Date: 20080307
Docket: T-161-07
Citation: 2008 FC 320
Montréal, Quebec, March 7, 2008
PRESENT: The Honourable Madam Justice Snider
BETWEEN:
SANOFI-AVENTIS CANADA INC. and
SCHERING CORPORATION
Plaintiffs
and
APOTEX INC.
Defendant
AND
BETWEEN:
APOTEX INC.
Plaintiff by Counterclaim
and
SANOFI-AVENTIS CANADA INC. and
SCHERING CORPORATION
SANOFI-AVENTIS DEUTSCHLAND GmbH and
RATIOPHARM INC.
Defendants by
Counterclaim
REASONS FOR ORDER AND ORDER
(Motion for
Relief from Implied Undertaking)
I. Introduction
[1]
Apotex
Inc. (Apotex) is the Defendant and Plaintiff by counterclaim in Court File No. T‑161-07
(the Ramipril Action). Apotex is also one of the Defendants and Plaintiffs by
counterclaim in Court File No. T-1548-06 (the Perindopril Action). In this
motion, Apotex seeks relief from the implied undertaking rule that would allow
it to use certain documents from the Ramipril Action in the Perindopril Action.
[2]
Specifically,
Apotex seeks relief in respect of the following documents (collectively
referred to as the Ramipril Documents) which it has obtained during the
discovery process in the Ramipril Action:
1.
lab
notebooks detailing the synthesis and testing of compounds related to captopril
by Schering Corporation before the 17th National Medicinal Chemistry
Conference in Troy, New York (the Pre-Troy Notebooks);
2.
the
semi-annual reports of Schering Corporation concerning the work performed with
respect to ACE inhibitors spanning the times relevant to the Perindopril Action
(the Semi-Annual Reports);
3.
slides
used at the 17th National Medicinal Chemistry Conference in Troy,
New York, by Merck, Sharp and Dohme disclosing on June 18, 1980, “a group of
carboxyalkyl proline derivatives which were potent non-sulfhydryl ACE
inhibitors” (the Troy Slides);
4.
the
licence agreements between Schering Corporation and the Respondent Sanofi‑Aventis
Deutschland GmbH and subsequent agreements thereto (the Licence Agreements);
and
5.
transcripts
from the examinations for discovery of Drs. Elizabeth Smith and Bernard
Neustadt (the Ramipril Transcripts) for use in impeaching Dr. Smith and
Mr. Anthony Creber at the trial of the Perindopril Action.
[3]
For
the reasons that follow, I am not persuaded that relief should be granted to
Apotex and will dismiss the motion, except in respect of the Troy Slides.
II. Background
[4]
The
background to this motion is somewhat complex but necessary to understand the
issues in this motion.
A. The Conflict Proceedings
leading to the 196 Patent and the 206 Patent
[5]
On
October 1, 1981, ADIR, one of the Plaintiffs in the Perindopril Action, filed
Canadian Application Number 387,093 (the 093 Application). Around the same
time, other claimants filed their own patent applications for the issuance of
patents covering overlapping compounds, including Schering Corporation (Schering)
in Canadian Application Number 388,336 (the 336 Application) and Hoechst
Aktiengesellchaft (Hoechst AG - the corporate predecessor to Sanofi-Aventis
Deutschland GmbH (Sanofi Germany)) Canadian Applications Numbers 384,787 (the
787 Application) and 418,453 (the 453 Application). As provided for under the Patent
Act, R.S.C.
1985, c. P-4,
then
in force, the Commissioner of Patents (the Commissioner) placed certain claims
in the 093 Application into conflict with the claims of the other applications.
[6]
As
part of the conflict proceedings, the parties filed affidavit evidence before
the Commissioner. Schering filed an affidavit of Dr. Elizabeth Smith (now
publicly available), which documented the work done by Schering with respect to
its claim to first inventorship of the applications in conflict (the Smith
Affidavit). The Smith Affidavit indicated that Schering’s work fell into two
general phases. First, in the late 1970’s, Schering sought to develop
antihypertensive compounds which were more effective than captopril. Second,
after June 18, 1980, Schering sought to develop antihypertensive compounds that
were more effective than what later became known as enalapril. The Smith
Affidavit also indicated that between these two phases a disclosure was made by
Merck, Sharp, and Dohme (Merck) on June 18, 1980, of “a group of carboxyalkyl
proline derivatives which were potent non-sulfhydryl ACE inhibitors” at the 17th
National Medicinal Chemistry Conference in Troy, New York (the Troy
Conference).
[7]
In
six decisions dated August 8, 1996, the Commissioner made determinations
related to inventorship of the claims in conflict and awarded some claims to
Schering, some to ADIR and some to Hoechst AG.
[8]
Six
proceedings were then commenced by way of actions in the Federal Court which
challenged the determinations of the parties’ rights by the Commissioner. All
of the proceedings were consolidated by the Order of Justice Joyal dated May
27, 1997, into Court File No. T-228-97.
[9]
Subsequent
to completion of discoveries in the consolidated action, the parties to the
conflict agreed to settle on terms set out in Minutes of Settlement. The
parties, based on the Minutes of Settlement, applied to the Court for an Order
on consent. The Order that was issued by Justice Nadon on December 12, 2000
provided for an allocation of the claims of the competing applications.
Ultimately, the result of the Order for ADIR was the issuance of the Canadian
Patent No. 1,341,196 (the 196 Patent). The result for Schering was the issuance
of Canadian Patent No. 1,341,206 (the 206 Patent).
B. T-161-07: the Ramipril Action
[10]
By
Statement of Claim dated January 26, 2007, Schering, Sanofi-Aventis Canada
(Sanofi Canada) and Sanofi
Germany (collectively referred to with Sanofi Canada as Sanofi)
commenced the underlying action against Apotex alleging that Apotex has
infringed the 206 Patent. In its pleadings in response, Apotex raises issues
that relate to the conflict proceedings and the allocation of patents pursuant
to the Order of Justice Nadon that gave effect to the Minutes of Settlement.
Apotex also alleges that the plaintiffs in the Ramipril Action entered into an
unlawful settlement agreement with ADIR, one of the plaintiffs in the
Perindopril Action, for the purpose of limiting competition in the market for
ACE inhibitors, contrary to s. 45 of the Competition Act, R.S.C.
1985, c. C-34 (referred
to by Apotex as the Settlement Conspiracy Allegations).
C. T-1548-06: the Perindopril
Action
[11]
By
Statement of Claim dated August 25, 2006, Les Laboratoires Servier, ADIR, ORIL
Industries, Servier Canada Inc., Servier Laboratories (Australia) Pty. Ltd.
and Servier Laboratories Limited (collectively referred to as Servier)
commenced an action in Court File No. T-1548-06 against Apotex and Apotex
Pharmachem Inc. (Pharmachem) claiming that Apotex and Pharmachem have infringed
certain claims of the 196 Patent. In its pleadings in response, Apotex raises
the same Settlement Conspiracy Allegations as it does in the Ramipril Action,
alleging that ADIR entered into an unlawful settlement agreement with Schering
and the predecessors to Sanofi Germany, for the purpose of
limiting competition in the market for ACE inhibitors, contrary to s. 45 of the
Competition Act. In this action, Apotex has also pleaded that Schering,
and not ADIR, is the first and true inventor of the subject matter of the 093
Application.
D. The Joinder Motions of Sanofi Germany and Schering
[12]
By
Notice of Motion dated August 17, 2007, Sanofi Germany sought to be
added as a Defendant by Counterclaim to the Perindopril Action. Schering filed
a similar Notice of Motion on November 12, 2007. This Court dismissed both
Sanofi Germany’s and Schering’s motions on November 19, 2007 (Laboratoires
Servier v. Apotex Inc., 2007 FC 1210).
E. Discoveries in the Ramipril
Action
[13]
On
December 6-7, 2007, Apotex held examinations for discovery of Dr. Bernard
Neustadt, a named inventor of the 206 Patent, in the Ramipril Action. On
November 13-16, 19-21, and 27, 2007, Apotex held examinations for discovery of
Dr. Elizabeth Smith, also a named inventor of the 206 Patent, in the Ramipril
Action. During the examination for discovery of Dr. Smith, Schering produced
the Troy Slides.
F. The Forthcoming Trial of the
Perindopril Action
[14]
The
date for the trial of the Perindopril Action is fast approaching. The trial,
originally to begin on February 25, is now set to commence on March 5, 2008.
III. Analysis
A. The Implied Undertaking of
Confidentiality
[15]
The
implied undertaking of confidentiality prevents the use of information obtained
in discovery from being used other than in the litigation in which it was
disclosed. Recognition of the rule was reinforced by the Supreme Court of
Canada in Lac d'Amiante du Québec Ltée v. 2858‑0702 Québec Inc.,
[2001] 2 S.C.R. 743. The rule has been explicitly and consistently recognized
by the Federal Court (see, for example, Canada v. ICHI Canada Ltd.,
[1992] 1 F.C. 571 at 579 (T.D.); Merck and Co. v. Apotex Inc., [1997]
F.C.J. No. 1852 at para. 27 (T.D.) (QL); Visx Inc. v. Nidek Co. (1998),
80 C.P.R. (3d) 437 (T.D.)).
[16]
The
rationale behind the rule was succinctly stated by Justice Joyal in Merck, above
at para. 18:
In Goodman v. Rossi,
the Ontario Court of Appeal explains that there are two rationales for the
implied undertaking rule. Firstly, the discovery process represents an
intrusion into the right of privacy which a person has with respect to his or
her documents and a necessary corollary to this intrusion is that it should not
be permitted to extend beyond that which is necessary for securing justice in
the proceeding in which the discovery takes place. Secondly, the rule is said
to promote full discovery by avoiding the disincentive to production which the
risk of collateral use might cause.
[17]
In
other words, the rule serves the interests of justice in two ways, by preserving a
litigant’s right to privacy and by encouraging parties to make full disclosure
on discovery (see also Lac d'Amiante, above at para. 60; Goodman
v. Rossi, [1995] O.J. No. 1906 at para. 36 (C.A.)).
B. Relief from the Implied
Undertaking of Confidentiality
[18]
The
implied undertaking of confidentiality, however, is not absolute. Limits to the
rule were explicitly recognized by the Supreme Court of Canada in Lac
d’Amiante, above, where the Supreme Court indicated that the courts retain
the power to relieve persons of the obligation where it is in the interests of
justice. More specifically, the test was framed by Justice LeBel as a balancing
exercise
which requires the court to weigh the prejudice that would be suffered if relief
were not granted against the prejudice that would result if the sought-after
information were to be disclosed:
The courts must therefore assess the
severity of the harm to the parties involved if the rule of confidentiality
were to be suspended, as well as the benefits of doing so. In cases where the
harm suffered by the party who disclosed the information seems insignificant,
and the benefit to the opposing party seems considerable, the court will be
justified in granting leave to use the information. Before using information,
however, the party in question will have to apply for leave, specifying the
purposes of using the information and the reasons why it is justified, and both
sides will have to be heard on the application. The court will determine whether
the interests of justice in the information being used in the relations between
the parties and, where applicable, in respect of other persons, outweigh the
right to keep the information confidential. A number of factors, which cannot
be listed exhaustively, will be taken into consideration. Disclosure of all or
part of an examination, or of exhibits produced during an examination, may then
be approved, in cases where there is an interest at stake that is important to
the justice system or the parties (Lac d'Amiante, above at para. 77; see
also Goodman, above at paras. 65-66).
[19]
Justice
LeBel cautioned, however, that the courts should avoid exercising their power
to relieve a party from the implied undertaking too routinely, as to do so
would compromise the usefulness, and potentially even the existence, of the
rule (Lac d'Amiante, above at para. 76; see also Goodman, above
at para. 64).
[20]
The
test for relief from the implied undertaking rule was also articulated by
Justice Rothstein, as he then was, in Visx, above at para. 3. In Justice
Rothstein’s view, two factors must be considered before relief from the
undertaking may be granted: (i) the existence of special circumstances; and
(ii) the weighing of the injustice between the parties between granting or
denying the application for relief from the rule. This test has been followed
by two cases in the Federal Court (Kirkbi AG v. Ritvik Holdings Inc.,
[2000] F.C.J. No. 1793 at para. 31 (T.D.) (QL); Letourneau v. Clearbrook
Iron Works Ltd., 2003 FC 949). However, upon closer review, I do not find
that the Visx test adds anything to the more general test identified in Lac
d'Amiante, above. In particular, neither Visx, nor the cases that
follow, clearly distinguish between the factors that must be considered at the
“special circumstance” stage versus the interest of justice stage. Accordingly,
the Court will consider all the surrounding circumstances in the case at bar to
determine whether the interests of justice will be served by granting relief.
[21]
The
jurisprudence on the implied undertaking of confidentiality identifies a number
of factors that should be considered in order to determine whether relief
should be granted:
·
The
use to which the party seeks leave to put the discovered material. For example,
whether relief is sought in order to use the documents in another proceeding or
whether relief is sought for a commercial purpose unconnected with litigation
(John B. Laskin, Q.C., “The Implied Undertaking in Ontario” (1990) 11 Adv. Q.
298 at 314-315 [Laskin]);
·
If
the sought-after relief is connected with litigation, whether the parties in
the proceeding for which the discovery took place (the Original Proceeding) are
the same or similar as the parties in the proceeding in which the documents
will be used (the Companion Proceeding) (Gleadow v. Nomura Canada Inc.,
[1996] O.J. No. 668 at para. 9 (S.C.J.));
·
If
the sought-after relief is connected with litigation, whether the issues or
factual background in the Original Proceeding are the same as in the Companion
Proceeding (Gleadow, above at para. 10; Merck & Co. v. Apotex
Inc.,
2004 FC 1723 at para. 8 [Merck 2]; Laskin at 315). However, this factor
alone does not warrant granting relief (Letourneau, above at para. 8);
·
Whether
the discovered material is inherently confidential (Laskin at 315);
·
Whether
the documents obtained through discovery were once publicly available but are
now no longer publicly available through no fault of the party seeking relief (Kirkbi
AG, above at para. 31);
·
If
the sought-after relief is connected with litigation, whether the party seeking
relief in the Original Proceeding wishes to establish a witness has given
inconsistent versions of the same fact in the Companion Proceeding (Lac
d'Amiante, above at para. 77);
·
If
the sought-after relief is connected with litigation, whether the Original
Proceeding and the Companion Proceeding are protected by orders of
confidentiality (Merck, above at para. 24);
·
Whether
granting relief will result in dissemination of the information beyond the
parties who already have access to it (Merck 2, above at para. 8; Laskin
at 315);
·
Whether
a third party claim is likely to be initiated against the party who gave the
discovery (Laskin at 316);
·
If
the sought-after relief is connected with litigation, whether the purposes of
the Companion Proceeding can be accomplished by the Original Proceeding (Goodman,
above at para. 68);
·
If
the sought-after relief is connected with litigation, whether the information
sought is otherwise compellable (Merck, above at para. 27, Merck 2, above
at para. 8); and
·
If
the sought-after relief is connected with litigation, whether granting relief
affects third parties (for example, it results in the commencement of legal
proceedings against third parties) (Merck, above at para. 22; Merck
2, above at para. 8).
C. Application of Principles to
the Motion before the Court
[22]
Applying
these principles to the facts before me, I find the following factors favour
relief from the implied undertaking covering the Ramipril Documents:
·
The
issue of an unlawful conspiracy is common to both actions;
·
The
Perindopril Action is protected by a confidentiality order (Merck, above
at para. 24);
·
Apotex
will not be using the Ramipril Documents to launch a legal proceeding against a
third party (Merck 2, above at para. 8);
·
The
Ramipril Documents are most likely relevant to the Perindopril Action; and
·
Apotex’s
efforts to locate the Troy Slides in the public sphere have been unsuccessful
despite the documents being formerly available to the public.
[23]
Furthermore,
I note that the potential prejudice to Sanofi and Schering is of a general
nature and, while significant, is present whenever a party requests to be
relieved from the implied undertaking of confidentiality where companion
proceedings involving similar issues exist. Given that Apotex is not seeking
any damages from either Sanofi or Schering in the Perindopril Action, I do not
find the potential tactical advantage that Apotex might gain from using the
Ramipril Documents to be of a particularly egregious nature. With respect to
the Troy Slides, I can see no prejudice whatsoever to Sanofi and Schering.
[24]
Notwithstanding
the above, I am not persuaded that Apotex should be granted relief with respect
to the Ramipril Documents, other than the Troy Slides. Even assuming all of these
documents are relevant, I have numerous problems with Apotex’s motion. I turn
to the factors that militate against granting the requested relief.
[25]
Some
of the obvious responses to Apotex’s request are as follows:
1.
The
mere fact that Apotex has alleged a common conspiracy does not justify granting
relief (Letourneau, above at para. 8).
2.
The
named parties in the Perindopril Action are not the same as the parties in the
Ramipril Action (Gleadow, above at para. 9).
3.
Apotex
points to the confidentiality order in place in the Perindopril Action.
However, I take judicial notice that such orders are not rare in pharmaceutical
patent actions and the presence of one here does not add much, if any, weight
to Apotex’s argument for relief.
[26]
The
impact on Servier, even though it is not a party to the Ramipril Action, must
also be considered. As the Plaintiff and Defendant by Counterclaim to the
Perindopril Action, it is self‑evident that Servier is one of the
“parties involved” (Lac d'Amiante, above at para. 77). For this motion,
Apotex has selected groups of documents from the discovery process in the
Ramipril Action. As a third party, Servier is unable to review the entire
discovery record to determine whether there are other documents or transcript
references that might assist it in responding to Ramipril Documents that would
now become available in the Perindopril Action. In this, I see the potential
for serious prejudice to Servier. In response, Apotex asserts that it has only
“selected” entire groups of documents (for example, all of the
semi-annual reports and all of the pre-Troy lab notebooks). Even
accepting that this is true, I do not find this explanation to be sufficient to
dissipate the potential prejudice. There may be other documents outside these
defined “groups” that could assist Servier. While Servier may have tools at its
disposal to overcome the potential prejudice (although none have been
described), the late hour of this motion closes that possibility. Apotex has
not persuaded me that Servier would not suffer any prejudice; indeed, I believe
that it is more likely than not that Servier would, at best, be at a
disadvantage and, at worst, be seriously prejudiced.
[27]
Further,
the importance of this potential prejudice or disadvantage to Servier is
heightened, in my view, by the fact that other means could have been pursued by
Apotex to obtain the Ramipril Documents. Sanofi and Schering have highlighted
at least five different ways – including methods explicitly spelled out in the Federal
Courts Rules, S.O.R./98-106 – in which Apotex could have obtained the
Ramipril Documents while still preserving the implied undertaking of
confidentiality. Briefly, Apotex could have:
1.
Used
r. 233(1) of the Federal Courts Rules to seek the documents from a third
party;
2.
Sought
leave to examine a non-party by r. 238(1) of the Federal Courts Rules;
3.
Included
Schering and Sanofi as parties to its counterclaim;
4.
Consented
to Schering and Sanofi being joined as a party; or
5.
Asked
Dr. Michel Vincent questions relating to the Troy Conference.
[28]
I
acknowledge the arguments of Apotex that each of these avenues might pose
problems. Nevertheless, it is not convincing that Apotex did not seek the
information earlier and through one or more of the other means that could have
brought the issue and the Ramipril Documents (or at least some of them)
squarely into the Perindopril Action without the need for the extraordinary
relief from the implied undertaking rule. A party should not be rewarded for
its failure to use such obvious alternative procedures (Merck, above at
para. 27).
[29]
Nor
is it an adequate excuse that the Perindopril Action has proceeded at such a
fast pace that Apotex is unable to obtain the Ramipril Documents through other
means. This Court has been involved with the Ramipril Action ever since the
injunction motion in December 2006. At that time, the parties were advised of
the availability of the February 2008 dates for trial. With the support of all
parties, the challenge of the trial date was accepted – with, as I distinctly
recall, great enthusiasm on the part of Apotex. At no time, has Apotex sought a
later trial date. It is simply not acceptable for Apotex to use the timing of
the trial as an excuse for obtaining relief from its implied undertaking.
[30]
Apotex
submits that it needs the Ramipril Documents to pursue the issues of anti‑competitiveness
and inventorship. The problem with this argument is that Apotex, without access
to the Ramipril Documents, has managed to produce many expert reports and
conduct extensive discovery. While it may have been at some disadvantage from
not having the Ramipril Documents, Apotex cannot say that it was prevented from
preparing what appears to be a well-documented record on the issues. While the
absence of the Ramipril Documents may present difficulties to Apotex, I
cannot conclude that the Ramipril Documents are “necessary” within the meaning
contemplated by the jurisprudence (see, for example, Lac d'Amiante, above
at para. 76).
[31]
Finally,
it should not be forgotten that the “discovery process represents an intrusion
into the right of privacy” of the discovered parties (Merck, above at
para. 18). That right should not be easily set aside lest it become
meaningless.
[32]
While
the above reasons are sufficient to dispose of Apotex’s motion with respect to
all the Ramipril Documents, other than the Troy Slides, I also note the
following problems with respect to certain individual documents:
·
The
Licence Agreements: Servier is not a party to the Licence
Agreements. While the pleadings in the Ramipril Action make specific reference
to the Licence Agreements, no such reference is contained in the Perindopril
Pleadings. Accordingly, the question of the relevance of these particular
documents remains in question, even though Apotex has gone to considerable
lengths to demonstrate that the Licence Agreements are evidence of a “three-way
trade” among ADIR, Sanofi and Schering.
·
The
Pre-Troy Notebooks and the Semi-Annual Notebooks: Apotex claims that
these materials contain information that has been “generically disclosed”.
However, “documents and information given under compulsion of this Court are
confidential until they become part of the public record” (N.M. Paterson & Sons Ltd. v. St. Lawrence
Seaway Management Corp.,
2002 FCT 1247 at
paras. 7-9). Apotex has submitted no evidence that these documents are part of
the public record. Indeed, the Affidavit of Andrew Lapierre indicates at
paragraph 24 that the majority of the Semi-Annual Reports have not been
disclosed to the public.
·
The
Ramipril Transcripts: The use of discovered documents may justify
relief from the implied undertaking where they are used to impeach a witness
who has already given evidence and that evidence is inconsistent with an
earlier statement (Lac d'Amiante, above at para. 77 citing Wirth Ltd. v.
Acadia Pipe & Supply Corp. (1991), 79 Alta. L.R. (2d) 345). In the
case at bar, as neither Dr. Smith nor Mr. Creber has given any evidence
yet, Apotex’s motion is premature. Should that situation arise, this Court
would entertain a further request for relief from the undertaking. Further, if
a party is granted relief on the basis of speculation that witnesses may
contradict themselves in some future testimony, relief from the rule would be
granted as a matter of course; the rule would be rendered meaningless. I also
agree that Mr. Creber, as counsel to Schering during the discovery of Dr. Neustadt,
gave statements with respect to his client’s position. It is unclear how
those statements could be used to impeach Mr. Creber, if indeed he were called
to testify.
[33]
The
Troy Slides are inherently different from the balance of the Ramipril
Documents. They are not confidential documents. Rather, the Troy Slides were
available to anyone who attended the related session at the Troy Conference.
Moreover, it appears, they were disseminated afterwards. Given that 28 years
have passed since the conference, it is not surprising that Apotex has been
unable to locate copies of the slides from other sources, in spite of their
efforts to do so. Neither Sanofi nor Schering made any submissions of prejudice
if the undertaking were to be released for the Troy Slides. Accordingly, I am
prepared to grant Apotex’s request for relief for the Troy Slides in this
Order.
Conclusion
[34]
In
sum, except with respect to the Troy Slides, I am not persuaded that the interests
of justice in the information that is sought to be used outweigh the rights of
the parties to keep the information confidential. For these reasons, the motion
will be dismissed for all but the Troy Slides. As Sanofi and Schering have been
almost entirely successful in their response to Apotex’s motion, they are
entitled to their costs in any event of the cause. Although each of Sanofi and
Schering seeks costs on an elevated scale, I can see nothing that would warrant
anything other than the normal scale.
ORDER
THIS COURT ORDERS that
1.
Apotex
is granted relief from the implied undertaking rule with respect to the Troy
Slides and may use the Troy Slides in the Perindopril Action (Court File No. T‑1548-06);
2.
the
motion for relief from the implied undertaking rule is dismissed with respect
to all other Ramipril Documents; and
3.
costs
are awarded to Sanofi and Schering in any event of the cause.
“Judith
A. Snider”
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