Date: 20071119
Docket: T-1548-06
Citation: 2007
FC 1210
Toronto, Ontario, November 19, 2007
PRESENT: The Honourable Madam Justice Snider
BETWEEN:
LES LABORATOIRES SERVIER,
ADIR, ORIL INDUSTRIES,
SERVIER CANADA INC.,
SERVIER LABORATORIES (AUSTRALIA) PTY LTD
and SERVIER LABORATORIES LIMITED
Plaintiffs
(Defendants to the Counterclaim)
and
APOTEX INC. and
APOTEX PHARMACHEM INC.
Defendants
(Plaintiffs by Counterclaim)
REASONS FOR ORDER AND ORDER
I. Introduction
[1]
In the
first of two motion before this Court, Sanofi-Aventis Deutschland GmbH (Sanofi
Germany) seeks to be added as a defendant to the Counterclaim in Court File
T-1548-06 (the Perindopril Action), pursuant to r. 104(1)(b) of the Federal
Courts Rules, S.O.R./98-106. Schering Corporation (Schering) has made the
same request in a companion motion. For the reasons set out below, I have
determined that neither Sanofi Germany nor Schering should be joined in the
Perindopril Action.
II. Background
[2]
In the
Perindopril Action, Les Laboratoires Servier, ADIR, Oril Industries, Servier
Canada Inc., Servier Laboratories (Australia)
Pty Ltd, and Servier Laboratories Limited (collectively referred to as Servier)
are Plaintiffs in an action against Apotex Inc. and Apotex Pharmachem Inc.
(collectively referred to as Apotex). Servier claims that Apotex has infringed
its rights under Canadian Patent No. 1,341,196 (the 196 Patent).
[3]
Apotex, in its
Defence and Counterclaim to the Servier claim, asserts that the 196 Patent is
invalid on numerous grounds. Further and of importance to this motion, Apotex
has alleged that Servier and others, including Schering and the predecessor to
Sanofi Germany, “entered into an agreement or
conspiracy in contravention of section 45 of the Competition Act”. The
alleged conspiracy relates to an agreement in respect of the allocation among
the alleged co-conspirators of certain patent claims that were involved in a
conflict proceeding in the Canadian Patent Office. The conflict proceedings
concerned a determination of inventorship of a number of co-pending Canadian
patent applications, including: the 196 Patent; Canadian Patent No. 1,341,296
(the 296 Patent); and Canadian Patent No. 1,341,206 (the 206 Patent).
[4]
Apotex did
not name either Sanofi Germany or Schering as Defendants to the Counterclaim.
In the motions before me, both Apotex and Servier strongly object to the
joinder of Sanofi Germany and Schering in the
Perindopril Action.
[5]
The
Perindopril Action is set for trial commencing on February 25, 2008 – just over
three months from now.
[6]
The events
in the alleged conspiracy are also in play in Court File T-161-07 (the Ramipril
Action) and T-1161-07 (the Novopharm Ramipril Action).
[7]
In the Ramipril
Action, by Statement of Claim dated January 26, 2007, Schering and
Sanofi-Aventis Canada Inc. (Sanofi Canada) have commenced an action against Apotex
Inc. alleging infringement of the 206 Patent. Apotex Inc. defends the claim by
Statement of Defence and Counterclaim served March 12, 2007 and issued April
10, 2007. The Counterclaim in the Ramipril Action alleges two conspiracies, one
of which is exactly the same conspiracy alleged in the Perindopril Action.
Apotex has joined Sanofi Germany and Ratiopharm Inc. as defendants to the
Counterclaim in that action. However, although Apotex names ADIR, one of the
Plaintiffs in the Perindopril Action, as one of the co-conspirators, it has not
joined ADIR as a party in the action.
[8]
In the Novopharm
Ramipril action, by Statement of Claim dated June 22, 2007, Sanofi Canada and Schering commenced an action against Novopharm Limited
(Novopharm) in Court File No. T-1161-07 alleging that Novopharm has infringed
the 206 Patent. Novopharm defends the claim by Statement of Defence and
Counterclaim and has added Sanofi Germany as a defendant to the Counterclaim. In
its Counterclaim, Novopharm alleges that Sanofi, ADIR and Schering engaged in
conduct contrary to s. 45 of the Competition Act. ADIR has not been
joined in the action.
[9]
Trials in the Ramipril and Novapharm
Ramipril Actions are to commence in early 2009.
III. Analysis
A. General Principles
[10]
At common
law, plaintiffs are entitled to choose the defendants against whom they wish to
proceed. As noted, in the Perindopril Action, Apotex has not chosen to add
Sanofi Germany or Schering and in this case
opposes their addition. Thus, the only way that either Sanofi Germany or
Schering may be joined as a defendant to the Counterclaim is through the
operation of r. 104(1)(b) of the Federal Courts Rules. This Rule
allows the addition of a party in special circumstances. Specifically, the
Court may only add a person as a party to an action pursuant to r. 104(1)(b) if
one of the following two tests is met:
a)
The person
ought to have been joined as a party; or
b)
The
person’s presence before the Court is necessary to ensure that all matters in
dispute in the proceeding may be effectively and completely determined.
[11]
Where, as
here, the plaintiff opposes the addition of a defendant:
…the test…is a stringent one requiring
special or exceptional circumstances to allow a departure from the general rule
that it is for the plaintiff to choose the defendants, not to have defendants
forced upon him or her (Ferguson v. Arctic Transportation Ltd.,
[1996] 1 F.C. 771 at 781 (Proth.)).
[12]
The first
test was considered in the case of Ferguson, above. In determining whether a party “ought to have been
joined”, Prothonotary Hargrave analyzed the jurisprudence and noted that it had
been narrowly interpreted to require “parties who ought to have been joined, in
the strict legal sense, for example joint contractors or…co-covenantees…” or to
permit a party to be added “only if the question at issue cannot be adjudicated
unless the new party is added.” (Ferguson, above
at 780-782).
[13]
The second
test was also considered in Ferguson, above. Prothonotary Hargrave
noted that, generally, the necessity of a party had been found to vary
according to the circumstances (Ferguson, above
at 783-784). Prothonotary Hargrave denied the defendant’s motion to add a third
party as a defendant after noting that the third party would not lose any legal
right if it were not a defendant and that, even with its absence, all matters
the plaintiff had put in dispute could still be completely determined and
adjudicated upon (Ferguson, above at 784-785).
[14]
The
question of joinder has been examined in a number of other cases.
[15]
In Canadian Red Cross Society v.
Simpsons Ltd. (1983),
70 C.P.R. (2d) 19 at 22 (F.C.T.D.), Justice Mahoney, considered an application
by Twentieth Century-Fox Film Corporation to be joined as a defendant to an
action to restrain the defendant from selling towels bearing the design of the
Red Cross. After considering the case of Re Starr and Township of Puslinch
et al. (1976), 12 O.R. (2d) 40 (Div. ct.), Justice Mahoney held that “it is not necessary that the applicant
have an interest in the immediate issue; it is sufficient that determination
of that issue will directly affect his rights or his pocket-book” [emphasis
added]. However, this
rather narrow and, I suggest, case-specific test set out by Justice Mahoney has
seen significant refinement in more recent jurisprudence.
[16]
The
question of joinder was further considered by the Court of Appeal in Shubenacadie
Indian Band v. Canada (Minister of Fisheries and
Oceans) (2002),
299 N.R. 241 at para. 8 (F.C.A.). Although Shubenacadie involved an appeal from a
motions judge dismissing a motion to remove defendants as parties, the
Court quoted the following passage from Amon v. Raphael Tuck &
Sons, [1956] 1 Q.B. 357 with approval as to when a person should be
considered a “necessary” party:
What
makes a person a necessary party? It is not, of course, merely that he has
relevant evidence to give on some of the questions involved; that would only
make him a necessary witness. It is not merely that he has an interest in the
correct solution of some question involved and has thought of relevant
arguments to advance and is afraid that the existing parties may not advance
them adequately. ... The only reason which makes it necessary to make a
person a party to an action is so that he should be bound by the result of the
action, and the question to be settled therefore must be a question in the
action which cannot be effectually and completely settled unless he is a party.
[Emphasis added.]
[17]
The
following principles also apply when determining whether a person is a
necessary defendant:
·
The fact a
person has evidence relevant to the plaintiff’s
statement of claim
is not sufficient to make them a necessary
defendant (Shubenacadie,
above at para. 7).
·
The fact
that a person may be adversely affected by the
outcome of the
litigation is not sufficient to make them a
necessary
defendant (Shubenacadie, above at para. 7).
·
A mere
commercial interest rather than a legal interest is not
sufficient to make
a person a necessary party (Ferguson,
above at 784-785; Apotex
Inc. v. Canada (Attorney General)
(1986), 9 C.P.R.
(3d) 193 at 201 (F.C.T.D.)).
·
Absent a
specific legislative provision (as in, for example,
Nissho-Iwai
Canada Ltd. v. Minister of National Revenue for
Customs &
Excise,
[1981] 2 F.C. 721 (T.D.)), when the
plaintiff’s statement of claim
seeks no relief against a person and makes no allegations against them the
person will not be considered a necessary party (Shubenacadie, above at
para. 6; Hall v. Dakota Tipi Indian Band, [2000] F.C.J. No. 207 at
paras. 5, 8 (T.D.) (QL); Stevens v. Canada (Commissioner, Commission of
Inquiry), [1998] 4 F.C. 125 at para. 21 (C.A)).
B.
Application to the facts of this case
[18]
In assessing the
facts before me against these principles, there is no difference between the
position of Sanofi Germany and Schering. As Sanofi Germany brought the first motion to be joined, I will refer mainly
to its arguments. However, if I were to conclude that Sanofi Germany should
succeed on this motion, I can think of no valid reason to exclude Schering. Apart
from the timing of its motion, Schering’s interests are identical to those of
Sanofi Germany.
Ought
Sanofi Germany and Schering to have been joined?
[19]
Sanofi Germany is not “a party who ought to have been joined” in the
“strict legal sense” contemplated by r. 104(1)(b). Therefore, an order to join
Sanofi Germany should only be made if the second part
of r. 104(1)(b) is satisfied. That is, Sanofi Germany
should only be joined if I am persuaded that its presence is “necessary to
ensure that all matters in dispute in the proceeding may be effectually and
completely determined”.
Will
the rights or pocket-book of Sanofi Germany
and Schering be affected?
[20]
Will the
rights or pocket-book of Sanofi Germany
or Schering be affected by a decision of the Court in the Perindopril Action?
To respond to this question, it is helpful to place the key claims made by
Apotex in the Perindopril Action side-by-side with the key claims made in the
Ramipril Action.
|
|
Perindopril Action
|
Ramipril Action
|
|
Remedy sought by
Apotex in its Statement of Defence and Counterclaim with respect to Competition
Act.
|
79. The Defendants,
Plaintiffs by Counterclaim, therefore claim:
(a). A Declaration
that [the 196 Patent] and each of claims 1,2,3 and 5 is invalid, void,
unenforceable, and of no force and effect.
(b) …
(c) Damages pursuant
to section 36 of the Competition Act…
|
125. The Defendant,
Plaintiffs by Counterclaim, therefore claims:
(a) A Declaration that
[the 206 Patent] and each of claims 1, 2, 3, 6 and 12 inclusive is invalid,
void, unenforceable and of no force and effect.
(b) Damages for
conspiracy to unlawfully violate the Patent Act
(c) Damages for
conspiracy to injure Apotex
(d) Damages pursuant
to section 36 of the Competition Act
|
|
Key Claim with respect
to Competition Act.
|
76. By reason of the
foregoing, ADIR and its co-plaintiffs, Schering and Hoecht and Aventis, and
each of them have:
(a) limited unduly the
facilities for transporting, producing, manufacturing, supplying, storing or
dealing in ACE inhibitors, including compounds falling within the scope of
the claims of the ‘196 Patent;
(b) restrained or injured,
unduly, trade or commerce in ACE inhibitors falling within the scope of the
claims of the ‘196 Patent;
(c) prevented, limited, or
lessened, unduly, the manufacture, purchase, barter, sale, transportation or
supply of ACE inhibitors, including compounds falling within the scope of the
claims of the ‘196 Patent.
|
70. By reason of the
foregoing, Schering and Hoecht/Sanofi and ADIR, and each of them have:
(a) limited unduly the
facilities for transporting, producing, manufacturing, supplying, storing or
dealing in ACE inhibitors, including compounds falling within the scope of
the claims of the ‘206 Patent;
(b) restrained or injured,
unduly, trade or commerce in ACE inhibitors falling within the scope of the
claims of the ‘206 Patent; and
(c) prevented, limited, or
lessened, unduly, the manufacture, purchase, barter, sale, transportation or
supply of ACE inhibitors, including compounds falling within the scope of the
claims of the ‘206 Patent.
|
[21]
The following facts
become clear from a review of this chart and the full versions of the relevant
parts of the Counterclaim in each action:
·
The conspiracy
allegations are largely the same; however, Apotex places the focus in each set
of allegations on the 196 Patent or 206 Patent respectfully.
·
Apotex is not seeking
any damages against anyone other than Servier in the Perindopril Action.
Similarly, Apotex limits its claims against the plaintiffs (Defendants by Counterclaim)
in the Ramipril Action.
·
Apotex is not
seeking a general declaration in either action that the Plaintiffs (Defendants
by Counterclaim) breached the Competition Act.
·
Apotex is not
seeking to declare that the 206 Patent is invalid in the Perindopril Action.
Similarly, Apotex is not seeking to declare that the 196 Patent is
invalid in the Ramipril Action.
In other words, Sanofi Germany’s
and Schering’s rights and pocket-books in the Ramipril Action are not affected
by the Perindopril Action.
Are
Sanofi Germany and Schering otherwise “necessary”?
[22]
Sanofi Germany submits that, as an alleged co-conspirator, it is a
necessary party to the Perindopril case. In support of its position, Sanofi Germany cites the Ontario Superior
Court of Justice decision in Vitapharm Canada Ltd. v. F. Hoffmann-La Roche
Ltd., [2002] O.J. No. 298 (Sup. Ct.)
(QL). The Court in Vitapharm was considering a motion by
five named defendants challenging the jurisdiction of the Ontario Superior
Court of Justice to hear five class actions relating to losses in Canada connected to a worldwide
price fixing conspiracy in vitamins. The motion was dismissed. In his analysis, Justice Cumming
remarked, at para. 78:
In my view, and I so find, the balance of
convenience favours trying all of the defendants in each action together. The
claims against all defendants in a given action arise out of the same alleged
conspiracy. The issues will involve common questions of fact and law. It is
logical that the claims against all the alleged conspirators in an alleged
single price-fixing scheme be tried together. Each of the alleged
co-conspirators is a necessary and proper party.
[23]
In my
view, this case is readily distinguishable from the situation before me. First,
the plaintiffs in Vitapharm were not only asserting that some of the
named defendants had conspired to fix prices contrary to s. 45 of the Competition
Act but also were pleading that the defendants were liable at common law
for the tort of civil conspiracy. Presumably, damages were being sought against
all of the defendants. In contrast, in the Perindopril Action Counterclaim,
Apotex does not plead the tort of civil conspiracy. Nor does it seek any
damages from Sanofi Germany or Schering. Further, given
that the named defendants in Vitapharm were seeking to avoid the suit,
rather than asking to be joined, the Court did not have to consider the common
law rule that a plaintiff may choose its defendants. In sum, the case does not
stand for the general proposition that all parties to an alleged conspiracy
should be joined as defendants in an action.
Should Sanofi Germany and Schering be bound by the
results in the Perindopril Action?
[24]
Can it be said that
Sanofi Germany and Schering should be bound by the result in the Perindopril
Action? I do not think that can be the case.
[25]
In the Perindopril
Action, Apotex will be required to prove the elements of conspiracy under the Competition
Act, including the actus reus and mens rea components (see the
leading case of R. v. Nova Scotia Pharmaceutical Society, [1992] 2
S.C.R. 606). In contrast to a prior conviction in a criminal case (see s. 36(2)
of the Competition Act), there is nothing in the jurisprudence or in the
Competition Act which indicates that establishing these elements for one
defendant of an alleged conspiracy in a civil suit relieves the burden on the
plaintiff in any way in subsequent proceedings against another party to the
same conspiracy. Therefore, Apotex would have to prove all the mens rea and
actus reus elements again in the Ramipril Action.
[26]
As part of its
burden, Apotex will be required to establish that the agreement likely
prevented or lessened competition unduly (Nova Scotia
Pharmaceutical, above at
para. 72). To do this, Apotex must show that Servier had “market power” – which
requires that the relevant market be determined. In the Perindopril Action, it
appears that Apotex will present expert evidence that the relevant market is
limited to that of perindopril rather than the broader market for ACE
inhibitors (which would include ramipril). Although the relevant market is a
fact which must be proved by Apotex in each action and which may be opposed by
the defendants to the counterclaim, the fact that Apotex has stated that it
intends to prove different relevant markets in each action is worth noting.
[27]
Sanofi Germany is concerned that a factual finding by the Court in the
Perindopril Action that there was a conspiracy will be binding on the trial
judges in the Ramipril and Novapharm Ramipril Actions. In its view, judicial
comity would restrict another judge from finding against Apotex in the later
cases.
[28]
I cannot agree that
the principles of judicial comity would necessarily present the problem
envisioned by Sanofi Germany. Any finding of fact by the trial judge
in the Perindopril Action that there was a conspiracy would be based on the
evidence before the Court. With different parties and additional or different
evidence, the judge in the later actions will have to reach his or her decision
on the basis of the evidence before the Court in those actions. The result may
differ.
Is
the question of the alleged conspiracy one “which cannot be effectually and
completely settled” unless Sanofi Germany and Schering are added?
[29]
Sanofi Germany also submits that it is not
in the interests of justice that the same counterclaim be tried twice. In this
argument, they appear to be asserting that adding all parties to the conspiracy
counterclaim in the Perindopril Action will “effectually and completely” settle the question of the
alleged conspiracy and, thus, lead to a more efficient use of judicial resources. A
determinative finding with all parties present in the Perindopril Action, it is
submitted, would obviate the need for separate determination in each of the
Ramipril and Novopharm Ramipril Actions.
[30]
I
acknowledge that such a result could be attained (although that is far
from clear). However, this is not a sufficient reason to warrant adding Sanofi Germany or Schering as a defendant.
In Ferguson, above, Prothonotary Hargrave noted that
the avoidance of a multiplicity of proceedings is a benefit of r. 104(1)(b)
rather than the primary reason behind the rule (Ferguson, above at 779). Similarly, Justice Devlin
remarked, in the case of Amon, above, that joinder was not “designed to
offer slightly cheaper alternative consolidation” (Amon, above at 381).
Would
there be prejudice to the parties?
[31]
Finally, I turn to
the question of prejudice. It should be recalled that r. 104(1)(b) is
discretionary.
[32]
Based on the above
analysis, I am not persuaded that Sanofi Germany or Schering will be prevented
from pursuing a full defence to the counterclaims in the other actions. I do
not see serious prejudice to the moving parties if I dismiss this motion.
[33]
In contrast, there
are factors that militate against joining Sanofi Germany
and Schering to the Perindopril Action. I note first the delay in bringing this
motion. Although Apotex’s Counterclaim in the Perindopril Action was filed
early in 2007, Sanofi Germany did not seek to bring this motion until
August 2007. Schering only made its request three days before this motion was
heard.
[34]
Sanofi Germany has put forward a schedule that, it submits, would allow
the trial in the Perindopril Action to proceed as scheduled in February 2008.
As helpful as this proposed schedule was to the Court, it is based on many
assumptions. Considering the number of issues that could arise concerning
discoveries, admissions and documents, I conclude that it is highly probable
that the late addition of two more parties to the Perindopril Action will cause
delays. Servier and Apotex have worked very hard and cooperatively to ensure an
early trial date in the Perindopril Action. Their interests in seeing an
expeditious and just resolution of the matters at issue would be prejudiced by
the joinder of Sanofi Germany and Schering.
IV.
Conclusion
[35]
In conclusion, I am
not persuaded that Sanofi Germany and Schering have met the requirements of r.
104(1)(b). They have not satisfied me:
·
That they ought to be
joined as parties to the counterclaim; or
·
That they are
necessary in the sense that they should be bound by the result of the
Perindopril Action or that the issue of the conspiracy by Servier cannot be
effectually and completely settled unless they are parties.
[36]
Accordingly, they
will not be joined as defendants to the Counterclaim of Apotex. The motion will
be dismissed with costs.
ORDER
THIS COURT ORDERS
that the motions of Sanofi Germany and Schering are dismissed with costs.
“Judith
A. Snider”
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