Date: 19990406
Docket: T-1999-97
BETWEEN:
ELI LILLY AND COMPANY and
ELI LILLY CANADA INC.
Applicants
- and -
ABBOTT LABORATORIES and
THE MINISTER OF HEALTH
Respondents
APPLICATION UNDER Section 55.2(4) of the Patent Act and
Section 6 of the Patented Medicines (Notice of Compliance) Regulations
REASONS FOR ORDER
EVANS J.:
[1] In September 1997 Eli Lilly and Company and Eli Lilly Canada Inc. filed an originating notice of motion in this Court indicating their intention to seek an order prohibiting the Minister of Health from issuing a notice of compliance to Abbott Laboratories in respect of the manufacture of vancomycin hydrochloride.
[2] Eli Lilly sought this order in response to a notice of allegation by Abbott to the effect that the vancomycin hydrochloride that it manufactures does not infringed Eli Lilly"s patents. The patents in question relate to an aqueous gel-free formulation of vancomycin hydrochloride that includes a gel-inhibiting compound selected from a group of alcohols including acetone. The other patent claims the compound crystalline vancomycin diphosphate.
[3] In July 1998 the parties consented to a schedule for the completion of the interlocutory steps in the proceeding which was approved by an order of Reed J. dated July 21, 1998. Under this schedule, which amended an earlier one, all parties were to complete cross-examination by September 18, 1998; the applicants" application record was to be filed and served a month later; and the respondents" application record filed and served a month after that.
[4] I shall consider first the motion dated November 26, 1998 in which Lilly seeks an order for the re-attendance for cross-examination of Dr. Chu, a chemist at Abbott who has been involved with the development of vancomycin. Dr. Chu had been cross-examined in August 1998. Lilly wishes to cross-examine him further in areas that it says are of great relevance to the issues in dispute in the prohibition proceeding, and on which Lilly alleges Dr. Chu"s answers were vague, contradictory or evasive.
[5] In addition, Lilly asserts that in a letter dated October 27, 1998 counsel for Abbott corrected, or qualified, an answer that Dr. Chu had given during his cross-examination in August to a question concerning one of those areas. Lilly claims that it is important that it be allowed to explore through further cross-examination the inconsistency between Dr. Chu"s answers at his cross-examination and the letter received from counsel.
[6] Abbott opposes this motion on two grounds. First, Lilly is out of time: the parties consented to a schedule under which cross-examination was to be completed by the end of August 1998. Lilly is in effect seeking an extension of approximately four months to the schedule.
[7] Second, and in the alternative, Abbott argues that many of the questions that Lilly seeks to put to Dr. Chu are irrelevant to the issues in dispute in the prohibition proceeding and that, properly understood, Dr. Chu"s answers are not inconsistent, ambiguous or inappropriately evasive.
[8] On the issue of delay, counsel for Abbott noted that Lilly also missed the schedule deadline for filing their application record, which is the subject of a separate motion by Abbott to which I shall turn later. As to the delay in the request for further cross-examination outside the scheduled date for its completion, there is case law identifying and elaborating the factors that the Court should take into consideration when determining a motion for an extension of time beyond that provided by either the Rules, or an order of the Court.
[9] First, the onus is on the moving party to justify all its delay in bringing its motion: see, in particular, Pfizer Canada Inc. v. Apotex Inc. (1996), 67 C.P.R. (3d) 423 (F.C.T.D.), which also concerned an attempt to extend a schedule to which the parties to a prohibition proceeding under section 6 of the Patented Medicines (Notice of Compliance) Regulations SOR/93-133 had consented. See also, in a different context, Moreno v. Canada (Ministre de la citoyenneté et de l"immigration) (1996), 110 F.T.R. 57 (F.C.T.D.); Valyenegro v. Canada (Secretary of State) (1994), 88 F.T.R. 196 (F.C.T.D.).
[10] In an attempt to discharge this onus, Lilly relied on settlement discussions that were on-going between the parties until the summer of 1998, and the time taken while it waited for both a draft confidentiality order to be produced by Abbott and Abbott"s responses to questions taken under advisement. Counsel for Lilly also noted that, until the receipt of the letter of Abbott"s counsel in October, the plaintiff was unaware that Dr. Chu"s evidence was incorrect on a material matter.
[11] As justifications these do not seem to me to be very impressive, especially in light of the examples given in some of the cases about the kind of reasons that render delay justifiable. For example, in Chin v. Minister of Employment and Immigration (1993), 69 F.T.R. 72 (F.C.T.D.) Reed J. said that, in order to justify a failure to comply with a time limit under the Rules, the reasons would have to be
"beyond the control of counsel or the applicant, for example, illness or some other unexpected or unanticipated event."
[12] I see nothing resembling events of these kinds in this case. Experienced counsel understand that settlement discussions may be protracted and that meanwhile they have to keep limitation periods in mind. Moreover, the letter from counsel correcting or qualifying Dr. Chu"s evidence on one item does not explain Lilly"s delay in seeking to extend the time for cross-examination on other areas of his affidavit and answers. Indeed, Lilly waited another month after receiving the letter before filing this motion. Nor was I satisfied that Abbott was at fault in failing to provide a draft confidentiality order.
[13] Another consideration is whether the moving party has produced evidence establishing that it has an arguable case on the merits for obtaining a prohibition order: Pfizer, supra. Lilly has not sought in this motion to adduce evidence of the strength of its case in the main proceeding.
[14] Finally, since Lilly is likely to gain by delay, and Abbott to lose, Lilly must produce evidence that it would be prejudiced if an extension of the schedule were not granted. No doubt it would be advantageous for it to be able to cross-examine Dr. Chu further, but I am not persuaded that, if it cannot, any potential prejudice is likely to outweigh the harm presumptively sustained by Abbott as a result of the further delay.
[15] For these reasons I shall dismiss Lilly"s motion to require Dr. Chu to re-attend for cross-examination outside the time frame established by the order of Reed J.
[16] In the second motion before me Abbott seeks an order dismissing Lilly"s application for a prohibition, on the ground that Lilly failed to comply with the schedule for the completion of the pre-hearing interlocutory steps to which the parties had agreed and which were made subject of an order by Reed J. on July 21, 1998.
[17] In particular, Abbott relies on Lilly"s failure to serve and file the applicants" record on or before October 18, 1998 as required by the order of Reed J. As a backdrop against which its submissions should be considered, Abbott made two points of a general nature.
[18] First, as the party seeking the order of prohibition, Lilly has the carriage of the proceeding and the burden of ensuring that it moves forward without undue delay. The fact that Lilly is likely to benefit from delay is only an additional reason for requiring it to proceed in the matter with diligence.
[19] Second, even if its prohibition proceeding is dismissed, Lilly can always institute proceedings against Abbott for infringement of its patent. Dismissing this proceeding would thus not deprive Lilly of any private law remedy available to it if it could establish that Abbott was infringing its intellectual property rights with respect to vancomycin hydrochloride.
[20] Given the general level of disputatiousness that seems regularly to characterize proceedings under the Patented Medicines (Notice of Compliance) Regulations, it comes as no surprise that the parties present in very different lights the events on which Abbott bases its motion to dismiss Lilly"s application.
[21] Essentially, Abbott attributes the delay to Lilly"s self-interested foot-dragging, while Lilly purports to portray itself as the innocent victim of litigation tactics by Abbott and its lawyers that might be characterized as aggressive, to say the least. Of course, on closer examination matters are rarely this clear cut, and the question that I have to decide is whether Abbott"s account is sufficiently accurate that it would be appropriate for me to grant the relief requested in its motion to dismiss.
[22] I have already at least touched on some of the relevant ground in my consideration of Lilly"s motion for an extension of time to permit the further cross-examination of Dr. Chu. However, it is necessary in the context of this motion to examine its principal features rather more closely.
[23] Lilly"s principal justification for why its application for an order of prohibition should not be dismissed for failure to comply with a court-ordered deadline is that it was engaged in settlement discussions with Abbott on and off during the first half of 1998. Indeed, it was because discussions were continuing that the parties agreed to the amended schedule that was approved by Reed J. on July 21, 1998.
[24] Following discussions and proposals in the spring, in mid-July Abbott was considering a counter-proposal put to it by Lilly in response to a settlement proposal from Abbott, shortly before the date when the amended schedule was put in place. However, no counter-proposal ever was forthcoming from Abbott, which had decided in July not to proceed with the discussions, a fact that it had not thought fit to bring to the attention of Lilly.
[25] Meanwhile, Lilly did nothing and had no communication from Abbott prior to the letter from Abbott"s solicitors dated November 17, 1998 serving it with Abbott"s application record in accordance with the schedule prescribed by order of Reed J., and informing Lilly that it intended to oppose any request by Lilly for an extension of time, such as to file the applicants" record.
[26] Abbott justifies its conduct by asserting that it was under no legal duty to inform Lilly that it no longer intended to proceed with settlement discussions, or to give an early warning to Lilly that it would insist on strict compliance with the schedule. Its position is that, as the initiator of the proceeding, Lilly had the obligation to move the matter forward, especially as it probably stood to profit by procrastination.
[27] To my mind, each party has on its side a part of the truth. That is, I can see no reason other than adversarial gamesmanship for Abbott not to have informed Lilly well before the third week of November that as long ago as July it had ceased to be interested in the possibility of settlement. On the other hand, I think that Lilly should also have enquired why Abbott had not come forward with a counter-offer. Nor could Lilly plausibly excuse its inactivity by asserting that, by consenting to delays before the amended schedule was put in place, Abbott had thereby waived its right to insist that Lilly observe the time limits imposed in Reed J."s order.
| (ii) The confidentiality order |
[28] Lilly also attributed its failure to file the applicants" record in time because it was waiting for a draft confidentiality order that Abbott had undertaken to provide, but did not. However, an examination of the transcript indicates that Abbott"s version of events on this issue is close to the truth. That is, Mr. Dimock on behalf of Abbott indicated that there was no agreement on the issue of confidentiality with respect to answers given by Dr. Chu on his cross-examination, and that there was no undertaking made on behalf of Abbott to provide a draft order.
| (iii) The inappropriateness of the remedy |
[29] Finally, counsel for Lilly urged, the Court should be very reluctant to take such a drastic step as dismissing the application on the ground of delay. In David Bull Canada Inc. v. Pharmacia Inc. (1994), 58 C.P.R. (3d) 209 (F.C.A.), Strayer J.A. stated at pages 214-215 that the Court should be very reluctant to strike out a notice of motion. This is because motions do not have pleadings and the other pe-trial steps of actions, so that it is often not feasible to identify with precision the allegations of fact. Lilly argued that in bringing this motion Abbott was in effect attempting to strike Lilly"s originating notice of motion, when, according to Strayer J.A., it should instead be responding on the merits at the hearing of the motion itself.
[30] However, any comfort that Lilly may derive from this portion of the reasons in Pharmacia would seem to be quickly removed by passages on page 215 of the judgment, where Strayer J.A. emphasises that applications for judicial review, including those brought under the Patented Medicines (Notice of Compliance) Regulations, are intended to be expeditious, and that the Court"s power to dismiss for delay provides a leverage that enables the Court to ensure that this policy is implemented.
[31] Counsel for Lilly noted that there was an alternative remedy available to Abbott that was less draconian than the dismissal of Lilly"s application. This is to invoke the discretion of the Court conferred by subsection 7(5) of the Regulations to shorten the 30 month statutory stay on the issue of a notice of compliance to which an applicant is entitled when giving notice that it is seeking to prohibit the Minister from issuing a notice of compliance.
[32] Since subsection 7(5) provides that the discretion is exercisable "if the Court finds that the first person [i.e. the applicant in this case] has failed, at any time during the proceeding, to reasonably cooperate in expediting the application" it would seem tailor-made by the legislature for dealing with precisely the situation that has arisen here. If the period that the stay is in force, whether 30 months (now 24 months), or some court-ordered period, expires before a prohibition is granted, a notice of compliance can be issued immediately, and the applicant in effect loses.
[33] At the end of the day, Abbott has not satisfied me that I should dismiss Lilly"s application because it failed to file the applicants" record within the time fixed by the order of Reed J. on the consent of the parties. While Lilly has certainly not been blameless in this matter, Abbott has not come with clean hands either, and it is Abbott that is invoking the Court"s remedial discretion.
[34] Moreover, I am impressed by the argument that subsection 7(5) provides an alternative and effective remedy to any "second person" who can demonstrate that it is the victim of delay on the part of a "first person". The power of the Court to shorten the period of the stay also has the advantage of not being an all-or-nothing remedy, but can be fashioned to fit the particular circumstances of the case.
[35] Having dismissed both motions, but only after a delay on my part that has no doubt contributed to the practical difficulties that have beset this litigation, I would think it appropriate for the parties to propose a further amended schedule in an attempt to get the proceeding back on track. Better still, in an attempt to bring this matter to a conclusion without incurring further delay and expense the parties might also resume the settlement discussions that were broken off last July.
TORONTO, ONTARIO "John M. Evans"
April 6, 1999. J.F.C.C.
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
COURT NO: T-1999-97
| STYLE OF CAUSE: ELI LILLY AND COMPANY and |
Applicants
| ABBOTT LABORATORIES and THE MINISTER OF HEALTH |
Respondents
DATE OF HEARING: MONDAY, DECEMBER 7, 1999
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR ORDER BY: EVANS J.
DATED: TUESDAY, APRIL 6, 1999
APPEARANCES: Mr. James Mills
For the Applicants
Mr. David Reive
SOLICITORS OF RECORD: Gowling, Strathy & Henderson
| Suite 2600, 160 Elgin Street |
For the Applicants
| Suite 3202, 20 Queen Street West |
FEDERAL COURT OF CANADA
Date: 19990406
Docket: T-1999-97
Between:
| ELI LILLY AND COMPANY and ELI LILLY CANADA INC. |
Applicants
| ABBOTT LABORATORIES and THE MINISTER OF HEALTH |
Respondents
REASONS FOR ORDER
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