Ottawa, Ontario, June 30, 2006
PRESENT: The Honourable Madam Justice Heneghan
BETWEEN:
and
REGISTRAR OF TRADE-MARKS
REASONS FOR ORDER AND ORDER
[1] Eli Lilly and Company (the "Applicant") appeals from the decision of the Registrar of Trade-Marks (the "Registrar") with respect to the decision of the Trade-marks Opposition Board (the "Board"), dated November 9, 2004. In that decision, the Applicant's application for registration of a trade-mark was refused, on the basis of a Statement of Opposition that had been submitted by Novopharm Limited (the "Respondent"). This appeal is taken pursuant to section 56 of the Trade-
Marks Act, R.S.C. 1985, c. T-13, as amended (the "Act") and the Federal Courts Rules, SOR/98-106 (the "Rules").
II. Background
A. The Parties
[2] The Applicant is a pharmaceutical manufacturer. It was the owner of Canadian Patent 1,051,034 (the "Patent") for, among other things, a specific compound that is fluoxetine hydrochloride. That substance is the active ingredient in a pharmaceutical preparation used for the treatment of depression. The Applicant sold the product in association with the trade-mark PROZAC; this was the first drug in the pharmaceutical class known as Selective Serotonin Re-Uptake Inhibitors ("SSRI").
[3] The Respondent is a pharmaceutical manufacturer engaged in the production and sale of generic pharmaceutical products, including a generic version of fluoxetine hydrochloride.
B. The Opposition Proceedings
[4] On May 26, 1995, the Applicant filed an application to register a trade-mark relative to its 20 mg capsule dosage of PROZAC, as follows:
... The trade-mark consists of the colours pale green and whitish yellow applied to the whole of the visible surface of the capsule, as shown in the specimens affixed to the application. The capsule shown in the dotted outline does not form part of the trade-mark.
[5] The application was advertised in the Trade-marks Journal on April 24, 1996. The Respondent opposed the application and filed a Statement of Opposition on September 24, 1996. The amended Statement of Opposition set out various grounds to subsections 38(2)(a), 38(2)(b) and 38(2)(d) as follows:
A. The Opponent bases its opposition on the grounds provided by Section 38(2)(a) of the Trade-Marks Act (hereinafter "the Act"), namely that application no. 783,742 filed by the Applicant does not conform to the requirements of Section 30 of the Act in that, contrary to Section 30:
1. The trade-mark has not been used in association with the wares described in the application since the date claimed;
2. The Applicant could not have been satisfied that it was entitled to use the alleged trade-mark in Canada, pursuant to section 30(i) of the Act as the Applicant did not intend to use the colours pale green and whitish yellow for the purpose of distinguishing its wares from those of others;
3. The Application does not include a drawing of the alleged trade-mark as used by the Applicant. Any alleged trade-mark of the Applicant includes size, shape, colour and markings which are not displayed on the drawings, namely "Lilly", "Prozac", the dosage 20 mg, and an identification number. The trade-mark description being "Colours pale green and whitish yellow applied to the whole of the visible surface of the capsule, as shown in the specimens affixed to the application", is not descriptive of the elements of the alleged trade-mark; and
4. The Applicant could not have been satisfied that it was entitled to use the alleged trade-mark in Canada, pursuant to Section 30(i) of the Act, as the alleged trade-mark is not a trade-mark, being functional, indicative of dosage and in view of the use by others of confusingly similar appearances;
B. The Opponent bases its opposition on the grounds provided by Section 38(2)(b) of the Act, namely that the Applicant's alleged trade-mark is not registrable, in that:
1. It is not a trade-mark and it is not a distinguishing guise within the meaning of Section 2 of the Act;
2. It is not registrable pursuant to Section 12(1)(b) of the Act, in that the trade-mark sought to be registered is clearly descriptive of the wares set out in the application, namely a pharmaceutical preparation in the form of the capsule;
C. The Opponent bases its opposition on the grounds provided by Section 38(2)(d) of the Act, namely that the Applicant's alleged trade-mark consisting of the appearance of its fluoxetine hydrochloride capsules is not distinctive:
1. In that is [sic] does not distinguish, nor is it adapted to distinguish, the Applicant's wares from those of others; pale green and whitish yellow capsules were and are at all material times common to the trade and had been used by others so that the wares of the Applicant are not and cannot be distinguished from others, inter alia, the tablets of:
a) Apotex, namely Apo-Fluoxetine 10 mg
b) Pharmascience Inc., namely PMS-fluoxetine 10 mg
c) Nu-Pharm Inc., namely Nu-Fluoxetine 10 mg
d) Pfizer Canada Inc., namely Lithane 300 mg
e) Rhone-Poulenc Rorer, namely Orudis 50 mg
f) Hoechst-Roussel, namely Rythmodan 100 mg.
2. The Applicant was the owner of Canadian Patent No. 1,051,034 which issued on March 20, 1979; a specific compound covered by this patent was fluoxetine chloride. This patent expired on March 26, 1996. The purported trade-mark of the Applicant can not have become distinctive of the Applicant at the date of the filing of this Application.
3. The Registrar is without jurisdiction to advertise the subject Application since the Registrar has not required the Applicant to establish distinctiveness of the mark in that it is a distinguishing guise. In fact being directed to the shape of the product and is of such a nature that the exclusive use by the Applicant is likely to unreasonably limit the development of the pharmaceutical industry, pursuant to Section 13(3) of the Act, and is an attempt to extend monopoly patent rights.
[6] The matter proceeded to a hearing before the Board. The Applicant filed the affidavits of Dr. Paul Stephan, Family Physician; Dr. George Salib, Obstetrician and Gynaecologist; Dr. Barry Jones, Physician; Ms. Donna Coady, patient; Mr. Robert E. Lee, Trademark/Senior Assistant General Patent Counsel for Eli Lilly and Company in the United States; Mr. Barry Fishman, Director of Operations at Eli Lilly Canada; Jennifer Clarke, patient; Lauri Bingham, patient; Bonny-Lynn Salo, patient; Colin Burrell, Head of Regulatory Affairs at Eli Lilly Canada Inc. (retired); Douglas Fyfe, lawyer; Robert W. White, Senior Vice-President of the Audit Bureau of Canada; Ned Benson, Pharmacist and Sales Representative for Eli Lilly and Company in the United States; and Dr. David Pye, Market Researcher.
[7] The Respondent also submitted affidavit evidence, that is the affidavits of Janet Brown, Market Researcher; Dr. Douglas C. Weir, Psychiatrist; Dr. Sam Ozersky, Psychiatrist; Dr. Susan Lieff, Academic Geriatric Psychiatrist; David Milovanovic, Pharmacist; Phil Reed, Pharmacist; and Dr. John Liefeld, Professor of Consumer Studies at University of Guelph.
[8] As well, the Respondent filed certified copies of the file relating to the Applicant's trade-mark application, a copy of the judgment delivered by Madam Justice Reed in cause number T-2432-95, reported as Eli Lilly and Co. v. Novopharm Ltd. (1997), 73 C.P.R. (3d) 371 (F.C.T.D.) (the "Passing Off Decision") and a copy of the Patent.
C. The Board's Decision
[9] The Board began its decision by setting out a brief history of the opposition proceedings. It referred to the affidavit evidence that had been submitted by each party and commented on the length of the hearing, that is over four days.
[10] It then moved on to discuss the Applicant's patent for the compound fluoxetine hydrochloride. The patent expired on March 26, 1996. From the alleged date of first use of the mark, that is January 1989, until March 1996, the Applicant was the only Canadian source of fluoxetine hydrochloride that was sold in a half pale green and half whitish yellow capsule, except for the period beginning in November 1996 when a licence was granted to Pharmascience for the sale of a generic brand of fluoxetine hydrochloride in association with that mark.
[11] The Board reviewed the history of the litigation between the parties, beginning with the passing off action commenced by the Applicant in 1995. On March 21, 1996, the Applicant obtained an interim injunction prohibiting the Opponent and other generic drug manufacturers from advertising, distributing or selling fluoxetine hydrochloride in "green/whitish yellow or green/pale grey capsules". On April 16, 1996 interlocutory injunctions were subsequently granted against three generic drug manufacturers, including the Respondent; see Eli Lilly and Co. v. Novopharm Ltd. (1996), 67 C.P.R. (3d) 173 (F.C.T.D.) (the "Injunction Decision").
[12] Subsequently, the Respondent entered the market with different coloured capsules, that is all cream for the 20 mg dosage form for fluoxetine hydrochloride. The Statement of Opposition was filed on September 24, 1996 and on September 25, 1996 the Federal Court of Appeal vacated the interlocutory injunction; see Eli Lilly and Co. v. Novopharm Ltd. (1996), 69 C.P.R. (3d) 455 (F.C.A.).
[13] In a judgment dated April 25, 1997, Madam Justice Reed dismissed the passing off action; see the Passing Off Decision. This judgment was upheld by the Federal Court of Appeal in Eli Lilly and Co. v. Novopharm Ltd. (2000), 10 C.P.R. (4th) 10 (F.C.A.), except on the issue of licensing. Leave to appeal to the Supreme Court of Canada was not granted; see [2001] S.C.C.A. No. 100 (QL).
[14] The Board acknowledged that the combined effect of the Applicant's patent and the issuance of the interim and interlocutory injunctions was to preclude use of any confusing trade-marks as between the Applicant's proposed trade-mark and the products of the generic drug manufacturers until the injunctions were vacated. That happened on September 25, 1996, the day after the Statement of Opposition had been filed.
[15] Following the dismissal of the passing off action by Justice Reed, the Respondent sought an order to stay the opposition proceedings, on the basis of res judicata. In a decision dated November 11, 1998, Madam Justice Tremblay-Lamer dismissed the prohibition application since there was an outstanding appeal from the decision of Justice Reed: Novopharm Ltd. v. Eli Lilly and Co. (1998), 84 C.P.R. (3d) 292 (F.C.T.D.) (the "Prohibition Decision").
[16] Before beginning the analysis of the relevant and admissible evidence submitted by the parties, the Board addressed, as preliminary matters, two evidentiary issues that had been raised in the hearing. The first related to the attempt by the Respondent, as the Opponent before the Board, to introduce in evidence the transcripts of the examination of Ms. Bingham in the trial proceedings before Justice Reed in the passing off action. The Board said that this transcript had been rejected as evidence in the Opposition proceedings on the ground that it had not been established that Ms. Bingham had made contradictory statements in her evidence before the Board, that is in her affidavit and subsequent cross-examination, in respect of her evidence at trial.
[17] Next, the Board dealt with the issue of the admissibility of the affidavit of Dr. Pye. He had been asked to comment on three surveys that were attached as exhibits to his affidavit, that is surveys conducted by Environics Research Group Limited, Market Facts Canada Limited (the "Liefeld Fenwick survey"), and CanTest ("CanTest" or "Heeler").
[18] First, the Board dealt with the objection raised by the Respondent concerning the admissibility of the transcript of Dr. Pye's re-examination. This was conducted by the Applicant in the absence of counsel for the Respondent. The Respondent had asked the Board to strike the entire affidavit of Dr. Pye from the record, on the basis of improper conduct. The Board declined to strike the affidavit and stated it would not consider the evidence obtained on the re-examination since that re-examination occurred in the absence of a representative of the Respondent.
[19] Then the Board proceeded to address the question of the admissibility of Dr. Pye's affidavit in response to an objection that it contained hearsay evidence. Dr. Pye purported to base his expert opinion on the following materials:
i) an affidavit of Dr. Liefeld that had been filed in the passing off action, containing the results and comments on the Market Facts survey;
ii) an affidavit of Dr. Heeler that had been filed in the passing off action, containing the results and comments on the CanTest survey; and
iii) the contents of the affidavit of Janet Brown to which was appended the results of the survey conducted by Environics Research Group Limited.
[20] No affidavits were filed in the opposition proceedings by Dr. Liefeld or Dr. Heeler concerning the conduct of the surveys attached to Dr. Pye's affidavit. Consequently, there was no opportunity for cross-examination. In the cross-examination Dr. Pye said that he did not participate in either of these surveys nor did he review the raw data that had been collected and upon which Dr. Liefeld and Dr. Heeler based their conclusions.
[21] The Board acknowledged the arguments that had been advanced by the parties concerning the hearsay nature of Dr. Pye's evidence. The Respondent argued that the evidence did not meet the criteria for admissibility, that is reliability and necessity, having regard to the decisions of the Supreme Court of Canada in R. v. Khan, [1990] 2 S.C.R. 531 and R. v. Smith, [1992] 2 S.C.R. 915. The Registrar concluded that the opinion of Dr. Pye was based on double hearsay and was inadmissible on that basis. Further the Registrar rejected the greater part of Dr. Pye's evidence on the grounds that it was unresponsive, as appears from the following comment:
Should I be wrong on the admissibility of Exhibits A and B to Dr. Pye's affidavit, I find in any event that the comments made by Dr. Pye on those exhibits are not very credible for the reasons outlined in the reply affidavit evidence of Dr. John Liefeld. I also based my decision on my reading of Dr. Pye's cross-examination wherein, on numerous occasions, he was not answering the questions asked or would provide a long answer in which he would simply try to avoid the issue raised by the question asked. This behaviour was one of the reasons as to why a cross-examination scheduled for one day was extended over a period of seven days.
[22] The Board referred to the Applicant's submissions that the Pye evidence was admissible pursuant to the decision in Saint John (City) v. IrvingOil Co., [1966] S.C.R. 581. The Board rejected this argument and said that the Liefeld and Heeler surveys, attached as exhibits to the affidavit of Dr. Pye, would not be considered. The comments of Dr. Pye in his direct examination and cross-examination on the surveys would likewise not be considered. However, the opinion of Dr. Pye concerning the affidavit of Ms. Brown and the Environics survey would be admissible. In this regard, the Board said that the affidavit of Ms. Brown was part of the record in the opposition hearing and consequently, the survey evidence attached to her affidavit met the requirement for admissibility as set out in Saint John(City). The only survey that was considered by the Board was the Environics survey.
[23] In any event, the Board provided an alternative basis for excluding the Liefeld and Huber surveys that were attached as exhibits to Dr. Pye's affidavit. It found that Dr. Pye's evidence with respect to those surveys was "not very credible for the reasons outlined in the reply affidavit evidence of Dr. John Liefeld". This reply affidavit was filed for the purpose of providing a review and commentary on the affidavit of Dr. Pye. A negative comment was also made about the manner in which Dr. Pye responded to questions during his cross-examination.
[24] The Board commented on the evidence submitted by doctors, pharmacists and patients. It noted that three of the four patients had experienced adverse reactions to a generic drug and concluded that these individuals were not representative of the typical Canadian consumer of the generic version of the medication PROZAC. The Board said that, in consequence, little weight would be assigned to the evidence of these patients.
[25] It noted, as well, that there was uncontradicted evidence that patients, that is those who had submitted affidavits for use in the Opposition proceedings, relied on the colour of the medication to associate the medication with the problem to be treated by their use. The Board used the example of associating "my blue pill for my cholesterol problem", and concluded that this did not establish an association between the medication and its source of supply.
[26] The Board commented on the evidence of pharmacists. Mr. Milovanovic, a pharmacist who provided an affidavit on behalf of the Respondent, stated in his cross-examination that, as of the date of his cross-examination that is April 30, 1998, there were other fluoxetine hydrochloride
capsules on the Canadian market in the same get-up as the mark, produced by Pharmascience, the Respondent, Apotex and Nu-Pharm.
[27] Mr. Reed, a pharmacist who filed an affidavit on behalf of the Respondent, testified in cross-examination that the patient receives the medication in a vial upon which appears either the name of the manufacturer or a code that is associated with the name of the medication. The pharmacists rely on colour, shape and size of the capsule as sources of useful safety information that, together with the markings on the capsules, allow them, when required, to identify the type of the medication and its manufacturer.
[28] The Board observed that the Applicant had resisted the efforts made by the Respondent to introduce evidence of any use, after the filing of the Statement of Opposition, of the mark by third parties in connection with fluoxetine hydrochloride. It said that there was some evidence of use of similar colours, as identified in the mark, prior to the filing date of the Statement of Opposition, in association with Lithane, Orudis and Rythmodan, but there was no evidence as to the extent of their use in Canada nor for what time frames. These drugs can be prescribed and consumed at the same time as the 20 mg capsule of PROZAC.
[29] In light of the Board's ruling as to the admissibility of Dr. Pye's evidence about the Liefeld and Heeler surveys and the use of these surveys that were attached as exhibits to his affidavit, there remained the Environics survey. The reply affidavit of Dr. Liefeld responded to Dr. Pye's evidence but the Board determined that since a large part of the Pye evidence was excluded from the record,
he would not consider the survey results appended to the Liefeld reply affidavit. However, general statements relating to survey evidence and the Environics survey would be considered.
[30] The Board described the purpose and effect of the Environics survey as follows:
The purpose of the Environics' survey was to measure:
(a) The incidence in the Canadian public of those who associate a half-green and half-whitish yellow capsule with the medication Prozac; and
(b) The incidence in the Canadian public of people who are aware that PROZAC is a brand of drug manufactured by one company.
The results of the Environics' survey showed that 1.4% of Canadians think a half-green and half-whitish-yellow capsule means PROZAC. Of this 1.4% fewer than 4 in 10 (38.4%) think one company makes the medication PROZAC. In other words, just one half of one percent (0.5%) of Canadians think a half-green and half-whitish-yellow capsule means a drug called PROZAC, made by one company.
[31] The Board addressed the issue of res judicata that had been raised by the Respondent in the Opposition Proceedings. It acknowledged the findings of fact made by Justice Reed in the Passing Off Decision and said that it felt bound to adopt the factual findings on issues where the evidence appeared to be similar if not identical. It also acknowledged the comments of Justice Tremblay-Lamer in paragraph 40 of the Prohibition Decision where she said the following:
40. Although this point is not necessary to decide the matter before me, I am of the opinion that res judicata should apply to opposition boards, but only where the pre-conditions are satisfied. However, on a practical level, I note that the number of technical differences in this area of the law will render the principle of little relevance.
[32] The Board referred to the Respondent's arguments concerning res judicata and its reliance on the decisions in Canadian Shredded Wheat Co. v. Kellogg Co. of Canada, [1939] Ex. C.R. 58, aff'd., [1939] S.C.R. 329. It distinguished the result in the Shredded Wheat case from the current proceedings and pointed out that the passing off action required demonstration that the mark acquired a reputation. In an opposition proceeding where lack of distinctiveness is an issue, the applicant must show that the mark meets the statutory definition of "distinctive".
[33] The Board quoted extensively from the Passing Off Decision of Justice Reed in which she reviewed the requirements of a successful passing off action. It concluded that, although there may be some similarities between the passing off action and the opposition proceedings, different legal issues arise as appears from the Statement of Opposition. It determined that the doctrine of res judicata did not dispose of the proceedings before him.
[34] The Board reviewed the general principles applicable to the opposition proceedings. It noted that the Applicant must show that its application satisfies the requirements of section 30 of the Act, then the initial evidential burden shifts to the Respondent, as Opponent, to prove the facts upon which it relies to support its opposition. Once this burden has been met, the Applicant must prove, on a balance of probabilities , that the specific grounds of opposition should not preclude registration of the Mark. The Board cited the decisions in Joseph E. Seagram & Sons Ltd. et al. v.
Seagram Real Estate Ltd. (1984), 3 C.P.R. (3d) 325 (T.M.O.B.) and John Labatt Ltd. v. Molson Companies Ltd. (1990), 30 C.P.R. (3d) 293 (F.C.T.D.).
[35] The Respondent argued before the Board that the Applicant had received the benefit of an injunction that was subsequently vacated. The existence of the injunction meant that the Applicant could preclude the entry of generic fluoxetine hydrochloride on to Canadian markets after the expiry of its patent, available for sale in the same trade dress described in the application, when the Statement of Opposition was filed. The Board concluded that this was not a basis for divergence from the jurisprudence that the relevant date for assessing distinctiveness is the date of filing of the Statement of Opposition. It further observed that there was no evidence in the record that, in the absence of the injunction, generic drugs would have been on the market the day after the expiry of the Patent with the same or similar trade dress that is described in the trade-mark registration application.
[36] Although the Respondent advanced arguments that the relevant date should be the date of the decision of the Board, this submission was not accepted, as appears from the following:
The Board since Andres Wines Ltd. has always determined the issue of distinctiveness as of the date of filing of the Statement of Opposition. I do not see why I should depart myself from this main line of jurisprudence.
[37] The Board reviewed the principles applicable to the registration of shape and colour of tablets or capsules as trade-marks. Reference was made to the decision in Novopharm Ltd. v. Bayer Inc. (1999), 3 C.P.R. (4th) 305 (F.C.T.D) ("Bayer"), aff'd. (2000), 9 C.P.R. (4th) 304 (F.C.A.) as well as other jurisprudence. It made it clear that a distinction must be made from the use of the trade-mark PROZAC, that is the word from the use of the proposed mark that deals with the colour and shape of the 20 mg capsule.
[38] The Board proceeded to analyse and discuss the three grounds of opposition. It rejected the first ground of opposition, in part because the Respondent had failed to meet its initial evidentiary burden in relation to the second allegation in the first ground.
[39] The Board dismissed the second ground of opposition, dealing with the allegation that the mark is not a trade-mark and is not a distinguishing guise on the basis that the mark is a proper subject for trade-mark registration and consequently, an issue of distinguishing guise is irrelevant.
[40] The Board addressed the three separate elements of the third ground of opposition in reverse order. The third element dealt with the Respondent's argument that the mark should be considered as a distinguishing guise. This submission was rejected because it was directly contrary to an earlier argument that was advanced and dismissed.
[41] In the second element of the third ground of opposition, the Respondent alleged that since the Patent provided exclusive rights to the Applicant, the mark could not act to distinguish the wares from those of others, since there could be no third parties selling fluoxetine hydrochloride during the term of the patent. This ground of opposition was rejected on the basis of the decision in Bayer.
[42] The first element of the first ground of opposition dealt with distinctiveness and provides as follows:
C. The Opponent bases its opposition on the grounds provided by Section 38(2)(d) of the Act, namely that the Applicant's alleged trade-mark consisting of the appearance of its fluoxetine hydrochloride capsules is not distinctive:
1. In that is [sic] does not distinguish, nor is it adapted to distinguish, the Applicant's wares from those of others; pale green and whitish yellow capsules were and are at all material times common to the trade and had been used by others so that the wares of the Applicant are not and cannot be distinguished from others, inter alia, the tablets of:
a) Apotex, namely Apo-Fluoxetine 10 mg
b) Pharmascience Inc., namely PMS-fluoxetine 10 mg
c) Nu-Pharm Inc., namely Nu-Fluoxetine 10 mg
d) Pfizer Canada Inc., namely Lithane 300 mg
e) Rhone-Poulenc Rorer, namely Orudis 50 mg
f) Hoechst-Roussel, namely Rythmodan 100 mg.
[43] The Board first considered whether the Respondent had presented sufficient evidence to meet its initial burden when the onus would shift to the Applicant to show that the mark is distinctive and likely to distinguish its wares from those of others.
[44] The Board found that there was use of the mark by Pharmascience in association with the wares and that, pursuant to section 50 of the Act, this is deemed use of the mark by the Applicant. Item (b) of the first element of the third ground on opposition was rejected.
[45] The Board found that there was no evidence in the record to show use by third parties, as of the date of filing of the Statement of Opposition, of a trade dress with the characteristics described in the registration application, in association with the wares. It concluded that the Respondent had failed to meet its evidentiary burden with respect to items (a) and (c) of the first part of the remaining ground of opposition. It then proceeded to address items (d), (e) and (f), that is the lack of distinctiveness with respect to Lithane 300 mg, Orudis 50 mg and Rythmodan 100 mg.
[46] First, the Board referred to evidence of Dr. Stephen, a family physician and Dr. Salib, an obstetrician and gynaecologist who also operates a family practice. Both provided affidavit evidence on behalf of the Applicant. In cross-examination, they said that as of the filing date of the Statement of Opposition, Lithane, Orudis and Rythmodan were prescribed in Canada and were sold in green and ivory/beige or yellow capsules. The Board noted that, according to the uncontradicted evidence, Lithane is an antimanic agent, Orudis is an anti-inflammatory, and Rythmodan is an antiarrhythmic agent. These medications can be prescribed and taken by a patent at the same time as the fluoxetine hydrochloride. These medications are referenced in the Compendium of Pharmaceuticals and Specialties, 1996.
[47] On the basis of the evidence submitted, the Board concluded that the Respondent had met its burden and the onus shifted to the Applicant to show, on a balance of probabilities, that the mark meets the statutory requirement of distinctiveness.
[48] The Board began the analysis in this regard by considering the relevant population, in light of the decision of the Supreme Court of Canada in Ciba-Geigy Canada Ltd. v. Apotex Inc., [1992] 3 S.C.R. 120 ("Ciba-Geigy"). It concluded that the Applicant was required to show, upon a balance of probabilities, that the mark was distinctive among these groups, that is physicians, pharmacists and patients. It did not accept the view that the use of the word "or" in Novopharm Ltd. v. AstraZeneca AB et al. (2000) 28, C.P.R. (4th) 129 (F.C.T.D.) and Apotex Inc. v. Monsanto Canada, Inc. (2000), 6 C.P.R. (4th) 26 (F.C.T.D.) would lead to the conclusion that the Applicant was required to show distinctiveness in relation to only one of these groups.
[49] On the basis of the evidence submitted, the Board concluded that the Applicant had failed to discharge its burden, on a balance of probabilities that the mark was distinctive among the relevant population, that is physicians, pharmacists and patients, as follows:
1) There is evidence of the existence of three other capsules having the same or similar colours as the ones described in the present application and that those three medications can be taken at the same time with the Applicant's Wares. Under those circumstances I do not see how a consumer would be able to differentiate the Applicant's Wares from the others on the sole basis of the trade dress which is the object of the present application;
2) The doctors and pharmacists will not identify the source of the medication solely on its appearance but will use the markings on the capsules or tablets to identify it;
3) The only survey admissible in evidence shows that only 1.4% of the Canadian population associated the half-green and half-whitish-yellow capsule with PROZAC. A lesser percentage (0.5%) of the Canadian population associated the Mark with one source of supply. Even though there is no case law on what would constitute a reasonable percentage to enable me to conclude that the Mark is sufficiently known to the consumers such that it is distinctive within the meaning of Section 2 of the Act, I am of the opinion that those percentages are much too low to establish, on a balance of probabilities, that the Mark is distinctive, or is apt to distinguish the Applicant's Wares from those of others;
4) As established by the jurisprudence in cases of this nature, sales alone are not sufficient to establish the distinctiveness of the Mark. Moreover there has been no breakdown of the sales figures between the 20 mg. dosage which is the subject of the present application and the 10 mg. dosage which is the subject of application 783743.
[Emphasis in original]
[50] The Board said that the proposed mark dealing with colour and shape is essentially a weak mark and that the Applicant had failed to discharge the heavy burden upon it, to establish distinctiveness.
[51] The Board, in closing, acknowledged that in adjudicating the opposition proceedings, it was exercising delegated authority of the Registrar, pursuant to subsection 63(3) of the Act.
III. Submissions
A. The Applicant
[52] The Applicant, in its written submissions, focuses on two issues, that is the test for distinctiveness and the applicable standard of review.
[53] It argues that the Registrar misinterpreted and misapplied the test for distinctiveness when he found that distinctiveness must be shown in relation to the groups, that is physician, pharmacists and patients, rather than with respect to one group.
[54] Further, it submits that distinctiveness may be established in one of two ways, either by showing that the mark is inherently distinctive or that it is actually distinctive. In the first instance, it argues that the analysis of inherent distinctiveness would be limited to the product category, that is anti-depressants. In order to show actual distinctiveness, the Applicant argues that the analysis should also be conducted in relation to the product category. It refers to the evidence of the popularity of PROZAC, the marketing efforts made in relation to the product, media coverage given to it, as well as the survey evidence.
[55] The Applicant also submitted that the Registrar erred in concluding that the existence of similar products impacted upon the distinctiveness of PROZAC. It argued that the relevant market is different and there is no evidence of confusion.
[56] It noted that there is no requirement that a trade-mark specifically identify the associated wares, and took the position that the Registrar imposed special requirements upon it. It argued that there is not a separate system for the assessment of distinctiveness for the pharmaceutical industry.
[57] The Applicant argued that the standard of review in Molson Breweries v. John Labatt Ltd., [2000] 3 F.C. 145 (C.A.) has been overtaken by the decision of the Supreme Court of Canada in Barrie Public Utilities v. Canadian Cable Television Association, [2003] 1 S.C.R. 476 and that the applicable standard of review is correctness. It submitted that, in the circumstances of this case, application of the standard of correctness should lead to a de novo hearing.
[58] In oral argument, the Applicant introduced new submissions. It said that it holds a foreign registration for the trade-mark in the United States. Relying on section 14 of the Act, it argued that this statutory provision may give rise to a less stringent test for distinctiveness.
[59] The Applicant, at the hearing of this appeal, also introduced arguments about the rejection by the Registrar of the expert evidence tendered by Dr. Pye. It submitted that the objection to the Pye affidavit went to the weight, not the admissibility, of that evidence and submitted that the Court was able to review that evidence and make its own ruling, on a de novo basis, concerning its relevance.
[60] Similarly, at the hearing, the Applicant submitted that the Registrar had erred in "excluding" the evidence adduced by way of affidavits from patients. Again, it argued that this evidence could be considered on a de novo basis by the Court.
[61] The Applicant sought to submit a guide to the evidence that it argued was not properly considered by the Registrar. Upon objection by the Respondent, this guide was not accepted. The Respondent objected to any attempts by the Applicant to introduce arguments not raised in the written memorandum. The Applicant was permitted to make the arguments, subject to a ruling as to whether they would be considered.
B. The Respondent
[62] The Respondent, in its written submissions, argued that the decision meets the applicable standard of review, that is reasonableness simpliciter. It submitted that the Applicant had failed to establish distinctiveness of its mark, that the Registrar correctly identified the relevant universe as all pharmaceutical products, and that the relevant market is all consumers, not just one particular group.
[63] Further, the Respondent argued that the Applicant did not file any new evidence, as permitted pursuant to subsection 56(5) of the Act. It noted that the Applicant did not conduct any cross-examination upon the new evidence filed by the Respondent. That evidence, according to the Respondent, supports the decision of the Registrar.
[64] First, the new evidence filed by the Respondent shows the existence of similar pills at the relevant time. It establishes that the injunctions obtained by the Applicant delayed the entry of generic products into the market. Thirdly, the new evidence, according to the Respondent, demonstrates that the mark is not visible at the time of transfer of the product to the patient, one of the relevant consumers.
[65] The Respondent also advanced submissions concerning the application of the doctrine of res judicata, on the basis of the judgment rendered against the Applicant in the passing-off action.
C. Post-Hearing Submissions
[66] Subsequent to the hearing of this appeal, the Respondent sought and was granted leave to make further submissions on the issue of res judicata, in light of the recent decision of the Supreme Court of Canada in Kirkbi AG v. Ritvik Holdings Inc., [2005] 3 S.C.R. 302 ("Kirkbi"). The Applicant was given the opportunity to respond.
[67] The Respondent submits that in Kirkbi, the Supreme Court of Canada decided that the Act applies to both unregistered and registered trade-marks, and that the statutory definition of "trade-mark" includes a proposed trade-mark, such as the one at issue here. It argues that since the Court, in the Passing Off Decision, determined that the Applicant had failed to establish distinctiveness of the colour and shape of the mark, that the doctrine of res judicata should apply in this case.
[68] The Applicant, for its part, argues that the doctrine of res judicata does not apply since there are different issues involved in the present proceeding than were before the Court in the Passing Off Decision.
IV. Discussion and Disposition
[69] This appeal from the decision of the Registrar, rejecting the Applicant's application to register a trade-mark relating to the colour and shape of its 20 mg capsules of PROZAC, is governed by section 56 of the Act. Pursuant to Rule 300(d) of the Rules, the appeal proceeds as an application for judicial review, that is a proceeding where the evidence is introduced by means of affidavit. Other documentary material sought to be relied upon by the parties is produced in the respective application records of the parties. For the purposes of this appeal, the decision of the Board is treated as a decision of the Registrar.
[70] Subsection 56(5) of the Act provides for the introduction of new evidence upon an appeal, as follows:
| (5) On an appeal under subsection (1), evidence in addition to that adduced before the Registrar may be adduced and the Federal Court may exercise any discretion vested in the Registrar. |
5) Lors de l'appel, il peut être apporté une preuve en plus de celle qui a été fournie devant le registraire, et le tribunal peut exercer toute discrétion dont le registraire est investi. |
[71] The first issue to be addressed is the applicable standard of review. The Applicant, as noted above, argues that the standard of reasonableness, as discussed in Molson Breweries, has been supplanted by the standard of correctness, further to the decision of the Supreme Court in Barrie Public Utilities.
[72] In Molson Breweries, Justice Rothstein, as he then was, writing for the Court, said the following with respect to the standard of review applicable to decisions of the Registrar:
Having regard to the Registrar's expertise, in the absence of additional evidence adduced in the Trial Division, I am of the opinion that decisions of the Registrar, whether of fact, law or discretion, within his area of expertise, are to be reviewed on a standard of reasonableness simpliciter. However, where additional evidence is adduced in the Trial Division that would have materially affected the Registrar's findings of fact or the exercise of his discretion, the Trial Division Judge must come to his or her own conclusion as to the correctness of the Registrar's decision.
[73] Recently, in Marks and Clerk v. Sparkles Photo Limited (2005), 41 C.P.R. (4th) 236 (F.C.T.D.) Justice Mosley conducted a pragmatic and functional analysis with respect to the standard of review that governs an appeal from a decision of the Registrar made pursuant to section 45 of the Act, that is in respect of expungement proceedings. The respondent argued that the appropriate standard should be reasonableness simpliciter. The Court addressed the four elements of the pragmatic and functional analysis, as follows:
16. As for the first factor of the pragmatic and functional analysis, there is no privative clause and this proceeding has been brought pursuant to a statutory right of appeal under section 56 of the Act. This suggests that less deference should be shown to the Registrar's decision.
17. In the analysis of the expertise factor, there are three considerations: the nature of the question or questions at issue; the expertise of the administrative decision maker respecting those issues; and, the Court's own expertise relative to that of the decision maker: Dr. Q, supra at para. 28.
18. The appellant submits that this case turns on the interpretation and application of the relevant jurisprudence, notably Honey Dew and Saccone and Speed, supra and that there is no reason to consider that the hearing officer in this case would have any greater expertise than the court in applying the appropriate principles. This case differs, the appellant argues, from the fact-driven distinctive use or confusion cases in which the hearing officers have developed considerable expertise in assessing the evidence.
19. The issues in these proceedings are mixed questions of fact and law. The greater the fact component of the question, the greater the deference that ought to be given to the decision of the Registrar: Dr. Q. supra at para. 34.
[74] Ultimately, the Court concluded that the appropriate standard of review in that case was reasonableness simpliciter. At the same time, however, the Court noted that no new evidence had been introduced on appeal that could have materially affected the decision of the Registrar.
[75] In Mattel, Inc. v. 3894207 CanadaInc., [2006] S.C.J. No. 23, 2006 SCC 22, the appellant had sought to introduce fresh evidence upon the hearing of the appeal before the applications judge. That evidence was rejected on the grounds that it was unresponsive to the statutory test in issue; see Mattel, Inc. v. 3894207 Canada Inc. et al. (2004), 248 F.T.R. 228 (T.D.) at paragraphs 23 to 25. The Supreme Court confirmed the rejection of the "new evidence" by the applications judge. It considered the introduction of new evidence, pursuant to subsection 56(5) of the Act, in the context
of the first factor to be considered in the pragmatic and functional analysis, that is the existence of a privative clause. At paragraph 35, the Court said the following:
35. The Act provides for a full right of appeal to a Federal Court judge who is authorized to receive and consider fresh evidence (ss. 56(1) and 56(5). There is no privative clause. Where fresh evidence is admitted, it may, depending on its nature, put quite a different light on the record that was before the Board, and thus require the applications judge to proceed more by way of a fresh hearing on an extended record than a simple appeal (Philip Morris Inc. v. Imperial Tobacco Ltd. (No. 1) (1987), 17 C.P.R. (3d) 289 (F.C.A.)). Section 56 suggests a legislative intent that there be a full reconsideration not only of legal points but also of issues of fact and mixed fact and law, including the likelihood of confusion. See generally Molson Breweries v. John Labatt Ltd., [2000] 3 F.C. 145 (C.A.), at paras. 46-51; Novopharm Ltd. v. Bayer Inc. (2000), 9 C.P.R. (4th) 304 (F.C.A.), at para. 4, and Garbo Creations Inc. v. Harriet Brown & Co. (1999), 3 C.P.R. (4th) 224 (F.C.T.D.).
[76] The Supreme Court also considered the introduction of new evidence in relation to the second part of the pragmatic and functional analysis, that is the expertise of the decision-maker, and said the following at paragraph 37:
37. What this means in practice is that the decision of the registrar or Board "should not be set aside lightly considering the expertise of those who regularly make such determinations": McDonald's Corp. v. Silcorp Ltd. (1989), 24 C.P.R. (3d) 207 (F.C.T.D.), at p. 210, aff'd (1992), 41 C.P.R. (3d) 67 (F.C.A.). Reception of new evidence, of course, might (depending on its content) undermine the factual substratum of the Board's decision and thus rob the decision of the value of the Board's expertise. However, the power of the applications judge to receive and consider fresh evidence does not, in and of itself, eliminate the Board's expertise as a relevant consideration: Lamb v. Canadian Reserve Oil & Gas Ltd., [1977] 1 S.C.R. 517, at pp. 527-28.
[77] Ultimately, the Supreme Court concluded that, in the absence of fresh evidence, the appropriate standard of review is reasonableness. At paragraph 40, the Court said the following:
40. Given, in particular, the expertise of the Board, and the "weighing up" nature of the mandate imposed by s. 6 of the Act, I am of the view that despite the grant of a full right of appeal the appropriate standard of review is reasonableness. The Board's discretion does not command the high deference due, for example, to the exercise by a Minister of a discretion, where the standard typically is patent unreasonableness (e.g. C.U.P.E. v. Ontario (Minister of Labour), [2003] 1 S.C.R. 539, 2003 SCC 29, at para. 157), nor should the Board be held to a standard of correctness, as it would be on the determination of an extricable question of law of general importance (Chieu v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 84, 2002 SCC 3, at para. 26). The intermediate standard (reasonableness) means, as Iacobucci J. pointed out in Ryan, at para. 46, that "[a] court will often be forced to accept that a decision is reasonable even if it is unlikely that the court would have reasoned or decided as the tribunal did". The question is whether the Board's decision is supported by reasons that can withstand "a somewhat probing" examination and is not "clearly wrong": Southam Inc., at para. 60.
[78] The availability of the opportunity to introduce new evidence upon an appeal of a decision of the Registrar does not inevitably lead to the conclusion that the applicable standard of review will be something other than the standard of reasonableness. An appeal will proceed on a de novo basis if there is new evidence introduced that would materially affect the decision under review. In Mattel, Inc., the applications judge said the following about the introduction of new evidence at paragraph 23:
23. However, the new evidence must be sufficiently substantial to warrant a trial de novo. In other words, the new evidence must radically change the factual situation in order for the Court to have unfettered discretion to set aside the Registrar's decision.
[79] In the present case, the Applicant has not submitted new evidence but argues that the Court can conduct a de novo hearing because the Registrar committed errors of law in rejecting the affidavit of Dr. Pye and in "excluding" certain evidence of patients.
[80] These submissions cannot succeed. First, the Applicant did not address the issue of Dr. Pye's affidavit in its written argument. According to the decision in Mishak v. Canada(Minister of Citizenship and Immigration)(1999), 173 F.T.R. 144 (T.D.), a party cannot raise in argument matters not addressed in the memorandum of fact and law.
[81] Second, Dr. Pye's affidavit is not "new evidence", in the sense of evidence that was unavailable at the time of the hearing. The evidence was filed in the Opposition proceedings. An objection was made to its admissibility and the Registrar acceded to the objection, finding that for the most part, Dr. Pye's evidence constituted inadmissible hearsay. Further, the Registrar made negative credibility findings concerning Dr. Pye's evidence in cross-examination.
[82] The Registrar is authorized to make findings of fact. That role necessarily involves decisions concerning the admissibility of evidence and its assessment.
[83] The same comments apply in response to the Applicant's arguments about the alleged "exclusion" of evidence from patients. It is clear from the decision that the patient evidence was considered and found lacking in probative value. There is no basis upon which this Court can reweigh the evidence. It has been dealt with by the Registrar.
[84] The Respondent, for its part, filed further evidence, that is the affidavits of Mr. David Boughner, Novopharm Limited Director of Marketing; Mr. Colin Simpkin, Apotex Inc. Director of Marketing; Ms. Paula Rembach, Canadian Generic Pharmaceutical Association Research Analyst; Ms. Cathy Conroy, Pharmacist, and Mr. Christopher Gleave, Law Clerk. This evidence was tendered in response to concerns raised by the Registrar as to the lack of evidence of the intention by the Respondent and similarly situated generic pharmaceutical manufacturer to begin the sale of generic "lookalike" pharmaceutical products on September 24, 1996. As well, the evidence was submitted to support the Respondent's arguments concerning the appropriate date for assessing distinctiveness.
[85] In my opinion, there is nothing about the new evidence submitted by the Respondent that supports a de novo review. In the first place, the evidence was filed in order to support the Registrar's decision. Its effect, in the present case, is neutral.
[86] The secondary purpose for the filing of this new evidence by the Respondent relates to the Registrar's finding as to the relevant date for assessing distinctiveness. The Registrar declined to adopt a date other than the date of filing of the Statement of Opposition. In making that decision, he specifically referred to the prevailing jurisprudence. I see no basis for taking a different course.
[87] It now remains to apply the standard of reasonableness to the Registrar's decision. Was his conclusion with respect to the lack of distinctiveness of the proposed trade-mark reasonable, having regard to the evidence and the identification of the relevant market?
[88] Distinctiveness is a question of fact; see Bayer at 322, aff'd. (2000), 9 C.P.R. (4th) 304 (F.C.A.).
[89] The Registrar assessed the distinctiveness of the proposed trade-mark in relation to the pharmaceutical industry at large, not simply in respect to the product category of anti-depressant, anti-obsessive and anti-bulimic medications.
[90] This assessment is consistent with relevant jurisprudence; see AstraZeneca AB v. Novopharm Ltd. (2003), 238 F.T.R. 240 (F.C.A.).
[91] There was evidence before the Registrar to show that there were several other pharmaceutical products that were prescribed for different conditions other than those treated by PROZAC, with green and ivory/beige capsules. His conclusion, that a consumer would be unlikely to differentiate the Applicant's design from others on the sole basis of trade dress, was reasonable.
[92] The Registrar assessed the question of distinctiveness in relation to a broad class of consumers, that is physicians, pharmacists and patients. It gave little weight to the evidence of patients and noted that the physicians and pharmacists rely on the markings on the capsule, not only its appearance, to identify the product. This conclusion is grounded in the evidence filed, including the transcripts of the cross-examinations.
[93] The Registrar's choice of a broad class of consumer is consistent with the jurisprudence; see Ciba-Geigy.
[94] In my opinion, the Registrar's choice of the relevant universe and its assessment of the survey evidence, were reasonable.
[95] I turn now to the issue of res judicata. This argument was advanced by the Respondent in the Opposition proceedings and rejected. It was advanced upon the hearing of the appeal as an alternative argument to the Respondent's principal submission in support of the Registrar's decision. In light of the request to submit further arguments on the basis of the decision of the Supreme Court of Canada in Kirkbi, it is apparently a subject of great interest to the Respondent.
[96] The doctrine of res judicata can be invoked where there is identity of parties, identity of the action or issue and a final judicial decision of a court of competent jurisdiction; Celliers du Monde Inc. c. DumontVins & Spiriteux Inc. (1992), 42 C.P.R. (3d) 197 (F.C.A.) and the Prohibition Decision at paragraph 28. The principal basis for the Respondent's submissions in this regard is the Passing Off Decision of Justice Reed. It argues that since the issue of distinctiveness has been determined against the Applicant in a court of competent jurisdiction, following litigation between the same parties, that this Court should apply the doctrine of res judicata to dismiss the Applicant's appeal. It relies on the decision in Kirkbi to argue that the scheme of the Act, including the criteria of distinctiveness, applies to unregistered marks, such as the one here in issue.
[97] I am not persuaded that the doctrine of res judicata applies in this case. The passing off action involved assessment of the issue of distinctiveness but in a different context, that is in a trial. In Bayer, as above, Justice Evans said the following at paragraph 75:
I should also note that, while there are some obvious differences between actions for the tort of passing-off and opposition proceedings to the registration of a trade-mark, there is also a significant link between them. ...
[98] In the absence of any authority supporting the Respondent's arguments, I am not prepared to find that the doctrine of res judicata applies here.
[99] I do not propose to address the new submissions advanced by the Applicant concerning the relevance of section 14 of the Act. This was not raised in its memorandum of fact and law.
V. Conclusion
[100] In the result, I am satisfied, upon the application of the standard of reasonableness, the Registrar reached a reasonable decision on the basis of the evidence. The appeal is dismissed.
[101] There remains the question of costs. The Respondent sought increased costs given it was obliged to reply to new arguments in the course of the hearing. The Applicant argued that no increased costs should be awarded or, alternatively, that it be allowed to make submissions.
[102] Accordingly, the parties may make brief submissions in writing, by July 7, 2006, if they cannot agree on costs.
ORDER
The appeal is dismissed. If the parties cannot agree on costs, brief written submissions may be made by July 7, 2006.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-89-05
STYLE OF CAUSE: ELI LILLY AND COMPANY v.
NOVOPHARM LIMITED and
REGISTRAR OF TRADE-MARKS
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: October 24, and 25, 2005 - Additional submissions from the parties received December 16, 23 and 30, 2005
APPEARANCES:
|
Mr. Patrick S. Smith and Mr. Marc Richard |
FOR THE APPLICANT |
|
Mr. Warren Sprigings and Ms. Paula Bremner |
FOR THE RESPONDENT Novopharm Limited |
|
No appearance
|
FOR THE RESPONDENT Registrar of Trade-Marks |
SOLICITORS OF RECORD:
| Gowling Lafleur Henderson LLP Ottawa, Ontario |
FOR THE APPLICANT |
|
Hitchman & Sprigings Toronto, Ontario |
FOR THE RESPONDENT Novopharm Limited |
|
Mr. John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Ontario |
FOR THE RESPONDENT Registrar of Trade-Marks |