaz et al. v. Boston Scientific B.V. et al. (the "Dutch Action") between Boston Scientific B.V. et al., privies of the defendant herein, and Expandable Grafts Partnership, one of the plaintiffs herein, Julio C. Palmaz, and Ethicon Inc. and Cordis Europe S.A., privies of the plaintiffs in this action;
b. comprises a tubular member having a wall surface with a plurality of slots formed therein, the slots being disposed substantially parallel to the longitudinal axis of the tubular member, by virtue of the decisions in the English Action;
c. comprises a plurality of thin walled tubular members, each of which has a wall surface having slots formed therein and each of which is connected to adjacent tubular members by connector members, by virtue of the decisions in the English Action and by virtue of the withdrawal with prejudice dated March 22, 2000 by Cordis Corporation, one of the plaintiffs herein, of claims based on United States Patent no. 5,102,417 in United States District Court for the District of Delaware C.A. No. 97-550-SLR, C.A. No. 97-700-SLR and C.A. No. 98-19-SLR (the "Delaware Action") between, inter alia, Cordis Corporation, one of the plaintiffs herein, and Boston Scientific Corporation, the parent company of the defendant herein.
12. The plaintiffs are further precluded and estopped from denying that the patents in suit are invalid. In particular, by virtue of the decisions in the English Action, the plaintiffs are precluded and estopped from denying that:
a. the 1980 Monograph (no. 52 on Schedule I hereto) was published by Palmaz more than two years prior to the filing of the applications for the patents in suit;
b. the 303 Patent and the 505 Patent are anticipated by the 1980 Monograph;
c. the 303 Patent and the 505 Patent are obvious in light of the 1980 Monograph;
d. the 303 Patent and the 505 Patent are obvious in light of United States Patent No. 3,657,744 to Ersek;
e. the Palmaz-Schatz Patent is obvious in light of the original Palmaz stent and the description thereof in Expandable Intraluminal Graft: A Preliminary Study (no. 34 on Schedule I hereto) and in light of Tracheobronchial Tree: Expandable Metallic Stents used in Experimental and Clinical Applications (no. 46 on Schedule I hereto).
13. The decisions in the English Action and in the Dutch Action and the withdrawal in the Delaware Action involved the same questions and issues and the same NIR Stent as this action. The decisions in the English Action and the withdrawal in the Delaware Action are final and are binding on the plaintiffs in this action.
14. The decision in the Dutch Action dated October 29, 1997 was a provisional judgment and held that the NIR Stent did not comprise a tubular shaped member having first and second ends and a wall surface disposed between the first and second ends, the wall surface being formed by a plurality of first and second intersecting elongate members, at least some of the elongate members intersecting intermediate the ends of the tubular shaped member. After the issuance of this provisional judgment of non-infringement, Expandable Grafts Partnership and its co-plaintiffs in the Dutch Action cancelled their claims of infringement by the NIR Stent. Such cancellation was made for the sole purpose of avoiding a final judgment in the Dutch Action, and constitutes an admission, that the NIR Stent is not an infringement of the European (Dutch) patent rights of Palmaz that correspond to the '303 Patent.
15. The plaintiffs are precluded and estopped from challenging the findings of facts and admissions made in the foreign litigation identified above. It is an abuse of process, unconscionable, contrary to the rule of law and contrary to the principle of comity for the plaintiffs in this action to attempt to re-litigate admissions and statements made and findings of fact in litigation in other jurisdictions. It is an abuse of process for the plaintiffs to allege that the NIR Stent infringes the patents in suit in view of the contrary statements and findings made in litigation in other jurisdictions.
[3] The Defendant submits that the Plaintiffs would suffer no prejudice if leave to amend were granted. They say that the new allegations are proper in that this Court has recently held that a pleading of estoppel based on findings of fact in foreign litigation relating to patents having common ancestry as the patents in suit is a valid and permissible plea: Connaught Laboratories Ltd. v. Medeva Pharma Ltd. (1999), 4 C.P.R. (4th) 508 (F.C.T.D.) at 519; aff'd., (2000) 4 C.P.R. (4th) 521 (F.C.A.). The Defendant says that it simply seeks to make similar allegations as those permitted by Sharlow J. in Connaught - namely that the Plaintiffs in this action should not be permitted to take inconsistent positions on specific questions of fact that have already been litigated elsewhere.
[4] The Plaintiffs object to the proposed amendments on numerous grounds. First of all, they submit that the proposed amendments contain conclusions of law which are not supported by material facts. Secondly, they contend that all the conditions for issue estoppel have not been established in that a prior determination of the same cause of action has not been pleaded. Thirdly, the Plaintiffs assert that paragraphs 11 to 15 of the Fresh Defence should not be allowed as that they lack the required particularity. Finally, the Plaintiffs say that they will suffer an injustice not reparable in costs as the proposed amendments would necessitate further discovery, thereby significantly delaying the proceeding and lengthening the trial.
[5] The parties are agreed that on a motion for leave to amend pleadings, the Court must assume that the facts pleaded in the proposed amendments are true. The Court must then determine whether the amendments, if already part of the proposed pleading, would be capable of being struck out under Rule 221 of the Federal Court Rules, 1998. If not, the amendments should be allowed.
[6] Further, the general rule is that an amendment to a pleading should be allowed at any stage of an action for the purpose of determining the real questions in controversy between the parties, provided that to do so would not result in an injustice to the other party not capable of being compensated by an award of costs.
Analysis
[7] In Connaught, supra, Sharlow, J. concluded that there is no general rule that a finding of fact in foreign patent proceedings can never be the subject of a plea of res judicata or issue estoppel. The following are certain relevant extracts of her decision setting out her analysis:
The first step in the analysis is to examine the proposed legal arguments as set out in paragraph 25 [of the Second Amended Statement of Claim], which are based on one or more of "res judicata, issue estoppel, collateral estoppel, comity, abuse of process". These are different expressions of the general principle that judicial proceedings must at some point be conclusive, that an issue of fact need only be decided once.
¼
In principle, there is no reason to conclude that a plea of issue estoppel cannot be based on a foreign judgment, although inevitable difficulties will arise in establishing the conditions for its application.
¼
However, I do not understand why inconsistencies in findings of fact made by different tribunals should be tolerated if they can be avoided without the substantive law or procedural norms. Connaught is simply attempting to argue in this case that it is wrong in principle for Medeva to be permitted to take inconsistent positions on specific questions of fact that are in issue in this case and that have already been litigated elsewhere.
I have been referred to no case law that persuades me that the arguments Connaught would make based on res judicata, issue estoppel and related arguments cannot succeed. Therefore, I conclude that the Associate Senior Prothonotary erred in ordering that they be struck out.
[8] In light of the above, I do not propose to revisit the question whether it is proper to plead issue estoppel based on a foreign judgment. The case law on this issue is clearly not settled and will no doubt be the subject of much debate at the trial of this action. However, for the purpose of this motion, I propose to adopt the line of reasoning of Sharlow, J. in Connaught, which was subsequently affirmed by the Federal Court of Appeal.
[9] I now turn to specific objections raised by the Plaintiffs relating to the sufficiency of the proposed amendments.
[10] The Plaintiffs maintain that the Defendant is seeking by its amended pleading to have the validity of the patents-in-suit on the issues of anticipation and obviousness determined by the legal regimes of foreign countries. The Plaintiffs submit that patent construction is a question of law, a proposition which was endorsed by Sharlow, J. in Connaught when she rejected the assertion that a finding of validity of a foreign court can be determinative in Canada:
"I accept that inconsistent results may be inevitable due to differences in the substantive and procedural laws relating to patents. In the final analysis, the validity of a patent granted by the laws of Canada cannot be determined by the legal regime in another country."
[11] The Plaintiffs say that the question of what constitutes "a tubular-shaped member having a wall surface formed by a plurality of intersecting elongate members ..." "a tubular member having a wall surface with a plurality of slots formed therein ..." and "a plurality of thin walled tubular members ..." can only be determined using Canadian principles of patent construction.
[12] The Plaintiffs argument is compelling and may ultimately prove successful at trial, however, in the words of Sharlow, J., the Defendant should not be denied an opportunity to argue "that it is wrong in principle for [the Plaintiffs] to be permitted to take inconsistent positions on specific questions of fact that are in issue in this case and that have already been litigated elsewhere".
[13] This brings me to the second objection raised by the Plaintiffs with respect to perceived deficiencies in the plea of issue estoppel. In [1975] 2 S.C.R. 248">Angle v. M.N.R., [1975] 2 S.C.R. 248, the Supreme Court of Canada set out four requirements for the application of issue estoppel:
(a) that the same question has been decided;
(b) that the judicial decision which is said to create the estoppel was final;
(c) 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; and
(d) that it will not suffice if the question rose collaterally or incidentally in earlier proceedings or is one which must be inferred by argument from the judgment ... the question out of which the estoppel is said to arise must have been fundamental to the decision arrived at in the earlier proceedings.
[14] The Plaintiffs submissions before me focussed primarily on the first and third requirements. They say that before the doctrine of issue estoppel can apply, "the question in issue in the subsequent proceedings must be precisely the question at issue in the prior proceedings ... one has to be very careful indeed to define the precise issue.": Re Manly's Will Trust (No. 2), [1976] All E.R. 673 at 676 (Ch.D.).
[15] At paragraph 13 of the proposed pleading, the Defendant alleges that the decisions in the English Action and in the Dutch Action, and the withdrawal in the Delaware Action, "involve the same questions and issues and the same Nir Stent as this action". Later, at paragraph 15 the Defendant asserts that the Plaintiffs are estopped from "challenging" certain unspecified findings of facts and admissions, and makes reference to certain unspecified "contrary statements" in the foreign litigation.
[16] In Connaught, the pleading at issue related to alleged findings of fact as to inventive activity by the European Patent Office, the English Patents Court and the United States District Court, Southern District of New York. Justice Sharlow had before her "a detailed statement of the findings of fact alleged to have been made in each of the foreign proceedings".
[17] That is certainly not the case here. Although some detail is provided, there is in my view no clear indication in the proposed pleading as to which questions and issues are "the same" as between the various actions. In addition, there is some uncertainty with respect to what admissions were allegedly made by the Plaintiffs or their privies, who made the admissions, when they were made and in what context they were made.
[18] Although one cannot expect perfection from counsel in drafting a pleading, precision is essential in order to allow the opposing party to respond intelligently. A clear definition of the issues at this stage would avoid any confusion and would address, at least in part, some of the concerns of the Plaintiffs that the amendments, if allowed, would unnecessarily complicate and lengthen the proceeding.
[19] The Plaintiffs pointed out another significant difference between the pleading in Connaught and the one before me. The Defendant's amendments which plead estoppel are based on privity, given that there is no identity of parties between the foreign actions relied upon and this action.
[20] The Plaintiffs submit that other than a bare assertion of privity, there is no pleading of material facts in the proposed pleading to support the Defendant's allegations that the parties to the respective actions are privies. The Plaintiffs contend that in order for one entity to be a privy of another for the purpose of issue estoppel, there must be a community of interest between them: Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 853 at 936. Moreover, a party is not a privy to a prior action, for the purposes of issue estoppel, where the party had no right to participate in the prior action and had no participatory interest in its outcome. Verlysdonk v. Premier Petrenas Construction Co. Ltd. (1987), 60 O.R. (2d) 65 (Div. Ct.) at 69, 70.
[21] In my view, the Defendant's plea of privity is sufficient in the circumstances. It is not clear what additional material facts are required by the Plaintiffs, nor has any evidence been adduced to establish the need for such facts, to properly respond to the allegations. In any event, the Plaintiffs could seek better particulars of the allegations of privity, if required, prior to filing their reply.
[22] The Plaintiffs also take issue with paragraph 14 in which the Defendant alleges that the cancellation of certain claims of infringement after issuance of the provisional judgment "was made for the sole purpose of avoiding a final judgment". The Plaintiffs submit that no facts, other than the cancellation, are put forward in this pleading to support the request that such an inference be drawn. The allegation may ultimately prove wanting however it is in my view clear and adequately pleaded.
[23] As for the Plaintiffs' concerns that the proposed amendments will have the effect of delaying the proceeding and lengthening the trial, I am satisfied that they would be adequately addressed if better particulars of the allegations at paragraph 13 and 15 are provided.
ORDER
1. The Defendant's motion for leave to file its Fresh As Amended Statement of Defence and Counterclaim is dismissed, with leave to reapply on condition that further and better particulars are provided of paragraphs 13 and 15 of the proposed pleading in accordance with these reasons and once the Plaintiffs have been afforded an opportunity to request any further particulars they require.
2. Costs of the motion shall be to the Plaintiffs in the cause.
"Roger R. Lafrenière"
Prothonotary
Toronto, Ontario
August 13, 2001
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
COURT NO: T-1822-97
STYLE OF CAUSE: JOHNSON & JOHNSON INC.,
EXPANDABLE GRAFTS PARTNERSHIP and
CORDIS CORPORATION
Plaintiffs
- and -
BOSTON SCIENTIFIC LTD./BOSTON
SCIENTIFIQUE LIMITÉE
Defendant
DATE OF HEARING: THURSDAY, FEBRUARY 15, 2001
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR ORDER AND ORDER BY: LAFRENIÈRE P.
DATED: MONDAY, AUGUST 13, 2001
APPEARANCES: Mr. Donald M. Cameron, and
Mr. Scott MacKendrick, and
Mr. Bill W. K. Chan
For the Plaintiffs
Mr. David M. Reive, and
Mr. Michael Crinson
For the Defendant
SOLICITORS OF RECORD: Aird & Berlis
Barristers & Solicitors
BCE Place
Suite 1800, Box 754
181 Bay Street
Toronto, Ontario
M5J 2T9
For the Plaintiffs
Dimock Stratton Clarizio LLP
Barristers & Solicitors
Suite 3202, Box 102
20 Queen Street West
Toronto, Ontario
M5H 3R3
For the Defendant
FEDERAL COURT OF CANADA
Date: 20010813
Docket: T-1822-97
Between:
JOHNSON & JOHNSON INC.,
EXPANDABLE GRAFTS PARTNERSHIP and
CORDIS CORPORATION
Plaintiffs
- and -
BOSTON SCIENTIFIC LTD./BOSTON
SCIENTIFIQUE LIMITÉE
Defendant
REASONS FOR ORDER
AND ORDER
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