Date: 20030408
Docket: T-485-02
Neutral citation: 2003 FCT 414
Toronto, Ontario, Tuesday, the 8th day of April, 2003
PRESENT: The Honourable Mr. Justice Russell
BETWEEN:
APOTEX INC.
Plaintiff
- and -
HER MAJESTY THE QUEEN, BRISTOL-MYERS SQUIBB
CANADA INC. and BRISTOL-MYERS SQUIBB COMPANY
Defendants
REASONS FOR ORDER AND ORDER
[1] This is a motion by one of the Defendants, Bristol-Myers Squibb Canada Inc. ("BMS Canada"), for partial summary judgment pursuant to Rule 213 of the Federal Court Rules, 1998 dismissing the Plaintiff's action with respect to:
a) The Plaintiff's claim for an accounting of BMS Canada's profits; and
b) The Plaintiff's claim for legal expenses incurred in connection with court file T-2020-99.
[2] The underlying action is based upon the section 8 remedial provisions of the Patented Medicines (Notice of Compliance) Regulations, SOR/98-166 (the "Regulations"), which came into force in 1998. Briefly put, these remedial provisions allow a "second person" (in this case the Plaintiff) to claim relief from a "first person" (in this case BMS Canada) during a specified period of time in a situation where prohibition proceedings under section 6 of the Regulations have been withdrawn, discontinued or dismissed.
[3] In this case the proceedings under section 6 fo the Regulations (the "Prohibition Proceedings") were discontinued by agreement and Notice of Discontinuance signed inter alia, by the Plaintiff and BMS Canada on court file T-2020-99 in February 2001.
[4] In the section 8 remedial action to which this motion relates the Plaintiff requests various forms of relief against BMS Canada, including damages flowing from the initiation of the Prohibition Proceedings, an accounting of profits in the alternative, and legal expenses which the Plaintiff "was caused to incur in defending the prohibition proceedings."
[5] BMS Canada objects to the accounting for profits and the claim for legal expenses and seeks partial summary judgment to have them dismissed.
Basis for BMS Canada's Objections
[6] As regards the claim by the Plaintiff for an accounting for profits, BMS Canada says that section 8 of the Regulations does not permit such relief and this Court has no inherent or other jurisdiction to allow such a remedy in this action.
[7] As regards the Plaintiff's claim for legal expenses suffered in defending the Prohibition Proceedings, BMS Canada says that all parties to the Prohibition Proceedings, including the Plaintiff, agreed to discontinue those proceedings on consent and on a "without costs basis," so that the matter has already been dealt with and the Plaintiff should not be allowed to resurrect it under a claim for "legal expenses" in this action.
[8] BMS Canada says that the Plaintiff's claims for profits and legal expenses are so obviously excluded that they should be dismissed on this motion in order to ensure the "just, most expeditious and least expensive determination" of the claim in accordance with Rule 3 of the Federal Court Rules, 1998.
Summary Judgment Principles
[9] There is no material disagreement between the parties as to the general principles applicable in a motion for summary judgment under rules 213 - 219 of the Federal Court Rules, 1998. As enunciated in cases such as Granville Shipping Co. v. Pegasus Lines Ltd. S.A. et al. (1996), 111 F.T.R. 189, I am required to find that the claims in question present no genuine issue for trial or that the issue is so doubtful that it deserves no further consideration. Also, each case must be interpreted in its own context and if the necessary facts cannot be found, or if there are serious issues of credibility, the matter should go to trial.
[10] The burden lies with the moving party to establish that here is no genuine issue to be tried, but both parties must "put their best foot forward" to enable the motions judge to decide whether or not there is a genuine issue for trial, and the judge is required to take "a hard look" at the merits and, if possible, make findings of fact and law if the materials allow this. F. Bon Langsdorff Licensing Limited v. S.F. Concrete Technology Inc. (1999), 165 F.T.R. 74.
The Profit Claim
[11] As regards the Plaintiff's claim for "profits realized by BMS Canada," BMS Canada says there is no genuine issue for trial on this issue because section 8 of the Regulations (the remedial section upon which the Plaintiff's claim is based) does not allow such a remedy and the Federal Court of Canada has no other statutory, inherent or other jurisdiction to grant such relief in this claim.
[12] Section 8 of the Regulations provides as follows:
| 8. (1) If an application made under subsection 6(1) is withdrawn or discontinued by the first person or is dismissed by the court hearing the application or if an order preventing the Minister from issuing a notice of compliance, made pursuant to that subsection, is reversed on appeal, the first person is liable to the second person for any loss suffered during the period
(a) beginning on the date, as certified by the Minister, on which a notice of compliance would have been issued in the absence of these Regulations, unless the court is satisfied on the evidence that another date is more appropriate; and (b) ending on the date of the withdrawal, the discontinuance, the dismissal or the reversal.
(2) A second person may, by action against a first person, apply to the court for an order requiring the first person to compensate the second person for the loss referred to in subsection (1).
(3) The court may make an order under this section without regard to whether the first person has commenced an action for the infringement of a patent that is the subject matter of the application.
(4) The court may make such order for relief by way of damages or profits as the circumstances require in respect of any loss referred to in subsection (1).
(5) In assessing the amount of compensation the court shall take into account all matters that it considers relevant to the assessment of the amount, including any conduct of the first or second person which contributed to delay the disposition of the application under subsection 6(1). SOR/98-166, ss. 8, 9.
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8. (1) Si la demande présentée aux termes du paragraphe 6(1) est retirée ou fait l'objet d'un désistement par la première personne ou est rejetée par le tribunal qui en est saisi, ou si l'ordonnance interdisant au ministre de délivrer un avis de conformité, rendue aux termes de ce paragraphe, est annulée lors d'un appel, la première personne est responsable envers la seconde personne de toute perte subie au cours de la période : a) débutant à la date, attestée par le ministre, à laquelle un avis de conformité aurait été délivré en l'absence du présent règlement, sauf si le tribunal estime d'après la preuve qu'une autre date est plus appropriée;
b) se terminant à la date du retrait, du désistement ou du rejet de la demande ou de l'annulation de l'ordonnance.
(2) La seconde personne peut, par voie d'action contre la première personne, demander au tribunal de rendre une ordonnance enjoignant à cette dernière de lui verser une indemnité pour la perte visée au paragraphe (1).
(3) Le tribunal peut rendre une ordonnance aux termes du présent article sans tenir compte du fait que la première personne a institué ou non une action pour contrefaçon du brevet visé par la demande.
(4) Le tribunal peut rendre l'ordonnance qu'il juge indiquée pour accorder réparation par recouvrement de dommages-intérêts ou de profits à l'égard de la perte visée au paragraphe (1).
(5) Pour déterminer le montant de l'indemnité à accorder, le tribunal tient compte des facteurs qu'il juge pertinents à cette fin, y compris, le cas échéant, la conduite de la première personne ou de la seconde personne qui a contribué à retarder le règlement de la demande visée au paragraphe 6(1). DORS/98-166, art. 8 et 9. |
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[13] Subsection 8(4) does say that the "Court may make such order for relief by way of damages or profits as the circumstances require" but, BMS Canada argues, this has to be "in respect of any loss referred to in subsection 8(1)," so that the only "profits" referred to in subsection 8(4) are the Plaintiff's lost profits. In other words, an accounting of BMS Canada's profits would not be "in respect of any loss referred to in subsection 8(1)."
[14] BMS Canada argues that this issue is purely a matter of statutory interpretation and that there are no evidentiary or credibility issues standing in the way of my interpreting this section.
[15] A brief synopsis of the principal arguments advanced by BMS Canada for its interpretation of section 8 is as follows:
a) The wording of section 8 is clear in excluding any profits that may have been made by the first person (in this case BMS Canada). Subsection 8(4), which mentions "profits," clearly refers back to "any loss referred to in subsection 8(1)," suffered by the second person (in this case the Plaintiff);
b) Section 8 losses are analogous to the damages payable in respect of an undertaking as to damages given in conjunction with an interlocutory injunction where the Plaintiff's profits are irrelevant in measuring the Defendant's loss;
c) To allow a claim for first person profits under section 8 would provide a windfall to the Plaintiff that is clearly not contemplated by the legislation;
d) Allowing the Plaintiff to obtain BMS Canada's profits would also allow the Plaintiff access to "irrelevant and confidential documentation" belonging to BMS Canada so that the Plaintiff "could use the discovery process for improper purposes;"
e) Subsection 8(5) of the Regulations, in directing the court to "take into account all matters that it considers relevant to the assessment of the amount" when it is "assessing the amount of compensation" makes it clear that the section 8 remedial provisions are purely compensatory and do not allow a claim for first person profits;
f) The Regulatory Impact Analysis Statement that accompanies the Regulations is a guide to interpretation and it does not contemplate first person profits;
g) The significance of "or" between "damages" and "profits" in subsection 8(4) is that the Plaintiff must choose between reliance losses and its own lost profits;
[16] In support of this interpretation of section 8 BMS Canada admits there is no case directly on point but the obiter remarks of the Federal Court of Appeal in Apotex Inc. v. Canada (Minister of National Health and Welfare) (2000), 3 C.P.R. (4th) 1 at page 11 paragraph 27 are persuasive:
Paragraph 8(1)(a) specifically provides that a patent holder whose prohibition application is dismissed is liable for the loss suffered by a generic manufacturer for the delay incurred in the issuance of a Notice of Compliance to the generic by reason of the prohibition application. Under subsection 8(4), the Court has been given jurisdiction to make an award of damages or lost profits. Section 8 of the Regulations makes it apparent that the Governor in Council recognized that generic manufacturers could be subject to unjustified prohibition applications, including applications based upon ineligible patents on the Register and provided a remedy in the form of an award of damages or lost profits in such circumstances.
[17] BMS Canada argues that the Federal Court of Appeal's reference to "damages" or "lost profits" is evidence that the Court felt the scheme constituted by section 8 was intended to be purely compensatory with no access to first person profits.
[18] In addition to this interpretation of section 8 of the Regulations, BMS Canada further argues that this Court has no other statutory, common law or equitable jurisdiction to allow an accounting of profits against BMS Canada in this case.
[19] As far as the availability of first person profits under section 8 is concerned, a brief synopsis of the Plaintiff's principal arguments is as follows:
a) Subsection 8(4) clearly allows "damages or Profits" and does not restrict the Plaintiff to first person profits. To accept BMS Canada's interpretation of this provision would be to accept that subsection 8(4) effectively reads "profits or profits as the circumstances require" because the second person's damages will invariably be its lost profits;
b) Subsection 8(4) is intended to be a broad provision giving the Court jurisdiction to order relief in whatever manner may be appropriate in the circumstances, including an award of first person profits if necessary;
c) If first person profits were not available there would be considerable incentive for parties in the position of BMS Canada to commence prohibition proceedings every time a Notice of Allegation is received, regardless of whether there is any real possibility of patent infringement;
d) The relief contemplated by section 8 of the Regulations is not co-extensive with an undertaking for damages in an interlocutory injunction situation, but is, rather, a discrete statuary scheme;
e) The reference back to subsection 8(1) in subsection 8(4) of the Regulations is essentially a reference to the period of time that the Court must consider when deciding upon appropriate remedies and does not exclude first person profits;
f) The Regulatory Impact Analysis Statement that accompanies the Regulations does not focus on the entirety of section 8 and so does not interpret that provision for the Court;
g) The Plaintiff's motives are irrelevant to the interpretation of section 8 and, in this case, the Plaintiff will consent to bifurcate the claim to alleviate any concerns BMS Canada might have over access to its books and records before the Court decides that an accounting of first person profits is available to the Plaintiff.
[20] The Plaintiff further argues that, even if section 8 of the Regulations did not allow a claim for first person profits, this Court has a broad jurisdiction under section 20 of the Federal Court Act, R.S.C. 1985, c. F-7 to grant on appropriate remedy, including an accounting for profits, where the subject matter of the action primarily concerns a patent. As authority for this proposition the Plaintiff cites, among other cases, Beloit Canada Ltd. v. Valmet - Dominion Inc.(1997), 73 C.P.R. (3d) 321 at 355, where the Federal Court of Appeal held that the Court had the jurisdiction to award an accounting of profits under paragraph 57(1)(b) of the Patent Act, R.S.C. 1985, c. P-4 and sections 3 and 20 of the Federal Court Act, R.S.C. 1985, c. F-7, despite the fact that such a remedy was not expressly provided for in paragraph 57(1)(b).
[21] The Plaintiffs conclusion is that the arguments and authorities it has produced in relation to the availability of first person profits under section 8 make it more than evident that BMS Canada's interpretation of that section is problematic, to say the least, and it cannot be argued on these facts that there is no genuine issue for trial when it comes to the "profit" claim.
[22] The Plaintiff argues further that, notwithstanding the authority provided by paragraph 216(2)(b) of the Federal Court Rules, 1998 to determine a question of law on an application for summary judgment, it would be inappropriate to do so in this case because section 8 of the Regulations and its purposes involve complex questions of statutory interpretation which can only be dealt with at a full trial on the basis of a proper and complete evidentiary record.
[23] Recent cases involving section 8 of the Regulations in the context of applications to strike in the Federal Court have consistently indicated that a motion hearing is not the place to make decisions about contentious issues of a complex nature better suited for determination at trial. See for instance, Apotex Inc. v. Eli Lilly and Co. (2001), 13 C.P.R. (4th), 78 at 83; Apotex Inc. v. Merck & Co., [2002] F.C.J. No. 236, 2002 FCT 166.
[24] BMS Canada argues that the cases dealing with applications to strike involved many more issues than the availability of an accounting for profits that is before me today, and there are no evidentiary or other issues to prevent me interpreting what is a pure question of law.
[25] Subsection 216(1) of the Federal Court Rules, 1998 provides that, if I decide there is no issue for trial with respect to a claim or defence, then I "shall" grant summary judgment accordingly.
[26] The strong, but diametrically opposed, arguments by BMS Canada and the Plaintiff concerning the availability of an accounting for profits (either under section 8 of the Regulations or under some other jurisdiction enjoyed by the Court) have convinced me that this is a serous issue for trial that is not so beyond doubt that it does not deserve further consideration at a full trial.
[27] As regards exercising the discretion granted by rule 216(2)(b) to determine the question of law as to whether first person profits are available to the Plaintiff under section 8 of the Regulations or under some other statutory or inherent jurisdiction enjoyed by the Court, I decline to do so because I do not have before me the full context of the Plaintiff's claim or adequate evidence concerning the proper purposes of section 8 of the Regulations.
[28] Such complex and far-reaching issues require a more thoroughgoing contextual explanation of the meaning and purposes of section 8 than was placed before me on this motion and are the proper domain of the trial judge. To borrow the words of Blanchard J. in Apotex Inc. v. Eli Lilly and Co., supra, at paragraph 13, although used in the context of an application to strike:
I am of the view that the interpretation of section 8 and the determination of its objects is a complex matter of statutory interpretation and is better left for argument at trial where proper evidence may be adduced and should not be disposed of by a motions judge in a preliminary proceeding.
[29] These words, echoed in subsequent decisions of this Court dealing with section 8 and motions to strike, were not intended to preclude a summary judgment on the implications of the words "damages or profits" in subsection 8(4) of the Regulations. But the materials and arguments presented to me in the present case suggest that a similar caution is required and I decline to award partial summary judgment to BMS Canada by dismissing the Plaintiff's claim for an accounting for BMS Canada's profits.
The Legal Expenses Claim
[30] As regards the Plaintiff's claim for legal expenses incurred in connection with Court File No. T-2020-99, I am of a different view.
[31] On this matter we are not dealing with complex issues of statutory interpretation.
[32] In order to justify dismissing this aspect of the Plaintiff's claim, BMS Canada raised arguments base upon estoppel and res judicata. The Plaintiff argues that a settlement agreement followed by a Notice of Discontinuance executed and filed "on a without costs bases" does not constitute a final order so that there can be no argument based upon res judicata.
[33] The Plaintiff also argues that the settlement agreement embodied in the Notice of Settlement does not represent any binding agreement or a release of any claims that either party might have with respect to damages for legal expenses.
[34] Indeed, the Plaintiff went further in this matter and filed affidavit evidence given by Dr. Bernard Sherman, the "Chair and Chief Executive Officer" of the Plaintiff, to the effect that the Plaintiff "was not requested to provide a release of all claims that it might have, including claims for damages in respect of the expenses to which [the Plaintiff] had been put in defending the proceeding."
[35] Releases were not exchanged but the Notice of Discontinuance on its face indicates that the parties have discontinued the claim "on a without costs basis." There is no reasonable interpretation of this agreement other than the obvious one that the parties have agreed not to claim costs against each other over the discontinuance of the Prohibition Proceedings continued in Court File No. T-2020-99. Dr. Sherman's interpretation of the agreement does not displace the reasonable expectations raised by the document itself.
[36] Counsel for the Plaintiff did not deny that an agreement existed but argued that the terms of the agreement did not preclude a claim for "legal expenses" because "costs" are not the same thing as "legal expenses." He also took the position that the only evidence before me of the contents of the agreement is contained in Dr. Sherman's affidavit.
[37] But the best evidence before me is the Notice of Discontinuance itself, and Dr. Sherman's interpretation is not definitive, even in the absence of affidavit evidence from BMS Canada of its understanding of the arrangement and what did and did not take place in the discussions.
[38] I also find any distinction that may exist conceptually between "legal expenses" and "costs" difficult to make on the present facts. One of the definitions of "cost" given in the Canadian Oxford Dictionary (2001) is "legal expenses, esp. those allowed in favour of the winning party or against the losing party in a suit." Consequently I find the words "costs" and "expenses" to be coterminous in this context and that the parties did agree they would not claim against each other for expenses incurred in connection with Court File No. T-2020-99.
[39] On the issue of legal expenses there is no genuine issue for trail. Hence, BMS Canada should have summary judgment on that issue and the Plaintiff's claim for "legal expenses which Apotex was caused to incur in defending the prohibition proceedings" should be dismissed in the action in Court File No. T-485-02.
ORDER
THE COURT HEREBY ORDERS THAT:
1. BMS Canada's motion for partial summary judgment dismissing the Plaintiff's action with respect to the Plaintiff's claim for an accounting of BMS Canada's profits is dismissed and should proceed to trial in the ususal way;
2. BMS Canada's motion for partial summary judgment dismissing the Plaintiff's action with respect to the Plaintiff's claim for legal expenses incurred in connection with Court File No. T-2020-99 is granted.
3. No costs are awarded in this motion.
"James Russell"
J.F.C.C.
FEDERAL COURT OF CANADA
TRIAL DIVISION
Names of Counsel and Solicitors of Record
DOCKET: T-485-02
STYLE OF CAUSE: APOTEX INC.
Plaintiff
- and -
HER MAJESTY THE QUEEN, BRISTOL-MYERS SQUIBB CANADA INC. and BRISTOL-MYERS SQUIBB COMPANY
Defendants
DATE OF HEARING: THURSDAY, APRIL 3, 2003
PLACE OF HEARING: OTTAWA, ONTARIO
REASONS FOR ORDER
AND ORDER BY: RUSSELL J.
DATED: TUESDAY, APRIL 8, 2003
APPEARANCES BY: Mr. Andrew R. Brodkin
For the Plaintiff
No Appearance
For the Defendant,
Her Majesty the Queen
Mr. Antony G. Creber
Ms. Cristin A. Wagner
For the Defendant,
Bristol-Myers Squibb Canada Inc.
SOLICITORS OF RECORD: Goodmans
Barristers & Solicitors
2400-250 Yonge Street W. Box 24
Toronto, Ontario M5B 2M6
For the Plaintiff
Morris Rosenberg
Deputy Attorney General of Canada
For the Defendant,
Her Majesty the Queen
Gowling Lafleur Henderson LLP
Barristers & Solicitors
2600-160 Elgin Street
Ottawa, Ontario K1P 1C3
For the Defendant,
Bristol-Myers Squibb Canada Inc.
FEDERAL COURT OF CANADA
Date: 20030408
Docket: T-485-02
BETWEEN:
APOTEX INC.
Plaintiff
- and -
HER MAJESTY THE QUEEN, BRISTOL-MYERS SQUIBB CANADA INC. and BRISTOL-MYERS SQUIBB COMPANY
Defendants
REASONS FOR ORDER
AND ORDER