Date: 19991217
Docket: T-1578-96
BETWEEN:
CONNAUGHT LABORATORIES LIMITED
Plaintiff
(Defendant-by-Counterclaim)
- and -
MEDEVA PHARMA LIMITED
Defendant
(Plaintiff-by-Counterclaim)
REASONS FOR ORDER
SHARLOW J.
[1] Medeva Pharma Limited is the holder of Canadian Letters Patent No. 1,253,073, which relates to an acellular vaccine for use against whooping cough in humans. I will call this the "Canadian Medeva Patent". Connaught Laboratories Limited has a certain vaccine that it believes may attract a claim of infringement by Medeva. On July 3, 1996, Connaught commenced this action for a declaration that the Canadian Medeva Patent is void, or that certain claims within it are void, and a declaration that Connaught's vaccine does not infringe any valid claim under the Canadian Medeva Patent.
[2] There are patents in Europe, the United Kingdom and the United States based on the same priority document as the Canadian Medeva Patent, which means that the same inventive activity is the root of all of those patents. In proceedings in Europe, the United Kingdom and the United States, findings of fact relating to that inventive activity have been determined. Connaught argues that in principle, those findings of fact should be taken as proved conclusively against Medeva, or at least proved subject to evidence to the contrary being adduced by Medeva.
[3] To bring those findings of fact into these proceedings, Connaught filed a Second Amended Statement of Claim dated April 15, 1999 which includes the following paragraphs:
| 24. There have been decisions in other jurisdictions respecting patents granted, all [of] which claim priority from the same application filed in the United Kingdom Patent Office, namely U.K. application no. 8,412,207 filed May 12, 1984, as does the Canadian patent at issue here (Patent 1,253,073). Those decisions are: |
| a) European Patent Office, Technical Board of Apeal, Case Number T 0780/95-3.3.4 decision dated 11 March 1998 wherein European Patent 0,162,639 was revoked. (The EPO decision). This is a final decision. |
| b) English Patents Court, Evans Medical Ltd.'s Patent reported at [1998] RPC 517 wherein European Patent 0,162,639, aforesaid was held to be invalid. An appeal from this decision was taken but not pursued in view of the revocation of this patent by the EPO decision aforesaid. (The UK decision). This decision is a final decision. |
| c) United States District Court, Southern District of New York, Evans Medical Ltd., et al v. American Cyanamid Company, et al proceedings number 96 Civ. 3529 (WCC), a decision of Connor, Senior District Judge dated June 10, 1998. (The US decision). This decision has been appealed but is final at the District Court level. |
| 24A. In each of the decisions referred to in paragraph 24 above: |
| a) the same questions as at issue in this action have been decided as particularized in paragraphs 25 below; |
| b) each of the decisions are final; and |
| c) these decisions are binding on the defendant in respect of the patent in this action. |
| 25. Certain matters of fact having been fully litigated in the aforesaid decisions, are and, by reason of one or more of res judicata, issue estoppel, collateral estoppel, comity, abuse of process or a principle that once a matter relating to a patent having common ancestry has been fully litigated in one jurisdiction, it ought not to be litigated in another, are now binding in respect of the Canadian patent at issue herein or, additionally or in the alternative, they are admissible per se in these proceedings and the onus rests on [Medeva] to displace them on at least a civil burden of proof.1 |
[4] The patent laws of Canada are not identical to the patent laws of the United States, the United Kingdom or the other countries of Europe. There are treaties dealing with the determination of priority dates for patents based on the filing of a patent application in a treaty country, but the validity of the patent relating to a particular invention may vary from country to country.
[5] In addition, there are variations from country to country in the procedures by which the validity of patents is determined. For example, Europe has "opposition proceedings" that permit the validity of a patent to be determined by what is essentially an administrative tribunal. In Canada, the validity of a patent must be determined by a Court.
[6] Because of those differences, Medeva moved to strike out paragraphs 24, 24A and 25 on the basis that they disclose no reasonable cause of action, that they are immaterial and redundant, that they are frivolous and vexatious, that they will prejudice and delay the fair trial of the action, and that they constitute an abuse of the process of the Court. The motion to strike was based on Rules 174 and 221, which read as follows:
| 174. Every pleading shall contain a concise statement of the material facts on which the party relies, but shall not include evidence by which those facts are to be proved. |
| 221.(1) On motion, the Court may, at any time, order that a pleading, or anything contained therein, be struck out, with or without leave to amend, on the ground that it |
| (a) discloses no reasonable cause of action or defence, as the case may be, |
| (b) is immaterial or redundant, |
| (c) is scandalous, frivolous or vexatious, |
| (d) may prejudice or delay the fair trial of the action, |
| (e) constitutes a departure from a previous pleading, or |
| (f) is otherwise an abuse of the process of the Court, |
| and may order the action be dismissed or judgment entered accordingly. |
| (2) No evidence shall be heard on a motion for an order under paragraph (1)(a). |
[7] The material filed in support of the motion to strike included two affidavits that provide information about the foreign proceedings, including the decisions referred to above. I summarize that information as follows:
| (a) The European proceeding. An opposition to Medeva's European patent was filed by Connaught and others, who alleged that the patent was invalid. In a decision dated March 11, 1998, the European Patent Office Technical Board of Appeal revoked the European patent on the basis of insufficiency of disclosure. That decision revoked the European patent in all European countries for which it was issued. The European Patent Office Technical Board of Appeal is an adminstrative tribunal. There is no discovery of documents or oral discovery. Oral evidence is permitted, but not cross-examination. Hearsay evidence is permitted and informal and unverified proof is accepted regarding the admission of exhibits and other documentary evidence. |
| (b) The United Kingdom proceeding. This proceeding was in the High Court of England and Wales and was commenced by Chiron Corporation against Medeva and others, seeking among other things an order revoking Medeva's United Kingdom patent on the basis that it was invalid. That order was granted on January 16, 1998. An appeal was filed, but was discontinued once the patent was revoked as a result of the European Patent Offfice Technical Board of Appeal decision described above. |
| (c) The United States proceeding. Medeva and others brought an action in the United States District Court against American Cyanamid Company, Takeda Chemical Industries, Ltd. and American Home Products Corporation, alleging infringement of Medeva's United States patents. In pre-trial proceedings, Senior District Judge Conner granted summary judgment for the defendants. He held, based on his construction of the patent claims, that they were not infringed by the defendants' products. That decision was issued on June 10, 1998 and is final. |
| (d) Medeva was a party to all of the foreign proceedings referred to above. Connaught was not a party to any of the proceedings except those in Europe. It was an "interested party" in the United Kingdom proceedings, which means only that it was given access to certain witness statements and other documents. Connaught was not represented at the trial, and could not adduce evidence or cross-examine witnesses. |
[8] On May 4, 1999 the Associate Senior Prothonotary granted the motion to strike. As his reasons are short I will quote them in full:
| It having been admitted that the traditional prerequisites for res judicata or rem judicatem do not exist, the issue here is really whether the desirability of adopting the concept of collateral estoppel can be determined by the Federal Court in this action. |
| In this case it is alleged that there has been a determination by the European Patent Office, Technical Board of Appeal ("E.P.O.") which is not a Court but an administrative tribunal without discovery or cross-examination. |
| Also alleged is a summary judgment by an American Court and a judgment by an English Court with respect to facts for the purpose of impugning a fringe patent which has ceased to exist because of the action of E.P.O. I therefore question that it is an appropriate case but in any event so far as my decision is concerned I have no alternative but to follow the decided cases in this Court which indicate that there is no estoppel in circumstances such as those here. |
| Paragraphs 24, 24A and 25 are struck out without leave to amend. |
| Costs to the defendant in the cause. |
[9] Connaught has filed a notice of motion under Rule 51 appealing this order. A discretionary order of a prothonotary is not to be disturbed on appeal unless it is based upon a wrong principle or a misapprehension of the facts, or the prothonotary improperly exercised his discretion on a question vital to the final issue of the case. If an error of that kind is made, the Motions Judge on appeal must hear the matter de novo and exercise his or her own discretion: Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.).
[10] The decision of the prothonotary in this case is not on a question vital to the final issue of the case. The essential questions relating to the validity of the patent are still represented in the pleadings and may be tried in the normal fashion. The result of striking paragraphs 24, 24A and 25 is simply to confirm the usual rule that Connaught has the burden of proving a number of facts, even though Connaught believes those facts have already been proven elsewhere.
[11] I have been unable to discern any misapprehension of the facts by the prothonotary. Therefore, his decision must stand unless it is based on a wrong principle.
[12] The broad principle underlying the prothonotary's decision is that a claim should be struck only if it is plain and obvious that the claim will fail: Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959. The first step in the analysis is to examine the proposed legal arguments as set out in paragraph 25, 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.
[13] "Res judicata" is the shorthand way of describing that general principle in its broadest form. Res judicata was explained as follows by the Judicial Committee of the Privy Council in Thomas v. Trinidad and Tobago (Attorney General) (1990), 115 N.R. 313 at page316 (P.C.):
| [...] It is in the public interest that there should be finality to litigation and that no person should be subjected to action at the instance of the same individual more than once in relation to the same issue. The principle applies not only where the remedy sought and the grounds therefor are the same in the second action as in the first but also where, the subject matter of the two actions being the same, it is sought to raise in the second action matters of fact or law directly related to the subject matter which could have been but were not raised in the first action. The classic statement on the subject is contained in the following passage from the judgment of Wigram, V.C., in Henderson v. Henderson (1843), 3 Hare 100, at page 115: |
| ". . . where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time." |
[14] "Issue estoppel" is a subcategory of res judicata, and refers to the principle that precludes a party to litigation from seeking a judicial determination of a point of fact that has been determined with finality in another proceeding. As the case law now stands, three conditions must be met before the principle of issue estoppel will preclude a party from litigating a question of fact: (1) the same question must have been decided in other judicial proceedings, (2) the decision must be final, and (3) the parties to that decision or their privies must be the same as the parties to the proceeding in which the estoppel is raised: [1975] 2 S.C.R. 248">Angle v. M.N.R., [1975] 2 S.C.R. 248. Issue estoppel applies only if the factual determination in the other proceedings was fundamental to the substantive decision.
[15] 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. Such a plea was attempted in Carl-Zeiss-Stiftung v. Rayner and Keeler, Ltd. and others (No. 2), [1966] 2 All E.R. 536 (H.L.). The plea failed, not because the prior decision was that of a foreign court, but because the conditions for issue estoppel were not established. Lord Reid in that case advised caution in relying on foreign proceedings but did not preclude the possibility. He said this at page 555:
| I can see no reason in principle why we should deny the possibility of issue estoppel based on a foreign judgment, but there appear to me to be at least three reasons for being cautious in any particular case. In the first place, we are not familiar with the modes of procedure in many foreign countries, and it may not be easy to be sure that a particular issue has been decided or that its decision was a basis of the foreign judgment and not merely collateral or obiter. |
[16] In support of its pleading on the question of issue estoppel based on foreign patent litigation, Connaught placed particular reliance on this passage from Kirin-Amgen Inc. v. Beohringer Mannheim GMBH, [1997] F.S.R. 289 (Eng. C.A.), per Aldous L.J. at page 314:
| [...] I envisage cases where issue estoppel will arise in patent actions. For instance, the same issue can arise in different countries of the world, for example whether a particular scientific effect occurs when the invention or a manufacturing process is carrried out or how an infringing product is made, or the properties of a product or its composition. Thus this judgment should not be taken as concluding that issue estoppel has no place in patent actions. To the contrary, I believe that it does in appropriate cases. |
[17] "Collateral estoppel" is a subcategory of "res judicata" that has been accepted in the United States courts but not, so far, in Canada. It differs from "issue estoppel" in that the condition of identity of parties applies only to the party who is attempting to relitigate a question of fact, not to the party who is asserting the plea. A description of collateral estoppel is found in the judgment of Urie J.A. in Van Rooy v. Minister of National Revenue (1988), 87 N.R. 13 at page 21 (F.C.A.):
| [29] I conclude this brief survey of issue estoppel jurisprudence by referring to one U.S. Supreme Court decision, viz. Parklane Hosiery Co., Inc. v. Store (1979), 99 S. Ct. 645 at page 649. In the United States issue estoppel is known as collateral estoppel and on that subject Stewart, J., had this to say:- |
| "Collateral estoppel like the related doctrine of res judicata, has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation." |
| [30] Affirming an earlier decision of the Court in Blonder-Tongue Laboratories Inc. v. University of Illinois Foundation, 91 S. Ct. 1434, the Court held that a plea of collateral estoppel could succeed against any party or his privy who was a party to previous litigation whether or not the party claiming the estoppel had been a party or privy in the earlier litigation. In other words mutuality of parties in issue estoppel cases was found not to be a requirement. It is fair to say, I think, that no Canadian Court has gone that far in issue estoppel cases and there is no necessity to discuss that problem in this case because the parties were the same in each proceeding. That being acknowledged, I must say that I lean very much to the reasoning of the Supreme Court in the Blonder-Tongue case. Where the problem of mutuality has arisen in other Canadian Courts, the cases have been disposed of on the basis of the Court's inherent jurisdiction to prevent an abuse of process, as was done in the Demeter2 and Del Core3 cases, so that its requirement in issue estoppel cases in Canada, has not been decided to my knowledge. |
[18] I take two points from this passage. First, in this Court, the availability of a plea of collateral estoppel, as understood by Urie J.A., is an open question. Second, the facts that would support a plea of collateral estoppel may also support a plea of "abuse of process." Either plea could preclude a party from asserting certain factual allegations that are inconsistent with reasons for judgment in other litigation. That is so even if the other litigation was in another jurisdiction (see Solomon v. Smith (1987), 45 D.L.R. (4th) 266 (Man. C.A.)).
[19] "Comity" is the name given to the general principle that encourages the recognition in one country of the judicial acts of another. Its basis is not simply respect for other nations, but convenience and necessity, recognizing the need to facilitate interjurisdictional transactions. The Supreme Court of Canada has said, in the context of a case involving the recognition in one province of Canada of a decision of the Courts of another province, that the content of comity must be adjusted in light of a changing world order: Morguard Investments Limited v. De Savoye, [1990] 3 S.C.R. 1077 at 1095-6. I see no reason why that principle should not apply on an international scale.
[20] Connaught wishes to argue all of these principles, and also wishes to argue that "once a matter relating to a patent having common ancestry has been fully litigated in one jurisdiction, it ought not to be litigated in another." This principle is novel, in the sense that it is not found in any decided case, but it is obviously a specific application of res judicata and its variations as referred to above.
[21] In support of the prothonotary's decision, Medeva relies on a number of cases in which it has been said that this Court is not bound by the results of patent litigation in other countries; for example, Lubrizol Corp.v. Imperial Oil Ltd.(1992), 45 C.P.R. (3d) 449 (F.C.A.), Kirin-Amgen Inc. v. Hoffmann-La Roche Ltd. (1999), 87 C.P.R. (3d) 1 (F.C.T.D.) and Apotex Inc. v. Wellcome Foundation Ltd. (1998), 79 C.P.R. (3d) 193 (F.C.T.D.). However, I do not read these cases, or any other cases cited by Medeva, as standing for a general rule that a finding of fact in foreign patent proceedings can never be the proper subject of a plea of res judicata or issue estoppel. If they were intended to suggest that such a principle has been established by the case law, then I must respectfully disagree.
[22] It is worth noting that in the cases referred to in the preceding paragraph, the significance of findings made in the foreign proceedings was determined after a trial, and not on the basis of a motion to strike pleadings. A motion to strike a plea of issue estoppel based on prior United States proceedings was denied by Tremblay-Lamer J. in Apotex Inc. v. Wellcome Foundation Ltd. (1996), 68 C.P.R. 23 (F.C.T.D.).
[23] Medeva also cited a number of cases indicating that judicial decisions in patent cases are often inconsistent in different countries: Traver Investments Inc. v. Union Carbide Corporation (1967), 50 C.P.R. 59 (S.C.C.) as compared to Union Carbide Corporation v. Traver Investments (1965), 238 F. Supp. 540 (U.S. District Court); Apotex Inc. v. Wellcome Foundation Ltd. (1998), 79 C.P.R. (3d) 193 (F.C.T.D.) as compared to Burroughs Wellcome Co. v. Barr Laboratories Inc. (1993), 29 U.S.P.Q. 2d 1721, affirmed 32 U.S.P.Q. 2d 1915; Kirin-Amgen Inc. v. Hoffmann-La Roche Ltd. (1999), 87 C.P.R. (3d) 1 (F.C.T.D.) as compared to proceedings of the European Patent Office Board of Appeal; and Proctor & Gamble Co. v. Kimberley-Clark of Canada Ltd. (1991), 40 C.P.R. (3d) 1 (F.C.T.D.) as compared to The Proctor and Gamble Company v. Kimberley-Clark Corporation (1988), 862 F. 2d 320 (Fed. Cir. (Tex.)).
[24] Inconsistent outcomes may occur even in separate proceedings in this Court: J.M. Voith GmbH v. Beloit Corp. (1989), 27 C.P.R. (3d) 289 (F.C.T.D.), reversed (1991), 36 C.P.R. (3d) 322 (F.C.A.); Hy Kramer Canada Ltd. v. Lindsay Speciality Products Ltd. (1986), 9 C.P.R. (3d) 297 (F.C.T.D.).
[25] 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.
[26] However, I do not understand why inconsistencies in findings of fact made by different tribunals should be tolerated if they can be avoided without offending 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.
[27] 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.
[28] Another aspect of the pleadings that were ordered struck is the allegation that the findings of fact in the foreign tribunals "are admissible per se in these proceedings and the onus rests on [Medeva] to displace them on at least a civil burden of proof." It seems to me that Connaught is attempting to say, first, that the foreign decisions ought to be received at trial as evidence of the factual findings they contain, and second, that the factual findings in those foreign decisions must be accepted as conclusive proof of those facts unless rebutted by other evidence. These statements are arguments as to the manner in which the alleged facts may be proved. As such, they go beyond the scope of Rule 174 and should be struck for that reason.
[29] I have not overlooked the arguments of Medeva that permitting paragraphs 24, 24A and 25 to stand will force Medeva to adduce additional expert evidence and devise new arguments about the differences between the substantive and procedural laws of Europe, the United Kingdom and the United States, in order to explain why the particular findings of fact should not be accepted in the trial of this action. This trial will be more complex with paragraphs 24, 24A and 25 than without. Any plea of res judicata or a related principle adds complexity, because they compel the Court to consider difficult issues as to the nature of the prior proceedings and the precise significance of particular conclusions reached in the course of those proceedings.
[30] However, complexity by itself cannot justify striking pleadings that are worthy of the Court's attention. It is appropriate to recall that in Hunt v. Carey, the Supreme Court of Canada said that a claim should not be struck merely because it is novel or invites a complex application or extension of existing legal principles.
[31] It is also worth noting that the problem of complexity may be viewed in different ways. Patent litigation is already complex, in this Court and in every court that deals with patents. Ultimately, patent litigation may be simplified by principles that permit or require, in appropriate cases, the adoption of findings of fact in foreign proceedings. But that will never happen unless, in this case or another one, the Court undertakes an examination of the arguments that would open the door for establishing such a principle.
Karen R. Sharlow
Judge
Ottawa, Ontario
December 17, 1999
__________________
1There follows a detailed statement of the findings of fact alleged to have been made in each of the foreign proceedings. As those statements are lengthy and do not aid in the analysis of the issue raised before me, I have not reproduced them.
2Demeter v. British Pacific Life Insurance Co. (1984), 48 O.R. (2d) 266.
3Del Core v. Ontario College of Pharmacists (1985), 51 O.R. (2d) 1.
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