Date: 20030213
Docket: T-2792-96
Neutral citation: 2003 FCT 159
Ottawa, Ontario, this 13th day of February 2003
Present: THE HONOURABLE MR. JUSTICE SIMON NOËL
BETWEEN:
MERCK & CO., INC.
MERCK FROSST CANADA & CO.
ZENECA LIMITED
ASTRAZENECA UK LIMITED and
ASTRAZENECA CANADA INC.
Plaintiffs
(cross-defendants)
and
APOTEX INC.
Defendants
(cross-plaintiff)
REASONS FOR ORDER AND ORDER
[1] This is a motion by the plaintiffs, pursuant to Rule 51 of the Federal Court Rules, 1998, for an appeal of the Order of Prothonotary Morneau, dated May 2, 2002, granting the defendant Apotex Inc. ("Apotex") leave to file another Amended Statement of Defence and Counterclaim ("the amended Defence") and related particulars. Through this appeal, the plaintiffs seek an Order setting aside the prothonotary's Order, as they continue to take issue with two categories of the amendments permitted by the Order.
BACKGROUND
[2] This action commenced on December 19, 1996 and concerns allegations relating to the infringement and validity of Canadian Letters Patent No. 1,275,350 ("'350 Patent'"), which contains amongst other claims, a class of compound including lisinopril, a medicine used for reducing hypertension. The main issues in dispute in the underlying proceeding are confined to whether the lisinopril acquired by Apotex infringes the '350 Patent and whether the '350 Patent' is valid.
[3] Apotex pleaded that the lisinopril it acquired and subsequently sold is non-infringing because either (i) the lisinopril was made before the '350 Patent' was issued on October 16, 1990, (ii) it was made and sold by a licensee under the '350 Patent' before the licence was extinguished, or (iii) Apotex's use and sale of lisinopril dihydrate is not claimed in the '350 Patent'. The latter defence was one of the amendments allowed by Prothonotary Morneau's decision under appeal.
DECISION OF THE PROTHONOTARY
[4] In Apotex's motion before the prothonotary, the proposed amendments were grouped in categories, three of which were opposed by the plaintiffs. Therefore, Prothonotary Morneau, apart from stating the applicable principles which I will repeat following this, solely addressed the issues in those three categories.
[5] The applicable principles for amending pleadings, which were implemented by the prothonotary, were asserted in Minister of National Revenue v. Canderel Ltd., [1994] 1 F.C. 3 (F.C.A.) at page 10 and in Visx Inc. v. Nidek Co. et al. (1998), 234 N.R. 94 at 95 (F.C.A.). In Canderel, the Court of Appeal stated that the "general rule is that an amendment should be allowed at any stage of an action for the purpose of determining the real questions in controversy between the parties, provided, notably, that the allowance would not result in an injustice". In Visx, the Court of Appeal added "...that however negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed, if it can be made without injustice to the other side...".
[6] The prothonotary referred to Décary J. A. in Cardinal et al. v. Canada (1993), 164 N.R. 301 (F.C.A.), where he stated at paragraph 8: "We have heard the appeals on the basic assumption that in these areas the Court will only strike pleadings or deny amendments in plain and obvious cases where the case is beyond doubt."
[7] The first opposed category of amendments related to the chemical compound known as lisinopril dihydrate. The prothonotary was satisfied that through the documentary productions and examinations for discovery, Apotex uncovered the allegation that lisinopril dihydrate is not included within the scope of the '350 Patent' and that the marketed version of Apotex's drug (as well as Merck's) actually contains only the compound lisinopril dihydrate. Accordingly, the prothonotary found that the proposed amendments under this category arguably disclosed a reasonable defence to the plaintiffs' allegations of infringement.
[8] In the second category of amendments, Apotex wanted to sustain that Canadian Application Serial No. 607,198 ("Application 198"), from which the '350 Patent' was issued, was not a proper Divisional Application of Patent Application No. 314,340 ("Application 340") within the meaning of subsection 36(2) of the Patent Act, R.S.C. 1985, c. P-4, because the invention claimed in Application 198 is the same invention disclosed in Application 340. Even though Apotex did not cite any case law in support of its position, Prothonotary Morneau allowed the amendments based on the approach in Canderel, supra.
[9] In the third category of amendments, only one paragraph, namely paragraph 19(m)(v), was still opposed by the plaintiffs. The proposed amended allegation states that the patentee has failed to teach that lisinopril is unstable and is susceptible to degradation and conversion, and therefore has breached section 34 of the Patent Act. The prothonotary allowed the amendments because he was satisfied that the facts were uncovered as a result of documentary disclosure and discoveries of the plaintiffs. Moreover, he stated that "Apotex's existing and proposed allegation in respect of section 34 of the Patent Act cannot be said to be forlorn, futile or "beyond doubt". The addition of this paragraph in the pleadings necessitated the prothonotary to order the filing of related particulars.
[10] Finally, the prothonotary decided that Apotex was not entitled to further discovery with respect to any of the amendments introduced by the amended Defence.
ISSUES
[11] 1. What is the applicable standard of review?
2. Did the prothonotary exercise his discretion based on a wrong principle or a misapprehension of the facts?
ANALYSIS
1. What is the applicable standard of review?
[12] The standard of review governing appeals of discretionary orders of a prothonotary is well established. In Canada v. Aqua-Gem Investments Ltd. [1993] 2 F.C. 425 (F.C.A.), at paragraph 95, MacQuigan J.A., explained what was the standard review to be applied by a motion Judge when reviewing a discretionary decision of a prothonotary:
"Following in particular Lord Wright in Evans v. Bartlam [1937] A.C. 473 (H.L.) at page 473 (H.L.) at page 484 and Lacourcière J.A. in Stoicevski v. Casement (1983) 43 O.R. (2d) 436 (Div. Ct) discretionary orders of prothonotaries ought not to be disturbed on appeal to a Judge unless:
a. they are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of facts; or
b. they raised questions vital to the final issue of the case.
[13] The issue of standard of review was well debated at the hearing. On one hand, the plaintiffs submitted that the Order of the prothonotary ought to be reviewed de novo because the prothonotary misapprehended the facts and the law and that the questions raised by the amendments are vital to final issues of the case. On the other hand, Apotex claimed that the test for the present judicial review is whether the prothonotary was "clearly wrong".
[14] The plaintiffs suggested that I should hear the case de novo and therefore not as a judicial review. The grounds for this argument lie at pages 464 - 465 of the Aqua-Gem decision, supra:
Now, in the case at bar, what kind of interlocutory order was in question? The appellant urged this Court to follow Stoicevski, but was unable to explain in argument why the prothonotary's decision here was not on a question vital to the final issue of the case. The formulations both of Lord Wright and Lacourciere J.A. underline the contrast between "routine matters of pleading" (Lord Wright) and "a routine amendment to a pleading" (Lacourciere J.A.) and questions vital to the final issue of the case, i.e., to its final resolution.
The question before the prothonotary in the case at bar can be considered interlocutory only because the prothonotary decided it in favour of the appellant. If he had decided it for the respondent, it would itself have been a final decision of the case: A-G of Canada v. S.F. Enterprises Inc. et al. (1990), 90 DTC 6195 (F.C.A.) at pages 6197-6198; Ainsworth v. Bickersteth et al., [1947] O.R. 525 (C.A.). It seems to me that a decision which can thus be either interlocutory or final depending on how it is decided, even if interlocutory because of the result, must nevertheless be considered vital to the final resolution of the case. Another way of putting the matter would be to say that for the test as to relevance to the final issue of the case, the issue to be decided should be looked to [page465] before the question is answered by the prothonotary, whereas that as to whether it is interlocutory or final (which is purely a pro forma matter) should be put after the prothonotary's decision. Any other approach, it seems to me, would reduce the more substantial question of "vital to the issue of the case" to the merely procedural issue of interlocutory or final, and preserve all interlocutory rulings from attack (except in relation to errors of law).
I believe this approach is supported by the Ontario Court of Appeal in Stoicevski, where Lacourciere J.A. held (at page 439) that "[a]n amendment [to a statement of defence] which may have the effect of reducing the plaintiff's quantum of recovery of damages is clearly vital to the final issue." [emphasis mine]
[15] Therefore the plaintiffs submitted that in order to determine if the decision is one that is vital to the final issue of the case, I should not look at the prothonotary's decision itself, but rather I should look at the issue before it was answered by the prothonotary, in which case, had Apotex been denied its amendments, the decision would have been determinative of the issue. If this is the case, then I must view this appeal de novo and determine whether I find that the amendments should in fact be allowed or refused.
[16] However, Justice Reed, in James River Corp. of Virginia v. Hallmark Cards, Inc. et al., (1997) 72 C.P.R. (3d) 157, at page 160, gave examples of what is a question vital to the final issues of a case. These examples included "the entering of default judgment, a decision not to allow an amendment to pleadings, a decision to add additional defendants, etc..." [emphasis mine]. Therefore, according to Reed J., a contrario, a decision to allow amendments to pleadings, as in this case, is not vital to the final issue of the case.
[17] In my opinion, this last interpretation is more refined; the prothonotary's decision is not determinative of the final issue of the case because the final determination of the new amended allegations will occur at trial. Therefore, I will examine whether the prothonotary was clearly wrong in the exercise of his discretion.
Did the prothonotary exercise his discretion based on a wrong principle or a misapprehension of the facts?
[18] Five years ago, Apotex had admitted that the medicine it was selling was within the claims of the '350 Patent' but that it was non-infringing because it relied on the prior acquired inventory exception to infringement. The plaintiffs argued that the amendments regarding the allegation that lisinopril dihydrate is not included in the '350 Patent', as allowed by the prothonotary, contradict the first admission. Consequently, the plaintiffs claimed that the first category of amendments constitute a withdrawal of the admission.
[19] On this issue I take Apotex's view on the jurisprudence and conclude that it does not matter if the amendments equal a withdrawal of admission because the same test in Canderel, supra and Visk, supra, applies. In my opinion, this is the interpretation which we should read from the following citation of Andersen Consulting v. Canada, [1998] 1. F.C. 605, at pages 611-612:
At the other end, the British Columbia courts have taken a more flexible approach and have not required as a condition essential to a withdrawal of an admission that the admission in the statement of defence be made inadvertently or hastily. Rather, they have adopted as a test that, in all the circumstances of the case, there be a triable issue which ought to be tried in the interests of justice and not be left to an admission of fact. Under such a test, inadvertence, error, hastiness, lack of knowledge of the facts, discovery of new facts, and timeliness of the motion to amend become factors to be taken into consideration in deciding whether or not the circumstances show that there is a triable issue which ought to be tried in the interests of justice.
We prefer the approach taken by the courts in British Columbia which gives the Court seized with a motion to amend pleadings, including an amendment withdrawing or purporting to withdraw an admission, the needed flexibility to ensure that triable issues are tried in the interests of justice without injustice to the litigants.
...
Indeed, the desirable flexibility in matters of amendment to pleadings, including, in our view, the withdrawal of admissions, was stated by our colleague Décary J.A. in the following terms in the Canderel case: [My emphasis]
. . . while it is impossible to enumerate all the factors that a judge must take into consideration in determining whether it is just, in a given case, to authorize an amendment, the general rule is that an amendment should be allowed at any stage of an action for the purpose of determining the real questions in controversy between the parties, provided, notably, that the allowance would not result in an injustice to the other party not capable of being compensated by an award of costs and that it would serve the interests of justice.
[20] In light of this excerpt, I conclude that the same test applies regardless of the type of amendment (including the withdrawal of an admission by amendment) and regardless of the stage of the proceedings we are in. Although I concur with the plaintiffs that the timeliness of this motion to amend is one factor to weigh, I do not think that the late amendments are prejudicial and outweigh the interests of justice if allowed.
[21] Also, the plaintiffs submitted that the prothonotary's conclusion that the discoveries helped to uncover the allegation that lisinopril dihydrate is not included within the scope of the '350 Patent' and that the marketed version of Apotex's drug contains only the compound lisinopril dihydrate are a misapprehension of the facts. The plaintiffs argued that there was no evidence before the prothonotary to support these factual findings, but that there was evidence that Apotex was aware as early as 1996 that lisinopril was, in fact, lisinopril dihydrate. The plaintiffs submit that, in any event, it is irrelevant whether two molecules of water was added to the lisinopril compound to make it lisinopril dihydrate, because adding something to a patent does not stop the infringement.
[22] Apotex claimed that the evidence before prothonotary Morneau established that the documents produced by the plaintiffs and the discovery of the named inventors of the '350 Patent', disclosed critical information upon which these amendments were largely based. The discovery process revealed that the assertion at paragraph 13 of the Amended Claim, that the name "lisinopril" could neither denote nor comprehend the defined compound lisinopril dihydrate, was unsupported by the information obtained from the plaintiffs' documents and from the testimony of Dr. Wyvatt, one of the named inventors. Furthermore, Mr. Hugues' affidavit described that the importance of the distinction between the compounds was not appreciated until Apotex learned in the discovery process that lisinopril dihydrate had not even been synthesized at the priority date of the '350 Patent'.
[23] This information supports the prothonotary's conclusion that the discovery process helped reveal and substantiate the proposed allegations based upon the distinction between lisinopril and lisinopril dihydrate. In deciding to accept the affidavit evidence of Mr. Hugues, rather than the plaintiffs' argument that Apotex should have appreciated that lisinopril and lisinopril dihydrate were different compounds before discoveries, prothonotary Morneau cannot be said to have misapprehended the facts; rather he exercised his discretion and decided that it might be useful to the trial judge to examine this information. Nonetheless, whether Apotex knew or should have known that lisinopril dihydrate was outside the scope of the claims in the '350 Patent' does not prevent Apotex from making the amendments to reflect that knowledge at this time in proceedings.
[24] That being said, the plaintiffs argued that the only difference between lisinopril and lisinopril dihydrate is the addition of "two molecules of water" on the lisinopril compound. I understand the plaintiffs' position that this addition does not affect the infringement [see: section 32 of the Patent Act and Fox, Harold G., The Canadian Law and Practice Relating to Letters Patent for Inventions, 4th edition, 1969 The Carswell Company Limited, Toronto, Canada, pages 358-359.] and therefore does not disclose a reasonable cause of defence. However, I believe that pronouncing myself on this issue would amount to a final determination of the issue. Since I determined that I am not hearing this case de novo, I will let the merits of this argument be debated before the trial judge.
[25] The other main argument relates to the admittance of paragraph 19(m)(v). The plaintiffs submitted that the prothonotary erred in finding that this paragraph was not forlorn, futile or "beyond doubt", and claimed that it does not disclose a reasonable cause of action under section 34 of the Patent Act.
[26] Paragraph 19(m)(v) states that the patentee has failed to teach that lisinopril is unstable and is susceptible to degradation and conversion, therefore breaching section 34 of the Patent Act. The plaintiffs submitted that the facts alleged in paragraph 19(m)(v) could not, in law, lead to invalidity of the claims of the patent on the basis of lack of compliance with section 34. Section 34 of the Patent Act provides that an applicant shall, in the specification of his invention, correctly and fully describe the invention and its operation or use as contemplated by the inventor.
[27] At the hearing, the plaintiffs argued that the issue is not whether the information relating to the patent should have been disclosed under section 34 of the Patent Act, but whether the same information would in fact be needed for a person skilled in the art to reproduce the invention. The Supreme Court of Canada, in Consolboard Inc. v. MacMillan Bloedel (Saskatchewan) Ltd. (1981), 56 C.P.R. (2d) 145 at pages 154- 155, accepted the test that "the inventor must, in return for the grant of a patent, give to the public an adequate description of the invention with sufficiently complete and accurate details as will enable a workman, skilled in the art to which the invention relates, to construct or use that invention when the period of the monopoly expires". Thus, the plaintiffs submitted that the information Apotex claims should have been disclosed by the patentee need not be disclosed for a person skilled in the art to reproduce the invention.
[28] In my opinion, this argument goes to the merit of the issue. Ultimately, both parties will lead expert evidence at trial regarding the information persons skilled in the art would require in order to successfully formulate pharmaceutical dosage forms of the subject compounds. But there is no doubt that the allegation as framed states a reasonable cause of action, contrary to the plaintiffs' submissions. On this basis, I maintain that the prothonotary did not improperly exercise his discretion in concluding that the amendment should be allowed.
[29] The prothonotary properly exercised his discretion and did not base his decision on a wrong principle, nor did he misapprehend the facts. Therefore, I conclude that this motion should be dismissed.
ORDER
THIS COURT ORDERS THAT:
This motion should be dismissed. Costs to follow the cause.
"Simon Noël"
Judge
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2792-96
STYLE OF CAUSE : MERCK & CO. INC, AND MERCK FROSST
CANADA INC. & Co., & All and
APOTEX INC.
PLACE OF HEARING : Ottawa, Ontario
DATE OF HEARING : January 7th, 2003
APPEARANCES :
Mr. Gunars A. Gaikis For Plaintiffs - Syngenta Ltd
Ms. Denise Lacombe For Plaintiffs AstraZeneca UK
Ms. Judith A. Robinson For the Plaintiffs - Merck & Co.
Ms. Frédérique Amrouni For Merck Frosst Canada & Co.
Mr. David M. Scrimger FOR THE DEFENDANT
Ms. Nicole Roth
SOLICITORS OF RECORD :
SMART & BIGGAR
Barristers & Solicitors FOR THE PLAINTIFFS
Toronto, Ontario
Goodmans FOR THE DEFENDENT
Barristers & Solicitors
Toronto, Ontario