Date: 20001106
Docket: T-1272-97
BETWEEN:
MERCK & CO., INC. and
MERCK FROSST CANADA & CO.
Plaintiffs
- and -
APOTEX INC. and
APOTEX FERMENTATION INC.
Defendants
REASONS FOR ORDER and ORDER
TREMBLAY-LAMER J.:
[1] This is an appeal from the Orders of Madam Prothonary Aronovitch rendered December 23, 1999 and May 4, 2000, which collectively disposed of the motion filed by Apotex Inc. ("Apotex") and Apotex Fermentation Inc. ("AFI"), both referred to as the Defendants, on June 10, 1999, as amended November 15, 1999, seeking to either strike or obtain particulars with respect to certain paragraphs of the fourth amended statement of claim filed by Merck & Co. Inc. ("Merck") and Merck Frosst Canada Inc. ("Merck Frosst"), both referred to as the Plaintiffs.
[2] The Plaintiffs commenced their action by statement of claim dated June 12, 1997. The Defendants served the Plaintiffs with a motion on July 24, 1997, seeking to strike the statement of claim or parts thereof, or in the further alternative, seeking an order requiring the Plaintiffs to provide particulars of the specified paragraphs.
[3] The Plaintiffs subsequently served successive amended statements of claim and the Defendants renewed their motion on each occasion to address the deficiencies which allegedly remained in each pleading.
[4] The Orders of Madam Prothonary Aronovitch stemmed from the motion filed by the Defendants in respect to the fourth amended statement of claim. The said statement of claim alleges, amongst others, that the Defendants had infringed a number of claims in Canadian Letters Patent Nos. 1,161,380 and 1,287,639 which relate to certain processes that can be used to make the medicine lovastatin.
[5] The Patent No. 1,161,380 relates to the alleged invention of certain fermentation processes for making lovastatin using the microbe Aspergillus terreus. This Patent identifies a number of optional substituents and process steps that can be used in those processes and contains separate dependants claims for each. The compound lovastatin itself is claimed in process-dependant form.
[6] The Patent No. 1,287,639 relates to the alleged invention of certain processes which can be used to convert lovastatin into a lactone form. This Patent identifies various optional substituents and process sequences and conditions and contains separate dependants claims for each. The lactone form of lovastatin is not itself claimed.
[7] The Defendants, in the motion filed in respect to the fourth amended statement of claim, reduced the number of grounds of objection but maintained that certain fundamental deficiencies had still not been adequately addressed. The motion sought to either strike or obtain particulars with respect to certain paragraphs of the said statement of claim.
[8] The motion filed by the Defendants in respect to the fourth amended statement of claim was heard on December 22 and 23, 1999 and May 3 and 4, 2000.
[9] Madam Prothonary Aronovitch disposed of parts of the motion by Order dated December 23, 1999 which, amongst others, required the Plaintiffs to make amendments indicated in the accompanying Endorsement.
[10] Madam Prothonary Aronovitch disposed of the balance of the motion by Order dated May 4, 2000 which, amongst others, directed the Plaintiffs to provide particulars of certain paragraphs of the fourth amended statement of claim.
[11] Madam Prothonary Aronovitch, in disposing of the motion, declined to strike or order any particulars with respect to five categories of paragraphs, described below, which are the subject of this appeal.
[12] It is trite law that, while a discretionary order of a prothonotary is subject to review by a judge of the Federal Court Trial Division, the order will not be interfered with unless it is clearly wrong, in the sense that it proceeds from a misapprehension of the facts, misapplication of law or otherwise raises questions vital to the final issue of the case.1
[13] If a discretionary order of a prothonotary raise questions vital to the final issue, the exercise of discretion by the prothonotary is entitled to some deference by the judge of the Federal Court Trial Division.2
[14] The standard of review of a discretionary order of a prothonotary on a matter which is not vital to the final issue of the case is similar to the standard exercised by the Federal Court of Appeal when considering a discretionary decision of a judge of the Federal Court Trial Division.3
Description of Defendant AFI's Process
[15] The Defendants allege that the fourth amended statement of claim describes a range of process rights granted by each patent but fails to identify with the requisite precision the actual process or sequence of process steps allegedly used by the Defendant AFI to make lovastatin and to convert lovastatin into a lactone form, or explain how any such process infringes the Patent Nos. 1,161,380 and 1,287,639. The simple recitation of what Patent Nos. 1,161,380 and 1,287,639 claim without a corresponding identification of what it is the Defendant AFI is alleged to have done, according to the Defendants, is insufficient to sustain a reasonable cause of action.
[16] The Plaintiffs first point out that it is noted in the Order of December 23, 1999 that the Plaintiffs had agreed to provide certain particulars requested by the Defendants. The Plaintiffs submit that, in the exercise of her discretion, Madam Prothonotary Aronovitch properly apprehended all the facts and based her decision on the applicable principles of law. The Plaintiffs are of the view that the fourth amended statement of claim sets out sufficient material facts to allow the Defendants to know the cause of action and does not require them to provide further particulars.
[17] I find, after a careful reading of the fourth amended statement of claim, that there are enough material facts to sustain a reasonable cause of action. It is important to remember that, although using my discretion I may have ordered more particulars on that point, I should not interfere on appeal with a discretionary order of a prothonotary unless the order is clearly wrong, in the sense that the order proceeds from a misapprehension of the facts, misapplication of law or otherwise raises questions vital to the final issue of the case.
[18] The processes disclosed and claimed in Patent Nos. 1,161,380 and 1,287,639 comprise a number of different process or process steps. The Plaintiffs allege that the Defendant AFI made lovastatin and converted lovastatin into a lactone form, starting on certain dates, by infringing Patent Nos. 1,161,380 and 1,287,639, through the different processes steps provided by the patents. This is enough for the Defendants, both pursuing activities in the pharmaceutical area, to know the cause of action and does not require the Plaintiffs to provide further particulars:
| The plaintiffs cannot be expected to give particulars as to the precise method employed by the defendants, at least before discovery.4 |
[19] The Plaintiffs are not required to provide a detailed roadmap which goes beyond laying out the particular cause of action and defines the nature of the case the Defendants have to meet.5 I find that Madam Prothonotary Aronovitch did not err in law or in principle.
Liability of Defendant Apotex for Activities of Defendant AFI
[20] The Defendants submit that the fourth amended statement of claim fails to set out the requisite material facts to establish how the Defendant Apotex is directly liable for infringing either Patent No. 1,161,380 or Patent No. 1,287,639 as a consequence of the alleged activities of the Defendant AFI, a separate and distinct corporate entity.
[21] The Plaintiffs argue that there exists sufficient material facts to support the conclusion that the Defendant Apotex authorized, directed and controlled the activities of the Defendant AFI and is therefore liable. In the Order of May 4, 2000, Madam Prothonotary Aronovitch noted that the Plaintiffs had provided an affidavit of its president Bernard Sherman to support this conclusion. Madam Prothonotary Aronovitch also referred to paragraphs of the third amended statement of claim, which were voluntarily removed at the request of the Defendants, which also supported this conclusion.
[22] Madam Prothonotary Aronovitch ordered that the information contained in the affidavit of Bernard Sherman and in the relevant paragraphs of the third amended statement of claim be provided by way of particulars which was done by letter dated May 17, 2000.6
[23] The tests to determine whether or not a corporation has induced another to infringe is stated in Warner-Lambert:
| (a) plaintiff wishing to rely on the doctrine of infringement by inducement must allege and prove: |
| 1) That the act of infringement was completed by the direct infringer [...] |
| 2) Completion of the act of infringement was influenced by the acts of the inducer. Without said influence, infringement would not otherwise take place [...] |
| 3) The influence must knowingly be exercised by the seller, i.e. the seller knows his influence will result in the completion of the act of infringement.7 |
[24] In the present matter, I find that the material facts provided in the form of particulars ordered by Madam Prothonotary Aronovitch, including an admission by the president of the Defendant Apotex, if proven, provide support for the conclusion that the Defendant Apotex authorized, directed and controlled the activities of the Defendant AFI and would therefore liable.
Allegation of Sale
[25] The Defendants allege that the fourth amended statement of claim asserts as discrete acts of infringement the sale of lovastatin by the Defendants using different microbial fermentation processes, which the Defendants strongly deny.
[26] The Defendant Apotex received its Notice of Compliance from the Minister of Health on March 26, 1997, permitting the Defendant Apotex to sell lovastatin produced by a process using the micro-organism Coniothyrium fuckelii.
[27] The fourth amended statement of claim, according to the Defendants, asserts that the Defendants sold lovastatin before the Notice of Compliance was granted by the Minister and that the Defendants sold lovastatin made by different microbial fermentation processes after receiving the Notice which did not use Coniothyrium fuckelii, thereby constituting a serious violation of the Food and Drugs Act and the accompanying regulations.
[28] The Defendants further submit that this assertion is done without providing any material facts to support the allegations, or the particulars of any such infringing sales. The Defendants argue that Madam Prothonotary Aronovitch erred in law and in principle when she failed to order the Plaintiffs to provide particulars after March 26, 1997, to support the allegations that the Plaintiffs were selling lovastatin made by a number of different microbial fermentation processes which the Minister had never approved. The Defendants also take the position that Madam Prothonotary Aronovitch erred in law and in principle in allowing such brazen allegations of public misconduct to stand unsupported.
[29] The Plaintiffs submit with respect to the allegation of sale, that the position of the Defendants is erroneous because the Food and Drugs Act and the accompanying regulations do not require a Notice of Compliance for every sale of lovastatin. Also, Madam Prothonotary Aronovitch ordered the Plaintiffs to provide particulars of sales of lovastatin by the Defendants prior to the issuance of the Notice of Compliance; these particulars were provided to the Defendants.
[30] First, with regards to the alleged violation of the Foods and Drugs Act and Regulations, the Act and Regulations do not require a Notice of Compliance for every sale of lovastatin; section 2 of the Act and article C.08.002(1) of the Regulations do not apply to sales of lovastatin other than to Canadian public for use as a drug.
[31] Second, regarding the sale of lovastatin prior to the issuance of the Notice of Compliance by the Minister, I find that they are sufficient material facts in support of the allegations made by the Plaintiffs following the Order of Prothonotary Aronovitch to provide such particulars.
[32] Third, regarding the sale of lovastatin after to the issuance of the Notice of Compliance by the Minister, the fourth amended statement of claim does not disclose facts to support the allegations that the Defendants continued to sell lovastatin made by any unapproved process after March 26, 1997. Simply stating that the Defendants have offered for sale and sold an allegedly infringing article is insufficient.8
[33] The Prothonotary Aronovitch did not require the Plaintiffs to provide particulars of any sales made by the Defendants after the issuance of the Notice of Compliance. Therefore, the Prothonotary erred in law.
Compensation for Damages
[34] Paragraph 104B of the fourth amended statement of claim deals with compensation for damages not encompassed in the sales made by the Defendants. More particularly, the paragraph alleges that the Defendants have obtained a considerable technology and know-how for the fermentation and extraction of lovastatin by reason of the infringing activities of the Defendants with Aspergillus terreus or mutants thereof.
[35] The Defendants submit that the Plaintiffs are advancing a quasi-restitutionary claim for damages in addition to a claim for all damages consequent upon infringement. The Defendants are of the view that restitutionary compensation is an alternative to compensatory damages; one form of compensation cannot be used to supplement another.
[36] The Plaintiffs submit that the allegations relating to the technology and know-how gained by the Defendants are relevant to determine the remedies available to them. The Plaintiffs argue that they are entitled to seek compensation for all loses, including those alleged in paragraph 104B of the fourth amended statement of claim, and that the question should be decided by the trial judge.
[37] I agree with the Plaintiff that, in some instances, damages based on infringing activity alone may not provide full compensation.9 Thus, it would not be appropriate, at this stage, to strike the allegation because it raises an arguable cause of action, as the pleading is not forlorn or futile.10 It is for the trial judge to determine whether or not the Plaintiffs are entitled to receive the compensation sought. I find that Madam Prothonotary Aronovitch did not err in deciding not to strike paragraph104B of the fourth amended statement of claim.
In Rem Injunction
[38] In paragraph E(i) of the fourth amended statement of claim, the Plaintiffs seek, amongst others, an injunction restraining the Defendants, their affiliated companies, directors, officers, servants, employees, representatives, agents and otherwise, or anyone aware of the Order, from undertaking the acts subsequently identified.
[39] The Defendants allege that the fourth amended statement of claim requests an entitlement to an in rem permanent injunction against unidentified and unknown persons and parties. The Defendants take the position that this Court has no jurisdiction to enjoin the activities of unnamed persons who have not been given an opportunity to appear and present evidence in the proceedings in which the injunction is to be issued.
[40] The Plaintiffs argue that the Defendants have no basis to strike the prayer for injunction at this stage; the Defendants are free however to submit argument to the trial judge as to the appropriate scope of the injunction. The Plaintiffs, at this stage, are simply giving notice of the relief they will be seeking after trial.
[41] The Supreme Court of Canada has recently decided whether or not courts have jurisdiction to make orders (interim injunction) binding on non-parties. In MacMillen Bloedel, McLachlin J., as she then was, writing for an unanimous court, stated that:
| [...] I note, however, that where a final injunction is in issue, some cases suggest that caution should be exercised in including non-parties in the terms of the order: Sandwich West (Township) v. Bubu Estates Ltd. (1986), 30 D.L.R. (4th) 477 (Ont. C.A.); see also Marengo, supra. Subject to this caveat and other considerations bearing on the special circumstances of the case, the proposition that the courts possess inherent jurisdiction to issue injunctions to restrain large-scale public action violative of private rights enjoys wide recognition.11 |
[42] I find that it is for the trial judge to determine whether or not the Plaintiffs are entitled to such permanent injunction. It would not be appropriate, at this stage, to strike the allegation as it is not forlorn or futile.12 I note, in passing, that this Court has previously issued a permanent injunction in the form sought by the Plaintiffs in Avant-Garde Engineering.13 I conclude therefore that Madam Prothonotary Aronovitch did not err in refusing to strike the prayer for injunction.
O R D E R
[43] The appeal is allowed in part. The Plaintiffs are ordered to provide particulars within 30 days of the date of this Order, to support the allegations that the Defendants were continuing to, after the issuance of the Notice of Compliance, simultaneously sell lovastatin made by a number of different processes which the Minister of Health had never approved for sale.
[44] The cost of this motion shall be in the cause.
"Danièle Tremblay-Lamer"
JUDGE
OTTAWA, ONTARIO
November 6, 2000
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1272-97
STYLE OF CAUSE: MERCK & CO., INC. ET AL. v. APOTEX INC. ET AL.
PLACE OF HEARING: MONTRÉAL
DATE OF HEARING: OCTOBER 31, 2000
REASONS FOR ORDER AND ORDER OF TREMBLAY-LAMER, J.
DATED: NOVEMBER 6, 2000
APPEARANCES:
BRIAN DALEY FOR PLAINTIFFS
DAVID SCRIMGER FOR DEFENDANT
APOTEX INC.
JOHN MYERS FOR DEFENDANT
APOTEX FERMENTATION INC.
SOLICITORS OF RECORD:
OGILVY RENAULT FOR PLAINTIFFS
MONTRÉAL
GOODMAN PHILLIPS & VINEBERG FOR DEFENDANT
TORONTO APOTEX INC.
TAYLOR McCAFFREY FOR DEFENDANT
WINNIPEG APOTEX FERMENTATION INC.
__________________1 Canada v. Aqua-Gem Investments Limited, [1993] 2 F.C. 425 (F.C.A.) at 463.
3 James River Corp. of Virginia v. Hallmark Cards Inc. (1997), 126 F.T.R. 1 (F.C.T.D.) at 3.
4 Dow Chemical Co. v. Kayson Plastics and Chemicals Ltd. (1966), 47 C.P.R. 1 (Ex. Ct.) at 7-8.
5 See , e.g., Merck & Co. v. Nu-Pharm Inc., (23 May 2000), Court File No. T-753-99 (F.C.T.D.), where a very similar argument was made by counsel for the Defendant but rejected by the Court. See also Hirsh Co. v. Minshall et al. (1988), 22 C.P.R. (3d) 268 (F.C.A.) at 268-269.
6 Plaintiff's Motion Record, Tab 2.
7 Warner Lambert Co. v. Wilkinson Sword Canada Inc. (1988), 19 C.P.R. (3d) 402 (F.C.T.D.) at 407.
8 See, e.g., Windsurfing International Inc. v. Maurice Oberson Inc. (1987), 18 C.P.R. (3d) 91 (F.C.T.D.).
9 See, e.g., Baker Hughes Inc. v. Galvanic Analytical Systems Ltd. (1991), 37 C.P.R. (3d) 512 (F.C.T.D.) at 515.
10 See, e.g.,Burnaby Machine & Mill Equipment Ltd. v. Berglund Industrial Supply Co. Ltd. et al. (1982), 64 C.P.R. (2d) 206 (F.C.T.D.) [hereinafter "Burnaby Machine & Mill Equipment"].
11 MacMillan Bloedel Ltd. v. Simpson, [1996] 2 S.C.R. 1048 at 1064-1066.
12 See, e.g.,Burnaby Machine & Mill Equipment Ltd., supra note 10.
13 Avant Garde Engineering (1994) Co. v. Gestion de Brevets Fraco, (7 May 1998), Court File No. T-309-95 (F.C.T.D.).