Date: 20020613
Docket: T-1337-99
Neutral citation: 2002 FCT 668
Ottawa, Ontario, June 13, 2002
Present: The Honourable Madam Justice Tremblay-Lamer
BETWEEN:
NOVARTIS PHARMACEUTICALS CANADA INC.
and NOVARTIS AG
Applicants
- and -
APOTEX INC., and
THE MINISTER OF HEALTH
Respondents
REASONS FOR ORDER AND ORDER
[1] This is a motion by the Respondent (Apotex) seeking an order dismissing the within proceeding for abuse of process pursuant to paragraph 6(5)(b) of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 (the Regulations).
[2] Pursuant to section 4 of the Regulations, the Applicant (Novartis) included Canadian Letters Patent Nos. 1,308,656, 1,309,671, 1,338,775, 1,332,150 (the ‘150 Patent) and 2,072,509 (collectively, the Patents) on patent lists filed with the Minister of Health (the Minister) in respect of a Notice of Compliance (NOC) issued to it in respect of cyclosporine.
[3] By letter dated May 28, 1999, Apotex sent a Notice of Allegation to Novartis (the Invalidity Allegation) in which it alleged invalidity of certain claims of the ‘150 Patent. By letter dated June 10, 1999, Apotex sent a further Notice of Allegation to Novartis (the Non-Infringement Allegation) in which it alleged non-infringement of all of the remaining relevant claims of the Patents, as well as claim 27 of the ‘150 Patent which was also addressed in the Invalidity Allegation.
[4] In response to the Invalidity Allegation, Novartis, by Notice of Application dated July 13, 1999, commenced proceedings (Court File T-1266-99, or cyclo #7) pursuant to subsection 6(1) of the Regulations for an order prohibiting the Minister from issuing a NOC to Apotex until after the expiration of the ‘150 Patent.
[5] On July 23, 1999, Novartis commenced the within proceeding (Court File T-1337-99, or cyclo #8) in response to the Non-Infringement Allegation. Novartis took no other steps in this proceeding until March 6, 2000, when it received a Notice of Status Review.
[6] At the request of Novartis, Apotex agreed to the filing of a joint submission in response to the Status Review on the condition that the outcome of cyclo #7 would determine that of cyclo #8.
[7] By order dated May 3, 2000, McKeown J. ordered that the cyclo #8 proceeding be dismissed unless a motion to implement a stay in that proceeding was delivered on or before May 31, 2000.
[8] Prothonotary Aronovitch granted the stay of proceedings in cyclo #8 on June 7, 2000.
[9] On October 18, 2001, Blais J. dismissed the cyclo #7 proceeding holding that the Invalidity Allegation was justified and that the impugned claims of the ‘150 Patent were invalid.
[10] Following this order, Novartis refused to discontinue the cyclo #8 proceeding. Apotex therefore filed a notice of motion on October 25, 2001 seeking an order to dismiss it. In response, Novartis argued that there had been no meeting of the minds between it and Apotex as to when the application should be dismissed. According to Novartis, the issue of infringement would be dealt with after the resolution of the question of invalidity, which included Novartis' right of appeal.
[11] Kelen J. agreed with Novartis and dismissed Apotex' motion on November 1, 2001:
I am satisfied from reviewing the correspondence and the affidavit evidence that there is no clear agreement between the parties regarding when this matter would be discontinued. Apotex submits that the agreement was to discontinue this matter upon resolution of Court File T-1266-99 in Apotex' favour at the Trial Division. The applicants submit that the said agreement takes effect after the disposition of any appeals or the expiration of any appeal periods.
Since the purpose of this motion is to give effect to the parties' agreement which resulted in the stay granted by Madam Prothonotary Aronovitch, and since the parties' agreement is unclear, this Court cannot amend or interpret the agreement to make it clear. In fact, the evidence on this motion demonstrates that the parties had no meeting of minds.
2001 FCT 1179, [2001] F.C.J. No. 1612, at paras. 5-6.
[12] It is important to note that the issue that was before Kelen J. was not whether the cyclo #8 proceeding was an abuse of process. The purpose of the motion before Kelen J. was to give effect to the parties' agreement which resulted in the stay of that proceeding.
[13] On November 29, 2001, Apotex filed another notice of motion, this time for an order dissolving the stay of this proceeding as ordered by Prothonotary Aronovitch on June 7, 2000, and for an order dismissing it.
[14] The motion was heard by Prothonotary Aronovitch. As Novartis consented to the dissolution of the stay, the only issue before the Court was whether, absent the stay, the proceeding ought to be dismissed pursuant to paragraph 6(5)(b) of the Regulations.
[15] By order dated March 20, 2002, Prothonotary Aronovitch dismissed Apotex' motion. She found that Novartis' application was not an abuse of process, and that it was not frivolous or vexatious:
[...] I cannot find a conclusive indication that Novartis never intended to prosecute this proceeding or that it has abandoned its right to do so. Beyond the evident lack of understanding between the two parties regarding the meaning of "resolution of T-1266-99", the evidence is equally consistent with Novartis' assertion that it has always reserved the right to litigate this matter. I therefore find that there is no clear abuse of process on these facts.
Motion Record of Apotex, Tab 2, p. 18.
[16] As this is an appeal from a prothonotary's order that raises questions vital to the final issue of the case, the standard of review is that of the exercise of discretion de novo (Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.)).
[17] The only issue that needs to be resolved to dispose of this motion is whether the prohibition proceedings commenced by Novartis in cyclo #8 amount to an abuse of process.
[18] The onus in these types of motions lies with the moving party. The burden of proof is very high. The moving party must show that the legal process has been used for an ulterior or collateral purpose (Levi Strauss & Co. v. Roadrunner Apparel Inc. (1997), 76 C.P.R. (3d) 129 at 133 (F.C.A.)).
[19] In Margem Chartering Co. Inc. v. Bocsa (The), [1997] 2 F.C.1001 at para. 18, Prothonotary Hargrave reviewed the meaning of the terms frivolous, vexatious, and abuse of process:
The terms "frivolous" and "vexatious" are often used interchangeably with the term "abuse of the process of the Court". The term abuse of process "connotes that the process of the Court must be used bona fide and properly and must not be abused": see the Supreme Court Practice 1993 (hereinafter the White Book), at page 345 and "The Inherent Jurisdiction of the Court" by I. H. Jacob (1970) 23 Current Legal Problems 23, at page 40. It means that:
The Court will prevent the improper use of its machinery, and will, in a proper case, summarily prevent its machinery from being used as a means of vexation and oppression in the process of litigation (White Book, loc. cit.)
The editors of the White Book point out that the categories of frivolous and vexatious claims and abuse of process are never closed (loc. cit.). It is for the Court to summarily intervene to prevent its process from being misused and subverted.
[20] Pursuant to the Regulations, while a prohibition proceeding is pending, the Minister is prohibited from issuing a NOC to a second person. However, upon the dismissal of a prohibition proceeding by this Court, and notwithstanding the commencement of any appeal proceeding, the Minister is no longer restrained from issuing a NOC unless other patents or patent lists filed with the Minister remain unaddressed.
[21] In the case at bar, because the within proceeding, cyclo #8, is still pending, the Minister is prevented from issuing a NOC to Apotex for cyclosporine. Apotex argues that by maintaining the within proceeding Novartis has effectively obtained a stay of the Order of Blais J. in cyclo #7 when no such stay could be legally obtained. Novartis has thus succeeded in obtaining a benefit, indirectly, which it could not obtain directly.
[22] Apotex submits that Novartis has never had any interest in proceeding with this matter on its merits and it simply wishes to preserve the right of appeal that would be lost if Apotex were granted its NOC prior to the appeal being disposed of.
[23] Novartis, on the other hand, argues that it was always its intention to revisit the resolution of cyclo #8 after the issues in cyclo #7 were finally concluded, and therefore there is no abuse of process.
[24] I have reviewed the evidence and have been unable to find any indication that, prior to the filing of the notice of motion on November 29, 2001 to have the within proceeding dismissed, Novartis ever intended to prosecute cyclo #8. In fact, at the hearing of the present motion, counsel for Novartis conceded that no such evidence existed.
[25] As can be seen from the correspondence between the parties themselves and between the parties and the Court, Novartis has, since the very beginning, maintained that cyclo #8 would never be prosecuted.
[26] Before the within proceeding was commenced, Novartis sent a letter to Apotex advising that it was prepared not to commence proceedings in respect of the Non-Infringement Allegation stating that "[i]n light of the prior Notice of Allegation relating to validity, we assume that the real issue in these two proceedings is the allegation of invalidity ... and not infringement."
[27] The next day, Novartis decided to commence the within proceeding. However, it did not take any action for nearly ten months, at which time it was confronted with a Notice of Status Review. At a time when the within proceeding might have been dismissed altogether, it is inconceivable that Apotex would simply have agreed to stay the proceeding indefinitely, and permit Novartis to revive the application at some unforeseen future date, without ever having to make any explanation for its delay. Such an agreement would have had no possible benefit for Apotex and would have placed it in a worse position than if this proceeding had simply been litigated.
[28] When faced with the Notice of Status Review, Novartis explained, in a letter to the Associate Chief Justice, that "Novartis and Apotex agree that the disposition of application T-1266-99, whichever way decided, will make it unnecessary for proceeding T-1337-99 to proceed and accordingly it would be a waste of Court resources to proceed with T-1337-99 until the resolution of T-1266-99." [emphasis added].
[29] Based on these representations, McKeown J. ordered that the within proceeding be dismissed for delay unless Novartis and Apotex filed a notice of motion to implement the matters set out in the letter Novartis sent to the Associate Chief Justice. Subsequently, the parties files a notice of motion. In their joint written representations, Novartis and Apotex stated that:
[...] the parties agree that if Apotex' allegation of invalidity with respect to the ‘150 patent in the seventh Notice of Allegation is found to be justified in Court File T-1266-99, the proceedings in Court File T-1337-99 will become moot and therefore be discontinued on consent without costs and Apotex will be permitted to come to market with the formulation that was disclosed in this proceeding. [emphasis added].
Conversely, if Apotex' allegation of invalidity is found not to be justified in Court File T-1266-99, Apotex has agreed to withdraw the allegation which gave rise to this proceeding, in which case Novartis will discontinue this proceeding on consent without costs on the basis that the proceeding is moot by reason of the withdrawal of the allegation. [emphasis added].
Motion Record of Apotex, Tab 4F, p.95, paras. 6-7.
[30] More recently, on October 29, 2001, Novartis wrote to Apotex stating that it was its understanding "...that this proceeding would be concluded only after any appeal of the issue of validity has been resolved." This letter does not mention that Novartis reserved the right to prosecute cyclo #8. This demonstrates that Novartis is using the within proceeding for ulterior purposes and that it never intended to prosecute cyclo #8. In light of the jurisprudence of the Federal Court of Appeal, which has held that once an NOC has issued, the appeal is moot (Pfizer Canada Inc. v. Apotex Inc. (2001), 11 C.P.R. (4th) 245 at 252 (F.C.A.)), I am convinced that Novartis only wishes to preserve the right of appeal that would be lost if Apotex were granted its NOC prior to the appeal in cyclo #7 being disposed of.
[31] Novartis' ulterior purpose is even more apparent when considered with the October 29 letter in which it proposes to discontinue the within proceeding immediately with the caveat that should the Court of Appeal overturn Blais J.'s decision, Apotex would surrender any NOC obtained in the interim. The relevant passage of this letter reads:
If you are in agreement with this interpretation, then I believe we may be able to avoid attending at court tomorrow as this would permit us to immediately file a discontinuance, on the clear and express understanding that in the event that the Court of Appeal overturns the decision of Justice Blais, your client would immediately withdraw its allegation in Cyclo #8 and thereby surrender its Notice of Compliance, if any, that has been obtained in the interim.
[32] Kelen J.'s decision of November 1, 2001 concerning Apotex' motion to have the agreement between it and Novartis enforced confirms that the cyclo #8 proceeding was not going to be prosecuted. The only issue was when, not if, it would be discontinued:
I am satisfied from reviewing the correspondence and the affidavit evidence that there is no clear agreement between the parties regarding when this matter would be discontinued . . . Apotex submits that the agreement was to discontinue this matter upon resolution of Court File T-1266-99 in Apotex' favour at the Trial Division. The applicants submit that the said agreement takes effect after the disposition of any appeals . . . [emphasis added].
2001 FCT 1179, [2001] F.C.J. No. 1612, at para. 5
[33] Novartis' intention to "revisit" cyclo #8 was first expressed in Mr. Creber's affidavit of December 13, 2001. That affidavit was prepared in response to Apotex' notice of motion to have the within proceeding dismissed pursuant to paragraph 6(5)(b) of the Regulations, and does not reflect the correspondence between the parties and the representations made by Novartis to this Court at the Status Review.
[34] In light of all these facts, in my opinion, Novartis does not appear to have any interest in proceeding with this matter on its merits and simply wishes to preserve the right of appeal that would be lost if Apotex were granted its NOC prior to the appeal in cyclo #7 being disposed of.
[35] I am satisfied that the within proceeding is being maintained by Novartis for an ulterior or collateral purpose and represents an abuse of process.
ORDER
THIS COURT ORDER THAT:
The motion is granted with costs.
« Danièle Tremblay-Lamer »
J.F.C.C.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF SOLICITORS AND SOLICITORS ON THE RECORD
COURT FILE NO.: T-1337-99
STYLE OF CAUSE: NOVARTIS PHARMACEUTICALS CANADA INC. and
NOVARTIS AG
v.
APOTEX INC. and THE MINISTER OF HEALTH
PLACE OF HEARING: OTTAWA, ONTARIO
DATE OF HEARING: JUNE 10, 2002
REASONS FOR ORDER OF THE HONOURABLE MME JUSTICE TREMBLAY-LAMER
DATED: JUNE 13, 2002
APPEARANCES:
MR. RICHARD DEARDEN FOR THE APPLICANTS
MS. JENNIFER WILKIE
MR. ANDREW BRODKINFOR THE RESPONDENT,
MS. NATHALIE BUTTERFIELD APOTEX, INC.
SOLICITORS ON THE RECORD:
GOWLING LAFLEUR HENDERSON LLPFOR THE APPLICANTS
OTTAWA, ONTARIO
GOODMANS LLPFOR THE RESPONDENT,
TORONTO, ONTARIO APOTEX, INC.
MR. MORRIS ROSENBERG FOR THE RESPONDENT,
DEPUTY ATTORNEY GENERAL OF CANADA THE MINISTER OF HEALTH