Federal Court Decisions

Date: 20020926

Docket: T-1100-97

Neutral citation: 2002 FCT 1007

BETWEEN:

                                                         ELI LILLY AND COMPANY,

ELI LILLY CANADA INC.

                                                                                                                                                        Plaintiffs

                                                                              - and -

                                                                       APOTEX INC.

                                                                                                                                                      Defendant

                                                            REASONS FOR ORDER

ARONOVITCH, P.                 

[1]                 These reasons pertain to the first of two motions heard together. The second motion to be separately disposed of, is to consolidate the within proceeding with a later action that deals with the same medicine as is at issue in this case.

[2]                 By the present motion the defendant ("Apotex") seeks to add Novopharm Limited ("Novopharm") as defendant by counterclaim and to make certain amendments to Apotex' statement of defence and counterclaim in the context of Eli Lilly's underlying suit for patent infringement.                

[3]                 In essence, the amendments sought by Apotex are the addition of allegations of breach of contract and interference with Apotex' economic interest said to be in aid of an alleged arrangement or conspiracy by Eli Lilly and Novopharm to lessen competition.    At issue is whether these allegations are proper in defence and may be made by way of counterclaim for damages for breaches of the Competition Act, R.S.C. 1985, c. C-34, as amended (the "Competition Act").

BACKGROUND

[4]                 As I have mentioned, Apotex' motion arises in the context of an action for patent infringement commenced by Eli Lilly.    A review of the background against which the action was commenced is useful to better understand the amendments sought by Apotex.

[5]                 In 1984, Eli Lilly was granted Canadian Letters Patent 1,166,248 (the "'248 Patent") for nizatidine, which is an anti-ulcer medicine. The '248 Patent covers both the process for making nizatidine and the medicine itself, that is, the compound nizatidine when made by the process.

[6]                 Novopharm held a compulsory licence from Eli Lilly, for nizatidine, pursuant to s. 39(4) of the Patent Act, R.S.C. 1985, c. P-4, (the "Patent Act") as it then read. In 1992, in anticipation of the abolition of the compulsory licencing regime, Novopharm and Apotex entered into an agreement whereby, if one of the parties were to be caught unlicenced under the new regime, the other party agreed to sell, supply or arrange for the sale or supply of nizatidine to the unlicenced party. This agreement is referred to throughout as the "supply agreement".

[7]                 Essential terms of the supply agreement bear noting. The agreement allows the unlicenced party to direct the licencee to acquire the bulk medicine from a designated source, or its own sources, for resale to the unlicenced party. It is also a term of the supply agreement that the licenced party remit the royalty payments required to be made pursuant to the terms of the operative compulsory licence, and to otherwise observe the terms of the licence and maintain it in good standing.    

[8]                 In 1993, Apotex applied for a Notice of Compliance ("NOC") under the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, as amended (the "Regulations"). Eli Lilly having listed the relevant patents on the Minister's Register, Apotex served a Notice of Allegation ("NOA") on Eli Lilly. The NOA claimed that the relevant patents would not be infringed, as Apotex, proposed to obtain its nizatidine from Novopharm, who possessed a valid licence for the medicine. Eli Lilly sought to prohibit issuance of the NOC on the basis that Novopharm had granted an unlawful sub-licence to Apotex such that Apotex could not acquire nizatidine from Novopharm without infringing the '248 Patent.

[9]                 Relying on its own licence, Novopharm also sought an NOC for nizatidine. Eli Lilly commenced a proceeding in opposition under the Regulations, again claiming that the supply agreement constituted an unlawful sub-licence and that as a result Eli Lilly was authorized to terminate the compulsory licence to Novopharm.

[10]            The prosecution of these proceedings and appeals therefrom gradually wound their way to the Supreme Court of Canada and were finally resolved by judgment of the Supreme Court in 1998.    In Eli Lilly & Co. v. Novopharm Ltd. [1998] 2 S.C.R. 129, the Supreme Court held, inter alia that the supply agreement did not constitute a sub-licence and that Apotex was entitled to implement it.

[11]            In the interim, Apotex having filed a second application for a NOC, was granted it in April 1997, subsequent to a successful mandamus application. In May of the same year, Eli Lilly commenced this action for patent infringement.    As the issue of the effect of the supply agreement was then before the courts, Apotex did not plead a defence of licence at the time it filed its first statement of defence and counterclaim in September 1997.

[12]            Following the Supreme Court decision, Apotex took leave to amend its pleadings in the within proceeding to include the licence as a defence and sought to enforce the supply agreement as against Novopharm.    After some resistance by Novopharm, and further litigation, Novopharm complied by acquiring bulk nizatidine from a foreign supplier, which it then resold to Apotex in or about 1999.

CURRENT CONTROVERSY

[13]            Apotex seeks to make two sets of amendments. The amendments proposed in subparagraphs 13 (a), (b), (f), and (g) and clause (h)(i) of the draft pleading, which deal with technical aspects of Apotex' attack on the validity of the '248 Patent, are uncontested and will be allowed. It is the second category of amendments relating to the arrangements allegedly made by Eli Lilly and Novopharm to impede Apotex' access to licenced nizatidine which remain controversial.

[14]            This motion was brought following the first round of discoveries. Apotex' evidence is that in the course of those discoveries and following service of a supplementary affidavit by Eli Lilly, Apotex was advised that Eli Lilly's denial of Apotex' licence was based on Eli Lilly's purported termination Novopharm's compulsory licence. Recently produced documents says Apotex, disclose that Novopharm had breached the terms of the licence by failing to remit royalty payments in respect of the nizatidine it purchased on behalf of Apotex. Apotex claims as well that it learned for the first time during these examinations for discovery that Eli Lilly had also entered into a separate, voluntary licence agreement with Novopharm to supply nizatidine to Novopharm but on terms that preclude Novopharm from reselling the licenced nizatidine to any third party, including Apotex. Apotex says that this second voluntary agreement was in effect at the same time that Novopharm was purchasing the drug for resale to Apotex and failing to remit royalties to Eli Lilly for the purchases. Apotex believes therefore that Eli Lilly and Novopharm have conspired to bring about a breach of the supply agreement thereby seeking to eliminate Apotex from competition in the market for nizatidine.

[15]            At inception, Apotex wished to allege and claim relief against Eli Lilly and Novopharm for    contract and tort violations, as well as violations of the Competition Act. Thus, the original

amendments to the defence and counterclaim alleged that Eli Lilly and Novopharm, were liable in damages as follows; Novopharm for breaching the supply agreement with Apotex; Eli Lilly for procuring a breach of the terms of the supply agreement and the compulsory licence and unlawfully interfering with Apotex' economic interest by entering into the second, voluntary agreement with Novopharm. Damages are also sought on the separate head of the conspiracy, or arrangement allegedly entered into by Eli Lilly and Novopharm for the purpose and with the effect of limiting or unduly lessening competition contrary to section 45 of the Competition Act.

[16]            As to Apotex' statement of defence, Apotex wishes to add that by reason of the conduct alleged in the counterclaim, Eli Lilly is estopped from relying on any purported termination of the compulsory licence and is disentitled from claiming any relief in respect of the infringement which Eli Lilly is alleged to have knowingly, brought about.

REVISIONS TO THE PROPOSED AMENDMENTS

[17]            Some days prior to the hearing of the motion, counsel for Apotex wrote to the Court that Apotex would no longer be seeking to amend the counterclaim to claim relief by way of damages in the proposed counterclaim, for breach of the supply agreement and interference with Apotex' contractual relations. Apotex did not withdraw or otherwise amend the allegations that supported these claims. However, at the hearing of the motion, Apotex took the position that while it sought to retain the allegations, some amendments were appropriate given the withdrawal of the claims for damages.

[18]            The allegations now sought to be retained, as amended are set out below. In sum the allegations with respect of the breach of the supply agreement, repudiation of the licence and interference with Apotex' economic interests are now alleged to be supportive of the conspiracy to lessen competition.

  

31. Apotex states that the supply agreement is a valid and enforceable contract, at all material times the Plaintiffs were aware that it was valid and subsisting, and the Plaintiffs knowingly and wrongfully procured a breach of its terms and a breach of Novopharm's compulsory licence causing consequent damage to Apotex.

32. Accordingly, Apotex states that, as part of the conspiracy, to the extent any of the nizatidine it has acquired from Novopharm is found to be infringing of any claim in the '248 Patent, and is also found to be unlicensed, Novopharm breached the supply agreement, and specifically clauses 1, 4, 6 and 8 thereof.

33. Apotex further states that, as part of the conspiracy, to the extent any of the nizatidine it has acquired from Novopharm is found to be infringing of any claim in the '248 Patent, and is found to be unlicensed, the Plaintiffs, Defendants by Counterclaim induced Novopharm to breach the supply agreement with Apotex and to forfeit its compulsory licence by entering into the said arrangement on terms which (i) prevented Novopharm from reselling to Apotex any nizatidine it acquired from the Plaintiffs, (ii) required Novopharm to withhold the royalty payments payable to Eli Lilly and Company in respect of Apotex' purchases of nizatidine form Novopharm, and (iii) required Novopharm to refrain from contesting any allegation made by Lilly that the compulsory licence had been breached.

34. Apotex further states, as part of the conspiracy, that to the extent any of the nizatidine it has acquired from Novopharm is found to be infringing of any claim in the '248 Patent, and is found to be unlicensed, the Plaintiffs, Defendants by Counterclaim wilfully and wrongful interfered with Apotex' economic interests by entering into the said unlawful arrangement with Novopharm on terms which prevented Novopharm from reselling to Apotex any nizatidine it acquired from the Plaintiffs, in breach of the supply agreement and compulsory licence, and did so with the intention of injuring Apotex, knowing that such injury would likely result.

35. Apotex further states that, as part of the conspiracy, to the extent any of the nizatidine it has acquired from Novopharm is found to be infringing of any claim in the '248 Patent, and is found to be unlicensed the Plaintiffs, Defendants by Counterclaim, and Novopharm knowingly and wilfully entered into a conspiracy, agreement or arrangement to bring about an unlawful breach of contract, which unlawful actions were undertaken for the purpose and effect of injuring Apotex, knowing that said injury to Apotex would likely result, and did in fact occur.

36. Apotex further states that, to the extent any of the nizatidine it has acquired from Novopharm is found to be infringing of any claim in the '248 Patent, and is found to be unlicensed, the Plaintiffs, Defendants by Counterclaim, and Novopharm are liable to Apotex for knowingly and wilfully entering into a conspiracy agreement or arrangement for the purpose and with the effect of preventing, limiting or lessening unduly competition in Canada in respect of the medicine nizatidine contrary to section 45 of the Competition Act, R.S. 1985, c.C-34, as amended. (emphasis added)

The following relief is now sought in addition to declarations of invalidity and non-infringement:

.....

(e) in the further alternative, if Canadian Letters Patent No. 1,166,248 is found to be valid and infringed by Apotex, damages pursuant to section 36 of the Competition Act.

.....

[19]            Needless to say, the counterclaim as further amended above, the provisions of the defence that incorporate the conduct alleged in the counterclaim, along with the allegations and claim for anti-competitive conduct, remain contentious.            

ANALYSIS

[20]            I start with a review of the principles applicable to amendments that are well settled at law. Generally, a party will be granted leave to amend its pleading at any time, so long as the amendments do not give rise to prejudice that cannot be compensated by an award of costs. (see: Scottish & York Insurance Co. v. Canada [1999] F.C.J. No. 277 (F.C.A.); VISX Inc. v. Nidek Co., [1998] F.C.J. No. 1766).

[21]               The proposed amendment is meant to be subjected to the same test as applies on a motion to strike.    Thus, an amendment will not be denied unless the Court is satisfied that the proposed pleading is manifestly futile and without any chance of success. This onerous burden of proof lies with the party opposing the amendment.

[22]            For the purposes of determining that it is plain and obvious that the pleading does not disclose a basis for a defence or counterclaim, the facts alleged, unless wholly improbable, are presumed to be true. (see: Volkswagen Canada Inc. v. Access International Automotive Ltd. [2001] FCA 79 at para 12, F.C.J. No. 446).

[23]            Other principles applicable to motions to strike, have bearing in the circumstances. One among these, is that the Court is required to take a broad and generous approach to the interpretation of the pleadings, at issue. The other, is that contested facts or law are not appropriate for determination in the context of the motion to strike. Finally, a wide berth is to be given to pleadings that are novel, untested or arise in areas where the law is unsettled.

[24]            In applying these principles, I shall deal first with the allegations of violations of the Competition Act.

[25]            Eli Lilly opposes these amendments, inter alia, on the basis that the cause of action is statute-barred as being beyond the two year limitation provided for at section 36(4) of the Competition Act.    The relevant portions of the statute are provided for reference as an appendix to these reasons.

[26]            Whether the impugned conduct is taken to have occurred at the date of the voluntary agreement between Eli Lilly and Novopharm on November 16, 1998, or the termination of the compulsory licence on September 21, 1999, says Eli Lilly, Apotex was out of time when it first served the proposed amendments on December 5, 2001.

[27]            The principles applicable to striking on the basis of limitations bear restatement here. They are, in fact, comprehensively canvessed in the recent decision in Fox Lake Indian Band v. Reid Crowthers & Partners Ltd., [2002] F.C.J. No. 823. Essentially, limitations periods are not ordinarily a basis for striking a pleading. Rather, a time-bar is to be pleaded and relied upon as a defence. The basis of the principle is that the time as of which the limitation runs is commonly subject to discoverability and a subsequent finding of fact that is not appropriately made on an interlocutory basis. That is the circumstance in this case. I am therefore not prepared to refuse the amendment on that basis.

THE COMPETITION ALLEGATIONS

[28]            Eli Lilly and Novopharm attack the competition allegations on two other grounds that I will now take up together. The first argument is that Apotex cannot succeed in its allegations since, its pleadings even, if assumed to be true, do not demonstrate that Apotex has suffered damages.    The second is that the evidence presented by Eli Lilly is at odds with the amendments sought to be made by Apotex. As with the limitation argument, in both cases Eli Lilly relies on the evidence it has adduced in the context of this motion.

[29]            As I see it, these submissions, raise what should properly be pleaded as defences. I am otherwise asked to evaluate extraneous and competing evidence that is a matter for determination by the trial judge.    I may have regard to such evidence, where it is claimed that the pleadings ought to be struck as frivolous, an abuse of process, or beyond the jurisdiction of the Court. Even in that context however, none of the evidence presented here is conclusive or uncontroversial. As to the issue of damages in particular, once pleaded by Apotex, it must be assumed to have been proved.

[30]            Let me now turn to Eli Lilly's and Novopharm's principle argument, that the utilization of intellectual property rights does not amount to an undue restriction or lessening of competition and as such cannot give rise to a valid claim in law. Eli Lilly relies principally on Molnlycke AB v. Kimberly Clark of Canada Ltd., (1991) 36 C.P.R. (3d) 393. In Molnlycke, the Court of Appeal had under consideration a defence and counterclaim alleging anti-competitive conduct arising out of the assignment of a patent. The Court concluded in that case, that the procurement of a patent, its assignment or the actions of patentee in enforcing its monopoly did not constitute an undue lessening of competition.

[31]            Eli Lilly finds further support in Procter & Gamble Co. v. Kimberly-Clark of Canada Ltd., (1990) 29 C.P.R. (3d) 545 and VISX Inc. v. Nidek Co. (1995), 68 C.P.R. (3d) 272 (F.C.T.D.); affirmed (1996), 72 C.P.R. (3d) 19 (F.C.A.) in which this Court struck defences in which the defendant alleged violations of the Competition Act and thus barred the plaintiffs' claim for equitable relief for patent infringement.

[32]            I do not take Procter & Gamble to stand for the proposition that allegations of breaches of the Competition Act cannot be maintained and have no place in claims for patent infringement. Rather, the Court's concern in that case was as to whether the defendant's allegations of predatory pricing by the patentee had some relevance to the plaintiffs' action for infringement. Commenting on the doctrine of "clean hands" Hugessen J.A., as he then was, explains as follows:

... For past conduct to be relevant to a refusal of equitable relief under the "clean hands" doctrine, relief to which the party would otherwise be entitled, such conduct must relate directly to the subject-matter of the plaintiffs' claim, in this case their patent. [see City of Toronto v. Polai (1969), 8 D.L.R. (3d) 689, [1970] 1 O.R. 483 (C.A.)]. Here not only must the alleged predatory pricing be unrelated to the patent (what wrong is done if the holder of a legal monopoly prices his products below their cost and who suffers thereby?), but the plaintiffs' recovery of the defendant's profits would actually be reduced by the alleged practice.

  

[33]            The decision was applied by Rothstein J., as he then was, in VISX , supra where it was reiterated that the Court will not entertain, as a bar to equitable relief, claims of misconduct that are not relevant to the plaintiff's claim. In the same vein as Procter & Gamble, Rothstein J., concluded in that case, that the defendants' allegations that a patentee was extracting certain fees and royalties pursuant to the patentee's monopoly ought to be struck, because these allegations did not "relate directly to the patent or whether the defendants are infringing the patent".

[34]            A more recent case, Volkswagen, supra, is also on point. It concerns allegations of anti-competitive behaviour both in defence and counterclaim, this time in the context of the alleged infringement of copyright.

[35]            At trial, the allegations were struck from the defence and counterclaim. The Court of Appeal approved of the latter on the grounds that there were statutory preconditions that the plaintiffs by counterclaim had not met that precluded them from counterclaiming for damages for breach of section 32 of the Competition Act.

[36]            Different considerations however, applied to the same allegations made in defence. In the circumstances described below, the Court declined to strike allegations of undue limitations on competition made by the defendant, and found that there was arguably a sufficient relationship with the copyright infringement:

  

... It this case, Access International wishes to argue that the assignment of copyright in the VW and Audi logos to Volkswagen Canada is conduct described in subsection 32(1) of the Competition Act, because the result of Volkswagen Canada's obtaining the copyright was to unduly limit or prevent competition in authentic Volkswagen and Audi parts and accessories. This allegation is quite different from the allegations considered in Visx and Procter & Gamble. In my view, it is at least arguable that in this case there is a sufficient relationship between the copyright and the unclean hands defence that the equitable remedy might not be granted.

[37]            Turning to the facts at hand, Apotex alleges that to the extent that it may be found to have infringed the '248 Patent, the infringement was brought about by Eli Lilly's anti-competitive conduct, namely, its alleged conspiracy with Novopharm to preclude Apotex from access to a non- infringing source of nizatidine.    But for the impugned conduct there would be no infringement says Apotex.    The circumstances differ from those in Procter & Gamble and VISX. There is no question that, in this case, the requirement of a direct link or nexus is established. The amendment is therefore properly made in defence and will be allowed.

[38]            I now turn to the counterclaim, Apotex takes the position that the jurisprudence cited by Eli Lilly, in any case, is commonly raised to strike a defence and has no application to counterclaims. Apotex points out that no leave is required to counterclaim under the present Federal Court Rules, 1998 (the "Rules") and that leave is only necessary, in this case due to the fact that the counterclaim has not been served in timely fashion, in accordance with the Rules.

[39]            I take Apotex' point to this extent. There are no cases cited that have considered a counterclaim for anti-competitive conduct, in the context of a patent infringement action, from the optic of the new Federal Court Rules. Presumably under the new Rules any independent cause of action maybe sustained as a counterclaim that is capable of joinder with the main action. Eli Lilly claims that the claim for damages is in any case not sustainable as nothing has been alleged by Apotex other than the mere exercise by Eli Lilly exercise of its patent rights, within the principle established in Molnlycke, supra. I cannot agree, as the conduct impugned in the present instance goes well beyond what is alleged in Molnlycke.

ADDITION OF NOVOPHARM

[40]            Notwithstanding the able arguments of counsel to the contrary, having regard to the proposed amendments, I conclude that sufficient facts have been alleged to arguably found a claim for breach of the Competition Act, I therefore come to whether Novopharm should be added as a defendant by counterclaim. Apotex correctly points out that, in general, leave of the Court is not required to join a defendant to a counterclaim under Rule 191(1). However, Rule 191(2)(b) requires that the defendant's statement of defence and counterclaim must be served on "the other parties" within 30 days after it is issued. Apotex has not complied with this rule and therefore seeks an extension of time or, in the alternative, an Order for joinder of parties under Rule 104.

[41]            As it appears that Apotex has only recently learned of additional material facts relating to Eli Lilly's and Novopharm's impugned activities, most notably, the existence of a separate voluntary licence from Eli Lilly to Novopharm, the delay in service is explained and justified. In any case, delay alone is not sufficient to preclude a counterclaim that arguably discloses a valid cause of action, or the addition of an otherwise proper party to an action. I am also satisfied on the facts alleged that it is necessary to have Novopharm before the Court in this matter, in order to completely and effectively adjudicate all of the matters in dispute pertaining to the compulsory licence, the supply agreement and the alleged anti-competitive behaviour.

[42]            Having allowed the claim in competition, I will now address the remaining proposed additions to the counterclaim. As mentioned above, the claims for damages in respect of alleged contract and tort violations were withdrawn by Apotex prior to the hearing, and with reason. There is no jurisdiction to grant the relief as requested (see: Innotech Pty. Ltd. v. Phoenix Rotary Spike Harrows Ltd., [1997] F.C.J. No. 855). However, Apotex now urges that the allegations be allowed to remain in the pleading as facts in support of the conspiracy to violate the Competition Act, which falls squarely within the jurisdiction of this Court. In this regard, counsel for Apotex points to Titan Linkabit Corp. v. S.E.E. See Electronic Engineering Inc., (1992), 58 F.T.R. 1 (F.C.T.D.) in which Jerome A.C.J. held as follows:

In my view, the defendants' pleadings only incidentally refer to the contract between the parties and support the defence of non-infringement. The defendants' allegations relating to breach of contract are advanced, not to seek relief for breach of the contract, but in support of the defence of non-infringement. This court is not being asked, as it was in the Blacktop and Flexi-Coil cases, to determine the validity of the contract between the parties, nor to determine whether there has been a breach of the contract. The primary issue remains whether there has been infringement of the plaintiffs' copyright as alleged in their statement of claim; the contractual issue raised by the defendants is not the entire subject-matter of the action and relates to it only incidentally. [emphasis added]

[43]            In so concluding Jerome A.C.J. relied on the following dicta of the Supreme Court of Canada in Kellogg Co. v. Kellogg, [1941] S.C.R. 242:

. . . the Exchequer Court has no jurisdiction to determine an issue purely and simply concerning a contract between subject and subject . . . but here the subject-matter of the appellant's allegation only incidentally refers to the contract of employment . . . The allegation primarily concerns the invention alleged to have been made by him and of which the appellant claims to the owner as a result of the contract and of the other facts set forth in the allegation. The contract and the claims based thereon are advanced for the purpose of establishing that the appellant is entitled both to the rights deriving from the invention and to the issue of a patent in its own name.

  

[44]            Eli Lilly maintains that the allegations ought to be struck as falling instead within the circumstances described by Rouleau J. in R W Blacktop Ltd. v. Artec Equipment Co., (1991) 39 C.P.R. (3d) 432 at 439:

In the present case, this is an action for infringement of the Plaintiffs' patent. The Plaintiffs' allegations relating to breach of contract and breach of fiduciary duty, are not advanced for the purpose of establishing infringement. The subject matter of the Plaintiffs' allegations does not incidentally refer to certain contracts between the parties. Rather, these claims are advanced for the sole purpose of establishing that there was a breach of these contracts. These allegations are not incidental to the cause of action such as to confer jurisdiction on this Court per Kellog [sic] (supra).

  

[45]            In our case, the facts relating to the supply agreement and the alleged conspiracy to breach the agreement are not pleaded for the purpose of enforcing the contract. That is a matter outside the jurisdiction of the Court and for another day. Here, the licence, the supply agreement and breaches thereof are pleaded to support allegations of non-infringement. As such, they are most certainly incidental to the patent infringement. These allegations are made to impugn conduct and to provide the factual basis to ground an action in competition, clearly within the jurisdiction of the Court. As such, the present case comes wholly within the ambit of Titan.

  

[46]            Viewed from another aspect, the alleged conspiracy to induce a breach of the supply agreement, to invalidate the licence, in sum, the allegations in the impugned paragraphs 31 to 35 of the counterclaim, are in essence particulars of the conspiracy to lessen competition. It is on the basis of those allegations that Apotex asserts violations of the Competition Act. As such, I will allow the paragraphs as amended and along with them, the proposed amendments at paragraphs 10 and 11 of the defence that reference the counterclaim.

[47]            An Order will go accordingly.

     

                   "Roza Aronovitch"

Prothonotary

   

Appendix A

  

                                                    FEDERAL COURT OF CANADA

                                                                 TRIAL DIVISION

                              NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                             T-1100-97

STYLE OF CAUSE:                          

ELI LILLY AND COMPANY and

ELI LILLY CANADA INC.

-and-

APOTEX INC.

  

PLACE OF HEARING:                     OTTAWA, ONTARIO

DATE OF HEARING:                       JULY 19, 2002

REASONS FOR ORDER OF MADAM PROTHONOTARY ARONOVITCH

DATED:                                                SEPTEMBER 26, 2002

APPEARANCES:

MR. PATRICK S. SMITH                                                           FOR PLAINTIFFS

MR. DAVID M. SCRIMGER                                                     FOR DEFENDANT

MR. J. ALAN AUCOIN                                                              FOR DEFENDANT "NOVOPHARM LTD" IN

FILE T-1697-01

SOLICITORS OF RECORD:

GOWLING LAFLEUR HENDERSON LLP                              FOR PLAINTIFFS

OTTAWA, ONTARIO

GOODMANS LLP                                                                       FOR DEFENDANT

TORONTO, ONTARIO

BLAKE CASSELS & GRAYDON LLP                                    FOR DEFENDANT

TORONTO, ONTARIO                                                              "NOVOPHARM LTD." IN FILE T-1697-01